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| ☒ | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||
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| ☐ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||
| Delaware | 13-3362547 | |||||||
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601 Merritt 7,
06850
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management.
Wealth.
Our
Analytics and Trading Solutions
Our
Our Wealth Solutions workflow (“Wealth”) is specific tofocused on the wealth management industry and creates offerings that enable wealth professionals across an entire enterprise, including home office, advisory, and client engagement. Wealth empowers wealth managers to demonstrate value to clients and prospects while protectinggrowing and growingprotecting their assets with FactSet’s combined solution set of portfolio analytics, market monitoring tools, multi-asset class research and customized client facing digital solutions. Our Research Management Solutionsresearch management solutions products enable our wealth management clients to increase collaboration and communication between Home Officehome office and Advisoryadvisory functions within the firm and deliver consistent and scalable messaging to the clients of the advisor.
Content and Technology Solutions
Our Content and Technology Solutions workflow (“CTS”) is focused
By enabling our clients to utilize their preferred choice of industry standard databases, programming languages, and data visualization tools, we empower them to focus on the core competencies needed to drive their business.
As buy-side
They access our multi-asset-class tools by utilizing our workstations, analytics and trading tools, proprietary content, data feeds, APIs and portfolio services.
2020. ASV at any given point in time represents the forward-looking revenue for the next 12 months from all subscription services currently being supplied to clients and excludes professional service fees, which are not subscription-based.
analysts.
2020.
During fiscal 2019, we added 432and User Additions
Organic ASV Growth
services. With proper notice provided to us, our clients can add to, delete portions of, or terminate service, subject to certain contractual limitations.
The U.S. segment hasSouth America, with offices in 15 locations, within 1312 states throughout the United States ("U.S."), including our corporate headquarters in Norwalk, Connecticut, as well as two additional offices locatedand an office in both Brazil and Canada. The EuropeanEMEA segment serves our clients in countries in Europe and Africa and maintains office locations in Bulgaria, UAE (Dubai), England, France, Germany, Italy, Latvia, Luxembourg, the Netherlands, South Africa, Spain, and Switzerland. The Asia Pacific segment hasserves our clients in countries in Asia and Australia and includes office locations in Australia, UAE (Dubai), China, Hong Kong, China, India, Japan, the Philippines, and Singapore. Segment revenue reflects direct sales to our clients based inon their respective geographic locations.
Expenditures associated with our data centers, third-party data costs and corporate headquarters charges are recorded by the U.S.Americas segment and are not allocated to the other segments. The content collection centers, located in India, the Philippines, and Latvia, benefit all our operating segments, and thus the expenses incurred at these locations are allocated to each segment based on a percentage of revenue.
Refer to Note 18,
Segment Information in the Notes to the Company’s Consolidated Financial Statements included in Item 8. of this Annual Report on Form 10-K for financial information, including revenues, operating income and long-lived assets for each of our segments.
In December 2018, we appointed Daniel Viens as Chief Human Resources Officer. In May 2019, we announced that John W. Wiseman, the Company’s Global Head of Sales and Client Solutions, would step down from his position on June 1, 2019, remaining at the company until August 31, 2019 to assist during the transition. In the same announcement, effective June 1, 2019, we appointed Franck A.R. Gossieaux as the Company's new Global Head of Sales and Client Solutions.
Third-Party Content
2020.
We are embarking on a set of programs that will increasingly move our systems and applications to cloud computing platforms.
Despite competing products and services, we enjoyown offerings.
Intellectual Property
Additionally, we broadcast live our quarterly earnings calls via the investor relations section of our website. We also provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs as part of our investor relations website. The contents of this website section are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document the Company files with the SEC and any reference to this section of our website is intended to be inactive textual references only.
Name of Officer | Age | Office Held with the Company | Officer Since |
F. Philip Snow | 55 | Chief Executive Officer | 2014 |
Helen L. Shan | 52 | Executive Vice President and Chief Financial Officer | 2018 |
Franck A.R. Gossieaux | 49 | Executive Vice President, Global Head of Sales and Client Solutions | 2019 |
Rachel R. Stern | 54 | Executive Vice President, General Counsel and Secretary | 2009 |
Gene D. Fernandez | 52 | Executive Vice President, Chief Technology and Product Officer | 2017 |
Robert J. Robie | 41 | Executive Vice President, Head of Analytics and Trading | 2018 |
Daniel Viens | 62 | Senior Vice President, Chief Human Resources Officer | 2018 |
| Name of Officer | Age | Office Held with the Company | Officer Since | ||||||||
| F. Philip Snow | 56 | Chief Executive Officer | 2014 | ||||||||
| Helen L. Shan | 53 | Executive Vice President and Chief Financial Officer | 2018 | ||||||||
| Goran Skoko | 59 | Executive Vice President, Managing Director EMEA and Asia Pacific, Head of Wealth Solutions | 2019 | ||||||||
| Gene D. Fernandez | 53 | Executive Vice President, Chief Technology and Product Officer | 2017 | ||||||||
| Rachel R. Stern | 55 | Executive Vice President, Chief Legal Officer, Global Head of Strategic Resources and Secretary | 2009 | ||||||||
| Robert J. Robie | 42 | Executive Vice President, Head of Analytics and Trading Solutions | 2018 | ||||||||
| Daniel Viens | 63 | Senior Vice President, Chief Human Resources Officer | 2018 | ||||||||
Frank A.R. Gossieaux
Rachel R. Stern–ExecutiveVice President, Strategic Resources and General Counsel. Ms. Stern joined FactSet in January 2001 as General Counsel. In addition to her role in the Legal Department, Ms. Stern is also responsible for Compliance, Facilities and Real Estate Planning, and the administration of our offices in Hyderabad, Manila and Riga. Ms. Stern is admitted to practice in New York, Washington D.C., and as House Counsel in Connecticut. Ms. Stern received a Bachelor of Arts from Yale University, a Master of Arts from the University of London and a Juris Doctor from the University of Pennsylvania Law School.
Gene D. Fernandez– Executive Vice President, Chief Technology and Product Officer. Mr. Fernandez joined FactSet in November 2017 from J.P. Morgan, where he served as the Chief Technology Officer, New Product Development. In this role, he developed the strategy and built the engineering function responsible for new product innovation. During a decade at J.P. Morgan, Mr. Fernandez held various other roles, including Chief Technology Officer for Client Technology and Research and Banking Information Technology. Prior to J.P. Morgan, he worked at Credit Suisse and Merrill Lynch. Mr. Fernandez received a Bachelor of Science in Computer Science and Economics from Rutgers University.
12Rachel R. Stern–Executive Vice President, Chief Legal Officer, Global Head of Strategic Resources and Secretary. Ms. Stern joined FactSet in January 2001 as General Counsel. In addition to her role in the Legal Department, Ms. Stern is also responsible for Compliance, Facilities Management and Real Estate Planning and the administration of our offices in Hyderabad, Manila and Riga. Ms. Stern is admitted to practice in New York, Washington D.C., and as House Counsel in Connecticut. Ms. Stern received a Bachelor of Arts from Yale University, a Master of Arts from the University of London and a Juris Doctor from the University of Pennsylvania Law School.RobertJ.Robie – Executive Vice President, Head of Analytics and Trading Solutions. Mr. Robie joined FactSet in July 2000 as a Product Sales Specialist. In his current role, he oversees strategy, research, development and engineering for Analytics and Trading platforms. During his tenure at FactSet, Mr. Robie has held several positions of increasingincreased responsibility, including Senior Director of Analytics and Director of Global Fixed Income and Analytics, where he led sales and support efforts for FactSet’s fixed income product offering.Income. Although Mr. Robie joined FactSet in 2000, he did work at BTN Partners from 2004 through 2005 in their quantitative portfolio management and performance division, before returning to continue his career with FactSet. Mr. Robie holds a Bachelor of Arts in Economics and Fine Arts from Beloit College.Daniel Viens – Senior Vice President, Chief Human Resources Officer. Mr. Viens joined FactSet in September 1998 as a Vice President, Director of Human Resources and has held several leadership positions of increased responsibility in Human Resources. Prior to joining FactSet, Mr. Viens was a Director of Human Resources for First Data Solutions and Donnelly Marketing (a former company of Dun & Bradstreet), where he developed significant Human Resources acumen. Mr. Viens graduated from Boston University, and holds both a Master's Degree from Eastern Illinois University in Clinical Psychology and a Master of Business Administration from Columbia University.Additional InformationAdditional information with respect to FactSet’s business is included in the following pages and is incorporated herein by reference:Page(s)Page(s) 212346Note 1 59Note 8 to Consolidated Financial Statements entitled Segment Information72
Loss, corruption and misappropriation of data and information relating to clients and others
and customer demands
Uncertainty, consolidation
Our investment banking clients that perform mergers and acquisitions ("M&A") advisory work, capital markets services and equity research, account for approximately 16.3%use of our ASV. A significant portionproducts or services or our delay or failure to provide services. Contracts with customers also increasingly include service level requirements and audits rights to review our security. Many of these revenues relate to services deployed by the largest banks. Consolidation or contraction in this industry directly impacts the number of prospective clients and users within the sector. Thus, economic uncertainty for our global investment banking clients, consolidation and business failures in this sector could adversely affect our financial results and future growth.
Volatilitycustomers in the financial marketsservices sector are also subject to regulations and requirements to adopt risk management processes commensurate with the level of risk and complexity of their third-party relationships, and provide rigorous oversight of relationships that involve certain "critical activities," some of which may delaybe deemed to be provided by us. Any failure on our part to comply with the spending pattern of clients and reduce future ASV growth
The decision on the part of large institutional clients to purchase our services often requires management-level sponsorship and typically depends upon the size of the client, with larger clients having more complex and time-consuming purchasing processes. The process is also influenced by market volatility. These characteristics often lead us to engagespecific provisions in relatively lengthy sales efforts. Purchases (and incremental ASV) may therefore be delayed as uncertaintiescustomer contracts could result in the financial marketsimposition of various penalties, which may cause clients to remain cautious about capitalinclude termination of contracts, service credits, suspension of payments, contractual penalties, adverse monetary judgments, and, data content expenditures, particularly in uncertain economic environments.
Additional cost due to tax assessments resultingthe case of government contracts, suspension from ongoingfuture government contracting. Even if the outcome of any claims brought against us were ultimately favorable, such a claim would require the time and future audits by tax authoritiesattention of our management, personnel, as well as changes in tax laws
In the ordinary course of business, we are subject to tax examinations by various governmental tax authorities. The global and diverse nature of our business means that there could be additional examinations by governmental tax authorities and the resolution of ongoingfinancial and other probable audits which could imposeresources and potentially pose a future risksignificant disruption to the results of our business. In August 2019, FactSet received a Notice of Intent to Assess (the “Notice”) additional sales taxes, interest and underpayment penalties from the Commonwealth of Massachusetts Department of Revenue relating to prior tax periods. The Notice follows FactSet’s previously disclosed response to a letter from the Commonwealth requesting additional sales information. Based upon a preliminary review of the Notice, the Company believes the Commonwealth may assess sales tax, interest and underpayment penalties on previously recorded sales transactions. The Company intends to contest any such assessment, if assessed, and continues to cooperate with the Commonwealth’s inquiry. Due to uncertainty surrounding the assessment process, the Company is unable to reasonably estimate the ultimate outcome of this matter and, as such, has not recorded a liability as of August 31, 2019. While FactSet believes that it will ultimately prevail if the Company is presented with a formal assessment; if FactSet does not prevail, the amount could have a material impact on the Company’s consolidated financial position, cash flows and results ofnormal business operations.
Changes in tax laws or the terms of tax treaties in a jurisdiction where we are subject to tax could increase our taxes payable. On December 22, 2017, the U.S. Tax Cuts and Jobs Act, ("TCJA") was signed into law. The TCJA enacted broad changes to the U.S. Internal Revenue code, including reducing the federal corporate income tax rate from 35% to 21%, amongst many other complex provisions. The ultimate impact of such tax reform may differ from our current estimate due to changes in interpretations and assumptions made by us as well as the issuance of further regulations or guidance.
Inability to hire and retain key qualified personnel
Our business is based on successfully attracting, motivating and retaining talented employees. Competition for talent, especially engineering personnel, is strong. We need technical resources such as engineers to help develop new products and enhance existing services. We rely upon sales personnel to sell our products and services and maintain healthy business relationships. If we are unsuccessful in our recruiting efforts, or if we are unable to retain key employees, our ability to develop and deliver successful products and services may be adversely affected and could have a material, adverse effect on our business.
Increased accessibility to free or relatively inexpensive information sources may reduce demand for our products
Operations outside
In fiscal 2019, approximately 38% of our revenue related to operations located outside the U.S. In addition, a significant numberInternal Revenue code, including reducing the federal corporate income tax rate from 35% to 21%, among many other complex provisions. The ultimate impact of such tax reform may differ from our employees, approximately 76%, are locatedcurrent estimate due to changes in offices outsideinterpretations and assumptions made by us, as well as the issuance of further regulations or guidance, or further legislative changes to the U.S. We expect our growth to continue outside the U.S., with non-U.S. revenues accounting for an increased portion of total revenue in the future. Our non-U.S. operations involve risks that differ from or are in addition to those faced by our U.S. operations. These risks include difficulties in developing products, services and technology tailored to the needs of non-U.S. clients, including in emerging markets; different employment laws and rules; rising labor costs in low-wage countries; difficulties in staffing and managing personnel that are located outside the U.S.; different regulatory, legal and compliance requirements, including in the areas of privacy and data protection, anti-bribery and anti-corruption, trade sanctions and currency controls, marketing and sales and other barriers to conducting business; social and cultural differences, such as languages; diverse or less stable political, operating and economic environments and market fluctuations; civil disturbances or other catastrophic events that reduce business activity; limited recognition of our brand and intellectual property protection; differing accounting principles and standards; restrictions on or adverse tax consequences from entity management efforts; and changes in U.S. or foreign tax laws. If we are not able to adapt efficiently or manage the business effectively in markets outside the U.S., our business prospects and operating results could be materially and adversely affected.
Internal Revenue code.
Legislative and regulatory changes in the environments in which we andWe provide public, full-year financial guidance based upon assumptions regarding our clients operate
Many of our clients operate within a highly regulated environment and must comply with governmental legislation and regulations. The U.S. regulators have increased their focus on the regulation of theexpected financial services industry. Increased regulation of our clients may increase their expenses, causing them to seek to limit or reduce their costs from outside services such as ours. Additionally, if our clients are subjected to investigations or legal proceedings they may be adversely impacted, possibly leading to their liquidation, bankruptcy, receivership, reduction in assets under management, or diminished operations, which would adversely affect our revenue. In the European Union, the new version of the Markets in Financial Instruments Directive (recast), also known as “MiFID II” became effective in January 2018. We believe that compliance with MiFID II requirements is time-consuming and costly for the investment managers who are subject to it and will cause clients to adapt their pricing models and business practices significantly. These increased costs may impact our clients’ spending and may cause some investment managers to lose business or withdraw from the market, which may adversely affect demand for our services. However, MiFID II may also present us with new business opportunities for new service offerings. In addition to the MiFID II requirements, we further believe the proposed withdrawal of the U.K. from the European Union (also known as Brexit) on terms still being negotiated, has created economic uncertainty among our client base. This uncertainty may have an impact on our clients’ expansion or spending plans, which may in turn negatively impact our revenue or growth.
As a business, we are also subject to numerous laws and regulations in the U.S. and in the other countries in which we operate. These laws, rules, and regulations, and their interpretations, may change in the future, and compliance with these changes may increase our costs or cause us to make changes in or otherwise limit our business practices. In addition, the global nature and scope of our business operations make it more difficult to monitor areas that may be subject to regulatory and compliance risk. If we fail to comply with any applicable law, rule, or regulation, we could be subject to claims and fines and suffer reputational damage.
Adverse resolution of litigation or governmental investigations
We are party to lawsuits in the normal course of business. Litigation and governmental investigations can be expensive, lengthy and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. Unfavorable resolution of lawsuits could have a material adverse effect on our business, operating results or financial condition. For additional information regarding legal matters, see Item 3, Legal Proceedings, contained in Part I of this Report on Form 10-K.
Failure to maintain reputation
We enjoy a positive reputation in the marketplace. Our ability to attract and retain clients and employees is affected by external perceptions of our brand and reputation. Reputational damage from negative perceptions or publicity could affectperformance, including our ability to attractgrow revenue and retain clientsorganic ASV plus professional services, to meet our planned expenses and employeesmaintain a certain tax rate, and our ability to achieve our profitability targets. We can provide no assurances that we will be able to maintain the levels of growth and profitability that we have experienced in the past, or that our pricing for our products. Althoughgrowth strategies will be successful. If we monitor developments for areas of potential riskare unable to our reputation and brand, negative perceptions or publicity could have a material adverse effectsuccessfully execute on our businessstrategies to achieve our growth objectives and retain our existing clients, or if we experience higher than expected operating costs or taxes, we risk not meeting our full-year financial results.
As of August 31, 2019, we leased approximately 202,000 square feet of office space at our headquarters in Norwalk, Connecticut. On February 14, 2018, we entered into a new lease agreement to relocate our
table below. We have data content collection offices located in India, the Philippines and Latvia, which benefit all our operating segments.Latvia. Additionally, we have data centers that support our technological infrastructure located in New Jersey and Virginia. The other locations listed in the table below are leased office space. The leases expire on various dates through 2035.
Including new lease agreements executed during fiscal 2019, our Company’s worldwide leased space increased to approximately 1,860,000 square feet as of August 31, 2019, up 110,000 square feet, or 6.3%, from August 31, 2018 and includes properties at the following locations:
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| Americas | Austin, Texas | ||||
Boston, Massachusetts | |||||
Chicago, Illinois | |||||
Jackson, Wyoming | |||||
Los Angeles, California | |||||
Manchester, New Hampshire | |||||
Minneapolis, Minnesota | |||||
New York, New York | |||||
Norwalk, Connecticut | |||||
Piscataway, New Jersey | |||||
Reston, Virginia | |||||
San Francisco, California | |||||
Sao Paulo, Brazil | |||||
Toronto, Canada | |||||
Youngstown, Ohio | |||||
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| EMEA | Amsterdam, the Netherlands | ||||
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Cologne, Germany | |||||
| Dubai, United Arab Emirates | |||||
Frankfurt, Germany | |||||
Gloucester, England | |||||
Johannesburg, South Africa | |||||
London, England | |||||
Luxembourg City, Luxembourg | |||||
Madrid, Spain | |||||
Milan, Italy | |||||
Paris, France | |||||
Riga, Latvia | |||||
Sofia, Bulgaria | |||||
Zurich, Switzerland | |||||
Asia Pacific | Chennai, India | ||||
Hong Kong, China | |||||
Hyderabad, India | |||||
Manila, the Philippines | |||||
Melbourne, Australia | |||||
Mumbai, India | |||||
Shanghai, China | |||||
Singapore | |||||
Sydney, Australia | |||||
Tokyo, Japan | |||||
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First | Second | Third | Fourth | |||||||||||||
2019 | ||||||||||||||||
High | $ | 237.29 | $ | 237.95 | $ | 284.32 | $ | 305.38 | ||||||||
Low | $ | 210.11 | $ | 188.31 | $ | 228.43 | $ | 266.06 | ||||||||
2018 | ||||||||||||||||
High | $ | 200.31 | $ | 209.02 | $ | 217.36 | $ | 229.98 | ||||||||
Low | $ | 155.88 | $ | 183.89 | $ | 184.48 | $ | 195.69 | ||||||||
| First | Second | Third | Fourth | ||||||||||||||||||||
| 2020 | |||||||||||||||||||||||
| High | $ | 289.98 | $ | 310.25 | $ | 307.97 | $ | 363.64 | |||||||||||||||
| Low | $ | 233.09 | $ | 275.12 | $ | 195.22 | $ | 279.01 | |||||||||||||||
| 2019 | |||||||||||||||||||||||
| High | $ | 237.29 | $ | 237.95 | $ | 284.32 | $ | 305.38 | |||||||||||||||
| Low | $ | 210.11 | $ | 188.31 | $ | 228.43 | $ | 266.06 | |||||||||||||||
Year Ended | Dividends per Share of Common Stock | Record Date | Total $ Amount (in thousands) | Payment Date | ||||||||
Fiscal 2019 | ||||||||||||
First Quarter | $ | 0.64 | November 30, 2018 | $ | 24,372 | December 18, 2018 | ||||||
Second Quarter | $ | 0.64 | February 28, 2019 | $ | 24,385 | March 19, 2019 | ||||||
Third Quarter | $ | 0.72 | May 31, 2019 | $ | 27,506 | June 18, 2019 | ||||||
Fourth Quarter | $ | 0.72 | August 30, 2019 | $ | 27,445 | September 19, 2019 | ||||||
Fiscal 2018 | ||||||||||||
First Quarter | $ | 0.56 | November 30, 2017 | $ | 21,902 | December 19, 2017 | ||||||
Second Quarter | $ | 0.56 | February 28, 2018 | $ | 21,799 | March 20, 2018 | ||||||
Third Quarter | $ | 0.64 | May 31, 2018 | $ | 24,566 | June 19, 2018 | ||||||
Fourth Quarter | $ | 0.64 | August 31, 2018 | $ | 24,443 | September 18, 2018 | ||||||
All the above cash dividends were paid from existing cash resources on a quarterly basis.
| Year Ended | Dividends per Share of Common Stock | Record Date | Total $ Amount (in thousands) | Payment Date | |||||||||||||
| Fiscal 2020 | |||||||||||||||||
| First Quarter | $ | 0.72 | November 29, 2019 | $ | 27,291 | December 19, 2019 | |||||||||||
| Second Quarter | $ | 0.72 | February 28, 2020 | $ | 27,251 | March 19, 2020 | |||||||||||
| Third Quarter | $ | 0.77 | May 29, 2020 | $ | 29,189 | June 18, 2020 | |||||||||||
| Fourth Quarter | $ | 0.77 | August 31, 2020 | $ | 29,283 | September 17, 2020 | |||||||||||
| Fiscal 2019 | |||||||||||||||||
| First Quarter | $ | 0.64 | November 30, 2018 | $ | 24,372 | December 18, 2018 | |||||||||||
| Second Quarter | $ | 0.64 | February 28, 2019 | $ | 24,385 | March 19, 2019 | |||||||||||
| Third Quarter | $ | 0.72 | May 31, 2019 | $ | 27,506 | June 18, 2019 | |||||||||||
| Fourth Quarter | $ | 0.72 | August 30, 2019 | $ | 27,445 | September 19, 2019 | |||||||||||
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2020:
Period | Total number of shares purchased(1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares (or approximate dollar value) that may yet be purchased under the plans or programs(2) | ||||||||||||
June 2019 | 28,421 | $ | 285.92 | 25,000 | $ | 292,465 | (3) | |||||||||
July 2019 | 102,629 | $ | 283.86 | 102,500 | $ | 263,370 | ||||||||||
August 2019 | 90,242 | $ | 275.02 | 90,000 | $ | 238,619 | ||||||||||
| 221,292 | 217,500 | |||||||||||||||
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| Period | Total number of shares purchased(1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares (or approximate dollar value) that may yet be purchased under the plans or programs(2) | ||||||||||||||||||||||
| June 2020 | 2,940 | $ | 328.47 | — | $ | 287,616 | ||||||||||||||||||||
| July 2020 | 47,428 | $ | 344.03 | 46,480 | $ | 271,616 | ||||||||||||||||||||
| August 2020 | 37,295 | $ | 355.76 | 35,468 | $ | 258,995 | ||||||||||||||||||||
| 87,663 | 81,948 | |||||||||||||||||||||||||
10-K.
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||||
FactSet Research Systems Inc. | $ | 100 | $ | 124 | $ | 140 | $ | 123 | $ | 180 | $ | 214 | ||||||||||||
S&P 500 Index | $ | 100 | $ | 98 | $ | 108 | $ | 123 | $ | 145 | $ | 146 | ||||||||||||
NYSE Composite Index | $ | 100 | $ | 92 | $ | 97 | $ | 108 | $ | 118 | $ | 115 | ||||||||||||
Dow Jones U.S. Financial Services Index | $ | 100 | $ | 104 | $ | 105 | $ | 132 | $ | 161 | $ | 155 | ||||||||||||
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |||||||||||||||
| FactSet Research Systems Inc. | $ | 100 | $ | 113 | $ | 100 | $ | 145 | $ | 172 | $ | 222 | ||||||||
| S&P 500 Index | $ | 100 | $ | 110 | $ | 125 | $ | 147 | $ | 148 | $ | 177 | ||||||||
| NYSE Composite Index | $ | 100 | $ | 106 | $ | 117 | $ | 128 | $ | 125 | $ | 128 | ||||||||
| Dow Jones U.S. Financial Services Index | $ | 100 | $ | 101 | $ | 127 | $ | 154 | $ | 148 | $ | 143 | ||||||||
| S&P 500 Financial Exchanges and Data | $ | 100 | $ | 119 | $ | 155 | $ | 191 | $ | 222 | ||||||||||
For the year ended August 31, | ||||||||||||||||||||
(in thousands, except per share data) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Revenue | $ | 1,435,351 | $ | 1,350,145 | $ | 1,221,179 | $ | 1,127,092 | $ | 1,006,768 | ||||||||||
Operating income | $ | 438,035 | (1) | $ | 366,204 | (4) | $ | 352,135 | (7) | $ | 349,676 | (10) | $ | 331,918 | (13) | |||||
Provision for income taxes | $ | 69,175 | $ | 84,753 | $ | 86,053 | $ | 122,178 | $ | 92,703 | ||||||||||
Net income | $ | 352,790 | (2) | $ | 267,085 | (5) | $ | 258,259 | (8) | $ | 338,815 | (11) | $ | 241,051 | (14) | |||||
Diluted earnings per common share | $ | 9.08 | (3) | $ | 6.78 | (6) | $ | 6.51 | (9) | $ | 8.19 | (12) | $ | 5.71 | (15) | |||||
Weighted average common shares (diluted) | 38,873 | 39,377 | 39,642 | 41,365 | 42,235 | |||||||||||||||
Cash dividends declared per common share | $ | 2.72 | $ | 2.40 | $ | 2.12 | $ | 1.88 | $ | 1.66 | ||||||||||
| For the year ended August 31, | |||||||||||||||||
| (in thousands, except per share data) | 2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||
| Revenue | $ | 1,494,111 | $ | 1,435,351 | $ | 1,350,145 | $ | 1,221,179 | $ | 1,127,092 | |||||||
| Operating income | $ | 439,660 | $ | 438,035 | $ | 366,204 | $ | 352,135 | $ | 349,676 | |||||||
| Provision for income taxes | $ | 54,196 | $ | 69,175 | $ | 84,753 | $ | 86,053 | $ | 122,178 | |||||||
| Net income | $ | 372,938 | $ | 352,790 | $ | 267,085 | $ | 258,259 | $ | 338,815 | |||||||
| Diluted earnings per common share | $ | 9.65 | $ | 9.08 | $ | 6.78 | $ | 6.51 | $ | 8.19 | |||||||
| Diluted weighted average common shares | 38,646 | 38,873 | 39,377 | 39,642 | 41,365 | ||||||||||||
| Cash dividends declared per common share | $ | 2.98 | $ | 2.72 | $ | 2.40 | $ | 2.12 | $ | 1.88 | |||||||
As of August 31, | ||||||||||||||||||||
(in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Cash and cash equivalents | $ | 359,799 | $ | 208,623 | $ | 194,731 | $ | 228,407 | $ | 158,914 | ||||||||||
Accounts receivable, net of reserves | $ | 146,309 | $ | 156,639 | $ | 148,331 | $ | 97,797 | $ | 95,064 | ||||||||||
Goodwill and intangible assets, net | $ | 806,280 | $ | 850,768 | $ | 881,103 | $ | 546,076 | $ | 348,339 | ||||||||||
Total assets | $ | 1,560,130 | $ | 1,419,447 | $ | 1,413,315 | $ | 1,019,161 | $ | 736,671 | ||||||||||
Non-current liabilities | $ | 668,951 | $ | 672,413 | $ | 652,485 | $ | 343,570 | $ | 65,307 | ||||||||||
Total stockholders’ equity | $ | 672,256 | $ | 525,900 | $ | 559,691 | $ | 517,381 | $ | 531,584 | ||||||||||
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| (in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||
| Cash and cash equivalents | $ | 585,605 | $ | 359,799 | $ | 208,623 | $ | 194,731 | $ | 228,407 | |||||||
| Accounts receivable, net of reserves | $ | 155,011 | $ | 146,309 | $ | 156,639 | $ | 148,331 | $ | 97,797 | |||||||
| Goodwill and intangible assets, net | $ | 830,798 | $ | 810,177 | $ | 850,768 | $ | 881,103 | $ | 546,076 | |||||||
| Total assets | $ | 2,083,388 | $ | 1,560,130 | $ | 1,419,447 | $ | 1,413,315 | $ | 1,019,161 | |||||||
| Non-current liabilities | $ | 910,720 | $ | 668,951 | $ | 672,413 | $ | 652,485 | $ | 343,570 | |||||||
| Total stockholders’ equity | $ | 896,375 | $ | 672,256 | $ | 525,900 | $ | 559,691 | $ | 517,381 | |||||||
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| •Executive Overview •Key Metrics •Results of Operations •Liquidity |
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The MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8, Financial StatementsCapital Resources
integrated client experience. To take advantage of these developments we have focused our innovations and strategic investments in cloud computing, data lakes, APIs and our hosted proprietary data and analytics platform to provide real-time, predictive business intelligence for a seamless client experience. We continue to expand our broad financial content to provide support for our clients' most sophisticated investment strategies including enhanced data in private markets, industry specific deep sector and ESG. As a premier financial solutions provider for the global financial community, we provide workflow solutions and leading analytical applications, powered by cognitive capabilities and robust technology, across the investment portfolio lifecycle. We bring the front, middle and back offices together to drive productivity and performance at every step of the investment process using our open and scalable solutions. Our strategy is focused on growing our business in each of our three segments: the Americas, EMEA, and
We won multiple
In December 2018, we appointed Daniel Viens as Chief Human Resources Officer and in June 2019, we appointed Franck Gossieaux as Executive Vice President, Global Head of Sales and Client Solutions.
Tool organized by Waters Technology.
AsCustomer Success
Key Metrics
coronavirus, now known as COVID-19 ("COVID-19"), was first reported in December 2019, and it has since extensively impacted the global health and economic environment, with the World Health Organization characterizing COVID-19 as a pandemic on March 11, 2020. The followingCOVID-19 virus has spread to nearly all regions in the world, creating significant uncertainties and disruption in the global economy.
As of and for the Year Ended August 31, | ||||||||||||
(in millions, except per share data, client and user counts) | 2019 | 2018 | Change | |||||||||
Revenue | $ | 1,435.4 | $ | 1,350.1 | 6.3 | % | ||||||
Operating Income | $ | 438.0 | $ | 366.2 | 19.6 | % | ||||||
Net Income | $ | 352.8 | $ | 267.1 | 32.1 | % | ||||||
Diluted EPS | $ | 9.08 | $ | 6.78 | 33.9 | % | ||||||
Clients(1) | 5,574 | 5,142 | 8.4 | % | ||||||||
Users | 126,822 | 91,897 | 38.0 | % | ||||||||
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As of August 31, | ||||||||||||
(in millions) | 2019 | 2018 | Change | |||||||||
As reported ASV(1) | $ | 1,458.0 | $ | 1,393.1 | ||||||||
Currency impact to ASV | 5.3 | — | ||||||||||
Organic ASV(2) | $ | 1,463.3 | $ | 1,393.1 | 5.0 | % | ||||||
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Organic Annual Subscription Value Growth
Organic
| As of August 31, | ||||||||||||||
| (in millions) | 2020 | 2019 | Change | |||||||||||
ASV(1) | $ | 1,539.2 | $ | 1,458.0 | ||||||||||
| Currency impact to ASV | (4.7) | — | ||||||||||||
| Organic ASV | $ | 1,534.5 | $ | 1,458.0 | 5.2 | % | ||||||||
annual price increase, partially offset by cancellations.
Growth
Addition
s| As of and for the Year Ended August 31, | |||||||||||
| 2020 | 2019 | Change | |||||||||
| Clients | 5,875 | 5,574 | 5.4 | % | |||||||
| Users | 133,051 | 126,822 | 4.9 | % | |||||||
corporate professionals.
2020.
internal-use software.
Years ended August 31, | ||||||||||||||||||||||||
(in thousands, except per share data) | 2019 | 2018 | Change | 2018 | 2017 | Change | ||||||||||||||||||
Revenue | $ | 1,435,351 | $ | 1,350,145 | 6.3 | % | $ | 1,350,145 | $ | 1,221,179 | 10.6 | % | ||||||||||||
Cost of services | $ | 663,446 | $ | 659,296 | 0.6 | % | $ | 659,296 | $ | 566,580 | 16.4 | % | ||||||||||||
Selling, general and administrative | $ | 333,870 | $ | 324,645 | 2.8 | % | $ | 324,645 | $ | 302,464 | 7.3 | % | ||||||||||||
Operating income | $ | 438,035 | $ | 366,204 | 19.6 | % | $ | 366,204 | $ | 352,135 | 4.0 | % | ||||||||||||
Net income | $ | 352,790 | $ | 267,085 | 32.1 | % | $ | 267,085 | $ | 258,259 | 3.4 | % | ||||||||||||
Diluted earnings per common share | $ | 9.08 | $ | 6.78 | 33.9 | % | $ | 6.78 | $ | 6.51 | 4.1 | % | ||||||||||||
Diluted weighted average common shares | 38,873 | 39,377 | 39,377 | 39,642 | ||||||||||||||||||||
| Years ended August 31, | ||||||||||||||||||||||||||
| (in thousands, except per share data) | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
| Revenue | $ | 1,494,111 | $ | 1,435,351 | $ | 58,760 | 4.1 | % | ||||||||||||||||||
| Cost of services | $ | 695,446 | $ | 663,446 | $ | 32,000 | 4.8 | % | ||||||||||||||||||
| Selling, general and administrative | $ | 359,005 | $ | 333,870 | $ | 25,135 | 7.5 | % | ||||||||||||||||||
| Operating income | $ | 439,660 | $ | 438,035 | $ | 1,625 | 0.4 | % | ||||||||||||||||||
| Net income | $ | 372,938 | $ | 352,790 | $ | 20,148 | 5.7 | % | ||||||||||||||||||
| Diluted earnings per common share | $ | 9.65 | $ | 9.08 | $ | 0.57 | 6.3 | % | ||||||||||||||||||
| Diluted weighted average common shares | 38,646 | 38,873 | ||||||||||||||||||||||||
Fiscal 2019compared to Fiscal 2018
| (in thousands) | Years ended August 31, | |||||||||||||
| 2020 | 2019 | |||||||||||||
| Americas | $ | 929,444 | $ | 894,554 | ||||||||||
| % of revenue | 62.2 | % | 62.3 | % | ||||||||||
| EMEA | $ | 422,203 | $ | 408,084 | ||||||||||
| % of revenue | 28.3 | % | 28.5 | % | ||||||||||
| Asia Pacific | $ | 142,464 | $ | 132,713 | ||||||||||
| % of revenue | 9.5 | % | 9.2 | % | ||||||||||
| Consolidated Revenue | $ | 1,494,111 | $ | 1,435,351 | ||||||||||
Fiscal 2018compared to Fiscal 2017
Revenue in fiscal 2018 were $1.35 billion, increasing 10.6% compared to fiscal 2017. Our organic revenue growth rate for fiscal 2018 was 5.6% compared to fiscal 2017, with cancellations remaining relatively flat during fiscal 2018. Organic revenue excludes the effects of acquisitions and dispositions completed in the last 12 months and foreign currency in all periods. The increase in revenue was throughout our geographical segments and workflow solutions. The U.S. segment revenues was up 7.4% compared to the fiscal 2017, primarily driven by additional clients, expansion from within our existing client base and an annual price increase, while holding client cancellations steady. Our international operations also grew as demonstrated by our 17.3% growth in Europe and a 13.1% increase in Asia Pacific. In addition to revenue growth amongst the geographic segments, achievements were also made across each workflow solution which include Research, Analytics and Trading, CTS, and Wealth. The Research workflow growth was driven by additional users due to banking new hires. The growth in the Analytics and Trading workflow was primarily attributed to increased sales in the portfolio analytics, reporting, and risk platforms, coupled with the enhancement of our multi-asset class risk model offerings, which strengthened our position in the analytics market. The CTS workflow growth was driven by increased demand for our proprietary content data feeds while new business sales drove the Wealth workflow growth.
Revenue by Geographic Segment
| Years ended August 31, | |||||||||||
| (in thousands) | 2019 | 2018 | 2017 | |||||||||
U.S. Revenue | $ | 894,554 | $ | 841,908 | $ | 784,146 | ||||||
% of revenue | 62.3 | % | 62.4 | % | 64.2 | % | ||||||
Europe Revenues | $ | 408,084 | $ | 387,589 | $ | 330,332 | ||||||
Asia Pacific Revenues | $ | 132,713 | $ | 120,648 | $ | 106,701 | ||||||
International Revenue | $ | 540,797 | $ | 508,237 | $ | 437,033 | ||||||
% of revenue | 37.7 | % | 37.6 | % | 35.8 | % | ||||||
Consolidated Revenue | $ | 1,435,351 | $ | 1,350,145 | $ | 1,221,179 | ||||||
Fiscal 2019compared to Fiscal 2018
Revenues from our U.S. segment increased 6.3% to $894.6 million in fiscal 2019 compared to $841.9 million in fiscal 2018. This increase was primarily due to increased sales of products and solutions to new and existing clients primarily in Analytics and Trading, CTS and Wealth, an annual price increase for the majority of our U.S. segment clients, partially offset by cancellations. Excluding the effects of acquisitions and dispositions, organic revenues in the U.S. was up 6.2% compared to fiscal 2018. Revenues from our U.S. operations accounted for 62.3% of our consolidated revenue during fiscal 2019, consistent with the prior year period.
Revenue from our international operations increased 6.4% in fiscal 2019 compared to fiscal 2018.
European revenues increased 5.3% to $408.1 million in fiscal 2019 compared to $387.6 million in fiscal 2018. This increase was primarily driven by increased sales of products and solutions to new and existing clients primarily in Analytics and Trading and CTS, which includes our annual price increase for the majority of our European clients, partially offset by increased cancellations in Research. European organic revenues grew 5.0% in fiscal 2019 compared to fiscal 2018. Foreign currency exchange rate fluctuations decreased our European growth rate by 30 basis points.
Asia Pacific revenues increased 10.0% during fiscal 2019, compared with fiscal 2018. This increase was due mainly to increased sales of products and solutions to new and existing clients primarily in Analytics and Trading, which includes our annual price increase for the majority of our Asia Pacific clients, partially offset by cancellations. Asia Pacific organic revenues grew 10.0% during fiscal 2019 compared to fiscal 2018, with foreign currency exchange rate fluctuations having a minimal impact.
Fiscal 2018compared to Fiscal 2017
Revenues from our U.S. segment increased 7.4% to $841.9 million in fiscal 2018 compared to $784.1 million in fiscal 2017, due to organic ASV growth across our workflow solutions and strong performance executing new business sales. Cancellations remained relatively flat for fiscal 2018 showing signs of stability. Excluding the effects of acquisitions and dispositions, organic revenues in the U.S. were up 5.1% compared to fiscal 2017. Revenues from our U.S. operations accounted for 62.4% of our consolidated revenue during fiscal 2018, a decrease from 64.2% in fiscal 2017.
Revenue from our international operations increased 16.3% in fiscal 2018 compared to fiscal 2017, due to growth across our workflow solutions, partially offset by higher cancellations compared to the prior year.
European revenues increased 17.3% to $387.6 million in fiscal 2018 compared to $330.3 in fiscal 2017. Excluding the effects of acquisitions and dispositions completed in the last 12 months and foreign currency, European organic revenues grew 9.4% in fiscal 2018 compared to fiscal 2017. Foreign currency exchange rate fluctuations increased our European growth rate by 150 basis points.
Asia Pacific revenues increased 13.1% during fiscal 2018, compared with fiscal 2017. Excluding the effects of acquisitions and dispositions completed in the last 12 months and foreign currency, Asia Pacific organic revenues grew 12.9% during fiscal 2018 compared to fiscal 2017, with foreign currency exchange rate fluctuations having a minimal impact.
Operating Expenses
| Years ended August 31, | |||||||||||
| (in thousands) | 2019 | 2018 | 2017 | |||||||||
Cost of services | $ | 663,446 | $ | 659,296 | $ | 566,580 | ||||||
Selling, general and administrative (“SG&A”) | 333,870 | 324,645 | 302,464 | |||||||||
Total operating expenses | $ | 997,316 | $ | 983,941 | $ | 869,044 | ||||||
Operating income | $ | 438,035 | $ | 366,204 | $ | 352,135 | ||||||
Operating Margin | 30.5 | % | 27.1 | % | 28.8 | % | ||||||
| (in thousands) | Years ended August 31, | |||||||||||||||||||||||||
| 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||
| Cost of services | $ | 695,446 | $ | 663,446 | $ | 32,000 | 4.8 | % | ||||||||||||||||||
| Selling, general and administrative ("SG&A") | 359,005 | 333,870 | $ | 25,135 | 7.5 | % | ||||||||||||||||||||
| Total operating expenses | $ | 1,054,451 | $ | 997,316 | $ | 57,135 | 5.7 | % | ||||||||||||||||||
| Operating income | $ | 439,660 | $ | 438,035 | $ | 1,625 | 0.4 | % | ||||||||||||||||||
| Operating Margin | 29.4 | % | 30.5 | % | ||||||||||||||||||||||
Fiscal 2019compared to Fiscal 2018
Employee compensation, when expressed as a percentage of revenue decreased 300 Computer-related expenses increased 150 basis points, in fiscal 2019, compared to the prior fiscal year. This decrease in employee compensation was primarily driven by a foreign currency benefit from a stronger U.S. dollar,increased technology investments, including cloud-based hosting and licensed software arrangements. Employee compensation costs decreased 60 basis points due mainly to higher capitalization of compensation costs related to development of our internal-use software projects, as well as a shift in headcount distribution from our higher to lower cost locations, the timing of newlocations. This employee hiring, and a restructuring charge impacting the prior year period,compensation expense decrease was partially offset by higher employee benefit costs. Computer-related expenses increased 40 basis points, when expressed asannual base salaries, a percentage of revenue for fiscal 2019, compared to the prior year period, primarily driven by increased costs from cloud-based hosting and licensed software arrangements.
Fiscal 2018compared to Fiscal 2017
Cost of services increased 16.4% to $659.3 millionnet increase in fiscal 2018 compared to $566.6 million in fiscal 2017. Cost of services, expressed as a percentage of revenue, was 48.8% during fiscal 2018, an increase of 240 basis points over fiscal 2017. This increase was primarily due to higher employee compensation costs driven by increased employee headcount and restructuring actions, incremental data costs from recent acquisitions and additional users as well as amortization of intangible assets associated with our recent acquisitions. This increase was partially offset by a reduction in stock-based compensation expenses from accelerated vesting in fiscal 2017.
Employee compensation, including stock-based compensation, when expressed as a percentage of revenue increased 100 basis points in fiscal 2018, compared to fiscal 2017. The increase is primarily due to the hiring of 497 net new803 employees, over the last 12 months, with the majority of theirthe compensation recordedfrom new employee headcount included in cost of services, due to their involvement with content collection, engineering and product development. Employee compensation expense further increased due to headcount expansion from fiscal 2017 acquisitions that were included for a full year in fiscal 2018, while fiscal 2017 only included a partial year amount. In addition, during fiscal 2018 we incurred $17.4 million of restructuring charges primarily related to severance of which $8.5 million was recorded within cost of services.higher vacation accrual expense. Data costs when expressed as a percentage of revenue, increased 60decreased 40 basis points due primarily from our recent acquisitions and higher variable data costs associated with additional users. Amortization of acquired intangible assets, when expressed as a percentage of revenue, increased 20 basis points in fiscal 2018 compared to the same period a year ago, primarily due to recent acquisitions, which added $93.2 million of intangible assetsour efforts to be amortized over a weighted-average life of 11.5 years. These intangible assets were amortized for the full fiscal 2018, while, fiscal 2017 did not include a similar amount of acquisition amortization due to the dates of each acquisition.
control our data cost spend.
Fiscal 2019compared to Fiscal 2018
Employee compensation, when expressed as a percentage of revenue, decreased 50 basis points in fiscal 2019, compared to fiscal 2018. This decrease is primarily driven by a foreign currency benefit from a stronger U.S dollar, a shift in headcount distribution from our higher to lower cost locations, the timing of new employee hiring, and a restructuring charge impacting the prior year period, partially offset by higher employee benefit costs. Travel expenses decreased 30 basis points, as a percentage of revenue, due to an internal focus on cost discipline measures. Bad debt expense increased 60 basis points, as a percentage of revenue.
Fiscal 2018compared to Fiscal 2017
SG&A expenses increased 7.3% to $324.6 million during fiscal 2018 compared to $302.5 million in fiscal 2017. expense.
Employee compensation, including stock-based compensation, when expressed as a percentage of revenue decreased 50 basis points compared to fiscal 2017. The decrease is primarily related to a higher percentage of our employees working in a cost of services capacity compared to an SG&A role. Compensation for our employees within the content collection, consulting, product development, software and systems engineering groups is recorded within cost of services while employees within our sales and various other support and administrative departments are reflected in SG&A. In fiscal 2018, the majority of our hiring had been in departments within cost of services, thus driving a higher percentage of our employee compensation in this area. Partially offsetting these decreases were higher legal expenses primarily from the settlement of a legal matter in the fourth quarter of fiscal 2018, a full year of employee compensation from acquisitions and $8.9 million of severance charges.
Operating Income and Operating Margin
Fiscal 2019compared to Fiscal 2018
Operating income increased 19.6% to $438.0 million in fiscal 2019 compared to $366.2 million in fiscal 2018. Operating income increased due to revenue growth, favorable foreign exchange rates which reduced the overall operating expense impact and mainly resulted in a reduction in compensation expense, as well as, decreased costs from restructuring actions, decreased travel expenses and contractor fees, partially offset by an increase in data costs, computer-related expenses and bad debt expense. Our operating margin increased in fiscal 2019 to 30.5%, compared to 27.1% for fiscal 2018. Operating margin increased due to incremental revenue that outpaced the growth of our operating expenses year over year, favorable foreign exchange rates, which reduced the overall operating expense impact and mainly resulted in a reduction in compensation expense, as well as, lower costs from restructuring actions, a reduction in travel expenses, partially offset by higher bad debt expense and computer-related expenses, when expressed as a percentage of revenue.
Fiscal 2018compared to Fiscal 2017
Operating income increased 4.0% to $366.2 million in fiscal 2018 compared to $352.1 million in fiscal 2017. Our operating margin decreased in fiscal 2018 to 27.1%, compared to 28.8% for fiscal 2017. Operating income increased due to incremental revenue that outpaced the growth of SG&A expenses year over year partially offset by higher cost of services. The reduction in operating margin year over year was due to an increase in employee compensation costs, including restructuring actions, data costs from acquisitions and additional users, amortization of intangible assets associated with acquisitions, and incremental legal fees partially offset by foreign currency exchange gains on hedging activities and lower stock-based compensation.
Operating Income by
Years ended August 31, | ||||||||||||
(in thousands) | 2019 | 2018 | 2017 | |||||||||
U.S. | $ | 179,374 | $ | 148,095 | $ | 137,104 | ||||||
Europe | 179,258 | 148,977 | 153,676 | |||||||||
Asia Pacific | 79,403 | 69,132 | 61,355 | |||||||||
Consolidated | $ | 438,035 | $ | 366,204 | $ | 352,135 | ||||||
Information
| Years ended August 31, | ||||||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
| Americas | $ | 168,909 | $ | 179,374 | $ | (10,465) | (5.8) | % | ||||||||||||||||||
| EMEA | 179,831 | 179,258 | $ | 573 | 0.3 | % | ||||||||||||||||||||
| Asia Pacific | 90,920 | 79,403 | $ | 11,517 | 14.5 | % | ||||||||||||||||||||
| Total Operating Income | $ | 439,660 | $ | 438,035 | $ | 1,625 | 0.4 | % | ||||||||||||||||||
months, annual base salary increases year-over-year, higher variable compensation accrual and higher vacation accrual expense. Fiscal 2019Americas operating income decreased 5.8% to $168.9 million during fiscal 2020 compared to Fiscal 2018U.S.$179.4 million a year ago. The decrease in Americas operating income was primarily due to an increase in computer-related expenses, an impairment of an investment in a company and higher professional fees, partially offset by revenue growth of 3.9%, inclusive of our annual price increase, a decrease in bad debt expense and a reduction in non-compensatory employee related expenses.34Computer-related expenses increased primarily due to increased technology investments including cloud-based hosting and licensed software arrangements. An investment impairment was recorded to reflect the estimated fair value of an investment in a company. Professional fees increased primarily to support our technology plan and business transformation activities. Non-compensatory employee related expenses, inclusive of travel, entertainment and office expenses, decreased mainly due to restrictions and impacts related to the COVID-19 pandemic, partially offset by increased technology investments to support remote work arrangements.EMEA operating income increased 21.1%0.3% to $179.4$179.8 million during fiscal 2019,2020, compared to $148.1$179.3 million a year ago. The increase in U.S.EMEA operating income was primarily due to revenue growth of 6.3%3.5%, inclusive of our annual price increase, a decrease in bad debt expense and a reduction in compensation expense, partially offset by increased computer-related expenses, data costs, bad debt expense and occupancy expense. Compensation expense decreased due to a net reduction in headcount of 4.9% over the past 12 months, the timing of newnon-compensatory employee hiring, and a restructuring charge impacting the prior year period, partially offset by higher employee benefit costs. Computer related expenses, increased year over year primarily due to increased costs from cloud-based hosting and licensed software arrangements. Data costs increased due to increased acquisition costs of fixed cost content and additional spend on variable cost content to drive revenue growth. Occupancy costs increased primarily related to leasing the new corporate headquarters space in Norwalk, Connecticut.European operating income increased 20.3% to $179.3 million during fiscal 2019, compared to $149.0 million a year ago. The increase in European operating income was primarily due to revenue growth of 5.3% and an overall reduction in operating expenses driven mainly by a decrease in employee compensation expense and occupancy expense, partially offset by an increase in bad debt expense.employee compensation costs. Operating income was positively impacted by movements in foreign currency exchange rates on a year-over-year basis. Non-compensatory employee related expenses, inclusive of travel, entertainment and office expenses, decreased, mainly due to restrictions and impacts related to the COVID-19 pandemic, partially offset by investment in technology to allow employees to work from home. Employee compensation decreasedincreased primarily due to a foreign currency benefit from a stronger U.S. dollar, a restructuring charge impacting the prior year period, partially offset by a net increase in employee headcount increase of 2.9%6.4% over the past 12 months. Occupancy costs decreased due to a one-time adjustment recognized in fiscal 2019. The impact of foreign currency increased European operating income by $6.6 million year over year.Asia Pacific operating income increased 14.9%14.5% to $79.4$90.9 million during fiscal 2019,2020, compared to $69.1$79.4 million a year ago. The increase in Asia Pacific operating income was mainly due to revenue growth of 10.0%7.3%, inclusive of our annual price increase, and benefits from a stronger U.S. dollar,reduction in non-compensatory employee related expenses, partially offset by increasesan increase in employee compensation expensecosts and occupancy costs. Operating income was negatively impacted by movements in foreign currency exchange rates on a year-over-year basis. Non-compensatory employee related expenses, inclusive of travel, entertainment and office expenses, decreased, mainly due to restrictions and impacts related to the COVID-19 pandemic, partially offset by investment in technology to allow employees to work from home. Employee compensation was higher, year over year,increased mainly due to a 3.3%9.8% increase in our Asia Pacific workforce partially offset by a foreign currency benefit from a stronger U.S. dollar. Occupancy costs increased due primarily toin the expansion of office space in Indialast 12 months and the Philippines. The impact of foreign currency increased Asia Pacific operating income by $3.2 million year over year.Fiscal 2018compared to Fiscal 2017U.S. operating income increased 8.0% to $148.1 million during fiscal 2018 compared to $137.1 million in fiscal 2017. The increase in U.S. operating income was primarily due to revenue growth of 7.4%, partially offset by increased expenses related to employee compensation, computer equipment and data costs. Employee compensation increased primarily due to annual base salary increases restructuring actions, and higher employee benefit costs including medical expenditures. Computer related expenses, which include depreciation, maintenance, software and other fees, increased year over year due to expenses associated with upgrades to existing computer systems in Norwalk, additional server equipment in our data centers located in New Jersey and Virginia, as well as laptop computers and peripherals for new and existing employees. Data costs increased due to higher third-party data costs from our recent acquisitions and additional users.European operating income decreased 3.1% to $149.0 million during fiscal 2018 compared to $153.7 million in fiscal 2017. The impact of foreign currency decreased European operating income by $4.9 million year over year. Additionally, the decrease in European operating income was due to a full year impact of fiscal 2017 acquisitions, that contributed to higher employee compensation, amortization of intangible assets, and data costs, partially offset by revenue growth of 17.3%.Asia Pacific operating income increased 12.7% to $69.1 million during fiscal 2018 compared to $61.4 million in fiscal 2017. The increase in Asia Pacific operating income was due to revenue growth of 13.1% and benefits from a stronger U.S. dollar, partially offset by increases in employee compensation and occupancy costs. Employee compensation was higher year over year as result of a 9.2% increase in our Asia Pacific workforce.year-over-year. Occupancy costs increased mainly due primarily to an increase in rent expense for additional office spacefacility costs in our Philippines location. The impact of foreign currency increased Asia Pacific operating income by $3.6 million year over year.
Income Taxes, Net Income and Diluted Earnings per Share
Years ended August 31, | ||||||||||||
(in thousands) | 2019 | 2018 | 2017 | |||||||||
Provision for income taxes | $ | 69,175 | $ | 84,753 | $ | 86,053 | ||||||
Net income | $ | 352,790 | $ | 267,085 | $ | 258,259 | ||||||
Diluted earnings per common share | $ | 9.08 | $ | 6.78 | $ | 6.51 | ||||||
| Years ended August 31, | ||||||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||
| Provision for income taxes | $ | 54,196 | $ | 69,175 | $ | (14,979) | (21.7) | % | ||||||||||||||||||
| Net income | $ | 372,938 | $ | 352,790 | $ | 20,148 | 5.7 | % | ||||||||||||||||||
| Diluted earnings per common share | $ | 9.65 | $ | 9.08 | $ | 0.57 | 6.3 | % | ||||||||||||||||||
Fiscal 2019compared to Fiscal 2018
Our effective tax rate was 16.4% for the full fiscal 2019 year compared to 24.1% a year ago was mainly due the reduction in the federal statutory ratebenefit from the enactmentrevision of the TCJA that was fully applicable for fiscal year 2019 compared to being phased in for the prior year comparable period. The decrease in the effective tax rate for fiscal 2019 was also due to the one-time transition tax frompermitted by the TCJA that was recorded in the prior year period. These benefits were partially offset by higher foreign income taxed at rates lower than U.S. rates.
Fiscal 2018 compared to Fiscal 2017
Therecognized during fiscal 2018 provision for income taxes was $84.8 million, a decrease of 1.5% from fiscal 2017. The decrease was primarily attributable to the impacts associated with the U.S. tax reform under the TCJA. On December 22, 2017, the U.S. government enacted comprehensive tax legislation through the TCJA. The TCJA, among other things, lowered the statutory U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. Due to our August 31 fiscal year-end, the lower tax rate was phased in, resulting in a blended U.S. statutory federal rate of 25.7% for fiscal 2018. The TCJA also implemented a modified territorial tax system and imposed a mandatory one-time transition tax on accumulated earnings and profits (“E&P”) of foreign subsidiaries that were previously deferred from U.S. income taxes.
Our effective tax rate was 24.1% for the full fiscal 2018 year compared to 25.0% in fiscal 2017, due to higher foreign income taxed at rates lower than U.S. rates, incremental income tax benefits from R&D tax credits and increased excess tax benefits from stock option exercises. These benefits were partially offset by the one-time transition tax of $23.2 million and a $2.3 million tax expense associated with the remeasurement of our net U.S. deferred tax position, both of which related to the TCJA. We had approximately $250 million in undistributed foreign E&P generated prior to December 31, 2017, which resulted in the provisional amount for the one-time transition tax expense of $23.2 million, payable over an eight-year period.
2019.
Fiscal 2019compared to Fiscal 2018
Fiscal 2018compared to Fiscal 2017
Net income increased 3.4% to $267.1 million, while diluted earnings per share increased 4.1% to $6.78 during fiscal 2018 compared to fiscal 2017. Net income and diluted EPS grew primarily from higher revenue from strong performances across our segments and workflow solutions, gains earned from our foreign currency hedges, and a decrease in our effective tax rate due to the TCJA. These benefits were partially offset by an increase in employee compensation expenses, data costs, amortization of intangible assets from acquisitions, occupancy costs, and interest expense associated with our outstanding debt. Diluted EPS also benefited from a 0.3 million reduction in our weighted average shares outstanding due to share repurchases partially offset by stock option exercises during fiscal 2018.
Non-GAAP Financial Measures
Twelve Months Ended August 31, | ||||||||||||
(In thousands) | 2019 | 2018 | Change | |||||||||
Revenue | $ | 1,435,351 | $ | 1,350,145 | 6.3 | % | ||||||
Deferred revenue fair value adjustment(1) | 5,185 | 7,691 | ||||||||||
Currency impact(2) | 985 | — | ||||||||||
Organic revenue | $ | 1,441,521 | $ | 1,357,836 | 6.2 | % | ||||||
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| (In thousands) | 2020 | 2019 | Change | ||||||||||||||
| Revenue | $ | 1,494,111 | $ | 1,435,351 | 4.1 | % | |||||||||||
Deferred revenue fair value adjustment(1) | 4,192 | 5,185 | |||||||||||||||
| Currency impact | (705) | — | |||||||||||||||
| Organic revenue | $ | 1,497,598 | $ | 1,440,536 | 4.0 | % | |||||||||||
| Twelve Months Ended August 31, | |||||||||||||||||
| (In thousands, except per share data) | 2020(1) | 2019(2) | Change | ||||||||||||||
| Operating income | $ | 439,660 | $ | 438,035 | 0.4 | % | |||||||||||
| Intangible asset amortization | 22,269 | 24,920 | |||||||||||||||
| Deferred revenue fair value adjustment | 4,192 | 5,185 | |||||||||||||||
| Impairment of investment | 16,500 | — | |||||||||||||||
| Other items | 20,782 | 8,045 | |||||||||||||||
| Adjusted operating income | $ | 503,403 | $ | 476,185 | 5.7 | % | |||||||||||
| Adjusted operating margin | 33.6 | % | 33.2 | % | |||||||||||||
| Net income | $ | 372,938 | $ | 352,790 | 5.7 | % | |||||||||||
Intangible asset amortization(3) | 17,773 | 20,262 | |||||||||||||||
Deferred revenue fair value adjustment(4) | 3,385 | 4,215 | |||||||||||||||
Impairment of investment(5) | 16,500 | — | |||||||||||||||
Other items(6) | 16,611 | 6,315 | |||||||||||||||
| Income tax items | (7,085) | 5,274 | |||||||||||||||
| Adjusted net income | $ | 420,122 | $ | 388,856 | 8.0 | % | |||||||||||
| Diluted earnings per common share | $ | 9.65 | $ | 9.08 | 6.3 | % | |||||||||||
| Intangible asset amortization | 0.46 | 0.52 | |||||||||||||||
| Deferred revenue fair value adjustment | 0.10 | 0.11 | |||||||||||||||
| Impairment of investment | 0.42 | — | |||||||||||||||
| Other items | 0.42 | 0.15 | |||||||||||||||
| Income tax items | (0.18) | 0.14 | |||||||||||||||
| Adjusted diluted earnings per common share | $ | 10.87 | $ | 10.00 | 8.7 | % | |||||||||||
| Weighted average common shares (diluted) | 38,646 | 38,873 | |||||||||||||||
Twelve Months Ended August 31, | ||||||||||||
(In thousands, except per share data) | 2019(1) | 2018(2) | Change | |||||||||
Operating income | $ | 438,035 | $ | 366,204 | 19.6 | % | ||||||
Intangible asset amortization | 24,920 | 24,665 | ||||||||||
Deferred revenue fair value adjustment | 5,185 | 7,691 | ||||||||||
Other items | 8,045 | 26,950 | ||||||||||
Adjusted operating income | $ | 476,185 | $ | 425,510 | 11.9 | % | ||||||
Adjusted operating margin | 33.2 | % | 31.3 | % | ||||||||
Net income | $ | 352,790 | $ | 267,085 | 32.1 | % | ||||||
Intangible asset amortization(3) | 20,262 | 19,723 | ||||||||||
Deferred revenue fair value adjustment(4) | 4,215 | 6,084 | ||||||||||
Other items(5) | 6,315 | 21,614 | ||||||||||
Income tax items | 5,274 | 21,310 | ||||||||||
Adjusted net income | $ | 388,856 | $ | 335,816 | 15.8 | % | ||||||
Diluted earnings per common share | $ | 9.08 | $ | 6.78 | 33.9 | % | ||||||
Intangible asset amortization | 0.52 | 0.50 | ||||||||||
Deferred revenue fair value adjustment | 0.11 | 0.15 | ||||||||||
Other items | 0.15 | 0.56 | ||||||||||
Income tax items | 0.14 | 0.53 | ||||||||||
Adjusted diluted earnings per common share(6) | $ | 10.00 | $ | 8.53 | 17.2 | % | ||||||
Weighted average common shares (diluted) | 38,873 | 39,377 | ||||||||||
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Liquidity
(3)The table below, for the periods indicated, provides selected cash flow information:
Years ended August 31, | ||||||||||||
(in thousands) | 2019 | 2018 | 2017 | |||||||||
Net cash provided by operating activities | $ | 427,136 | $ | 385,668 | $ | 320,527 | ||||||
Capital expenditures(1) | (59,370 | ) | (33,520 | ) | (36,862 | ) | ||||||
Free cash flow(2) | $ | 367,766 | $ | 352,148 | $ | 283,665 | ||||||
Net cash used in investing activities | $ | (56,100 | ) | $ | (48,531 | ) | $ | (347,306 | ) | |||
Net cash used in financing activities | $ | (214,274 | ) | $ | (320,037 | ) | $ | (8,161 | ) | |||
Cash and cash equivalents at end of year | $ | 359,799 | $ | 208,623 | $ | 194,731 | ||||||
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Fiscal 2019compared to Fiscal 2018
Cash and cash equivalents aggregated to $359.8intangible asset amortization was recorded net of a tax impact of $4.5 million or 23.1% of total assets at August 31, 2019,in fiscal 2020 compared with $208.6$4.7 million or 14.7%for fiscal 2019.
Net cash used in investing activities was $56.1 million in fiscal 2019, representing a $7.6 million increase in cash used from investing activities, compared to fiscal 2018. This increase was primarily due to $25.9 million of higher capital expenditures, offset by a $15.0 million decrease in acquisition activity, and a $3.3 million increase in net proceeds from investments (net of purchases).
During fiscal 2019, net cash used in financing activities was $214.3 million, representing a $105.8 million decrease from fiscal 2018. This decrease was due primarily to $575.0 million of borrowings under our 2019 Credit Agreement, an $83.6 million decrease in share repurchases and a $35.4 million increase in proceeds from employee stock plans. This decrease was partially offset by the $575.0 million retirement of the 2017 Credit Agreement and a $10.6 million increase in dividend payments. Refer to the Capital Resources section of the MD&A for a discussion on our Long-term debt borrowings.
We expect that for at least the next 12 months, our operating expenses will continue to constitute a significant use of our cash. As of August 31, 2019, our total cashcommon stock. Based on past performance and cash equivalents worldwide was $359.8 million, with $132.6 million included in the U.S. segment, the majority of which is held in bank accounts located within the U.S., $183.5 million in the Europe segment, predominantly within bank accounts in the UK, France, and Germany, and the remaining $43.7 million held in the Asia Pacific segment. As of August 31, 2019,current expectations, we also had $574.2 million in outstanding borrowings (net of $0.8 million of unamortized debt issuance costs). We believe our liquidity, (including cash on hand, cash from operating activities and other cash flows that we expect to generate) within each geographic segment will be sufficient to meet our short-term and long-term operating requirements, including working capital needs, capital expenditures, dividend payments, stock repurchases, growth objectives andalong with other financing activities. In addition, we expect existing foreign cash, cash equivalents and cash flows from operations to continue to be sufficientalternatives, will provide us the necessary capital to fund these transactions and achieve our foreign operating activities and cash commitmentsplanned growth for investing activities, such as capital expenditures, for at least the next 12 months and thereafter, for the foreseeable future.
Free cash flow generated in fiscal 2019 was $367.8 million, an increaseSources of 4.4% compared to $352.1 million in fiscal 2018. Free cash flow is the result of $427.1 million of net cash provided by operating activities, partially offset by $59.4 million in capital expenditures. The year over year increase to free cash flow was primarily driven by higher net income and an increase in client collections due to a reduction in our days sales outstanding ("DSO") to 37 days as of August 31, 2019, compared to 41 days for the prior year period, partially offset by higher capital requirements from the build-out of new office space and the timing of supplier and tax payments.
Fiscal 2018compared to Fiscal 2017
Cash and cash equivalents aggregated to $208.6 million, or 14.7% of our total assets at August 31, 2018, compared with $194.7 million, or 13.8% of our total assets at August 31, 2017. Our cash and cash equivalents increased $13.9 million during fiscal 2018 due to net cash provided by operating activities of $385.7 million and $71.6 million in proceeds from the exercise of employee stock options. These cash inflows were partially offset by $89.4 million in dividend payments, $33.5 million of capital expenditures, $15.0 million related to a business investment, $3.2 million from the effects of foreign currency translations and $303.9 million in share repurchases, which included $302.4 million under the existing share repurchase program and $1.5 million in shares repurchased from employees to cover their cost of taxes upon vesting of restricted stock.
Net cash used in investing activities was $48.5 million in fiscal 2018, representing a $298.8 million decrease from fiscal 2017. This reduction was primarily due to decreased acquisition activity with $15.0 million invested in fiscal 2018 compared to $303.1 million largely related to the BI-SAM Technologies (“BISAM”) and Vermilion Holdings Limited (“Vermilion”) acquisitions in fiscal 2017. Additionally, cash used in investing activities decreased year over year due to lower capital expenditures of $3.3 million and a decrease in the purchase of investments (net of proceeds) of $7.4 million year over year
During fiscal 2018, net cash used in financing activities was $320.0 million, representing a $311.9 million increase from fiscal 2017. This increase was due to $275.0 million in proceeds (net of repayment) from the issuance of long-term debt in fiscal 2017 that did not occur in fiscal 2018. In addition, the decrease was due to higher dividend payments of $8.5 million, an increase in share repurchases of $43.0 million, and a change in the presentation of tax benefits from share-based payment arrangements due to the adoption of the accounting standard update, which required us to disclose benefits from stock option exercises as an operating cash inflow instead of a financing activity. This presentation change was adopted prospectively beginning with fiscal 2018. These cash outflows were partially offset by an increase in proceeds from employee stock plans of $21.6 million.
Free cash flow generated in fiscal 2018 was $352.1 million, an increase of 24.1% compared to $283.7 million in fiscal 2017. Free cash flow was attributable to $267.1 million of net income, $87.0 million of non-cash items, $31.6 million of working capital changes, less $33.5 million in capital expenditures. The year over year free cash flow growth was driven by positive working capital changes totaling $47.6 million and lower capital expenditures of $3.3 million. Working capital improved year over year due to timing of supplier payments and payroll, stabilization of our days sales outstanding (“DSO”) at 41 days and the adoption of an accounting standard update for share-based payments, which required the presentation of benefits from stock options exercised to be reported as an operating activity, when in prior periods it was reported as a financing activity.
Capital Resources
Capital Expenditures
Capital expenditures were $59.4 million during fiscal 2019, compared to $33.5 million a year ago. Capital expenditures of $28.0 million, or 47%, were primarily related to corporate infrastructure investments, additional server equipment for our data centers located in New Jersey and Virginia, as well as computers and peripherals for new office space primarily in India. The remainder of our capital expenditures was primarily for the build-out of office space, with $22.3 million related to the new corporate headquarters in Norwalk, Connecticut and $6.6 million related to new office space in India.
Capital expenditures were $33.5 million during fiscal 2018, down from $36.9 million in fiscal 2017. Capital expenditures of $24.2 million, or 72% of our capital expenditures during fiscal 2018 related to upgrades to existing computer systems in Norwalk, additional server equipment in our data centers located in New Jersey and Virginia, as well as laptop computers and peripherals for new and existing employees. The remainder of our capital expenditures was primarily for the build out of office space including $2.2 million at our India location, $2.8 million at our Hong Kong location and $1.5 million at our Netherlands location.
Capital Needs
Long-Term Debt
March 29, 2024. 2020. Letters of Credit 2020. The Company intends to reinvest substantially all of its accumulated undistributed foreign earnings, except in instances where repatriation would result in 2020. Payments due by period (in millions) 2020 2025 and thereafter Total Operating lease obligations(1) Purchase commitments(2) Long-term debt obligations(3) Total contractual obligations by period(4) Year Ended Dividends per Share of Common Stock Record Date Total $ Amount (in thousands) Payment Date Fiscal 2019 First Quarter November 30, 2018 December 18, 2018 Second Quarter February 28, 2019 March 19, 2019 Third Quarter May 31, 2019 June 18, 2019 Fourth Quarter August 30, 2019 September 19, 2019 Fiscal 2018 First Quarter November 30, 2017 December 19, 2017 Second Quarter February 28, 2018 March 20, 2018 Third Quarter May 31, 2018 June 19, 2018 Fourth Quarter August 31, 2018 September 18, 2018 We describe our significant accounting policies in Note 3, Summary of Significant Accounting Policies2019 Credit AgreementOn March 29, 2019, the Companywe entered into the 2019 Credit Agreement ("the 2019 Credit Agreement") between FactSet, as the borrower, anda credit agreement with PNC Bank, National Association ("PNC") (the "2019 Credit Agreement"), as the administrative agent and lender. The 2019 Credit Agreementwhich provides for a $750.0 million revolving credit facility ("the 2019(the "2019 Revolving Credit Facility"). FactSetWe may request borrowings under the 2019 Revolving Credit Facility until its maturity date of March 29, 2024. The 2019 Credit Agreement also allows FactSet,us, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount of up to $500.0 million, provided that any such request for additional borrowings must be in a minimum amount of $25.0 million.FactSetAs of August 31, 2020, we have borrowed $575.0 million of the available $750.0 million provided by the 2019 Revolving Credit Facility, resulting in $175.0 million available to be withdrawn. FactSet isWe are required to pay a commitment fee using a pricing grid currently atwhich was 0.10% as of August 31, 2020. This fee is based on the daily amount by which the available balance in the 2019 Revolving Credit Facility exceeds the borrowed amount. All outstanding loan amounts are reported as Long-term debt within the consolidated balance sheetsConsolidated Balance Sheets at August 31, 2020 and August 31, 2019. The principal balance is payable in full on the maturity date.The fair value of our long-term debt was $575.0 million as of August 31, 2019,2020, which the Companywe believe approximates the carrying amount as the terms and interest ratesrate approximate market rates given its floating interest rate basis. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid, currently atwhich was 0.875%. During fiscal years 2019, 2018 and 2017, FactSet recorded interest expense of $19.8 million, $15.9 million and $8.4 million, respectively, on its outstanding debt amounts. The weighted average interest rate on amounts outstanding under our credit facilities was 3.35% and 2.69% as of August 31, 2020. The variable rate of interest on our long-term debt can expose us to interest rate volatility due to changes in LIBOR. To mitigate this exposure, on March 5, 2020, we entered into an interest rate swap agreement with a notional amount of $287.5 million to hedge the variable interest rate obligation on a portion of our outstanding balance under the 2019 Revolving Credit Facility. Under the terms of the interest rate swap agreement, we will pay interest at a fixed rate of 0.7995% and 2018, respectively. Interestreceive variable interest payments based on the loan outstanding is payable quarterly, in arrears, andsame one-month LIBOR utilized to calculate the interest expense from the 2019 Revolving Credit Facility. The interest rate swap agreement matures on the maturity date.During fiscal 2019, FactSetwe incurred approximately $0.9 million in debt issuance costs related to the 2019 Credit Agreement. These costs were capitalized as loan origination fees and are amortized into interest expense ratably over the term of the 2019 Credit Agreement.During fiscal 2020, we recorded interest expense on our outstanding debt, including the amortization of debt issuance costs, net of the effects of the interest rate swap agreement of $12.9 million. During fiscal 2019, we recorded interest expense on our outstanding debt, including the amortization of debt issuance costs, of $19.8 million. Including the effects of the interest rate swap agreement, the weighted average interest rate on amounts outstanding under our credit facilities was 2.20% for the twelve months ended August 31, 2020. The weighted average interest rate for fiscal 2019 was 3.35%. Interest on the loan outstanding is payable quarterly, in arrears, and on the maturity date.The 2019 Credit Agreement contains covenants and requirements restricting certain FactSet activities, which are usual and customary for this type of loan. In addition, the 2019 Credit Agreement requires that FactSetwe maintain a consolidated net leverage ratio, as measured by total net funded debt/EBITDA (as defined in the 2019 Credit Agreement) below a specified level as of the end of each fiscal quarter. The Company wasWe were in compliance with all the covenants and requirements within the 2019 Credit Agreement as of August 31, 2019.The borrowings fromunder the 2019 Credit Agreement were used to retire all outstanding debt under the previous 2017 Credit Agreement between FactSet, as the borrower, and PNC, as the lender, on March 29, 2019. The total principal amount of the debt outstanding at the time of retirement was $575.0 million and there were no prepayment penalties.382017 Credit AgreementOn March 17, 2017, the Company entered into a Credit Agreement (the "2017 Credit Agreement") between FactSet, as the borrower, and PNC, Bank, National Association ("PNC"), as the administrative agent and lender. The 2017 Credit Agreement provided for a $575.0 million revolving credit facility (the "2017 Revolving Credit Facility")"). The 2017 Credit Agreement also allowed FactSet, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount of up to $225.0 million, provided that any such request for additional borrowings was in a minimum amount of $25.0 million. FactSet could have requested borrowings under the 2017 Revolving Credit Facility until its maturity or retirement date. Borrowings under the loan were subject to interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus 1.00%. Interest on the loan outstanding was payable quarterly in arrears and on the maturity date. There were no prepayment penalties if the Companywe elected to prepay the outstanding loan amounts prior to the scheduled maturity date. The principal balance was repaid in full on March 29, 2019.From time to time, we are required to obtain letters of credit in the ordinary course of business. Approximately $2.8$2.9 million of standby letters of credit have been issued in connection with our leased office spaces as of August 31, 2019.2020. These standby letters of credit containutilize the same covenants that, among other things, require us to maintain minimum levels of consolidated net worth and certain leverage and fixed charge ratios. As of August 31, 2019 and 2018, we were in compliance with all covenants containedincluded in the standby letters2019 Credit Agreement. Refer to Note 12, Debt of credit.Foreign CurrencyForeign Currency ExposureCertain wholly-owned subsidiaries within the Europe and Asia Pacific segments operate under a functional currency different fromNotes to the U.S. dollar. The financial statementsCompany's Consolidated Financial Statements included in Item 8. of this Annual Report on Form 10-K for more information on these foreign subsidiaries are translated into U.S. dollars using period-end ratescovenants.Uses of exchange for assets and liabilities and average rates for the period for revenues and expenses. Translation gains and losses that arise from translating assets, liabilities, revenues and expensesLiquidityShare Repurchase ProgramRepurchases of foreign operations are recorded in accumulated other comprehensive (loss) income as a component of stockholders’ equity.Our foreign currency exchange exposure is related to our operating expense base in countries outside the U.S., where 76%shares of our employees were located as of August 31, 2019. During fiscal 2019, foreign currency movements increased operating income by $10.1 million, compared to a decrease in operating income by $1.3 million for fiscal 2018.Foreign Currency HedgesAs of August 31, 2019, we maintained the following foreign currency forward contracts to hedge our exposures:•Philippine Peso – foreign currency forward contracts to hedge approximately 75% of our Philippine Peso exposure through the fourth quarter of fiscal 2020.•Indian Rupee – foreign currency forward contracts to hedge approximately 50% of our Indian Rupee exposure through the end of the third quarter of fiscal 2020, and 25% of our Indian Rupee exposure through the fourth quarter of fiscal 2020.•Euro – foreign currency forward contracts to hedge approximately 75% of our Euro exposure through the first quarter of fiscal 2020, 50% of our Euro exposure from the second quarter through the third quarter of fiscal 2020, and 25% of our Euro exposure through the fourth quarter of fiscal 2020.•British Pound Sterling – foreign currency forward contracts to hedge approximately 75% of our British Pound sterling exposure through the first quarter of fiscal 2020, 50% of our British Pound Sterling exposure from the second quarter through the third quarter of fiscal 2020, and 25% of our British Pound sterling exposure through the fourth quarter of fiscal 2020.As of August 31, 2019, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos and Indian Rupees with U.S. dollars was ₱1.4 billion and Rs.1.4 billion, respectively. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros and British Pound Sterling was €35.7 million and £20.5 million, respectively.There were no other outstanding foreign currency contracts as of August 31, 2019. A loss on derivatives of $1.8 million was recorded in operating income during fiscal 2019, compared to a gain of $3.1 million in fiscal 2018.Off-Balance Sheet ArrangementsAt August 31, 2019 and 2018, we had no off-balance sheet financing or other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing or other debt arrangements or for other contractually limited purposes.Share Repurchase ProgramRepurchases will becommon stock are made from time to time in the open market and privately negotiated transactions, subject to market conditions. In fiscal 2019,2020, we repurchased 0.7 million shares for $199.6 million under our existing share repurchase program compared to 0.9 million shares for $213.1 million compared to 1.5 million shares for $302.4 million in fiscal 2018 under2019. existinglife of the share repurchase program. It is expected that share repurchases will be paid using existing and future cash generated by operations.DividendsOn August 14, 2020, our Board of Directors approved a regular quarterly dividend of $0.77 to be paid on September 17, 2020. During fiscal 2020, the dividend increased $0.05 per share or 6.9%, which marked the 15th consecutive year we have increased dividends, highlighting our continued commitment to returning value to stockholders. Over the last 12 months, we have returned $320.4paid $110.4 million in cash dividends. Future cash dividends will depend on our earnings, capital requirements, financial condition and other factors considered relevant by us and is subject to stockholdersfinal determination by our Board of Directors.Summary of Cash FlowsThe table below, for the periods indicated, provides selected cash flow information:Years ended August 31, (in thousands) 2020 2019 Net cash provided by operating activities $ 505,840 $ 427,136 Net cash used in investing activities $ (73,632) $ (56,100) Net cash used in financing activities $ (218,075) $ (214,274) Effect of exchange rate changes on cash and cash equivalents 11,673 (5,586) Net increase in cash and cash equivalents 225,806 151,176 Cash and cash equivalents aggregated to $585.6 million at August 31, 2020, compared with $359.8 million at August 31, 2019, an increase of $225.8 million. This increase was primarily due to $505.8 million of net cash provided by operating activities, $95.5 million in proceeds primarily from the formexercise of employee stock options and purchases under the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (the "ESPP"), and $11.7 million from the effects of foreign currency translations. These cash inflows were partially offset by $199.6 million in share repurchases, $110.4 million in dividend payments and dividends.On June 24, 2019,$77.6 million of capital expenditures.Our cash and cash equivalents are held in numerous locations throughout the Board of Directors of FactSet approved a $210.0world, with $303.0 million expansion ofwithin the existing share repurchase program. Subsequent to this expansion, $238.6Americas, $222.3 million is available for future repurchaseswithin EMEA (predominantly within the UK, France, and Germany) and the remaining $60.3 million within Asia Pacific (predominantly within the Philippines and India) as of August 31, 2019.39minimal additional tax. As a result of the TCJA, we believe that the income tax impact if such earnings were repatriated would be minimal.OperatingFor fiscal 2020, net cash provided by operating was $505.8 million compared to $427.1 million in fiscal 2019, an increase of $78.7 million. This increase was primarily driven by higher net income and timing of other operating cash flows, partially offset by the timing of income tax payments.InvestingFor fiscal 2020, net cash used in investing activities was $73.6 million compared to $56.1 million in fiscal 2019, an increase in cash used from investing activities of $17.5 million. This increase was mainly due to higher capital expenditures of $18.3 million, driven primarily by increased development costs related to internal-use software.FinancingFor fiscal 2020, net cash used in financing activities was $218.1 million compared to $214.3 million in fiscal 2019, representing a $3.8 million increase in cash used in financing activities. This increase was due primarily to a $11.5 million decrease in proceeds from the exercise of employee stock options and ESPP purchases and a $10.4 million increase in dividend payments, partially offset by a $20.7 million decrease in share repurchases.Free Cash FlowWe define free cash flow, a non-GAAP financial measure, as cash provided by operating activities less purchases of property, equipment, leasehold improvements and intangible assets. We present free cash flow solely as a supplemental disclosure to provide useful information to investors about the amount of cash generated by the business after necessary capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures. The following table reconciles our net cash provided by operating activities to free cash flow:Years ended August 31, (in thousands) 2020 2019 Net cash provided by operating activities $ 505,840 $ 427,136 Capital expenditures(1)(77,642) (59,370) Free cash flow $ 428,198 $ 367,766 (1)Capital expenditures are included in net cash used in investing activities during each fiscal period reported.For fiscal 2020, we generated free cash flow of $428.2 million compared to $367.8 million in fiscal 2019 , an increase of $60.4 million. This increase reflects an increase of $78.7 million in cash provided by operating activities, partially offset by an increase in capital expenditures of $18.3 million.Contractual ObligationsFluctuations in our operating results, the degree of success of our accounts receivable collection efforts, the timing of tax and other payments, as well as necessary capital expenditures to support growth of our operations, will impact our liquidity and cash flows in future periods. The effect of our contractual obligations on our liquidity and capital resources in future periods should be considered in conjunction with the factors disclosed below. Asmentioned here. With the exception of August 31, 2019the new leases entered in the ordinary course of business and 2018, we had total purchase commitments associated with suppliers of $83.3 millionour technology investment plan and $79.0 million, respectively. Therebusiness transformation activities, there were no materialother significant changes in the Company’s purchase commitments with suppliersto our contractual obligations during fiscal 2019.40The following table summarizes our significant contractual obligations as of August 31, 20192020 and the corresponding effect that these obligations will have on our liquidity and cash flows in future periods: 2021-2022 2023-2024 $ 41.4 $ 76.1 $ 67.0 $ 215.5 $ 400.0 62.7 17.8 2.8 — 83.3 — — 575.0 — 575.0 $ 104.1 $ 93.9 $ 644.8 $ 215.5 $ 1,058.3 (1)Operating lease amounts include future minimum lease payments under all our non-cancelable operating leases with an initial term in excess of one year. For more information on our operating leases, see Note 19, Commitments and Contingencies, in the Notes to the Company’s Consolidated Financial Statements included in Item 8 of this Report on Form 10-K.(2)Purchase commitments represent payments due in future periods in respect of obligations to our various data vendors as well as commitments to purchase goods and services such as telecommunication services, computer software and maintenance support and consulting services.(3)Represents the amount due under the Company’s 2019 Credit Agreement.(4)Non-current income taxes payable of $26.3 million and non-current deferred tax liabilities of $16.4 million have been excluded in the table above due to uncertainty regarding the timing of future payments. Payments due by fiscal year (in millions) 2021 2022-2023 2024-2025 2026 and thereafter Total Operating lease obligations(1)$ 40.8 $ 76.4 $ 68.3 $ 186.7 $ 372.2 Purchase commitments(2)77.7 84.7 63.6 — 226.0 Long-term debt obligations(3)— — 575.0 — 575.0 Total contractual obligations by period(4)$ 118.5 $ 161.1 $ 706.9 $ 186.7 $ 1,173.2
(1)Operating lease amounts include future minimum lease payments under all our non-cancelable operating leases with an initial term in excess of one year. Operating lease amounts also include renewal options that are reasonably certain to be exercised and are included in the measurement of the lease liability. Amounts above do not include future lease payments under leases that have not commenced. For more information on our operating leases, refer to Note 11, Leases, in the Notes to the Company’s Consolidated Financial Statements included in Item 8. of this Annual Report on Form 10-K.(2)Purchase commitments represent payments due in future periods in respect of obligations to our various data vendors as well as commitments to purchase goods and services such as telecommunication services, computer software and maintenance support and consulting services. As of August 31, 2020 and 2019, we had total purchase commitments of $226.0 million and $69.9 million, respectively.(3)Represents the amount due under the 2019 Credit Agreement.(4)Non-current income taxes payable of $27.7 million and non-current deferred tax liabilities of $19.7 million have been excluded in the table above due to uncertainty regarding the timing of future payments.Purchase orders do not necessarily reflect a binding commitment but are merely indicative of authorizationsauthorizations and intention to conclude purchases in the future. For the purpose of this tabular disclosure, purchase obligations for goods and services are defined as agreements that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. It is expected that all the contractual obligations noted in the table will be funded from existing cash and cash flows from operations. Expected timing pertaining to the contractual obligations included in the table above has been estimated based on information currently available. The amounts paid, and the timing of those payments, may differ based on when the goods and services provided by our vendors to whom we are contractually obligated are received, as well as due to changes to agreed-upon amounts for any of our obligations.On February 14, 2018, we entered into a new lease to relocate our corporate headquarters to 45 Glover Avenue in Norwalk, Connecticut. The new location will comprise approximately 173,000 square feet of office space. We took possession of the newly leased property on January 1, 2019 for fit-out purposes. We will continue to occupy our existing headquarters space until the new headquarters property is ready for occupancy, currently estimated to be in the second quarter of fiscal 2020.Including new lease agreements executed during fiscal 2019, our worldwide leased office space increased to approximately 1,860,000 square feet at August 31, 2019, up 110,000 square feet, or 6.3% from August 31, 2018. This increase was primarily related to additional office space in India. Future minimum requirements for our operating leases in place as of August 31, 2019 totaled $400.0 million, a decrease from $407.8 million as of August 31, 2018. This decrease is primarily due the passage of a year on remaining rental agreement terms, reducing the overall future minimum lease obligation, partially offset by added office space in India.As disclosed earlier in the Capital Resources section of this MD&A, we entered into the 2019 Credit Agreement on March 29, 2019 and borrowed $575.0 million. In conjunction with the 2019 Credit Agreement, FactSetwe retired itsthe loan outstanding under the 2017 Credit Agreement in the amount of $575.0 million.With the exception of the new leases entered Refer to Note 12, ordinary courseNotes to the Company’s Consolidated Financial Statements included in Item 8. of business, there werethis Annual Report on Form 10-K for more information on the 2019 Credit Agreement.Off-Balance Sheet ArrangementsAt August 31, 2020 and 2019, we had no off-balance sheet financing or other significant changesarrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing other debt arrangements, or other contractually limited purposes.Foreign CurrencyForeign Currency ExposureCertain wholly-owned subsidiaries within the EMEA and Asia Pacific segments operate under a functional currency different from the U.S. dollar. The financial statements of these foreign subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities and average exchange rates for revenue and expenses. Translation gains and losses that arise from translating assets, liabilities, revenue and expenses of foreign operations are recorded in accumulated other comprehensive loss ("AOCL")as a component of stockholders’ equity.Our foreign currency exchange exposure is related to our contractual obligationsoperating expenses in countries outside the Americas, where approximately 76% of our employees were located as of August 31, 2020. During fiscal 2020, foreign currency movements41increased operating income by $5.0 million, compared to a $10.1 million increaseto operating income in the same period a year earlier.As of August 31, 2020, we maintained foreign currency forward contracts to hedge a portion of our British Pound Sterling, Euro, Indian Rupee, and Philippine Peso exposures. We entered into a series of forward contracts to mitigate our currency exposure ranging from 25% to 75% over their respective hedged periods. The current foreign currency forward contracts are set to mature at various points between the first quarter of fiscal 2021 through the fourth quarter of fiscal 2021.As of August 31, 2020, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos and Indian Rupees with U.S. dollars was ₱1.3 billion and Rs1.4 billion, respectively. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros and British Pound Sterling was €31.8 million and £36.4 million, respectively.A loss on derivatives of $2.0 million was recorded in operating income during fiscal 2020, compared to a loss of $1.8 million in fiscal 2019.DividendsOn August 9, 2019,Critical Accounting Policies and EstimatesWe prepare the Consolidated Financial Statements in conformity with generally accepted accounting principles, which requires us to make certain estimates and apply judgements that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We base our Board of Directors approved a regular quarterly dividend of $0.72estimates on historical experience and other assumptions that we believe to be paid on September 19, 2019. The $0.08 per share or 12.5% increase marked our 14th consecutive year we have increased dividends, highlighting our continued commitment to returning value to shareholders. Overreasonable at the last 12 months, we have returned $320.4 million to stockholders intime the form of share repurchasesConsolidated Financial Statements are prepared and, cash dividends. Future cash dividends will depend on our earnings, capital requirements, financial condition and other relevant factors. Dividends must be authorized by our Board of Directors.During fiscal years 2019 and 2018, our Board of Directors declared the following dividends on our common stock: $ 0.64 $ 24,372 $ 0.64 $ 24,385 $ 0.72 $ 27,506 $ 0.72 $ 27,445 $ 0.56 $ 21,902 $ 0.56 $ 21,799 $ 0.64 $ 24,566 $ 0.64 $ 24,443 Significant Accounting Policies, of in the Notes to ourthe Company’s Consolidated Financial Statements included in Item 8 below.Critical Accounting EstimatesWe consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period, or use8. of different estimates that we reasonably could have used in the current period, would have a material impactthis Annual Report on our financial condition or results of operations.Form 10-K. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors. The critical accounting policies, estimates, and judgments that we believe to have the most significant impacts to our Consolidated Financial Statements are described below.
As of
August 31, 2020, we had gross unrecognized tax benefits totaling $12.3 million, including $0.9 million of accrued interest, recorded as Taxes Payable (non-current) within the Consolidated Balance Sheets. Refer to Note 10, Income Taxes in the Notes to the Company’s Consolidated Financial Statements included in Item 8. of this Annual Report on Form 10-K for further informationThe Company accounts
Performance-based Equity Awards
Performance-based equity awards, whether in the form of stock options
June 2017 Performance-based Option Grant Review
In connection with the acquisition of BISAM, FactSet granted 206,417 performance-based stock options in June 2017. These performance-based options were scheduled to vest 40% on the second anniversary date of the grant and 20% on each subsequent anniversary date, if certain BISAM revenue and operating income targets were achieved by March 31, 2019. In the third quarter of fiscal 2019, it was determined that the performance criteria were not achieved by March 31, 2019, and,same as such, the options were forfeited, and no stock-based compensation expense was recorded for this performance-based option grant for fiscal 2019.
Accrued Compensation
We make significant estimates in determining our accrued compensation. We conduct a final review of Company, departmental and individual performance each year end to determine the amount of discretionary employee compensation. We also review compensation throughout the year to determine how overall performance tracks against management’s expectations. Management takes these and other factors, including historical performance, into account in reviewing accrued compensation estimates on a quarterly basis and adjusts accrual rates as appropriate. As of August 31, 2019, and 2018, the amount of the variable employee compensation recorded within accrued compensation was $49.4 million and $43.6 million, respectively.
Goodwill and Intangible Assets
reportable segments. Goodwill is not amortized as it is estimated to have an indefinite life. At leastWe review our goodwill for impairment annually we are required to test goodwill atdur
Our impairment analysis contains uncertainties as it requires management to make assumptions and apply judgment to estimate industry and economic factors including market conditions, legal and technological factors and the profitabilityany one of our business strategies. It is our policy to conductreporting units below its respective carrying amount.
Future events could cause us to conclude that indicatorsreporting unit.
not performed.
2019.
Long-lived Assets
2019.
Estimated Tax Provision Refer to Note 7,
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Our tax provision is an estimate based on our understanding of laws in Federal, state and foreign tax jurisdictions. These laws can be complicated and are difficult to apply to any business. The tax laws also require us to allocate our taxable income to many jurisdictions based on subjective allocation methodologies and information collection processes. Our effective tax rates differ from the statutory rate primarily due to the impact of state taxes, foreign operations, R&D and other tax credits, tax audit settlements, incentive-stock options and the Foreign Derived Intangible Income Deduction. Our annual effective tax rate was 16.4%, 24.1% and 25.0% in fiscal 2019, 2018 and 2017, respectively.
Our provision for income taxes is subject to volatility and could be adversely impacted by numerous factors such as changes in tax laws, regulations, or accounting principles, including accounting for uncertain tax positions or interpretations of them. Significant judgment is required to determine recognition and measurement. Further, as a result of certain ongoing employment and capital investment actions and commitments, our income in certain countries is subject to reduced tax rates and in some cases is wholly exempt from tax. Our failure to meet these commitments could adversely affect our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse impact on our operating results and financial condition.
To account for unrecognized tax benefits, we first determine whether it is more-likely-than-not (defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date. A tax position that meets this more-likely-than-not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority. The determination of liabilities related to unrecognized tax benefits, including associated interest and penalties, requires significant estimates. There can be no assurance that we will accurately predict the outcomes of these audits, however, we have no reason to believe that such audits will result in the payment of additional taxes and/or penalties that would have a material adverse effect on the Company’s results of operations or financial position, beyond current estimates. For this reason and due to ongoing audits by multiple tax authorities, we regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The Company does not currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next 12 months.
We classify the liability for unrecognized tax benefits as Taxes Payable (non-current) and to the extent that we anticipate payment of cash within one year, the benefit will be classified as Taxes Payable (current). Additionally, we accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. This interest is classified as income tax expense in the financial statements. As of August 31, 2019, we had gross unrecognized tax benefits totaling $10.9 million, including $1.1 million of accrued interest, recorded as Taxes Payable (non-current) within the Consolidated Balance Sheets.
New Accounting Pronouncements
See Note 3, Summary of Significant Accounting Policies,Leasehold Improvements
Market Trends
In the ordinary course of business, we are exposed to financial risks involving the volatility of equity markets as well as foreign currency and interest rate fluctuations.
Shift from Active to Passive Investment Management
Approximately 83.7% of our ASV is derived from our investment management clients. The prosperity of these clients is tied to equity assets under management. An equity market decline not only depresses assets under management but also could cause a significant increase in redemption requests to move money out of equities and into other asset classes. Moreover, a shift from active investment management to passive investment management can result in lower demand for our services. Our investment banking clients that provide M&A advisory work, capital markets services and equity research, account for approximately 16.3% of our ASV. A significant portion of these revenues relate to services deployed by large, bulge-bracket banks. Credit continues to impact many of the large banking clients due to the amount of leverage deployed in past operations. Our clients could also encounter similar issues. A lack of confidence in the global banking system could cause declines in M&A funded by debt. Additional uncertainty, consolidation and business failures in the global investment banking sector could adversely affect our financial results and future growth. Our revenue may decline if banks, including those involved in merger activity, significantly reduce headcount in the areas of corporate M&A, capital markets and equity research to compensate for the challenges faced by other departments.
Brexit
On June 23, 2016, voters in the United Kingdom approved an advisory referendum to withdraw from the European Union ("Brexit"). On March 29, 2017, the United Kingdom invoked Article 50 of the Lisbon Treaty, formally starting negotiations with the European Union. United Kingdom and European Union leaders then backed an extension until October 31, 2019, to provide more time to complete negotiations on formal withdrawal and transitional arrangements. On October 17, 2019 a new Brexit deal was agreed between the European Union and the UK Government. On October 22, 2019 the UK Parliament approved the new Brexit deal but rejected the timing of its implementation. Following the vote in the UK Parliament, European Council President Donald Tusk confirmed that he would recommend that the European Union leaders agree to a third extension to the Article 50 period until January 31, 2020, to give the United Kingdom more time to scrutinize the new Brexit deal, and to avoid a no-deal Brexit. The political and economic instability created by the Brexit vote has caused, and may continue to cause, significant volatility in global financial markets. At this time, we cannot predict the impact that Brexit will have on our business as it will depend, in part, on the longer-term outcome of tariff, trade, regulatory and other negotiations. Although it is unknown what the result of those negotiations will be, it is possible that new terms may adversely affect our operations and financial results. While we evaluate our own risks and uncertainty related to Brexit, we will continue to partner with our clients to help them navigate the fluctuating international markets.
Markets in Financial Instruments Directive (“MiFID”)
MiFID II built upon many of the initiatives introduced through MiFID and is intended to help improve the functioning of the European Union single market by achieving a greater consistency of regulatory standards. MiFID originally became effective in 2007 and was enhanced through adoption of MiFID II, which became effective in January 2018. We continue to monitor the impact in the European Union of MiFID II on the investment process and trade lifecycle, as well as any impact of MiFID II on non-European Union countries. We also continue to review the application of key MiFID II requirements in the event of a no-deal Brexit in light of a recent publication by the European Securities and Markets Authority. We plan to work with our clients to navigate the MiFID II requirements.
Forward-Looking Factors
Forward-Looking Statements
In addition to current and historical information, this Report on Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements based on management’s current expectations, estimates, forecasts and projections about industries in which we operate and the beliefs and assumptions of management. All statements that address expectations, guidance, outlook or projections about the future, including statements about our strategy for growth, product development, revenue, future financial results, anticipated growth, market position, subscriptions, expected expenditures, trends in our business and financial results, are forward-looking statements. Forward-looking statements may be identified by words like “expects,” “believes,” “anticipates,” “plans,” “intends,” “estimates,” “projects,” “should,” “indicates,” “continues,” “may” and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this Report on Form 10-K or in any of our other filings with the Securities and Exchange Commission, could cause results to differ materially from those stated. These factors include, but are not limited to: the ability to integrate newly acquired companies, clients and businesses; strains on resources as a result of growth, the volatility and stability of global securities markets, including declines in equity or fixed income returns impacting the buying power of investment management clients; the ability to hire and retain qualified personnel; the maintenance of our leading technological position and reputation; failure to maintain or improve our competitive position in the marketplace; fraudulent, misappropriation or unauthorized data access, including cyber-security and privacy breaches; failures or disruptions of telecommunications, data centers, network systems, facilities, or the Internet; uncertainty, consolidation and business failures in the global investment banking industry; the continued shift from active to passive investing, the negotiation of contract terms with vendors, data suppliers and landlords; the retention of clients and the attraction of new ones; the absence of U.S. or foreign governmental regulation restricting international business; the unfavorable resolution of tax assessments and legal proceedings; and legislative and regulatory changes in the environments in which we and our clients operate. Forward-looking statements speak only as of the date they are made, and we assume no duty to and do not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
We intend that all forward-looking statements we make will be subject to safe harbor protection of the federal securities laws as found in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements involve certain known and unknown risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those listed in Part 1 Item 1A, Risk Factors, of this Report on Form 10-K. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this Report on Form 10-K to reflect actual results or future events or circumstances.
Business Outlook
The following forward-looking statements reflect our expectations as of September 26, 2019. Given the number of risk factors, uncertainties and assumptions discussed in this MD&A above and Part 1 Item 1A, Risk Factors, of this Report on Form 10-K, actual results may differ materially. We do not intend to update our forward-looking statements until our next quarterly results announcement, other than in publicly available statements.
Fiscal 2020Expectations
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Both GAAP operating margin and GAAP diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2020.
Business Developments
Departure ofGlobal Head of Sales and Client Solutionsand Appointment of Global Head of Sales and Client Solutions
On April 15, 2019, we entered into a separation of employment and general release agreement (the "Separation Agreement") with John W. Wiseman, the Executive Vice President, Global Head of Sales and Client Solutions. Pursuant to the Separation Agreement, Mr. Wiseman participated in an orderly transition of duties to his successor, Franck A.R. Gossieaux, appointed June 1, 2019. Mr. Wiseman remained an employee of FactSet until his effective termination date of August 31, 2019.
Effective June 1, 2019, we appointed Franck A.R. Gossieaux as the Executive Vice President, Global Head of Sales and Client Solutions. Mr. Gossieaux succeeded John W. Wiseman and reports directly to Philip Snow, the Chief Executive Officer.
Appointment of Chief Human Resources Officer
Effective December 1, 2018, we appointed Daniel Viens as the Chief Human Resources Officer. Mr. Viens reports directly to Philip Snow, the Chief Executive Officer.
Foreign Currency Exchange Risk
Weas we conduct business outside the U.S. in several currencies including the Euro, British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. The financial statements of these foreign subsidiaries are translatedChanges in the exchange rates for such currencies into U.S. dollars using period-end ratescan affect our revenues, earnings, and the carrying values of exchange forour assets and liabilities and average rates for the period for revenues and expenses. To the extent thatin our international activities recorded in local currencies increase in the future, our exposure to fluctuations in currency exchange rates will correspondingly increase. consolidated balance sheet, either positively or negatively.
Foreign Currency Hedges
As of August 31, 2019, we maintained the following foreign currency forward contracts to hedge our exposures:
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As of August 31, 2019, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos and Indian Rupees with U.S. dollars was ₱1.4 billion and Rs.1.4 billion, respectively. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros and British Pound Sterling was €35.7 million and £20.5 million, respectively.
A loss on derivatives of $1.8 million was recorded into operating income during fiscal 2019, compared to a gain of $3.1 million in fiscal 2018. The gains and losses on foreign currency forward contracts mitigate the variability in operating expenses associated with currency movements. These transactions are designated and accounted for as cash flow hedges in accordance with applicable accounting guidance. The changes in fair value for these foreign currency forward contracts are initially reported as a component of accumulated other comprehensive lossAOCL and subsequently reclassified into operating expenses when the hedged exposure affects earnings. The related cash flow impacts of all our derivative activities are reflected as cash flows from operating activities.
Interest Rate Risk
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The Audit Committee of the Board of Directors, which consists solely of independent non-employee directors, is responsible for overseeing the functioning of the accounting system and related controls and the preparation of annual financial statements. The Audit Committee periodically meets with management and the independent accountants to review and evaluate their accounting, auditing and financial reporting activities and responsibilities, including management’s assessment of internal control over financial reporting. The independent registered public accounting firm has full and free access to the Audit Committee and has met with the committee, with and without management present.
| /s/ F. PHILIP SNOW | /s/ HELEN L. SHAN | |||||||
F. Philip Snow | Helen L. Shan | |||||||
Chief Executive Officer | Executive Vice President and Chief Financial Officer | |||||||
October | October | |||||||
| Measurement of income tax provision | ||||||
Description of the Matter | As discussed in Note 3, Summary of Significant Accounting Policies, and Management’s calculation of the provision for income taxes was significant to our audit because the provision for income taxes involved subjective estimation and complex audit judgement related to the evaluation of tax laws, including the methods used to allocate taxable income, and the amounts and disclosures are material to the financial statements. | |||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over management’s calculation of its provision for income taxes. For example, we tested controls over management’s evaluation of the allocation methodologies and management’s review of the assumptions and data utilized in determining the allocation of income to applicable tax jurisdictions. | |||||
Among other audit procedures performed, we evaluated the reasonableness of management’s allocation methodologies by analyzing the methodology based on the Company’s structure, operations and current tax law. We recalculated income tax expense using management’s methodology and agreed the data used in the calculations to the Company’s underlying books and records. We involved our tax professionals to evaluate the application of tax law to management’s allocation methodologies and tax positions. This included assessing the Company’s correspondence with the relevant tax authorities and evaluating third-party reports and advice obtained by the Company. We also performed a sensitivity analysis to evaluate the effect from changes in management’s allocation methodologies and assumptions. We have evaluated the Company’s income tax disclosures included in Note | ||||||
| Years ended August 31, | ||||||||||||||||||||||||||||
| (in thousands, except per share data) | (in thousands, except per share data) | Years ended August 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||
Revenue | $ | 1,435,351 | $ | 1,350,145 | $ | 1,221,179 | Revenue | $ | 1,494,111 | $ | 1,435,351 | $ | 1,350,145 | ||||||||||||||||
Operating expenses | Operating expenses | ||||||||||||||||||||||||||||
Cost of services | 663,446 | 659,296 | 566,580 | Cost of services | 695,446 | 663,446 | 659,296 | ||||||||||||||||||||||
Selling, general and administrative | 333,870 | 324,645 | 302,464 | Selling, general and administrative | 359,005 | 333,870 | 324,645 | ||||||||||||||||||||||
Total operating expenses | 997,316 | 983,941 | 869,044 | Total operating expenses | 1,054,451 | 997,316 | 983,941 | ||||||||||||||||||||||
Operating income | 438,035 | 366,204 | 352,135 | Operating income | 439,660 | 438,035 | 366,204 | ||||||||||||||||||||||
Other expenses | Other expenses | ||||||||||||||||||||||||||||
(Loss) on sale of business | — | — | (1,223 | ) | |||||||||||||||||||||||||
Interest expense, net of interest income | (16,070 | ) | (14,366 | ) | (6,600 | ) | |||||||||||||||||||||||
| Interest expense, net | Interest expense, net | (9,829) | (16,624) | (16,286) | |||||||||||||||||||||||||
| Other (expense) income, net | Other (expense) income, net | (2,697) | 554 | 1,920 | |||||||||||||||||||||||||
Total other expense | (16,070 | ) | (14,366 | ) | (7,823 | ) | Total other expense | (12,526) | (16,070) | (14,366) | |||||||||||||||||||
Income before income taxes | 421,965 | 351,838 | 344,312 | Income before income taxes | 427,134 | 421,965 | 351,838 | ||||||||||||||||||||||
Provision for income taxes | 69,175 | 84,753 | 86,053 | Provision for income taxes | 54,196 | 69,175 | 84,753 | ||||||||||||||||||||||
Net income | $ | 352,790 | $ | 267,085 | $ | 258,259 | Net income | $ | 372,938 | $ | 352,790 | $ | 267,085 | ||||||||||||||||
Basic earnings per common share | $ | 9.25 | $ | 6.90 | $ | 6.55 | Basic earnings per common share | $ | 9.83 | $ | 9.25 | $ | 6.90 | ||||||||||||||||
Diluted earnings per common share | $ | 9.08 | $ | 6.78 | $ | 6.51 | Diluted earnings per common share | $ | 9.65 | $ | 9.08 | $ | 6.78 | ||||||||||||||||
Basic weighted average common shares | 38,144 | 38,733 | 39,444 | Basic weighted average common shares | 37,936 | 38,144 | 38,733 | ||||||||||||||||||||||
Diluted weighted average common shares | 38,873 | 39,377 | 39,642 | Diluted weighted average common shares | 38,646 | 38,873 | 39,377 | ||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements.52
| Years ended August 31, | ||||||||||||||||||||||||||||
| (in thousands) | (in thousands) | Years ended August 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||
Net income | $ | 352,790 | $ | 267,085 | $ | 258,259 | Net income | $ | 372,938 | $ | 352,790 | $ | 267,085 | ||||||||||||||||
Other comprehensive (loss) income, net of tax | |||||||||||||||||||||||||||||
| Other comprehensive income, net of tax: | Other comprehensive income, net of tax: | ||||||||||||||||||||||||||||
Net unrealized gain (loss) on cash flow hedges(1) | 504 | (7,288 | ) | 5,017 | Net unrealized gain (loss) on cash flow hedges(1) | 674 | 504 | (7,288) | |||||||||||||||||||||
Foreign currency translation adjustments | (24,325 | ) | (9,431 | ) | 28,816 | Foreign currency translation adjustments | 34,577 | (24,325) | (9,431) | ||||||||||||||||||||
Other comprehensive (loss) income | (23,821 | ) | (16,719 | ) | 33,833 | ||||||||||||||||||||||||
| Other comprehensive income (loss) | Other comprehensive income (loss) | 35,251 | (23,821) | (16,719) | |||||||||||||||||||||||||
Comprehensive income | $ | 328,969 | $ | 250,366 | $ | 292,092 | Comprehensive income | $ | 408,189 | $ | 328,969 | $ | 250,366 | ||||||||||||||||
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(1)The unrealized gain (loss) on cash flow hedges disclosed above was net of tax (expense) benefit of ($251), ($387), and $3,518 for the fiscal years ended August 31, 2020, 2019 and 2018, respectively.The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements.53
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2019 | 2018 | 2020 | 2019 | ||||||||||||||||
ASSETS | ASSETS | ||||||||||||||||||
Cash and cash equivalents | $ | 359,799 | $ | 208,623 | Cash and cash equivalents | $ | 585,605 | $ | 359,799 | ||||||||||
Investments | 25,813 | 29,259 | Investments | 19,572 | 25,813 | ||||||||||||||
Accounts receivable, net of reserves of $10,511 at August 31, 2019 and $3,490 at August 31, 2018 | 146,309 | 156,639 | |||||||||||||||||
| Accounts receivable, net of reserves of $7,987 at August 31, 2020 and $10,511 at August 31, 2019 | Accounts receivable, net of reserves of $7,987 at August 31, 2020 and $10,511 at August 31, 2019 | 155,011 | 146,309 | ||||||||||||||||
Prepaid taxes | 15,033 | 6,274 | Prepaid taxes | 38,067 | 15,033 | ||||||||||||||
Prepaid expenses and other current assets | 36,858 | 30,121 | Prepaid expenses and other current assets | 43,675 | 36,858 | ||||||||||||||
Total current assets | 583,812 | 430,916 | Total current assets | 841,930 | 583,812 | ||||||||||||||
Property, equipment and leasehold improvements, net | 132,524 | 100,545 | Property, equipment and leasehold improvements, net | 133,102 | 119,384 | ||||||||||||||
Goodwill | 685,729 | 701,833 | Goodwill | 709,703 | 685,729 | ||||||||||||||
Intangible assets, net | 120,551 | 148,935 | Intangible assets, net | 121,095 | 124,448 | ||||||||||||||
Deferred taxes | 7,571 | 9,716 | Deferred taxes | 0 | 7,571 | ||||||||||||||
| Lease right-of-use assets, net | Lease right-of-use assets, net | 248,929 | 0 | ||||||||||||||||
Other assets | 29,943 | 27,502 | Other assets | 28,629 | 39,186 | ||||||||||||||
TOTAL ASSETS | $ | 1,560,130 | $ | 1,419,447 | TOTAL ASSETS | $ | 2,083,388 | $ | 1,560,130 | ||||||||||
LIABILITIES | LIABILITIES | ||||||||||||||||||
Accounts payable and accrued expenses | $ | 79,620 | $ | 72,059 | Accounts payable and accrued expenses | $ | 82,094 | $ | 79,620 | ||||||||||
| Current lease liabilities | Current lease liabilities | 29,056 | 0 | ||||||||||||||||
Accrued compensation | 64,202 | 66,479 | Accrued compensation | 81,873 | 64,202 | ||||||||||||||
Deferred fees | 47,656 | 49,700 | Deferred fees | 53,987 | 47,656 | ||||||||||||||
Taxes payable | — | 8,453 | |||||||||||||||||
Dividends payable | 27,445 | 24,443 | Dividends payable | 29,283 | 27,445 | ||||||||||||||
Total current liabilities | 218,923 | 221,134 | Total current liabilities | 276,293 | 218,923 | ||||||||||||||
Long-term debt | 574,174 | 574,775 | Long-term debt | 574,354 | 574,174 | ||||||||||||||
Deferred taxes | 16,391 | 21,190 | Deferred taxes | 19,713 | 16,391 | ||||||||||||||
Deferred fees | 10,088 | 7,833 | Deferred fees | 9,319 | 10,088 | ||||||||||||||
Taxes payable | 26,292 | 29,626 | Taxes payable | 27,739 | 26,292 | ||||||||||||||
Deferred rent and other non-current liabilities | 42,006 | 38,989 | |||||||||||||||||
| Long-term lease liabilities | Long-term lease liabilities | 272,269 | 0 | ||||||||||||||||
| Other non-current liabilities | Other non-current liabilities | 7,326 | 42,006 | ||||||||||||||||
TOTAL LIABILITIES | $ | 887,874 | $ | 893,547 | TOTAL LIABILITIES | $ | 1,187,013 | $ | 887,874 | ||||||||||
Commitments and contingencies (See Note 19) | |||||||||||||||||||
| Commitments and contingencies (See Note 13) | Commitments and contingencies (See Note 13) | ||||||||||||||||||
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued | $ | — | $ | — | |||||||||||||||
Common stock, $.01 par value, 150,000,000 shares authorized, 40,104,192 and 39,264,849 shares issued, 38,117,840 and 38,192,586 shares outstanding at August 31, 2019 and 2018, respectively | 401 | 393 | |||||||||||||||||
| Preferred stock, $0.01 par value, 10,000,000 shares authorized, NaN issued | Preferred stock, $0.01 par value, 10,000,000 shares authorized, NaN issued | $ | 0 | $ | 0 | ||||||||||||||
Common stock, $0.01 par value, 150,000,000 shares authorized, 40,767,708 and 40,104,192 shares issued, 38,030,252 and 38,117,840 shares outstanding at August 31, 2020 and 2019, respectively | Common stock, $0.01 par value, 150,000,000 shares authorized, 40,767,708 and 40,104,192 shares issued, 38,030,252 and 38,117,840 shares outstanding at August 31, 2020 and 2019, respectively | 408 | 401 | ||||||||||||||||
Additional paid-in capital | 806,973 | 667,531 | Additional paid-in capital | 939,067 | 806,973 | ||||||||||||||
Treasury stock, at cost: 1,986,352 and 1,072,263 shares at August 31, 2019 and 2018, respectively | (433,799 | ) | (213,428 | ) | |||||||||||||||
| Treasury stock, at cost: 2,737,456 and 1,986,352 shares at August 31, 2020 and 2019, respectively | Treasury stock, at cost: 2,737,456 and 1,986,352 shares at August 31, 2020 and 2019, respectively | (636,956) | (433,799) | ||||||||||||||||
Retained earnings | 373,225 | 122,843 | Retained earnings | 633,149 | 373,225 | ||||||||||||||
Accumulated other comprehensive loss | (74,544 | ) | (51,439 | ) | Accumulated other comprehensive loss | (39,293) | (74,544) | ||||||||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 672,256 | $ | 525,900 | TOTAL STOCKHOLDERS’ EQUITY | $ | 896,375 | $ | 672,256 | ||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,560,130 | $ | 1,419,447 | TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,083,388 | $ | 1,560,130 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements.54
| Years ended August 31, | ||||||||||||||||||||||||||||
| (in thousands) | (in thousands) | Years ended August 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||||||||||||||
Net income | $ | 352,790 | $ | 267,085 | $ | 258,259 | Net income | $ | 372,938 | $ | 352,790 | $ | 267,085 | ||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities | Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||||||||||||||||
Depreciation and amortization | 60,463 | 57,285 | 48,294 | Depreciation and amortization | 57,614 | 60,463 | 57,285 | ||||||||||||||||||||||
| Amortization of lease right-of-use assets | Amortization of lease right-of-use assets | 43,185 | 0 | 0 | |||||||||||||||||||||||||
Stock-based compensation expense | 32,400 | 31,516 | 34,183 | Stock-based compensation expense | 36,579 | 32,400 | 31,516 | ||||||||||||||||||||||
Deferred income taxes | (2,278 | ) | (1,910 | ) | 4,879 | Deferred income taxes | 10,626 | (2,278) | (1,910) | ||||||||||||||||||||
| Impairment charge | Impairment charge | 16,500 | 0 | 0 | |||||||||||||||||||||||||
Loss on sale of assets | 196 | 140 | 1,282 | Loss on sale of assets | 172 | 196 | 140 | ||||||||||||||||||||||
Tax benefits from share-based payment arrangements | — | — | (10,331 | ) | |||||||||||||||||||||||||
Changes in assets and liabilities, net of effects of acquisitions | Changes in assets and liabilities, net of effects of acquisitions | ||||||||||||||||||||||||||||
Accounts receivable, net of reserves | 10,205 | (8,417 | ) | (29,503 | ) | Accounts receivable, net of reserves | (8,608) | 10,205 | (8,417) | ||||||||||||||||||||
Accounts payable and accrued expenses | (2,290 | ) | 12,077 | (2,226 | ) | Accounts payable and accrued expenses | 12,427 | (2,290) | 12,077 | ||||||||||||||||||||
Accrued compensation | (1,743 | ) | 5,735 | 6,427 | Accrued compensation | 16,446 | (1,743) | 5,735 | |||||||||||||||||||||
Deferred fees | 458 | 6,035 | (229 | ) | Deferred fees | 5,571 | 458 | 6,035 | |||||||||||||||||||||
Taxes payable, net of prepaid taxes | (19,238 | ) | 27,659 | 7,877 | Taxes payable, net of prepaid taxes | (24,224) | (19,238) | 27,659 | |||||||||||||||||||||
| Lease liabilities, net | Lease liabilities, net | (33,340) | 0 | 0 | |||||||||||||||||||||||||
Other, net | (3,827 | ) | (11,537 | ) | 1,613 | Other, net | (46) | (3,827) | (11,537) | ||||||||||||||||||||
Net cash provided by operating activities | 427,136 | 385,668 | 320,527 | Net cash provided by operating activities | 505,840 | 427,136 | 385,668 | ||||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||||||||||
Acquisition of businesses and investments, net of cash and cash equivalents acquired | — | (15,000 | ) | (303,086 | ) | ||||||||||||||||||||||||
| Purchases of property, equipment, leasehold improvements and intangible assets | Purchases of property, equipment, leasehold improvements and intangible assets | (77,642) | (59,370) | (33,520) | |||||||||||||||||||||||||
Purchases of investments | (11,135 | ) | (12,470 | ) | (30,757 | ) | Purchases of investments | (2,736) | (11,135) | (12,470) | |||||||||||||||||||
Proceeds from maturity or sale of investments | 14,405 | 12,459 | 23,399 | Proceeds from maturity or sale of investments | 6,746 | 14,405 | 12,459 | ||||||||||||||||||||||
Purchases of property, equipment and leasehold improvements | (59,370 | ) | (33,520 | ) | (36,862 | ) | |||||||||||||||||||||||
| Acquisition of businesses and investments, net of cash and cash equivalents acquired | Acquisition of businesses and investments, net of cash and cash equivalents acquired | 0 | 0 | (15,000) | |||||||||||||||||||||||||
Net cash used in investing activities | (56,100 | ) | (48,531 | ) | (347,306 | ) | Net cash used in investing activities | (73,632) | (56,100) | (48,531) | |||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||||||||||||||
| Repurchase of common stock | Repurchase of common stock | (199,625) | (220,372) | (303,955) | |||||||||||||||||||||||||
Dividend payments | (100,052 | ) | (89,408 | ) | (80,898 | ) | Dividend payments | (110,439) | (100,052) | (89,408) | |||||||||||||||||||
Repurchase of common stock | (220,372 | ) | (303,955 | ) | (260,978 | ) | |||||||||||||||||||||||
Repayment of debt | (575,000 | ) | — | (365,000 | ) | Repayment of debt | 0 | (575,000) | 0 | ||||||||||||||||||||
Proceeds from debt | 575,000 | — | 640,000 | Proceeds from debt | 0 | 575,000 | 0 | ||||||||||||||||||||||
Proceeds from employee stock plans | 107,051 | 71,610 | 50,045 | Proceeds from employee stock plans | 95,520 | 107,051 | 71,610 | ||||||||||||||||||||||
Tax benefits from share-based payment arrangements | — | — | 10,331 | Tax benefits from share-based payment arrangements | 0 | 0 | 0 | ||||||||||||||||||||||
Other financing activities, net | (901 | ) | 1,716 | (1,661 | ) | Other financing activities, net | (3,531) | (901) | 1,716 | ||||||||||||||||||||
Net cash used in financing activities | (214,274 | ) | (320,037 | ) | (8,161 | ) | Net cash used in financing activities | (218,075) | (214,274) | (320,037) | |||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (5,586 | ) | (3,208 | ) | 1,264 | Effect of exchange rate changes on cash and cash equivalents | 11,673 | (5,586) | (3,208) | ||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 151,176 | 13,892 | (33,676 | ) | |||||||||||||||||||||||||
| Net increase in cash and cash equivalents | Net increase in cash and cash equivalents | 225,806 | 151,176 | 13,892 | |||||||||||||||||||||||||
Cash and cash equivalents at beginning of period | 208,623 | 194,731 | 228,407 | Cash and cash equivalents at beginning of period | 359,799 | 208,623 | 194,731 | ||||||||||||||||||||||
Cash and cash equivalents at end of period | $ | 359,799 | $ | 208,623 | $ | 194,731 | Cash and cash equivalents at end of period | $ | 585,605 | $ | 359,799 | $ | 208,623 | ||||||||||||||||
Supplemental Disclosure of Cash Flow Information | Supplemental Disclosure of Cash Flow Information | ||||||||||||||||||||||||||||
Cash paid during the year for interest | $ | 19,509 | $ | 15,676 | $ | 8,466 | Cash paid during the year for interest | $ | 12,876 | $ | 19,509 | $ | 15,676 | ||||||||||||||||
Cash paid during the year for income taxes, net of refunds | $ | 89,997 | $ | 68,707 | $ | 74,788 | Cash paid during the year for income taxes, net of refunds | $ | 69,092 | $ | 89,997 | $ | 68,707 | ||||||||||||||||
Supplemental Disclosure of Non-Cash Transactions | Supplemental Disclosure of Non-Cash Transactions | ||||||||||||||||||||||||||||
Dividends declared, not paid | $ | 27,445 | $ | 24,443 | $ | 21,853 | Dividends declared, not paid | $ | 29,283 | $ | 27,445 | $ | 24,443 | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements.55
| Common Stock | Additional | Treasury Stock |
| Accumulated Other | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except share data) | Shares | Par Value | Paid-in Capital | Shares | Amount | Retained Earnings | Comprehensive Loss | Stockholders’ Equity | (in thousands, except share data) | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 1, 2016 | 51,150,978 | $ | 512 | $ | 623,195 | 11,112,753 | $ | (1,321,700 | ) | $ | 1,283,927 | $ | (68,553 | ) | $ | 517,381 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 258,259 | 258,259 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | 33,833 | 33,833 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for employee stock plans | 561,960 | 6 | 50,039 | 50,045 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted stock | 132,194 | 49,771 | (7,847 | ) | (7,847 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | 1,556,660 | (253,131 | ) | (253,131 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 34,183 | 34,183 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefits from share-based payment arrangements | 10,331 | 10,331 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accelerated share repurchase | 24,000 | 102,916 | (24,000 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | (83,363 | ) | (83,363 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of August 31, 2017 | 51,845,132 | $ | 518 | $ | 741,748 | 12,822,100 | $ | (1,606,678 | ) | $ | 1,458,823 | $ | (34,720 | ) | $ | 559,691 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except share data) | (in thousands, except share data) | Shares | Par Value | Additional Paid-in Capital | Shares | Amount | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 51,845,132 | $ | 518 | 12,822,100 | $ | (1,606,678) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 267,085 | 267,085 | Net income | 267,085 | 267,085 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | (16,719 | ) | (16,719 | ) | Other comprehensive loss | (16,719) | (16,719) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for employee stock plans | 685,807 | 8 | 80,983 | 80,991 | Common stock issued for employee stock plans | 685,807 | 8 | 80,983 | 80,991 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted stock | 26,599 | 8,070 | (1,514 | ) | (1,514 | ) | Vesting of restricted stock | 26,599 | 8,070 | (1,514) | (1,514) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | 1,534,782 | (302,441 | ) | (302,441 | ) | Repurchases of common stock | 1,534,782 | (302,441) | (302,441) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 31,517 | 31,517 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | Stock-based compensation | 31,517 | 31,517 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | (92,710 | ) | (92,710 | ) | Dividends declared | (92,710) | (92,710) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement of treasury shares | (13,292,689 | ) | (133 | ) | (186,717 | ) | (13,292,689 | ) | 1,697,205 | (1,510,355 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement of Treasury Shares | Retirement of Treasury Shares | (13,292,689) | $ | (133) | (186,717) | (13,292,689) | 1,697,205 | (1,510,355) | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of August 31, 2018 | 39,264,849 | $ | 393 | $ | 667,531 | 1,072,263 | $ | (213,428 | ) | $ | 122,843 | $ | (51,439 | ) | $ | 525,900 | Balance as of August 31, 2018 | 39,264,849 | $ | 393 | $ | 667,531 | 1,072,263 | $ | (213,428) | $ | 122,843 | $ | (51,439) | $ | 525,900 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 352,790 | 352,790 | Net income | 352,790 | 352,790 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | (23,821 | ) | (23,821 | ) | Other comprehensive loss | (23,821) | (23,821) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for employee stock plans | 753,942 | 7 | 107,043 | 107,050 | Common stock issued for employee stock plans | 753,942 | 7 | 107,043 | 107,050 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted stock | 85,401 | 1 | (1 | ) | 31,644 | (7,241 | ) | (7,241 | ) | Vesting of restricted stock | 85,401 | 1 | (1) | 31,644 | (7,241) | (7,241) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | 882,445 | (213,130 | ) | (213,130 | ) | Repurchases of common stock | 882,445 | (213,130) | (213,130) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 32,400 | 32,400 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | Stock-based compensation | 32,400 | 32,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | (103,710 | ) | (103,710 | ) | Dividends declared | (103,710) | (103,710) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of adoption of accounting standards* | 1,302 | 716 | 2,018 | Cumulative effect of adoption of accounting standards* | 1,302 | 716 | 2,018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of August 31, 2019 | 40,104,192 | $ | 401 | $ | 806,973 | 1,986,352 | $ | (433,799 | ) | $ | 373,225 | $ | (74,544 | ) | $ | 672,256 | Balance as of August 31, 2019 | 40,104,192 | $ | 401 | $ | 806,973 | 1,986,352 | $ | (433,799) | $ | 373,225 | $ | (74,544) | $ | 672,256 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | Net income | 372,938 | 372,938 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | Other comprehensive income | 35,251 | 35,251 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for employee stock plans | Common stock issued for employee stock plans | 630,520 | 7 | 95,515 | 75 | (21) | 95,501 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | Vesting of restricted stock | 32,996 | 11,945 | (3,511) | (3,511) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | Repurchases of common stock | 739,084 | (199,625) | (199,625) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | Stock-based compensation | 36,579 | 36,579 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | Dividends declared | (113,014) | (113,014) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of August 31, 2020 | Balance as of August 31, 2020 | 40,767,708 | $ | 408 | $ | 939,067 | 2,737,456 | $ | (636,956) | $ | 633,149 | $ | (39,293) | $ | 896,375 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
*Includes the cumulative effect of adoption of accounting standards primarily due to both the adoption of the new revenue recognition standard (ASC 606) resulting in a cumulative increase to retained earnings related to certain fulfillment costs and the accounting standard update related to the TCJAU.S. Tax Cuts and Jobs Act ("TCJA") providing for the reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects. SeeRefer to Note 3, Basis of Presentation and Note 4, Revenue Recognition in the Notes 3 and 4to the Company's Consolidated Financial Statements included in Item 8. of this Annual Report on Form 10-K for additional information.The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements.56Notes to the Consolidated Financial Statements
Accounts Receivable and Deferred Fees 2020. Comprehensive Income 2019. Goodwill at the reporting unit level is reviewed for impairment annually, and more frequently if impairment indicators exist. Goodwill is deemed to be impaired and written-down in the period in which the carrying value of the reporting unit exceeds its fair value. FactSet has 3 reporting units, Derivative Instruments be exercised. In February 2016, the FASB issued an accounting standard update related to accounting for restated and follow the Company's previous policy under ASC 840, Company’s Consolidated Financial Statements. The following table presents this disaggregation of revenue by geography: August 31, (in thousands) 2019 2018 2017 U.S. Europe Asia Pacific Total Revenue Fair Value Measurements at August 31, 2019 Level 1 Level 2 Level 3 Total Assets Corporate money market funds(1) Mutual Funds(2) Certificates of deposit(3) Derivative instruments(4) Total assets measured at fair value Liabilities Derivative instruments(4) Total liabilities measured at fair value Fair Value Measurements at August 31, 2018 Level 1 Level 2 Level 3 Total Assets Corporate money market funds(1) Mutual Funds(2) Certificates of deposit(3) Derivative instruments(4) Total assets measured at fair value Liabilities Derivative instruments(4) Total liabilities measured at fair value 2019. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented. Currency Hedged Gross Notional Value Fair Value (Liability) Asset August 31, 2019 August 31, 2018 August 31, 2019 August 31, 2018 Philippine Peso ) Indian Rupee ) ) Euro ) ) British Pound Sterling ) ) Total ) ) As of August 31, Designation of Derivatives (in thousands) Balance Sheet Location August 31, 2019 August 31, 2018 Derivatives designated as hedging instruments Assets: Foreign Currency Forward Contracts Prepaid expenses and other current assets Other assets Liabilities: Foreign Currency Forward Contracts Accounts payable and accrued expenses Deferred rent and other non-current liabilities (in thousands) (Loss) Gain Recognized in AOCL on Derivatives (Effective Portion) Location of (Loss) Gain Reclassified from AOCL (Loss) Gain Reclassified from AOCL into Income (Effective Portion) Derivatives in Cash Flow Hedging Relationships 2019 2018 2017 into Income (Effective Portion) 2019 2018 2017 Foreign currency forward contracts ) ) SG&A ) ) 2018: 7. August 31, 2019 August 31, 2018 August 31, 2017 (in thousands) Pre-tax Net of tax Pre-tax Net of tax Pre-tax Net of tax Foreign currency translation adjustments ) ) ) ) Net unrealized gain (loss) on cash flow hedges recognized in AOCL ) ) Other comprehensive (loss) income ) ) ) ) (in thousands) August 31, 2019 August 31, 2018 Accumulated unrealized losses on cash flow hedges, net of tax ) ) Accumulated foreign currency translation adjustments ) ) Total accumulated other comprehensive loss ) ) (in thousands) Year Ended August 31, 2019 U.S. Europe Asia Pacific Total Revenue from clients Segment operating profit Total assets Depreciation and amortization Stock-based compensation Capital expenditures Year Ended August 31, 2018 U.S. Europe Asia Pacific Total Revenue from clients Segment operating profit Total assets Depreciation and amortization Stock-based compensation Capital expenditures Year Ended August 31, 2017 U.S. Europe Asia Pacific Total Revenue from clients Segment operating profit Total assets Depreciation and amortization Stock-based compensation Capital expenditures Years ended August 31, 2019 2018 2017 Revenue(1) United States United Kingdom All other European countries Asia Pacific Total revenue At August 31, 2019 2018 Long-lived Assets(1) United States United Kingdom All other European countries Asia Pacific Total long-lived assets Changes in the carrying amount of goodwill by segment for fiscal years ended August 31, (in thousands) U.S. Europe Asia Pacific Total Balance at August 31, 2017 Acquisitions and other adjustments ) ) ) Foreign currency translations ) ) ) Balance at August 31, 2018 Foreign currency translations ) ) Balance at August 31, 2019 The gross carrying amounts and accumulated amortization totals related to the Company’s identifiable intangible assets are as follows: At August 31, 2019 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Data content Client relationships Software technology Non-compete agreements Trade names Total At August 31, 2018 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Data content Client relationships Software technology Non-compete agreements Trade names Total Fiscal Year (in thousands) Estimated Amortization Expense 2020 2021 2022 2023 2024 Thereafter Total August 31, 2019 2018 Leasehold improvements Computers and related equipment Furniture and fixtures Subtotal Less accumulated depreciation and amortization ) ) Property, equipment and leasehold improvements, net Years ended August 31, 2019 2018 2017 Balance, beginning of year (September 1) Common stock issued for employee stock plans Repurchase of common stock from employees(1) ) ) ) Repurchase of common stock under the share repurchase program ) ) ) Repurchase of common stock under accelerated share repurchase agreement ) Balance, end of year (August 31) (in thousands, except per share data) Net Income (Numerator) Weighted Average Common Shares (Denominator) Per Share Amount For the year ended August 31, 2019 Basic EPS Income available to common stockholders Diluted EPS Dilutive effect of stock options and restricted stock Income available to common stockholders plus assumed conversions For the year ended August 31, 2018 Basic EPS Income available to common stockholders Diluted EPS Dilutive effect of stock options and restricted stock Income available to common stockholders plus assumed conversions For the year ended August 31, 2017 Basic EPS Income available to common stockholders Diluted EPS Dilutive effect of stock options and restricted stock Income available to common stockholders plus assumed conversions 14. STOCKHOLDERS’ EQUITY 2019. The Company’s Board of Directors declared the following dividends on our common stock during the periods presented: Year Ended Dividends per Share of Common Stock Record Date Total amount (in thousands) Payment Date Fiscal 2019 First Quarter November 30, 2018 December 18, 2018 Second Quarter February 28, 2019 March 19, 2019 Third Quarter May 31, 2019 June 18, 2019 Fourth Quarter August 30, 2019 September 19, 2019 Fiscal 2018 First Quarter November 30, 2017 December 19, 2017 Second Quarter February 28, 2018 March 20, 2018 Third Quarter May 31, 2018 June 19, 2018 Fourth Quarter August 31, 2018 September 18, 2018 EARNINGS PER SHARE Number Outstanding Weighted Average Exercise Price Per Share Balance at August 31, 2016 Granted – non performance-based Granted – performance-based Granted – non-employee Directors grant Exercised ) Forfeited ) Balance at August 31, 2017 Granted – non performance-based Granted – performance-based Granted – non-employee Directors grant Exercised ) Forfeited ) Balance at August 31, 2018 Granted – non performance-based Granted – non-employee Directors grant Exercised ) Forfeited ) Balance at August 31, 2019 Outstanding Exercisable Range of Exercise Prices Per Share Number Outstanding Weighted Average Remaining Years of Contractual Life Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Number Exercisable Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Total Fiscal 2019 August 31, 2018 August 31, 2017 Number of Shares Weighted Average Exercise Price Per Share Number of Shares Weighted Average Exercise Price Per Share Outstanding at fiscal year end Exercisable at fiscal year end (in thousands, except per award data) Number Outstanding Weighted Average Grant Date Fair Value Per Award Balance at August 31, 2016 Granted (restricted stock and stock units) Vested(1) ) Canceled/forfeited ) Balance at August 31, 2017 Granted (restricted stock and stock units) Vested(2) ) Canceled/forfeited ) Balance at August 31, 2018 Granted (restricted stock and stock units) Vested(3) ) Canceled/forfeited ) Balance at August 31, 2019 (in thousands) Share-based Awards Available for Grant under the Employee Stock Option Plan Share-based Awards Available for Grant under the Non-Employee Stock Option Plan Balance at August 31, 2016 Granted – non performance-based options ) Granted – performance-based options ) Granted – non-employee Directors grant ) Restricted stock awards granted(1) ) Share-based awards canceled/forfeited(2) Balance at August 31, 2017 Increase in the number of shares available for issuance Granted – non performance-based options ) Granted – performance-based options ) Granted – non-employee Directors grant ) Restricted stock awards granted(1) ) Share-based awards canceled/forfeited(2) Balance at August 31, 2018 Granted – non performance-based options ) ) Restricted stock awards granted(1) ) Share-based awards canceled/forfeited(2) Balance at August 31, 2019 Employee Stock Option Fair Value Determinations The weighted average estimated fair value of employee stock options granted during fiscal 2020, 2019 2019 2018 2017 Term structure of risk-free interest rate Expected life (years) Term structure of volatility Dividend yield Weighted average estimated fair value Weighted average exercise price Fair value as a percentage of exercise price Awards assumptions used in the Black-Scholes option-pricing model: may be purchased by eligible employees under the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (the "ESPP") in three-month intervals. The purchase price is equal to 85% of the lesser of the fair market value of the Company’s common stock on the first day or the last day of each three-month offering period. Employee purchases may not exceed 10% of their gross compensation and there is a $25,000 contribution limit per employee during an offering period. Dividends paid on shares held in the ESPP are used to purchase additional ESPP shares at the market price on the dividend payment date. 2019 2018 2017 Risk-free interest rate % % % Expected life (months) Expected volatility % % % Dividend yield % % % Years ended August 31, 2019 2018 2017 U.S. operations Non-U.S. operations Income before income taxes U.S. operations Non-U.S. operations Total provision for income taxes Effective tax rate % % % Years ended August 31, 2019 2018 2017 Current U.S. federal U.S. state and local Non-U.S. Total current taxes Deferred U.S. federal U.S. state and local ) ) ) Non-U.S. ) ) Total deferred taxes ) ) Total provision for income taxes Years ended August 31, (expressed as a percentage of income before income taxes) 2019 2018 2017 Tax at U.S. Federal statutory tax rate % % % Increase (decrease) in taxes resulting from: State and local taxes, net of U.S. federal income tax benefit Foreign income at other than U.S. rates ) ) ) Foreign derived intangible income deduction ) Domestic production activities deduction ) ) Income tax benefits from R&D tax credits ) ) ) Income tax benefits from foreign tax credits ) Share-based payments(1) ) ) One-time transition tax from TCJA ) Other, net Effective tax rate % % % At August 31, 2019 2018 Deferred tax assets: Receivable reserve Depreciation on property, equipment and leasehold improvements Deferred rent Stock-based compensation Purchased intangible assets, including acquired technology ) ) Other Total deferred tax assets At August 31, 2019 2018 Deferred tax liabilities: Stock-based compensation ) ) Purchased intangible assets, including acquired technology Other ) Total deferred tax liabilities (in thousands) Unrecognized income tax benefits at August 31, 2016 Additions based on tax positions related to the current year Additions for tax positions of prior years Statute of limitations lapse ) Unrecognized income tax benefits at August 31, 2017 Additions based on tax positions related to the current year Additions for tax positions of prior years Statute of limitations lapse ) Reductions from settlements with Taxing Authorities ) Unrecognized income tax benefits at August 31, 2018 Additions based on tax positions related to the current year Additions for tax positions of prior years Statute of limitations lapse ) Reductions from settlements with Taxing Authorities Unrecognized income tax benefits at August 31, 2019 Property, equipment and leasehold improvements, net and Lease right-of-use assets, net and excludes goodwill, intangible assets, deferred taxes and other assets. At August 31, 2019 2018 2017 Revolving Credit Facility 2019 Revolving Credit Facility (maturity date of March 29, 2024) (in thousands) Minimum Lease Payments 2020 2021 2022 2023 2024 Thereafter Total equivalents. Concentrations of Credit Risk Fiscal 2018 (in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter Revenue Cost of services Selling, general and administrative Operating income Net income Diluted EPS(1) Diluted weighted average common shares this report. reference to our Notice of Annual Meeting of Stockholders and Proxy Statement to be filed within 120 days of August 31, 2020 (the "Proxy Statement"). Equity Compensation Plan Information (In thousands, except per share data) Plan category (a) Number of securities to be issued upon exercise of outstanding options and restricted stock vesting (b) Weighted-average exercise price of outstanding options (c) Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total Receivable Reserve and Billing Adjustments Balance at Beginning of Year Charged to Expense/ Against Revenue(1) Write-offs, Net of Recoveries Balance at End of Year 2019 ) 2018 ) 2017 ) Incorporated by Reference Exhibit Number Exhibit Description Form File No. Exhibit No. Filing Date Filed Herewith 3.1 S-1/A 333-04238 3.1 6/26/1996 3.2 10-K 333-22319 3.12 11/20/2001 3.3 Second Amendment to the Restated Certificate of Incorporation 8-K 001-11869 3.1 12/16/2011 3.4 Amended and Restated By-laws of FactSet Research Systems Inc. as amended September 1, 2018 8-K 001-11869 3.1 9/6/2018 4.0 S-1/A 333-04238 4.1 6/26/1996 10.1 FactSet Research Systems Inc. 2004 Employee Stock Option and Award Plan(1) DEF-14A 001-11869 Exhibit A 11/10/2004 10.2 FactSet Research Systems Inc. 2004 Stock Option and Award Plan, as Amended and Restated(1) DEFR-14A 001-11869 Appendix A 12/6/2010 10.3 FactSet Research Systems Inc. Stock Option and Award Plan as Amended and Restated(1) 8-K 001-11869 10.1 12/21/2017 10.4 FactSet Research Systems Inc. 2008 Non-Employee Directors’ Stock Option Plan(1) DEF-14A 001-11869 Appendix A 10/30/2008 10.5 8-K 001-11869 10.2 12/21/2017 10.6 Lease, dated February 14, 2018, between FactSet Research Systems Inc. and 45 Glover Partners, LLC(2) 10-Q 001-11869 10.1 4/9/2018 10.7 8-K 001-11869 10.1 3/29/2019 10.8 Separation Agreement and General Release of Claims with John W. Wiseman as of April 22, 2019(1) 10-Q 001-11869 10.1 7/10/2019 21 X 23 X 31.1 X 31.2 X 32.1 X 32.2 X 101.INS Inline XBRL Instance Document X 101.SCH Inline XBRL Taxonomy Extension Schema X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase X X (Registrant) Date: October /s/ F. PHILIP SNOW F. Philip Snow Chief Executive Officer Name Chief Executive Officer and Director October F. Philip Snow (Principal Executive Officer) /s/ HELEN L. SHAN Executive Vice President and Chief Financial Officer October Helen L. Shan (Principal Financial Officer) /s/ GREGORY T. MOSKOFF Senior Vice President, Controller October Gregory T. Moskoff (Principal Accounting Officer) /s/ ROBIN A. ABRAMS October Robin A. Abrams /s/ SCOTT A. BILLEADEAU Director October Scott A. Billeadeau /s/ SIEW KAI CHOY Director October Malcolm Frank /s/ SHEILA B. JORDAN Director October Sheila B. Jordan /s/ JAMES J. MCGONIGLE Director October James J. McGonigle /s/ LEE SHAVEL Director October Laurie Siegel /s/ JOSEPH R. ZIMMEL Director October Joseph R. ZimmelPage 1. ORGANIZATION AND NATURE DESCRIPTION OF BUSINESSFactSet Research Systems Inc. (the “Company”and its wholly-owned subsidiaries (collectively, the "Company" or “FactSet”"FactSet") is a global provider of integrated financial information, analytical applications and industry-leading services for the investment and corporate communities. For over 40 years, global financial professionals have utilized the Company’s content and multi-asset class solutions across each stage of the investment process. FactSet’s goal is to provide a seamless user experience spanning idea generation, research, portfolio construction and analysis, trade execution, performance measurement, risk management, reporting, and portfolio analysis,reporting, in which we servethe Company serves the front, middle, and back offices to drive productivity and improved performance. FactSet’s flexible, open data and technology solutions can be implemented both across the investment portfolio lifecycle or as standalone components serving different workflows in thean organization. FactSet is focused on growing the business throughout each of itsthrough 3 segments,segments: the Americas (formerly known as U.S.), Europe,EMEA (Europe and Africa, formerly known as Europe), and Asia Pacific. TheWithin each of the segments, the Company primarily delivers insight and information through the four workflow solutions of Research, Analytics and Trading, Content and Technology Solutions ("CTS"), and Wealth.FactSet currently serves a wide range of financial professionals, which include but are not limited to portfolio managers, investment research professionals, investment bankers, risk and performance analysts, wealth advisors, and corporate clients. FactSet provides both insights on global market trends and intelligence on companies and industries, as well as capabilities to monitor portfolio risk and performance and to execute trades. The Company combines dedicated client service with open and flexible technology offerings, such as a configurable desktop and mobile platform, comprehensive data feeds, and open marketplace a configurable mobile and desktop platform, digital portals and application programming interface (“APIs”("APIs"). FactSetThe Company's revenue is primarily derived from subscriptions to products and services such as workstations, portfolio analytics, enterprise data, and research management, and trade execution.management.572. BASIS OF PRESENTATIONFactSet conducts business globally and is managed on a geographic basis. The accompanying consolidated financial statementsConsolidated Financial Statements and notes of FactSet and its wholly-owned subsidiaries Notes to the Company's Consolidated Financial Statements are preparedprepared in accordance with generally accepted accounting principles in the United States (“GAAP”("GAAP"). All intercompany balances, transactions, and profits have been eliminated. The preparation of consolidated financial statementsConsolidated Financial Statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates have been made in areas that include allocation of purchase price to acquired assets and liabilities, stock-based compensation, income taxes, accrued compensation, valuation of goodwill, and useful lives and valuation of fixed and intangible assets.assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.ReclassificationThe Company has evaluated subsequent events through the date that the financial statements were issued.ReclassificationCertainreclassified certain prior year comparative figures from Interest expense, net, to Other expense, net including non-operational foreign exchange gains and losses in the Company's Consolidated Statement of Cash Flows have been reclassifiedIncome to conform to the current year's presentation.The Company reclassified certain capitalized software from Property, equipment and leasehold improvements, net to Intangible assets, net, except for capitalized develop costs associated with hosted solutions, which were reclassified to Other assets, in the prior year comparative figures in the Consolidated Balance Sheets to conform to the current year's presentation.COVID-19A novel strain of coronavirus, now known as COVID-19 ("COVID-19"), was first reported in December 2019, and it has since extensively impacted the global health and economic environment, with the World Health Organization characterizing COVID-19 as a pandemic on March 11, 2020. FactSet is closely monitoring pandemic-related developments and has taken, and continues to take, numerous steps to address them. FactSet has required nearly all its employees to work remotely on a temporary basis and has implemented global travel restrictions for employees. The Company believes the transition to remote working has been successful and has not significantly affected financial results for the fiscal year ended August 31, 2020. Since the situation surrounding the COVID-19 pandemic remains fluid, FactSet is actively managing its response and has assessed potential impacts to its financial position and operating results for fiscal 2020 as of August 31, 2020. The extent of the effect on the Company’s future operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, and governmental, regulatory and private sector responses, all of which are uncertain and difficult to predict.3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe significant accounting policies of the Company and its subsidiaries are summarized below.Revenue RecognitionThe majority of the Company’s revenue is derived from client access to its hosted proprietary data and analytics platform, which can include various combinations of products and services available over the contractual term. The hosted platform is a subscription-based service that consists primarily of providing access to products and services including workstations, analytics, enterprise data, research management, and trade execution. The Company determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. Based on the nature of the services and products offered by FactSet, the Company applies an input time-based measure of progress as the client is simultaneously receiving and consuming the benefits of the platform. The Company records revenue for its contracts using the over-time revenue recognition model as a client is invoiced or performance is satisfied. A provision for billing adjustments and cancellation of services is estimated and accounted for as a reduction to revenue, with a corresponding reduction to accounts receivable.Amounts that have been earned but not yet paid are reflected on the Consolidated Balance Sheets as Accounts receivable, net of reserves. Amounts invoiced in advance of client payments that are in excess of earned subscription revenue are reflected on the58Consolidated Balance Sheets as Deferred fees. As of August 31, 2020, the amount of accounts receivable that was unbilled totaled $17.1 million, and will be billed in fiscal 2021. As of August 31, 2019, the amount of accounts receivable that was unbilled totaled $15.8 million, which will be billed in fiscal 2020. As of August 31,2018, the amount of accounts receivable that was unbilled totaled $6.4 million, whichand was billed in fiscal 2019.The Company calculates its receivable reserve through analyzing aged client receivables, reviewing the recent history of client receivable write-offs and understanding general market and economic conditions. In accordance with this policy, a receivable reserve of $10.5$8.0 million and $3.5$10.5 million was recorded as of August 31,2019 2020 and 2018,2019, respectively, within the Consolidated Balance Sheets as a reduction to Accounts receivable.Cost of ServicesCost of services is comprised of compensation for Company employees within the content collection, consulting, product development, software and systems engineering groups in addition to data costs, computer maintenance and depreciation expenses, amortization of identifiable intangible assets, and client-related communication costs.Selling, General and AdministrativeSelling, general and administrative expenses include compensation for the sales and various other support and administrative departments in addition to travel and entertainment expenses, marketing costs, rent, amortization of leasehold improvements, depreciation of furniture and fixtures, amortization of lease right-of-use ("ROU") assets and leasehold improvements, as well as office expenses, professional fees and other miscellaneous expenses.Research and Product Development CostsFactSet does not have a separate research and product development department, but rather the Product Development and Engineering departments work closely with our strategists, product managers, sales and other client-facing specialists to identify areas of improvement with the goal of providing increased value to clients. As such, research and product development costs relate to the salary and benefits for the Company’s product development, software engineering and technical support staff and as such, these costs are expensed whenas incurred and primarily included within costCost of services as employee compensation. The Company expects to allocate a similar percentage of its workforce in future years in order to continue to develop new products and enhancements, respond quickly to market changes and meet the needs of its clients efficiently. FactSet incurred research and product development costs of $224.0 million, $214.7 million $217.1 million and $215.0$217.1 million during fiscal years 2020, 20192018 and 2017,2018, respectively.Earnings per ShareBasic earnings per share (“EPS”("EPS") is computed by dividing net income by the number of weighted average common shares outstanding during the period. Diluted EPS is computed by dividing net income by the number of weighted average common shares outstanding during the period increased by the dilutive effect of potential common shares outstanding during the period. The number of potential common shares outstanding has been determined in accordance with the treasury stock method to the extent they are dilutive. For the purpose of calculating EPS, common shares outstanding include common shares issuable upon the exercise of outstanding share-based compensation awards, including employee stock options and grants of restricted stock.stock and restricted stock units. Performance-based awards are omitted from the calculation of diluted EPS until it is determined that the performance criteria has been met at the end of the reporting period. Under the treasury stock method, the exercise price paid by the option holder and future stock-based compensation expense that the Company has not yet recognized are assumed to be used to repurchase shares. (Loss)The Company discloses comprehensive income (loss) in accordance with applicable standards for the reporting and display of comprehensive income (loss) in a set of financial statements. Comprehensive income (loss) is defined as the change in net assets of a business enterprise during a period from transactions generated from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.Fair Value MeasurementsFair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the “exit price”"exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income and cost approaches is permissible. The Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. The accounting guidance for fair value measurements establishes a fair value hierarchy that59requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s cash equivalents are classified as Level 1 while the Company’s derivative instruments (foreign exchange forward contracts) and certificates of deposit are classified as Level 2. There were no Level 3 assets or liabilities held by FactSet as of August 31,2019 2020 or 2018.2019. Refer to Note 5,Fair Value Measures for the definition of the fair value hierarchy.Cash and Cash EquivalentsCash and cash equivalents consist of demand deposits and money market funds with original maturities of three months or less and are reported at fair value. The Company’s corporate money market funds are readily convertible into cash and the net asset value of each fund on the last day of the quarter is used to determine its fair value.InvestmentsInvestments consist of both mutual funds and certificates of deposit as both are part of the Company’s investment strategy. These mutual funds and certificates of deposit are included as Investments (short-term) on the Company’s Consolidated Balance Sheets as the mutual funds can be liquidated at the Company’s discretion and the certificates of deposit have original maturities greater than three months, but less than one year and the mutual funds can be liquidated at that Company’s discretion. months. The mutual funds and certificates of deposit are held for investment and are not considered debt securities. Preservation of principal is the primary goal of our cash and investment policy. Pursuant to our established investment guidelines, we try to achieve high levels of credit quality, liquidity and diversification. Our investment guidelines do not permit us to invest in puts, calls, strips, short sales, straddles, options, commodities, precious metals, futures or investments on margin. Interest income earned from these investments during fiscal 2020, 20192018 and 20172018 was $1.1 million, $1.5 million $1.3 million and $1.6$1.3 million, respectively. The Company’s cash, cash equivalents and investments portfolio did not experience any realized or unrealized losses as a result of counterparty credit risk or ratings change during fiscal 20192020 and 2018.Property, Equipment and Leasehold ImprovementsProperty, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Computers and related equipment are depreciated on a straight-line basis over an estimated useful lives oflife ranging from three to five years. Furniture and fixtures are depreciated on a straight-line basis over their estimated useful lives of seven years. Leasehold improvements are amortized on a straight-line basis over the terms of the related leases or estimated useful lives of the improvements, whichever period is shorter. Repairs and maintenance expenditures, which are not considered leasehold improvements and do not extend the useful life of the property and equipment, are expensed as incurred.The Company performs a test for impairment whenever events or changes in circumstances indicate that the carrying amount of an individual asset or asset group may not be recoverable. Should projected undiscounted future cash flows be less than the carrying amount of the asset or asset group, an impairment charge reducing the carrying amount to fair value is required. Fair value is determined based on the most appropriate valuation technique, including discounted cash flows.GoodwillGoodwillU.S, EuropeAmericas, EMEA and Asia Pacific, which are consistent with the operating segments reported, as discrete financial information is not available for subsidiaries within the operating segments.FactSet may elect to perform a qualitative analysis for the reporting units to determine whether it is more likely than not the fair value of the reporting unit is greater than its carrying value. In performing a qualitative assessment, FactSet considers such factors as macro-economic conditions, industry and market conditions in which FactSet operates including the competitive environment and significant changes in demand for the Company’s services. The Company also considers its share price both in absolute terms and in relation to peer companies. If the qualitative analysis indicates that it is more likely than not the fair value of a reporting unit is less than its carrying amount or if FactSet elects not to perform a qualitative analysis, a quantitative analysis is performed to determine whether a goodwill impairment exists.The quantitative goodwill impairment analysis is used to identify potential impairment by comparing fair value of a reporting unit with its carrying amount using an income approach, along with other relevant market information, derived from a discounted cash flow model to estimate fair value of FactSet’s reporting units. The annual review of carrying value of goodwill requires the Company develop estimates of future business performance. These estimates are used to derive expected cash60flows and include assumptions regarding future sales levels and the level of working capital needed to support a given business. The discounted cash flow model also includes a determination of FactSet’s weighted average cost of capital by reporting unit. Cost of capital is based on assumptions about interest rates, as well as a risk-adjusted rate of return required by FactSet’s equity investors. Changes in these estimates can impact present value of expected cash flows used in determining fair value of a reporting unit. An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any, would be recognized. The loss recognized would not exceed total amount of goodwill allocated to that reporting unit.The Company performed its annual goodwill impairment test during the fourth quarter of fiscal 20192020 utilizing a qualitative analysis and concluded it was more likely than not the fair value of each reporting unit was greater than its respective carrying value and 0 impairment charge was required.Intangible AssetsAcquired Intangible AssetsFactSet’s identifiable intangible assets consist of acquired content databases, client relationships, software technology, non-compete agreements and trade names resulting from previous acquisitions, which have been fully integrated into the Company’s operations. The Company amortizes intangible assets over their estimated useful lives, which are evaluated quarterly to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of the remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. Amortizable Intangible assets are tested for impairment, if indicators of impairment are present, based on undiscounted cash flows, and, if impaired, written down to fair value based on discounted cash flows. NaN impairment of intangible assets has been identified during any of the fiscal years presented. The intangible assets have no assigned residual values.Internally Developed SoftwareFactSet capitalizes internal and external costs related to developing, modifying or obtaining software for internal use, incurred during the application development stage in accordance with ASC 350-40, Internal-Use Software. Costs related to software upgrades and enhancements are capitalized if it is determined that these upgrades or enhancements provide additional functionality to the software. The capitalized software is amortized using the straight-line method over the estimated useful life of the software, generally three to five years. These assets are subject to the impairment test guidance specified in the acquired intangible assets above.Accrued LiabilitiesAccrued liabilities include estimates relating to employee compensation, operating expenses and tax liabilities. At the end of each fiscal year, FactSet conducts a final review of both Company and individual performance within each department to determine the amount of discretionary employee compensation. The Company also reviews compensation throughout the year to determine how overall performance tracks against management’s expectations. Management takes these and other factors, including historical performance, into account in reviewing accrued compensation estimates quarterly and adjusting accrual rates as appropriate. The amountmajority of the variable employee compensation recorded within accrued compensation related to the annual performance bonus, which was $54.4 million and $49.4 million as of August 31,2019 2020 and 2018, was $49.4 million and $43.6 million,2019, respectively.Foreign Currency Forward ContractsFactSet conducts business outside the U.S. in several currencies including the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso British Pound Sterling, and Japanese Yen.. As such, the Company is exposed to movements in foreign currency exchange rates comparedrelative to the U.S. dollar. The Company utilizes derivative instruments (foreign currency forward contracts) to manage the exposures related to the effects of foreign exchange rate fluctuations and reduce the volatility of earnings and cash flows associated with changes in foreign currency. The Company does not enter into foreign exchange forward contracts for trading or speculative purposes. In designing a specific hedging approach, FactSet considers several factors, including offsetting exposures, significance of exposures, forecasting risk and potential effectiveness of the hedge. These transactions are designated and accounted for as cash flow hedges in accordance with applicable accounting guidance. The changes in fair value for these foreign currency forward contracts are initially reported as a component of accumulated other comprehensive loss (“AOCL”) and subsequently reclassified into operating expenses when the hedged exposure affects earnings. The gains and losses on foreign currency forward contracts mitigate the variability in operating expenses associated with currency movements.61Interest Rate Swap AgreementOn March 29, 2019, FactSet entered into a credit agreement with PNC Bank, National Association ("PNC") (the "2019 Credit Agreement"), which provides for a $750.0 million revolving credit facility (the "2019 Revolving Credit Facility"). The outstanding principal balance of $575.0 million bears interest at a rate equal to LIBOR plus a spread, using a debt leverage pricing grid. The variable rate of interest on the Company's long-term debt can expose FactSet to interest rate volatility due to changes in LIBOR. To mitigate this exposure, on March 5, 2020, FactSet entered into an interest rate swap agreement with a notional amount of $287.5 million to hedge the variable interest rate obligation, effectively converting the floating interest rate to fixed for the hedged portion. Thus, FactSet is only exposed to base interest rate risk on floating rate borrowings in excess of any amounts that are not hedged, or $287.5 million of the outstanding principal balance.Derivative Instrument ClassificationThe changes in fair value for these cash flow hedges are initially reported as a component of accumulated other comprehensive loss ("AOCL") and subsequently reclassified into operating expenses when the hedged exposure affects earnings. All derivatives are assessed for effectiveness at each reporting period.Foreign Currency TranslationCertain wholly-owned subsidiaries operate under a functional currency different from the U.S. dollar, such as the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso British Pound Sterling, and Japanese Yen.. The financial statements of these foreign subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates for the period for revenues and expenses. Translation gains and losses that arise from translating assets, liabilities, revenue and expenses of foreign operations are recorded in AOCL as a component of stockholders’ equity. The accumulated foreign currency translation loss totaled $37.7 million and $72.3 million at August 31, 2020 and $48.0 million at August 31,2019, and 2018, respectively.Income and Deferred TaxesIncome tax expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes are recorded for the temporary differences between the financial statement and tax bases of assets and liabilities using current enacted tax rates. FactSet recognizes the financial effect of an income tax position only if it is more likely than not (greater than 50%) that the tax position will prevail upon tax examination, based solely on the technical merits of the tax position as of the reporting date. Otherwise, no benefit or expense can be recognized in the consolidated financial statements.Consolidated Financial Statements. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Additionally, FactSet accrues interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. Interest is classified as income tax expense in the financial statements. As of August 31,2019, 2020, the Company had gross unrecognized tax benefits totaling $10.9$12.3 million, including $1.1$0.9 million of accrued interest, recorded as Taxes payable (non-current) on the Consolidated Balance Sheets.Stock-Based CompensationAccounting guidance requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including stock options, restricted stock, performance share units, and common shares acquired under employee stock purchases based on estimated fair values of the share awards that are scheduled to vest during the period. FactSet uses the straight-line attribution method for all awards with graded vesting features and service conditions only. Under this method, the amount of compensation expense that is recognized on any date is at least equal to the vested portion of the award on that date. For all stock-based awards with performance conditions, the graded vesting attribution method is used by the Company to determine the monthly stock-based compensation expense over the applicable vesting periods.As stock-based compensation expense recognized is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based primarily on historical experience. For fiscal 2019 and 2018, windfallexperience. Windfall tax benefits, defined as tax deductions that exceed recorded stock-based compensation, are classified as cash inflows from operationsoperations.Performance-based options and in fiscal 2017 are classified as cash inflows from financing activities.Performance-based stock optionsperformance share units require management to make assumptions regarding the likelihood of achieving Company performance targets on a quarterly basis. The number of performance-based options and performance share units that vest will be predicated on the Company achieving certain performance levels. A change in the financial performance levels the Company achieves could result in changes to FactSet’s current estimate of the vesting percentage and related stock-based compensation.62Treasury StockThe Company accounts for repurchased common stock under the cost method and includes such treasury stock as a component of its stockholders’Stockholders’ equity. The Company accounts for the formal retirement of treasury stock by deducting its par value from common stock, reducing additional paid-in capital (“APIC”("APIC") by the average amount recorded in APIC when the stock was originally issued and any remaining excess of cost deducted from retained earnings.Operating LeasesFactSet adopted the standard, ASC 842-10, Leases ("ASC 842") as of September 1, 2019, using a modified retrospective approach. The adoption of the lease standard primarily related to the Company’s real estate operating leases. FactSet reviews new arrangements at inception to evaluate whether the Company conductsobtains substantially all the economic benefits of its operationsand has the right to control the use of an asset. If FactSet determines that an arrangement qualifies as a lease, with a lease term of greater than one year, the Company records a lease ROU asset and lease liability at the lease commencement date. As there is no rate implicit in leased facilities which havethe Company’s operating lease arrangements, these balances are initially recorded as the present value of the future minimum lease obligations under non-cancelable operating leases. Certain of these leases contain rent escalationspayments, (including fixed lease payments and certain qualifying index-based variable payments) over the lease term, using FactSet’s incremental borrowing rate ("IBR") within the geography where the leased asset is located. As FactSet does not have any outstanding public debt, the Company estimates the IBR based on specified percentages. Most ofFactSet’s estimated credit rating and available market information. The IBR is determined at lease commencement and subsequently reassessed upon a modification to the leases contain renewal options and require paymentslease arrangement. Certain adjustments to our lease ROU assets may be required for taxes, insurance and maintenance. Rent expense is chargeditems such as initial direct costs paid or incentives received.FactSet elected the practical expedient not to operations as incurred except for escalating rents,separate lease components from non-lease components but, rather, to combine them into one single lease component, which are charged to operationswe recognize over the expected term on a straight-line expense basis in occupancy costs (a component of SG&A expense).As of August 31, 2020, the Company’s leases have remaining terms of less than one year to just over the life of the lease. Lease incentives, relating15 years. The lease ROU assets and lease liabilities recognized did not include any renewal or termination options that were not yet reasonably certain to allowances provided by landlords, are amortized over the term of the lease as a reduction of rent expense. Costs associated with acquiring a subtenant, including broker commissions and tenant allowances, are amortized over the sublease term as a reduction of sublease income.Business CombinationsThe Company accounts for its business combinations using the purchase method of accounting. The acquisition purchase price is allocated to the underlying identified tangible and intangible assets and liabilities assumed, based on their respective estimated fair values on the acquisition date. The excess of the purchase consideration over the fair values of the identified assets and liabilities is recorded as goodwill and assigned to one or more reporting units. The amounts and useful lives assigned to acquisition-related tangible and intangible assets impact the amount and timing of future amortization expense. Determining the fair value of assets acquired and liabilities assumed and the expected useful life requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. Acquisition-related expenses and restructuring costs are recognized separately from the business combination and are expensed as incurred.Concentrations of RiskCash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk. The Company seeks to mitigate its credit risks by spreading such risks across multiple counterparties and monitoring the risk profiles of these counterparties.New Accounting Standards or Updates Recently AdoptedAs of the beginning of fiscal 2019,2020, FactSet implemented all applicable new accounting standards and updates issued by the Financial Accounting Standards Board (“FASB”("FASB") that were in effect. There were no new standards or updates adopted during the last three fiscal years that had a material impact on the consolidated financial statements.Revenue RecognitionIn May 2014 and July 2015, Company's Consolidated Financial Statements, other than the FASB issuednew lease accounting standard updates which clarified principles for recognizing revenue arising from contracts with clients and superseded most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. The new guidance also requires increased disclosures including the nature, amount, timing, and uncertainty of revenue and cash flows related to contracts with clients.The standard allows two methods of adoption: i) retrospectively to each prior period presented ("full retrospective method"), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption ("modified retrospective method"). FactSet adopted the new standard using the modified retrospective method as of the beginning of its first quarter of fiscal 2019.FactSet’s implementation efforts include the evaluation of contract revenue under the new guidance. Additionally, an assessment of the qualitative and quantitative impacts of pricing changes during the contractual term and fulfillment costs was made.The Company derives most of its revenue by providing client access to its hosted proprietary data and analytics platform, which can include various combinations of products and services available over the contractual term. The Company determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. FactSet recorded an opening cumulative increase to retained earnings of $2.5 million, or $2.0 million net of tax, during the first quarter of fiscal 2019, related to certain fulfillment costs, which include up-front costs to allow for the delivery of services and products that are expected to be recovered. Under the new standard, such up-front costs are recognized as an asset and amortized consistent with the associated revenue for providing the services. The adoption of the new standards did not materially change the Company’s accounting policy for revenue recognition and did not have a material impact on the Company’s consolidated financial statements.discussed below. Refer to Note 4 Revenue Recognition11, further details.Recognition and Measurement of Financial Assets and Financial LiabilitiesDuring the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in January 2016, which amended the recognition, measurement, presentation, and disclosure of certain financial instruments. Under the amended guidance, investments in equity securities, excluding equity method investments, will be measured at fair value with changes in fair value to be recognized in net income. This guidance was applied on a modified retrospective approach through a cumulative effect adjustment to retained earnings as permitted by the standard and did not have a material impact on the Company’s consolidated financial statements.Cash Flow SimplificationDuring the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in August 2016, which simplified how certain transactions are classified in the statement of cash flows. This included revised guidance on the cash flow classification of debt prepayments and debt extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investments. The guidance is intended to reduce diversity in practice across all industries. The adoption of this standard had no impact on the Company’s consolidated financial statements.Income Taxes on Intra-Entity Transfers of AssetsDuring the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in October 2016, which removed the prohibition against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The guidance was issued in order to reduce diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. The adoption of this standard had no impact on the Company’s consolidated financial statements.Share-Based PaymentsDuring the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in May 2017, which amended the scope of modification accounting for share-based payment arrangements. The guidance focused on changes to the terms or conditions of share-based payment awards that would require the application of modification accounting and specifies that an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The adoption of this standard had no impact on the Company’s consolidated financial statements.Reclassification of Certain Tax Effects from Accumulated Other Comprehensive IncomeDuring the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in February 2018, which allowed companies to reclassify certain stranded income tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the "TCJA") from accumulated other comprehensive income to retained earnings. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
additional information.LeasesImplementation Costs in a Cloud Computing ArrangementDuring the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in August 2018, which related to a client’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the requirements for capitalizing implementation costs in a cloud computing service contract with the guidance for capitalizing implementation costs to develop or obtain internal-use software. Capitalized implementation costs will be amortized over the term of the arrangement. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021, however the Company elected to early adopt this standard on a prospective basis during the first quarter of fiscal 2019. There was no impact to the Company’s consolidated financial statements as a result of the adoption of this standard, as FactSet is currently accounting for costs incurred in a cloud computing arrangement in accordance with the guidance provided in this standard.Recent Accounting Standards or Updates Not Yet EffectiveLeasesleases. leases, ASC 842. The guidance introduces a lessee model thatupdate requires most leases to be reportedthe recognition of lease ROU assets and lease liabilities on the balance sheet. The accounting standard update aligns manysheet and the disclosure of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard.qualitative and quantitative information about leasing arrangements. The guidance also eliminates the requirement in current GAAP for an entity to use bright-linebright-63line tests in determining lease classification. FactSet will adoptadopted the new accounting standard effective September 1, 2019, using a modified retrospective approach to record the required cumulative effect adjustments to the opening balance sheet in the period of adoption, rather than in the earliest comparative period presented. As such, the Company's historical consolidated financial statements will Consolidated Financial Statements were not be restated.FactSet will electelected the package of practical expedients permitted under the transition guidance, which permits the Company not to reassess under the new standard the prior conclusions about lease identification, lease classification, and initial direct costs. FactSet will did not elect the use-of-hindsight practical expedient in determining the lease term and in assessing impairment. FactSet will also electelected the practical expedient not tonot separate lease components from non-lease components but, rather, to combine them into one single lease component. The Company has also elected to apply the short-term lease exception not to notrecognizelease ROU assets and lease liabilities and right-of-use assets for leases with a term of 12 months or less. FactSet will recognize these lease payments on a straight-line basis over the lease term.TheAs of November 30, 2019, the Company does not expectrecognized Lease ROU assets, net of amortization of $217.0 million and corresponding Current and Long-term lease liabilities of $266.4 million, related primarily to the adoption of the new lease accounting standard to have aCompany’s real estate leases. There was no material impact on itsto the Company’s Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, and Consolidated Statements of Cash flows. The Company does expect the adoption to have a material impact to itsFlows and Consolidated Balance Sheet due to the recognitionStatement of the required right of use asset and liability, which will primarily relate to the Company's real estate operating leases.Changes in Stockholders' Equity. Refer to Note 19 Commitments and Contingencies11, Leases for more information regarding the Company's undiscounted future lease commitments.Credit Losses on Financial InstrumentsIn June 2016, accounting.Hedge Accounting SimplificationDuring the FASB issued an accounting standard that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. This guidance will be effective for the Company beginning in the first quarter of fiscal 2021. The Company is currently evaluating2020, FactSet adopted the impact of this accounting standard update but it is not expected to have a material impact on the consolidated financial statements.Goodwill Impairment TestIn January 2017, updated issued by the FASB issued an accounting standard update which removes the requirement for companies to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021, with early adoption permitted for any impairment tests performed after January 1, 2017 and is not expected to have a material impact on the consolidated financial statements.Hedge Accounting SimplificationIn August 2017, the FASB issued an accounting standard update to reducewhich focused on reducing the complexity of and simplifysimplifying the application of hedge accounting. The guidance refines and expands hedge accounting for both financial and nonfinancial risk components, eliminates the need to separately measure and report hedge ineffectiveness, and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. ThisThe adoption of this standard had no impact on the Company's Consolidated Financial Statements. Recent Accounting Standards or Updates Not Yet EffectiveCredit Losses on Financial InstrumentsIn June 2016, the FASB issued an accounting standard that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. The guidance will be effective for the Company beginning in the first quarter of fiscal 2020.2021. The Company has evaluated the impact of this accounting standard update and has determined that its adoption will not have a material impact on the Company's Consolidated Financial Statements.Goodwill Impairment TestIn January 2017, the FASB issued an accounting standard update which removes the requirement for companies to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company has evaluated the impact of this accounting standard update and has determined that its adoption will not have a material impact on the Company's Consolidated Financial Statements.Income Tax SimplificationIn December 2019, the FASB issued an accounting standard update to simplify various aspects related to accounting for income taxes, eliminating certain exceptions to the general principles in accounting for income taxes related to intraperiod tax allocation, simplifying when companies recognize deferred taxes in an interim period, and clarifying certain aspects of the current guidance to promote consistent application. The guidance will be effective for the Company in the first quarter of fiscal 2022, with early adoption permitted. Most amendments are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the potential impact of adopting the guidance on its Consolidated Financial Statements.64Facilitation of the Effects of Reference Rate Reform on Financial ReportingIn March 2020, the FASB issued an accounting standard to provide optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships, and other transactions affected by the anticipated transition from LIBOR. As a result of the reference rate reform initiative, certain widely used reference rates such as LIBOR are expected to be discontinued. The guidance is designed to simplify how entities account for contracts, such as receivables, debt, leases, derivative instruments and hedging, that are modified to replace LIBOR or other benchmark interest rates with new rates. The guidance is effective upon issuance and may be applied through December 31, 2022. The Company is currently evaluating the impact of this accounting standard, update but it is not expected to have a material impact on the consolidated financial statements.No other new accounting pronouncements issued or effective as of August 31,2019 2020 have had or are expected to have ana material impact on the Company’s consolidated financial statements.Consolidated Financial Statements.4. REVENUE RECOGNITIONThe Company derives most of its revenue by providing client access to its hosted proprietary data and analytics platform which can include various combinations of products and services available over the contractual term. The hosted platform is a subscription-based service that consists primarily of providing access to products and services including workstations, portfolio analytics, enterprise data and research management, and trade execution.management. The Company determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. The Company also determined that the nature of the promise to the client is to provide daily access to one overall data and analytics platform. This platform provides integrated financial information, analytical applications and industry-leading service for the investment community. Based on the nature of the services and products offered by FactSet, the Company applies an input time-based measure of progress as the client is simultaneously receiving and consuming the benefits of the platform. The Company records revenue for its contracts using the over-time revenue recognition model as a client is invoiced or performance in satisfied, which is comparable with how revenue is recognized today.satisfied. FactSet does not consider payment terms as a performance obligation for customersclients with contractual terms that are one year or less and the Company has elected the practical expedient.In FactSet’s assessment of contractsContracts with clients the Company did identify a small portion of contracts withcan include certain fulfillment costs, which includecomprised of up-front costs to allow for the delivery of services and products, thatwhich are expected to be recovered.recoverable. In connection with the adoption of the newrevenue recognition standard, these fulfillment costs are recognized as an asset, and amortized consistent with the associated revenue for providing the services, which prior to adoption were expensed. As a result, during the first quarter of fiscal 2019, FactSet recorded an opening cumulative increase to Retained earnings of $2.5 million, or $2.0 million net of tax, with an offsetting increase related to the current asset portion in Prepaid expenses and other current assets and the non-current asset portion in Other assets based on the term of the license period. Prospectively, fulfillment costs will continue to be recognized in the same accounts used for the adoption impact, which include the Prepaid expenses and other current assets account for the current portion and Other assets for the non-current portion, based on the term of the license period. The differences betweenperiod, and amortized consistent with the Company’s reported operating results as of August 31,2019, which reflectassociated revenue for providing the application of the new standard on the Company’s contracts, and the results that would have been reported as if the accounting was performed pursuant to the accounting standards previously in effect, were not material.services. There are no significant judgments that would impact the timing of revenue recognition. The majority of client contracts have a duration of one year or less, or the amount FactSet is entitled to receive corresponds directly with the value of performance obligations completed to date, and therefore, the Company does not disclose the value of the remaining unsatisfied performance obligations.Disaggregated RevenueThe Company disaggregates revenue from contracts with clients by demographicgeographic region, which include U.S.includes the Americas , EuropeEMEA and Asia Pacific. FactSet believes these geographic regions are reflective of how the Company manages the business and the demographic markets in which it serves. The geographicThese regions best depict the nature, amount, timing and uncertainty of revenue and cash flows related to contracts with clients. Refer to Note 818, Segment Information for further information on revenue by geographic region. $ 894,554 $ 841,908 $ 784,146 $ 408,084 $ 387,589 $ 330,332 $ 132,713 $ 120,648 $ 106,701 $ 1,435,351 $ 1,350,145 $ 1,221,179 August 31, (in thousands) 2020 2019 2018 Americas $ 929,444 $ 894,554 $ 841,908 EMEA $ 422,203 $ 408,084 $ 387,589 Asia Pacific $ 142,464 $ 132,713 $ 120,648 Total Revenue $ 1,494,111 $ 1,435,351 $ 1,350,145 655. FAIR VALUE MEASURESFair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the “exit price”"exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income and cost approaches is permissible. The Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability.Fair Value HierarchyThe accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect theirits placement within the fair value hierarchy levels. FactSet has categorized its cash equivalents, investments and derivatives within the fair value hierarchy as follows:Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. These Level 1 assets and liabilities include FactSet’sthe Company's corporate money market funds that are classified as cash equivalents.Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. The Company’s certificates of deposit, mutual funds and derivative instruments are classified as Level 2.Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. There were 0 no Level 3 assets or liabilities held by FactSetthe Company as of August 31,2019 2020 or 2018.
2019.66(a) Assets and Liabilities Measured at Fair Value on a Recurring BasisThe following tables showsshow, by level within the fair value hierarchy, the Company’s assets and liabilities that are measured at fair value on a recurring basis at August 31,2019 2020 and 2018: (in thousands) $ 75,849 $ — $ — $ 75,849 — 18,583 — 18,583 — 7,090 — 7,090 — 520 — 520 $ 75,849 $ 26,193 $ — $ 102,042 $ — $ 3,575 $ — $ 3,575 $ — $ 3,575 $ — $ 3,575 (in thousands) $ 75 $ — $ — $ 75 — 18,668 — 18,668 — 10,591 — 10,591 — 90 — 90 $ 75 $ 29,349 $ — $ 29,424 $ — $ 4,036 $ — $ 4,036 $ — $ 4,036 $ — $ 4,036 (1)The Company’s corporate money market fundsarereadily convertible into cashand the net asset value of each fund on the last day of the quarter is used to determine its fair value. As such, the Company’s corporate money market funds are classified as Level 1 assets and included in Cash and cash equivalents withinthe Consolidated BalanceSheets.(2)The Company’s mutual funds have a fair value based on the fair value of the underlying investments held by the mutual funds allocated to each share of the mutual fund using a net asset value approach. The fair value of the underlying investments is based on observable inputs. As such, the Company’s mutual funds are classified as Level 2 assets and are classified asInvestments (short-term) on the Consolidated Balance Sheets.(3)The Company’s certificates of deposit held for investment are not debt securitiesand are classified as Level 2 assets. These certificates of deposit have original maturities greater than three months, but less than one year and, as such, are classified as Investments (short-term) withintheConsolidated Balance Sheets.(4)The Company utilizes the income approach to measure fair value for its derivative instruments (foreign exchange forward contracts). The income approach uses pricing models that rely on market observable inputs such asspot, forward and interest rates,as well as credit default swap spreadsand therefore are classified as Level 2 assets.(in thousands) Fair Value Measurements at August 31, 2020 Level 1 Level 2 Level 3 Total Assets Corporate money market funds(1)$ 276,852 $ 0 $ 0 $ 276,852 Mutual Funds(2)0 17,257 0 17,257 Certificates of deposit(3)0 2,315 0 2,315 Derivative instruments(4)0 3,644 0 3,644 Total assets measured at fair value $ 276,852 $ 23,216 $ 0 $ 300,068 Liabilities Derivative instruments(4)$ 0 $ 5,773 $ 0 $ 5,773 Total liabilities measured at fair value $ 0 $ 5,773 $ 0 $ 5,773 (in thousands) Fair Value Measurements at August 31, 2019 Level 1 Level 2 Level 3 Total Assets Corporate money market funds(1)$ 75,849 $ 0 $ 0 $ 75,849 Mutual Funds(2)0 18,583 0 18,583 Certificates of deposit(3)0 7,090 0 7,090 Derivative instruments(4)0 520 0 520 Total assets measured at fair value $ 75,849 $ 26,193 $ 0 $ 102,042 Liabilities Derivative instruments(4)$ 0 $ 3,575 $ 0 $ 3,575 Total liabilities measured at fair value $ 0 $ 3,575 $ 0 $ 3,575 (1)The Company’s corporate money market fundsarereadily convertible into cashand the net asset value of each fund on the last day of the quarter is used to determine its fair value. As such, the Company’s corporate money market funds are classified as Level 1 assets and included in Cash and cash equivalents withinthe Consolidated BalanceSheets.(2)The Company’s mutual funds have a fair value based on the fair value of the underlying investments held by the mutual funds, allocated to each share of the mutual fund using a net asset value approach. The fair value of the underlying investments is based on observable inputs. As such, the Company’s mutual funds are classified as Level 2 and are classified asInvestments (short-term) on the Consolidated Balance Sheets.(3)The Company’s certificates of deposit held for investment are not debt securitiesand are classified as Level 2 assets. These certificates of deposit have original maturities greater than three months but less than one year and, as such, are classified as Investments (short-term) withintheConsolidated Balance Sheets.(4)The Company utilizes the income approach to measure fair value for its foreign exchange forward contracts. The income approach uses pricing models that rely on market observable inputs such asspot, forward and interest rates,as well as credit default swap spreads, and are classified as Level 2 assets. To estimate fair value for the interest rate swap agreement, the Company utilizes a present value of future cash flows, leveraging a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. Refer to Note 6, Derivative Instruments for more information on the Company's derivative instruments designed as cash flow hedges.67(b) Assets and Liabilities Measured at Fair Value on a Non-RecurringBasisCertain assets, including goodwillAssets and intangible assets, and liabilities that are measured at fair value on a non-recurring basis; that is, thenonrecurring basis relate primarily to our tangible fixed assets, operating lease assets, goodwill and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances such as when they are deemed to be other-than-temporarily impaired.intangible assets. The fair values of these non-financial assets and liabilities are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparable information, and discounted cash flow projections. AnThe Company reviews goodwill and intangible assets for impairment charge is recorded whenannually, during the cost exceeds its fairfourth quarter of each fiscal year, or as circumstances indicate the possibility for impairment. The Company monitors the carrying value based uponof long-lived assets for impairment whenever events or changes in circumstances indicate the results of such valuations.carrying amount may not be recoverable. During fiscal 20192020 and 2018,2019, no fair value adjustments or material fair value measurements were required for the Company’s non-financial assets or liabilities.(c) Assets and Liabilities Measured at Fair Value for Disclosure Purposes OnlyAs of each of August 31,2019, 2020 and 2018,2019, the fair value of the Company’s long-term debt was $575.0 million, which approximated its carrying amount given the application of a floating interest rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid. As the interest rate is a variable rate, adjusted based on market conditions, it approximates the current market-rate for similar instruments available to companies with comparable credit quality and maturity, and therefore, the long-term debt is categorized as Level 2 in the fair value hierarchy.6. DERIVATIVE INSTRUMENTSCash Flow HedgesForeign Currency Forward ContractsFactSet conducts business outside the U.S. in several currencies including thethe British Pound Sterling, Euro, Indian Rupee, and Philippine Peso, British Pound Sterling, and Japanese Yen. Peso. As such, itthe Company is exposed to movements in foreign currency exchange rates compared to the U.S. dollar. The Company utilizes derivative instruments (foreign currency forward contracts) to manage the exposures related to the effects of foreign exchange rate fluctuations and reduce the volatility of earnings and cash flows associated with changes in foreign currency. The Company does not enter into foreign currency forward contracts for trading or speculative purposes. SeeRefer to Note 19, CommitmentsRisks and Contingencies - ConcentrationConcentrations of Credit Risk, for further discussion on counterparty credit risk.In designing a specific hedging approach, FactSet considered several factors, including offsetting exposures, the significance of exposures, the forecasting of risk and the potential effectiveness of the hedge. The gains and losses on foreign currency forward contracts offset the variability in operating expenses associated with currency movements. The changes in fair value for these foreign currency forward contracts are initially reported as a component of accumulated other comprehensive loss ("AOCL'")AOCL and subsequently reclassified into operating expenses when the hedge is settled. There was 0 no discontinuance of cash flow hedges during fiscal 20192020 or 2018,2019, and as such, no corresponding gains or losses related to changes in the value of the Company’s contracts were reclassified into earnings prior to settlement.As of August 31,2019, 2020, FactSet maintained the following foreign currency forward contracts to hedge a portion of its exposures:•Philippine Peso – foreign currency forward contracts to hedge approximately 75% of its Philippine Peso exposure through the fourth quarter of fiscal 2020.•Indian Rupee – foreign currency forward contracts to hedge approximately 50% of its Indian Rupee exposure through the end of the third quarter of fiscal 2020, and 25% of its Indian Rupee exposure through the fourth quarter of fiscal 2020.•Euro – foreign currency forward contracts to hedge approximately 75% of its Euro exposure through the first quarter of fiscal 2020, 50% of its Euro exposure from the second quarter through the third quarter of fiscal 2020, and 25% of its Euro exposure through the fourth quarter of fiscal 2020.•British Pound Sterling – foreign currency forward contracts to hedge approximately 75% of its British Pound sterling exposure through the first quarter of fiscal 2020, 50% of its British Pound Sterling exposure from the second quarter through the third quarter of fiscal 2020, and 25% of its British Pound Sterling exposure through the fourth quarter of fiscal 2020.
British Pound Sterling, Euro, Indian Rupee, and Philippine Peso exposures. FactSet entered into a series of forward contracts to mitigate its currency exposure ranging from 25% to 75% over their respective hedged periods. The current foreign currency forward contracts are set to mature at various points between the first quarter of fiscal 2021 through the fourth quarter of fiscal 2021.The following is a summary of all hedging positions and corresponding fair values: (in thousands, in U.S. dollars) $ 26,000 $ 52,000 $ 520 $ (1,230 20,410 50,780 (998 (1,490 40,854 26,312 (1,230 (503 26,436 18,995 (1,347 (723 $ 113,700 $ 148,087 $ (3,055 $ (3,946 2019, 2020, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos and Indian Rupees with U.S. dollars was ₱1.4₱1.3 billion and Rs.1.4Rs1.4 billion, respectively. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros and British Pound Sterling was €35.7€31.8 million and £20.5£36.4 million, respectively.68Interest Rate Swap AgreementOn March 5, 2020, FactSet entered into an interest rate swap agreement with a notional amount of $287.5 million to hedge the variable interest rate obligation on a portion of its outstanding debt under its 2019 Revolving Credit Facility (as defined in Note 12, Debt). As of August 31, 2020, FactSet has borrowed $575.0 million of the available $750.0 million under the 2019 Revolving Credit Facility, which bears interest on the outstanding principal amount at a rate equal to a contractual one month LIBOR plus a spread using a debt leverage pricing grid, which was 0.875% as of August 31, 2020. The variable interest rate on FactSet’s long-term debt can expose the Company to interest rate volatility arising from changes in LIBOR. Under the terms of the interest rate swap agreement, FactSet will pay interest at a fixed rate of 0.7995% and receive variable interest payments based on the same one-month LIBOR utilized to calculate the interest expense from the 2019 Revolving Credit Facility. The interest rate swap agreement matures on March 29, 2024. Refer to Note 12, Debt, for further discussion on the 2019 Revolving Credit Facility.As the terms for the interest rate swap agreement align with the 2019 Revolving Credit Facility, the Company does not expect any hedge ineffectiveness. The Company has designated and accounted for this instrument as a cash flow hedge with the unrealized gains or losses on the interest rate swap agreement recorded in AOCL in the Consolidated Balance Sheets.The following is a summary of the gross notional values of the derivative instruments:(in thousands, in U.S. dollars)Gross Notional Value August 31, 2020 August 31, 2019 Foreign currency forward contracts $ 129,649 $ 113,700 Interest rate swap agreement 287,500 0 Total cash flow hedges $ 417,149 $ 113,700 Fair Value of Derivative InstrumentsThe following tables provideis a summary of the fair value amountsvalues of derivative instruments and gains and losses onthe derivative instruments: $ 520 $ 90 $ — $ — $ 3,575 $ 1,731 $ — $ 2,305 Fair Value of Derivative Instruments Derivatives designated as hedging instruments Derivative Assets Derivative Liabilities August 31, August 31, 2020 2019 2020 2019 Balance Sheet Classification Fair Value Fair Value Balance Sheet Classification Fair Value Fair Value Foreign currency forward contracts Prepaid expenses and other current assets $ 3,644 $ 520 Accounts payable and accrued expenses $ 93 $ 3,575 Interest rate swap agreement Prepaid expenses and other current assets 0 0 Accounts payable and accrued expenses 1,861 0 Other assets 0 0 Other non-current liabilities 3,819 0 Total cash flow hedges $ 3,644 $ 520 $ 5,773 $ 3,575 All derivatives were designated as hedging instruments as of August 31,2019 2020 and 2018,2019, respectively.69Derivatives in Cash Flow Hedging RelationshipsThe following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the each of the three fiscal years ended August 31, 2020, 20192018 and 2017: $ (187 $ (7,700 $ 5,183 $ (1,794 $ 3,106 $ (2,883 (in thousands) Gain (Loss) Recognized
in AOCL on Derivatives
(Effective Portion)Location of (Loss) Gain Reclassified
from AOCL
into Income
(Effective Portion)(Loss) Gain Reclassified
from AOCL into Income
(Effective Portion)Derivatives in Cash Flow Hedging Relationships 2020 2019 2018 2020 2019 2018 Foreign currency forward contracts $ 5,049 $ (187) $ (7,700) SG&A $ (1,556) $ (1,794) $ 3,106 Interest rate swap agreement $ (6,138) $ 0 $ 0 Interest expense, net $ (458) $ 0 $ 0 Total cash flow hedges $ (1,089) $ (187) $ (7,700) $ (2,014) $ (1,794) $ 3,106 As of August 31, 2020, the Company assessed that these cash flow hedges were effective. Foreign currency forward contract gains and losses are recorded in the Consolidated Statement of Income in Selling, general, and administrative ("SG&A"). The gain or loss from the interest rate swap agreement is recorded in the Consolidated Statement of Income in Interest expense, net.As of August 31, 2020, the Company estimates that net pre-tax derivative gains of $1.7 million included in AOCL will be reclassified into earnings within the next 12 months. No amount of ineffectiveness was recorded in the Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. As of August 31,2019, FactSet estimates that $3.1 million of net derivative losses related to its cash flow hedges included in AOCL will be reclassified into earnings within the next 12 months.Offsetting of Derivative InstrumentsFactSet’s master netting and other similar arrangements with its respective counterparties allow for net settlement under certain conditions. As of August 31,2019 2020 and 2018,2019, there were no material amounts recorded net on the Consolidated Balance Sheets. OTHER COMPREHENSIVE (LOSS) INCOME PROPERTY, EQUIPMENT AND ACCUMULATED OTHER COMPREHENSIVE LOSSThe componentsLEASEHOLD IMPROVEMENTSProperty, equipment and leasehold improvements consist of other comprehensive (loss) income during the following:(in thousands) August 31, 2020 2019 Leasehold improvements $ 182,899 $ 155,520 Computers and related equipment 127,794 129,549 Furniture and fixtures 56,269 48,986 Subtotal $ 366,962 $ 334,055 Less accumulated depreciation and amortization (233,860) (214,671) Property, equipment and leasehold improvements, net $ 133,102 $ 119,384 Depreciation expense was $32.2 million, $35.4 million and $32.6 million for fiscal years ended August 31,2020, 20192018 and 2017 are as follows: $ (24,325 $ (24,325 $ (9,431 $ (9,431 $ 28,816 $ 28,816 891 504 (10,806 (7,288 8,066 5,017 $ (23,434 $ (23,821 $ (20,237 $ (16,719 $ 36,882 $ 33,833 The components2018, respectively.70Table of AOCL are as follows: $ (2,266 $ (3,486 (72,278 (47,953 $ (74,544 $ (51,439 Contents8. SEGMENT INFORMATIONOperating segments are defined as components of an enterprise that have the following characteristics: (i) it engages in business activities from which they may earn revenues and incur expenses, (ii) its operating results are regularly reviewed by the company’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and (iii) its discrete financial information is available. Executive management, along with the CEO, constitute FactSet’s chief operating decision making group (“CODMG”). Executive management consists of certain executives who directly report to the CEO, consisting of the Chief Financial Officer, Chief Technology and Product Officer, Global Head of Sales and Client Solutions, General Counsel, Chief Human Resources Officer and Head of Analytics and Trading. The CODMG reviews financial information at the operating segment level and is responsible for making decisions about resources allocated amongst the operating segments based on actual results.The Company's operating segments are aligned with how the Company, including its CODMG, manages the business and the demographic markets in which it serves. The Company’s internal financial reporting structure is based on 3 segments: the U.S., Europe and Asia Pacific. The Company believes this alignment helps to better manage the business and view the markets it serves, which are centered on providing integrated global financial and economic information. Sales, consulting, data collection, product development and software engineering are the primary functional groups within the U.S., Europe and Asia Pacific segments. These functional groups provide global financial and economic information to investment managers, investment banks and other financial services professionals.The U.S. segment serves investment professionals including financial institutions throughout the Americas. The Europe and Asia Pacific segments serve investment professionals located throughout Europe and Asia Pacific, respectively. Segment revenue reflects direct sales to clients based in their respective geographic locations. Each segment records compensation expense (including stock-based compensation), amortization of intangible assets, depreciation of furniture and fixtures, amortization of leasehold improvements, communication costs, professional fees, rent expense, travel, office and other direct expenses.Expenditures associated with the Company’s data centers, third-party data costs and corporate headquarters charges are recorded by the U.S. segment and are not allocated to the other segments. The content collection centers located in India, the Philippines, and Latvia, benefit all the Company’s operating segments and thus the expenses incurred at these locations are allocated to each segment based on a percentage of revenue.The following reflects the results of operations of the segments, consistent with the Company’s management structure. These results are used, in part, by management, both in evaluating the performance of, and in allocating resources to, each of the segments. $ 894,554 $ 408,084 $ 132,713 $ 1,435,351 179,374 179,258 79,403 438,035 851,014 588,911 120,205 1,560,130 40,018 14,703 5,742 60,463 26,152 5,320 928 32,400 43,647 2,595 13,128 59,370 $ 841,908 $ 387,589 $ 120,648 $ 1,350,145 148,095 148,977 69,132 366,204 724,259 585,497 109,692 1,419,448 37,453 15,710 4,122 57,285 26,014 4,857 645 31,516 20,358 3,140 10,022 33,520 $ 784,146 $ 330,332 $ 106,701 $ 1,221,179 137,104 153,676 61,355 352,135 703,941 609,368 100,006 1,413,315 35,244 9,837 3,213 48,294 30,247 3,320 616 34,183 29,561 2,385 4,916 36,862 GEOGRAPHIC INFORMATION - The following table sets forth information for those countries that are 10% or more of revenue: (in thousands) �� $ 894,554 $ 841,908 $ 784,146 166,944 157,346 163,732 241,140 230,243 166,600 132,713 120,648 106,701 $ 1,435,351 $ 1,350,145 $ 1,221,179 (1)Revenue is attributed to countries based on the location of the client.
8. GOODWILLThe following table sets forth long-lived assets by geographic area: (in thousands) $ 99,783 $ 74,792 5,347 5,806 5,069 5,774 22,325 14,173 $ 132,524 $ 100,545 (1)Long-lived assets consist of property, equipment and leasehold improvements, net of accumulated depreciation and amortization and exclude goodwill, intangible assets, deferred taxes and other assets.9. BUSINESS COMBINATIONSBISAMOn March 17, 2017, FactSet acquired BI-SAM Technologies (“BISAM”) for a total purchase price of $217.6 million. BISAM is a global provider of portfolio performance and attribution, multi-asset risk, GIPS composites management and reporting. BISAM’s product offerings include B-One, BISAM’s cross-asset solution, which will serve as a complement to both FactSet’s portfolio analytics suite and client reporting solutions, and Cognity, which enhances FactSet’s risk analysis for derivatives and quantitative portfolio construction. These factors contributed to a purchase price in excess of fair value of BISAM’s net tangible and intangible assets, leading to the recognition of goodwill. At the time of acquisition, BISAM employed over 160 employees based primarily in its New York, Boston, Paris, London and Sofia offices. Total transaction costs of $3.2 million were recorded within Selling, General and Administrative (“SG&A”) expenses in the Consolidated Statements of Income during fiscal 2017.The total purchase price of $217.6 million was allocated to BISAM’s net tangible and intangible assets based upon their estimated fair value as of the date of acquisition. The allocation included $27.6 million to tangible assets and $56.6 million to amortizable intangible assets consisting of client relationships, amortized over 16 years using an accelerated amortization method; software technology, amortized over five years using a straight-line amortization method; and a trade name, amortized over four years using a straight-line amortization method.Goodwill totaling $173.9 million represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. Goodwill generated from the BISAM acquisition is included in the US and European segments and is not deductible for income tax purposes. The results of operations of BISAM have been included in the Company’s Consolidated Statements of Income since the completion of the acquisition on March 17, 2017. Pro forma information has not been presented because the effect of the BISAM acquisition is not material to the Company’s consolidated financial results.VERMILIONOn November 8, 2016, FactSet acquired Vermilion Holdings Limited (“Vermilion”) for a total purchase price of $67.9 million. Vermilion is a global provider of client reporting and communications solutions and services to the financial services industry. Client reporting is a growing area of the market as regulatory requirements rise and with the acquisition of Vermilion and its Vermilion Reporting Suite (“VRS”), FactSet now offers a workflow around all elements of the client reporting process, which it expects will expand as investors grow increasingly sophisticated. This factor contributed to a purchase price in excess of fair value of Vermilion’s net tangible and intangible assets, leading to the recognition of goodwill. At the time of acquisition, Vermilion employed 59 individuals in its London, Boston and Singapore offices. Total transaction costs related to the acquisition were $0.7 million in fiscal 2017 and recorded within SG&A expenses in the Consolidated Statements of Income during fiscal 2017.The total purchase price of $67.9 million was allocated to Vermilion’s net tangible and intangible assets based upon their estimated fair value as of the date of acquisition. The allocation included $8.0 million to tangible assets and $18.2 million to intangible assets, consisting of client relationships, amortized over 15 years using an accelerated amortization method; software technology, amortized over six years using a straight-line amortization method; non-compete agreements, amortized over three years using a straight-line amortization method; and a trade name, amortized over four years using a straight-line amortization method.Goodwill totaling $51.2 million represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. Goodwill generated from the Vermilion acquisition is included in the European segment and is not deductible for income tax purposes. The results of operations of Vermilion have been included in the Company’s Consolidated Statements of Income since the completion of the acquisition on November 8, 2016. Pro forma information has not been presented because the effect of the Vermilion acquisition is not material to the Company’s consolidated financial results.10. GOODWILL2019 2020 and 20182019 are as follows: $ 386,835 $ 317,759 $ 2,966 $ 707,560 (640 (1,562 — (2,202 — (3,503 (22 (3,525 $ 386,195 $ 312,694 $ 2,944 $ 701,833 — (16,235 131 (16,104 $ 386,195 $ 296,459 $ 3,075 $ 685,729 (in thousands) Americas EMEA Asia Pacific Total Balance at August 31, 2018 $ 386,195 $ 312,694 $ 2,944 $ 701,833 Foreign currency translations 0 (16,235) 131 (16,104) Balance at August 31, 2019 $ 386,195 $ 296,459 $ 3,075 $ 685,729 Foreign currency translations 0 23,968 6 23,974 Balance at August 31, 2020 $ 386,195 $ 320,427 $ 3,081 $ 709,703 Goodwill is not amortized as it is estimated to have an indefinite life. At least annually, the Company is required to test goodwill at the reporting unit level for potential impairment, and, if impaired, write down to fair value based on the present value of discounted cash flows. The Company’s reporting units evaluated for potential impairment were the U.S., EuropeAmericas, EMEA and Asia Pacific, which reflect the level of internal reporting the Company uses to manage its business and operations. The 3 reporting units are consistent with the operating segments reported as there is no discrete financial information available for the subsidiaries within each operating segment. The Company performed its annual goodwill impairment test during the fourth quarter of fiscal 2019,2020, consistent with the timing of previous years, utilizing a qualitative analysis, and concluded it was more likely than not the fair value of each reporting unit was greater than its respective carrying value and 0 impairment charge was required.11.9. INTANGIBLE ASSETSFactSet’s identifiable intangible assets consist of acquired content databases, client relationships, acquired software technology, internally developed software, non-compete agreements and trade names resulting from previous acquisitions, which have been fully integrated into the Company’s operations. The Company amortizes intangible assets over their estimated useful lives. Data content intangible assets have estimated useful lives ranging from five to 20 years. Client relationship intangible assets have estimated useful lives ranging from eight to 18 years. Acquired software technology intangible assets have estimated useful lives ranging from three to nine years. The majority of the developed software technology intangible assets has estimated useful lives ranging from three to five years. Non-compete agreement intangible assets have estimated useful lives ranging from two to four years. Trade name intangible assets have estimated useful lives ranging from four to seven years. The weighted average useful life of the Company’s intangible assets at August 31,2019 2020 was 12.611.9 years. The Company amortizesevaluates the intangible assets over their estimatedasset useful lives which are evaluated quarterlyon an annual basis to determine whether events and circumstances warrant a revision to the remaining period of amortization. There have been no material changes to the estimate of the remaining useful lives during fiscal years 2020, 20192018 and 2017.2018.The Company assesses the intangible assets for indicators of impairment on a quarterly basis. If indicators of impairment are present, amortizable intangible assets are tested for impairment by comparing the carrying value to undiscounted cash flows and, if impaired, written down to fair value based on discounted cash flows. NaN impairment of intangible assets has been identified during any of the periods presented. The intangible assets have no assigned residual values. $ 32,200 $ 21,512 $ 10,688 95,905 35,506 60,399 105,426 56,965 48,461 1,311 1,228 83 3,994 3,074 920 $ 238,836 $ 118,285 $ 120,551 $ 33,992 $ 20,990 $ 13,002 98,882 29,387 69,495 106,505 44,231 62,274 4,840 2,381 2,459 4,070 2,365 1,705 $ 248,289 $ 99,354 $ 148,935 At August 31, 2020 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Data content $ 35,872 $ 24,847 $ 11,025 Client relationships 100,316 43,026 57,290 Acquired software technology 108,384 72,396 35,988 Internally developed software 30,276 13,689 16,587 Non-compete agreements 1,388 1,355 33 Trade names 4,106 3,934 172 Total $ 280,342 $ 159,247 $ 121,095 71At August 31, 2019 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Data content $ 32,200 $ 21,512 $ 10,688 Client relationships 95,905 35,506 60,399 Acquired software technology 105,426 56,965 48,461 Internally developed software 14,262 10,365 3,897 Non-compete agreements 1,311 1,228 83 Trade names 3,994 3,074 920 Total $ 253,098 $ 128,650 $ 124,448 Amortization expense recorded for intangible assets during fiscal years 2020, 20192018 and 20172018 was $25.4 million, $25.1 million $24.7 million and $19.9$24.7 million, respectively. As of August 31,2019, 2020, estimated intangible asset amortization expense for each of the next five years and thereafter are as follows: $ 22,151 20,859 18,088 13,508 8,061 37,884 $ 120,551 Fiscal Year (in thousands)Estimated Amortization Expense 2021 $ 26,939 2022 24,133 2023 18,092 2024 10,389 2025 7,712 Thereafter 33,830 Total $ 121,095 12. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTSProperty, equipment10. INCOME TAXESIncome tax expense is based on taxable income determined in accordance with current enacted laws and leasehold improvementstax rates. Deferred income taxes are recorded for the temporary differences between the financial statement and tax bases of assets and liabilities using currently enacted tax rates.Provision for Income TaxesThe provision for income taxes is as follows:(in thousands) Years ended August 31, 2020 2019 2018 U.S. operations $ 280,283 $ 288,860 $ 199,654 Non-U.S. operations 146,851 133,105 152,184 Income before income taxes $ 427,134 $ 421,965 $ 351,838 U.S. operations $ 31,926 $ 55,824 $ 65,778 Non-U.S. operations 22,270 13,351 18,975 Total provision for income taxes $ 54,196 $ 69,175 $ 84,753 Effective tax rate 12.7 % 16.4 % 24.1 % 72The components of the provision for income taxes consist of the following: (in thousands) $ 155,520 $ 119,479 153,868 181,623 48,986 44,699 $ 358,374 $ 345,801 (225,850 (245,256 $ 132,524 $ 100,545 Depreciation(in thousands) Years ended August 31, 2020 2019 2018 Current U.S. federal $ 9,332 $ 35,688 $ 58,835 U.S. state and local 8,034 18,389 5,159 Non-U.S. 27,640 17,376 22,669 Total current taxes $ 45,006 $ 71,453 $ 86,663 Deferred U.S. federal $ 11,896 $ 1,813 $ 2,079 U.S. state and local 2,665 (217) (295) Non-U.S. (5,371) (3,874) (3,694) Total deferred taxes $ 9,190 $ (2,278) $ (1,910) Total provision for income taxes $ 54,196 $ 69,175 $ 84,753 The Company’s effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as discrete and other nonrecurring events that may not be predictable. The provision for income taxes differs from the amount of income tax determined by applying the U.S. statutory federal income tax rate to income before income taxes as a result of the following recurring factors and nonrecurring events, including the taxation of foreign income: Years ended August 31, (expressed as a percentage of income before income taxes) 2020 2019 2018 Tax at U.S. Federal statutory tax rate 21.0 % 21.0 % 25.7 % Increase (decrease) in taxes resulting from: State and local taxes, net of U.S. federal income tax benefit 3.1 4.0 2.9 Foreign income at other than U.S. rates (1.4) (1.4) (3.2) Foreign derived intangible income ("FDII") deduction (1.8) (1.7) 0 Domestic production activities deduction 0 0 (1.6) Income tax benefits from R&D tax credits (3.8) (3.5) (3.7) Share-based payments (3.7) (3.2) (2.7) One-time transition tax from TCJA 0 (0.4) (1) 6.6 (1) Other, net (0.7) 1.6 0.1 Effective tax rate 12.7 % 16.4 % 24.1 % 1.The enactment of the TCJA resulted in a one-time transition tax expense of $23.2 million during fiscal 2018 and a $3.4 million net benefit revision recorded during fiscal 2019 associated with finalizing the accounting for the tax effects of the TCJA during fiscal 2019.The fiscal 2020 provision for income taxes was $35.4$54.2 million, $32.6compared to $69.2 million in fiscal 2019, a decrease of 21.7%. The decrease was primarily due to a lower effective tax rate in fiscal 2020 compared to the prior year period, driven mainly by higher research and development ("R&D") tax credits and a higher FDII deduction. The decrease was also driven by a reduction from finalizing prior year tax returns, which resulted in a benefit of $3.7 million from finalizing prior year tax returns in fiscal 2020 compared to an increase to the provision of $7.7 million in fiscal 2019. Additionally, the decrease in the provision was attributed to $1.9 million in higher windfall tax benefits from stock-based compensation for fiscal 2020 compared to fiscal 2019, partially offset by a $3.4 million income tax benefit from the revision of the one-time transition tax permitted by the TCJA recognized during fiscal 2019.73Due to the changes in taxation of undistributed foreign earnings under the TCJA, FactSet will continue to analyze foreign subsidiary earnings, as well as global working capital requirements, and may repatriate earnings when the amounts are remitted substantially free of additional tax.Deferred Tax Assets and LiabilitiesThe significant components of deferred tax assets that recorded within the Consolidated Balance Sheets were as follows:(in thousands) At August 31, 2020 2019 Deferred tax assets: Depreciation on property, equipment and leasehold improvements $ 0 $ 2,264 Deferred rent 0 9,479 Lease liabilities 56,280 0 Stock-based compensation 16,341 14,822 Unrealized tax loss on investment 4,172 0 Other 8,840 9,903 Total deferred tax assets $ 85,633 $ 36,468 The significant components of deferred tax liabilities recorded within the Consolidated Balance Sheets were as follows:(in thousands) At August 31, 2020 2019 Deferred tax liabilities: Depreciation on property, equipment and leasehold improvements $ 15,291 $ 0 Purchased intangible assets, including acquired technology 43,088 44,304 Lease right-of-use assets 45,344 0 Other 1,623 984 Total deferred tax liabilities $ 105,346 $ 45,288 Unrecognized Tax PositionsApplicable accounting guidance prescribes a comprehensive model for the financial statement recognition, measurement, classification and disclosure of uncertain tax positions that a company has taken or expects to take on a tax return. FactSet recognizes the financial effect of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained based on its technical merits of the tax position. Otherwise, no benefit or expense can be recognized in the Consolidated Financial Statements. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon effective settlement with a taxing authority. Additionally, FactSet accrues interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws.The determination of liabilities related to unrecognizedtaxbenefits, including associated interest and penalties, requires significant estimates. There can be no assurance that the Company will accurately predict the audit outcomes, however, FactSet has no reason to believe that such audits will result in the payment of additional taxes and/or penalties that would have a material adverse effect on the Company’s results of operations or financial position, beyond current estimates. For this reason and due to ongoing audits by multiple tax authorities, FactSet will regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The Company does not currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next 12 months.FactSet classifies the liability for unrecognized tax benefits as Taxes Payable (non-current) and to the extent that the Company anticipates payment of cash within one year, the benefit will be classified as Taxes Payable (current). Additionally, the Company accrues interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. This interest is classified as income tax expense in the financial statements. As of August 31, 2020, FactSet had gross unrecognized tax benefits totaling $12.3 million, including $0.9 million of accrued interest, recorded as Taxes Payable (non-current) within the Consolidated Balance Sheets.74The following table summarizes the changes in the balance of gross unrecognized tax benefits:(in thousands) Unrecognized income tax benefits at August 31, 2017 $ 11,484 Additions based on tax positions related to the current year 2,954 Additions for tax positions of prior years 531 Statute of limitations lapse (3,146) Reductions from settlements with Taxing Authorities (2,600) Unrecognized income tax benefits at August 31, 2018 $ 9,223 Additions based on tax positions related to the current year 3,133 Additions for tax positions of prior years 507 Statute of limitations lapse (1,979) Unrecognized income tax benefits at August 31, 2019 $ 10,884 Additions based on tax positions related to the current year 3,533 Release for tax positions of prior years (2,086) Unrecognized income tax benefits at August 31, 2020 $ 12,331 In the normal course of business, the Company’s tax filings are subject to audit by federal, state and foreign tax authorities. At August 31, 2020, the Company remained subject to examination in the following major tax jurisdictions for the tax years as indicated below:Major Tax Jurisdictions Open Tax Years U.S. Federal 2017 through 2019 State (various) 2017 through 2019 Europe United Kingdom 2018 through 2019 France 2018 through 2019 Germany 2017 through 2019 11. LEASESIn February 2016, the FASB issued an accounting standard update related to accounting for leases. The update requires the recognition of lease ROU assets and lease liabilities on the balance sheet and the disclosure of qualitative and quantitative information about leasing arrangements. FactSet adopted the standard, ASC 842, as of September 1, 2019, using a modified retrospective approach to record the required cumulative effect adjustments to the opening balance sheet in the period of adoption.FactSet reviews new arrangements at inception to evaluate whether the Company obtains substantially all the economic benefits of and has the right to control the use of an asset. If FactSet determines that an arrangement qualifies as a lease, a lease liability and a corresponding lease ROU asset are recognized on the lease commencement date which includes fixed lease payments and certain qualifying index-based variable payments.75In determining the amount of lease payments used in measuring each lease ROU asset and lease liability, FactSet elected the package of practical expedients permitted under the transition guidance, which permits the Company not to reassess under the new standard the prior conclusions about lease identification, lease classification, and initial direct costs. FactSet did not elect the use-of-hindsight practical expedient in determining the lease term and in assessing impairment. FactSet elected the practical expedient not to separate lease components from non-lease components but, rather, to combine them into one single lease component, which we recognize over the expected lease term on a straight-line expense basis in occupancy costs (a component of SG&A expense). The Company has also elected to apply the short-term lease exception to not recognize lease ROU assets and lease liabilities for leases with a term of 12 months or less. FactSet will recognize these lease payments on a straight-line basis over the lease term in occupancy costs.The adoption of the lease standard primarily related to the Company’s real estate operating leases. As a result of the adoption of the standard, the Company recognized lease liabilities (initially measured at the present value of the future minimum lease payments over the remaining lease term at the commencement date) of $266.4 million as of November 30, 2019, included in Current and Long-term lease liabilities on the Consolidated Balance Sheet. The Company also recognized lease ROU assets, net of amortization (initially measured as the lease liabilities, adjusted for deferred rent and lease incentives) of $217.0 million as of November 30, 2019, included in Lease right-of-use assets, net on the Consolidated Balance Sheet. As of August 31, 2020, the Lease right-of-use assets, net balance was $248.9 million and $28.0the Current and Long-term lease liabilities balance was $301.3 million, classified in the same Consolidated Balance Sheet accounts used upon adoption.Lease liabilities are measured as the present value of the future minimum lease payments over the lease term using FactSet’s incremental borrowing rate ("IBR") within the geography where the leased asset is located, as there is no rate implicit in the Company’s operating lease arrangements. As FactSet does not have any outstanding public debt, the Company estimates the IBR based on FactSet’s estimated credit rating and available market information. The IBR is determined at lease commencement, or as of September 1, 2019 for operating leases in existence upon adoption of ASC 842. The IBR is subsequently reassessed upon a modification to the lease arrangement.As of August 31, 2020, the Company’s leases have remaining terms of less than one year to just over 15 years. The lease ROU assets and lease liabilities recognized did not include any renewal or termination options that were not yet reasonably certain to be exercised.For fiscal 2019 and 2018, the Company followed ASC 840-10, Leases, which required the recognition of rent expense on a straight-line basis over the lease term. Rent expense for office space, as well as operating expenses associated with the leased premises, primarily related to utilities, real estate taxes, insurance and maintenance for fiscal 2019 and 2018 was $56.7 million and $54.6 million, respectively. For fiscal 2020, the Company followed ASC 842, and recognized fixed lease payments and qualifying index-based variable payments on a straight-line basis over the lease term, resulting in a net operating lease expense of $43.0 million for fiscal years 2019,2018 and 2017, respectively.13. COMMON STOCK AND EARNINGS PER SHAREOn May 17,2019, FactSet's Board of Directors approved a 12.5% increase2020. FactSet recognized $17.9 million in occupancy costs that were not included in the regular quarterly dividend from $0.64measurement of the lease liabilities during fiscal 2020, primarily related to $0.72 per share.Sharesvariable non-lease costs and leases that qualified for the short-term lease exception. These variable non-lease costs included costs that were not fixed at the lease commencement date nor dependent on an index or a rate, which primarily related to utilities, real estate taxes, insurance and maintenance.76The following table reconciles FactSet’s future undiscounted cash flows related to the Company’s operating leases and the reconciliation to the Current and Long-term lease liabilities as of August 31, 2020:(in thousands)Minimum Lease
PaymentsFiscal Years Ended August 31 2021 $ 40,848 2022 39,958 2023 36,426 2024 34,530 2025 33,742 Thereafter 186,658 Total 372,162 Imputed Interest 70,837 Present Value $ 301,325 FactSet previously entered into a real estate lease in the Philippines, which was planned to commence in phases, providing FactSet with access to the underlying leased rental space during fiscal 2020 and the first quarter of fiscal 2021. The rental space that FactSet has not taken possession of as of August 31, 2020 is not included in the table above nor included in the Lease ROU assets, net and Current and Long-term lease liabilities on the Consolidated Balance Sheets as of August 31, 2020. The overall lease term is approximately 10 years and the undiscounted future rent payments for the lease that has not commenced as of August 31, 2020 is approximately $19 million.The following table summarizes the Company's lease term and discount rate assumptions related to the operating leases recorded on the Consolidated Balance Sheets as of August 31, 2020:As of August 31, 2020 Weighted average remaining lease term (in years)10.1 Weighted average discount rate (IBR)4.2% The following table summarizes supplemental cash flow information related to the Company's operating leases:(in thousands)As of August 31, 2020 Cash paid for amounts included in the measurement of lease liabilities $39.7 Lease ROU assets obtained in exchange for lease liabilities $43.7 12. DEBTFactSet’s debt obligations consisted of the following:(in thousands) At August 31, 2020 2019 2019 Revolving Credit Facility $ 575,000 $ 575,000 Loan origination fees $ (646) (826) Long-term debt $ 574,354 $ 574,174 2019 Credit AgreementOn March 29, 2019, the Company entered into a credit agreement between FactSet, as the borrower, and PNC Bank, National Association ("PNC") (the "2019 Credit Agreement"), as the administrative agent and lender. The 2019 Credit Agreement provides for a $750.0 million revolving credit facility (the "2019 Revolving Credit Facility"). FactSet may request borrowings77under the 2019 Revolving Credit Facility until its maturity date of March 29, 2024. The 2019 Credit Agreement also allows FactSet, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount up to $500.0 million, provided that any such request for additional borrowings must be in a minimum amount of $25.0 million.FactSet borrowed $575.0 million of the available $750.0 million provided by the 2019 Revolving Credit Facility, resulting in $175.0 million available to be withdrawn. FactSet is required to pay a commitment fee using a pricing grid currently at 0.10% based on the daily amount by which the available balance in the 2019 Revolving Credit Facility exceeds the borrowed amount. All outstanding wereloan amounts are reported as follows: (in thousands) 38,193 39,023 40,038 839 712 693 (32 (8 (50 (882 (1,534 (1,555 — — (103 38,118 38,193 39,023 (1)For fiscal 2019,2018 and 2017, the Company repurchased 31,644, 8,070 and 49,771 shares, or $7.2 million, $1.5 million and $7.8 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock.A reconciliationLong-term debt within the consolidated balance sheets at August 31, 2020. The principal balance is payable in full on the maturity date.The fair value of our long-term debt was $575.0 million as of August 31, 2020, which the Company believe approximates carrying amount as the terms and interest rates approximate market rates given its floating interest rate basis. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR plus a spread using a debt leverage pricing grid, currently at 0.875%. During fiscal 2020, FactSet recorded interest expense on its outstanding debt, including the amortization of debt issuance costs, net of the effects of the interest rate swap agreement of $12.9 million. During fiscal 2019 and 2018, FactSet recorded interest expense on its outstanding debt, including the amortization of debt issuance costs, of $19.8 million and $15.9 million, respectively. Including the effects of the interest rate swap agreement, the weighted average sharesinterest rate on amounts outstanding usedunder the Company's credit facilities was 2.20%. The weighted average interest rate for fiscal 2019 was 3.35%. Interest on the loan outstanding is payable quarterly, in arrears, and on the basicmaturity date.During fiscal 2019, FactSet incurred approximately $0.9 million in debt issuance costs related to the 2019 Credit Agreement. These costs were capitalized as loan origination fees and diluted earnings per share (“EPS”) computations isare amortized into interest expense ratably over the term of the 2019 Credit Agreement.The 2019 Credit Agreement contains covenants and requirements restricting certain FactSet activities, which are usual and customary for this type of loan. In addition, the 2019 Credit Agreement requires that FactSet maintain a consolidated net leverage ratio, as follows: $ 352,790 38,144 $ 9.25 729 $ 352,790 38,873 $ 9.08 $ 267,085 38,733 $ 6.90 644 $ 267,085 39,377 $ 6.78 $ 258,259 39,444 $ 6.55 198 $ 258,259 39,642 $ 6.51 Dilutive potential common shares consistmeasured by total net funded debt/EBITDA below a specified level as of stock optionsthe end of each fiscal quarter. The Company was in compliance with all the covenants and unvested restricted stock awards. There were 11,481 stock options excludedrequirements within the 2019 Credit Agreement as of August 31, 2020.The borrowings from the fiscal 2019 calculation Credit Agreement were used to retire all outstanding debt under the previous 2017 Credit Agreement between FactSet, as the borrower, and PNC as the lender on March 29, 2019. The total principal amount of diluted EPS, because their inclusion would have been anti-dilutive. There were 0 stock options excluded from the fiscal 2018 calculationdebt outstanding at the time of diluted EPSretirement was $575.0 million and there were 704,786 stock options excludedno prepayment penalties.2017 Credit AgreementOn March 17, 2017, the Company entered into a Credit Agreement (the "2017 Credit Agreement") between FactSet, as the borrower, and PNC, as the administrative agent and lender. The 2017 Credit Agreement provided for a $575.0 million revolving credit facility. Borrowings under the loan were subject to interest on the outstanding principal amount at a rate equal to the daily LIBOR plus 1.00%. Interest on the loan outstanding was payable quarterly in arrears and on the maturity date. The principal balance was also payable in full on the maturity date. There were no prepayment penalties when the Company elected to prepay the outstanding loan amounts on March 29, 2019.13. COMMITMENTS AND CONTINGENCIESCommitments represent obligations, such as those for future purchases of goods or services that are not yet recorded on the balance sheet as liabilities. FactSet records liabilities for commitments when incurred (i.e., when the goods or services are received).Purchase Commitments with SuppliersPurchase obligations represent payments due in future periods in respect of commitments to the Company’s various data vendors as well as commitments to purchase goods and services such as telecommunication and computer maintenance services. These purchase commitments are agreements that are enforceable and legally binding on FactSet, and they specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. As of August 31, 2020 and 2019, the Company had total purchase commitments with suppliers of $226.0 million and $69.9 million, respectively. Refer to Note 11, Leases and Note 12, Debt for information regarding lease commitments and outstanding debt obligations, respectively.78Letters of CreditApproximately $2.9 million of standby letters of credit have been issued during the ordinary course of business in connection with the Company’s current leased office space as of August 31, 2020. These standby letters of credit contain covenants that, among other things, require FactSet to maintain minimum levels of consolidated net worth and certain leverage and fixed charge ratios. As of August 31, 2020 and 2019, FactSet was in compliance with all covenants contained in the standby letters of credit.ContingenciesIncome TaxesUncertain income tax positions are accounted for in accordance with applicable accounting guidance, refer to Note 10, Income Taxes for further details. FactSet is currently under audit by tax authorities and has reserved for potential adjustments to its provision for income taxes that may result from examinations by, or any negotiated settlements with, these tax authorities. The Company believes that the final outcome of these examinations or settlements will not have a material effect on its results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of tax benefits in the period FactSet determines the liabilities are no longer necessary. If the Company’s estimates of the federal, state, and foreign income tax liabilities are less than the ultimate assessment, a further charge to expense would result.Legal MattersFactSet accrues non income-tax liabilities for contingencies when management believes that a loss is probable, and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. The Company is engaged in various legal proceedings, claims and litigation that have arisen in the ordinary course of business, including employment matters, commercial and intellectual property litigation. The outcome of all the matters against the Company is subject to future resolution, including the uncertainties of litigation. Based on information available at August 31, 2020, FactSet’s management believes that the ultimate outcome of these unresolved matters against the Company, individually or in the aggregate, will not have a material adverse effect on the Company's consolidated financial position, its results of operations or its cash flows.Sales Tax MattersIn August 2019, FactSet received a Notice of Intent to Assess (the "Notice") additional sales taxes, interest and underpayment penalties from the fiscal 2017 calculationsCommonwealth of diluted EPS, because their inclusion would have been anti-dilutive.There were 0 performance-based stock options excludedMassachusetts Department of Revenue (the "Commonwealth") relating to prior tax periods. The Notice follows FactSet’s previously disclosed response to a letter from the calculationCommonwealth requesting additional sales information. Based upon the Notice, it is the Commonwealth's intention to assess sales/use tax, interest and penalties on previously recorded sales transactions. The Company filed an appeal to the Notice and intends to contest any such assessment, if assessed, and continues to cooperate with the Commonwealth’s inquiry. Due to uncertainty surrounding the assessment process, the Company is unable to reasonably estimate the ultimate outcome of diluted EPSthis matter and, as such, has not recorded a liability as of August 31, 2020. While FactSet believes that it will ultimately prevail if the Company is presented with a formal assessment; if FactSet does not prevail, the amount could have a material impact on the Company’s consolidated financial position, cash flows and results of operations.IndemnificationsAs permitted or required under Delaware law and to the maximum extent allowable under that law, FactSet has certain obligations to indemnify its current and former officers and directors for fiscal 2019. Ascertain events or occurrences while the officer or director is, or was serving, at FactSet’s request in such capacity. These indemnification obligations are valid as long as the director or officer acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of August 31,2018the Company, and 2017,with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The maximum potential amount of future payments FactSet could be required to make under these indemnification obligations is unlimited; however, FactSet has a director and officer insurance policy that it believes mitigates FactSet's exposure and may enable FactSet to recover a portion of any future amounts paid. The Company believes the numberestimated fair value of performance-based stock options excluded from the calculationthese indemnification obligations is immaterial.79Preferred StockAt August 31,2019 2020 and 2018,2019, there were 10,000,000 shares of preferred stock ($0.01 par value per share) authorized, of which 0 shares were issued and outstanding. FactSet’s Board of Directors may from time to time authorize the issuance of one or more series of preferred stock and, in connection with the creation of such series, determine the characteristics of each such series including, without limitation, the preference and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of the series.Common StockAt August 31,2019 2020 and 2018,2019, there were 150,000,000 shares of common stock ($($0.01 par value per share) authorized, of which 40,104,19240,767,708 and 39,264,84940,104,192 shares were issued, respectively. The authorized shares of common stock are issuable for any proper corporate purpose, including future stock splits, stock dividends, acquisitions, raising equity capital or to adopt additional employee benefit plans.Shares of common stock outstanding were as follows:(in thousands) Years ended August 31, 2020 2019 2018 Balance, beginning of year at September 1, 2019, 2018 and 2017, respectively 38,118 38,193 39,023 Common stock issued for employee stock plans 663 839 712 Repurchase of common stock from employees(1)(12) (32) (8) Repurchase of common stock under the share repurchase program (739) (882) (1,534) Balance, end of year at August 31, 2020, 2019, and 2018 respectively 38,030 38,118 38,193 (1)For fiscal years 2020, 2019 and 2018, the Company repurchased 11,945, 31,644 and 8,070 shares, or $3.5 million, $7.2 million and $1.5 million, of common stock, respectively, in settlement of employee tax withholding obligations to cover their cost of taxes due upon the vesting and exercise of stock-based awards.Treasury StockOn January 31, 2018, FactSet retired 13,292,689 shares of treasury stock. These retired shares are now included in the Company’s pool of authorized but unissued shares. The retired treasury stock was initially recorded using the cost method and had a carrying value of $1.7 billion at January 31, 2018. The Company’s accounting policy upon the formal retirement of treasury stock is to deduct its par value from common stock ($0.1 million),0.1) million, reduce additional paid-in capital (“APIC”("APIC") by the average amount recorded in APIC when stock was originally issued ($186.7 million)186.7) million and any remaining excess of cost as a reduction to retained earnings ($1.5 billion). As of 1.5) billion.At August 31,2019, 2020, and August 31,2018,2019, there were 1,986,3522,737,456 and 1,072,2631,986,352 shares of treasury stock (at cost) outstanding, respectively.Share Repurchase ProgramRepurchases will beof shares of common stock are made from time to time in the open market and privately negotiated transactions, subject to market conditions. During fiscal 2019,2020, the Company repurchased 882,4450.7 million shares for $199.6 million compared to 0.9 million shares for $213.1 million compared to 1,534,398 shares for $302.4 million in fiscal 2018.On JuneMarch 24, 2019, 2020, the Board of Directors of FactSet approved a $210.0$220.0 million expansion ofincrease to the existing share repurchase program. Subsequent to this expansion, $238.6a total of $259.0 million remainsremained authorized for future share repurchases as of August 31,2019. 2020. There is no defined number of shares to be repurchased over a specified timeframe through the life of the share repurchase program. It is expected that share repurchases will be paid using existing and future cash generated by operations.Restricted StockRestrictedAwards of restricted stock awards entitle the holder to shares of common stock as the awards vest over time. During fiscal 2019,2020, 32,996 shares of previously granted restricted stock awards of 85,401 shares vested and were included in common stock outstanding as of August 31, 2020 (recorded net of 11,945 shares repurchased from employees at a cost of $3.5 million to cover their cost of taxes upon vesting of the restricted stock). During fiscal 2019, 85,401 shares of previously granted restricted stock vested and were included in80common stock outstanding as of August 31, 2019 (recorded net of 31,644 shares repurchased from employees at a cost of $7.2 million to cover their cost of taxes upon vesting of the restricted stock). During fiscal 2018, 26,599 shares of previously granted restricted stock awards vested and were included in common stock outstanding as of August 31,2018 (recorded net of 8,070 shares repurchased from employees at a cost of $1.5 million to cover their cost of taxes upon vesting of the restricted stock).DividendsDividends $ 0.64 $ 24,372 $ 0.64 $ 24,385 $ 0.72 $ 27,506 $ 0.72 $ 27,445 $ 0.56 $ 21,902 $ 0.56 $ 21,799 $ 0.64 $ 24,566 $ 0.64 $ 24,443 All the aboveYear Ended Dividends per
Share of
Common StockRecord Date Total amount(in thousands)Payment Date Fiscal 2020 First Quarter $ 0.72 November 29, 2019 $ 27,291 December 19, 2019 Second Quarter $ 0.72 February 28, 2020 $ 27,251 March 19, 2020 Third Quarter $ 0.77 May 29, 2020 $ 29,189 June 18, 2020 Fourth Quarter $ 0.77 August 31, 2020 $ 29,283 September 17, 2020 Fiscal 2019 First Quarter $ 0.64 November 30, 2018 $ 24,372 December 18, 2018 Second Quarter $ 0.64 February 28, 2019 $ 24,385 March 19, 2019 Third Quarter $ 0.72 May 31, 2019 $ 27,506 June 18, 2019 Fourth Quarter $ 0.72 August 31, 2019 $ 27,445 September 19, 2019 Future cash dividends were paid from existing cash resources. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Company and isare subject to final determination by the Company’s Board of Directors.On May 5, 2020, FactSet's Board of Directors approved a 7% increase in the regular quarterly dividend from $0.72 to $0.77 per share.Accumulated Other Comprehensive LossThe components of AOCL are as follows:(in thousands) August 31, 2020 August 31, 2019 Accumulated unrealized losses on cash flow hedges, net of tax $ (1,591) $ (2,266) Accumulated foreign currency translation adjustments (37,702) (72,278) Total AOCL $ (39,293) $ (74,544) 8115. EMPLOYEE STOCK OPTION AND RETIREMENT PLANSA reconciliation of the weighted average shares outstanding used in the basic and diluted earnings per share ("EPS") computations is as follows:(in thousands, except per share data) Net Income
(Numerator)Weighted Average Common Shares
(Denominator)Per Share Amount For the year ended August 31, 2020 Basic EPS Income available to common stockholders $ 372,938 37,936 $ 9.83 Diluted EPS Dilutive effect of stock options and restricted stock 710 Income available to common stockholders plus assumed conversions $ 372,938 38,646 $ 9.65 For the year ended August 31, 2019 Basic EPS Income available to common stockholders $ 352,790 38,144 $ 9.25 Diluted EPS Dilutive effect of stock options and restricted stock 729 Income available to common stockholders plus assumed conversions $ 352,790 38,873 $ 9.08 For the year ended August 31, 2018 Basic EPS Income available to common stockholders $ 267,085 38,733 $ 6.90 Diluted EPS Dilutive effect of stock options and restricted stock 644 Income available to common stockholders plus assumed conversions $ 267,085 39,377 $ 6.78 Dilutive potential common shares consist of stock options and unvested performance-based awards. There were 1,750 stock options excluded from the calculation of diluted EPS as of August 31, 2020, because their inclusion would have been anti-dilutive. There were 11,481 stock options excluded from the calculation of diluted EPS as of August 31, 2019.Performance-based awards are omitted from the calculation of diluted EPS until it is determined that the performance criteria has been met at the end of the reporting period. As of August 31, 2020, there were 35,666 performance-based awards excluded from the calculation of diluted EPS. There were 0 performance-based awards excluded from the calculation of diluted EPS as of August 31, 2019.16. STOCK-BASED COMPENSATIONThe Company recognized total stock-based compensation expense of $36.6 million, $32.4 million and $31.5 million in fiscal 2020, 2019 and 2018, respectively. As of August 31, 2020, $81.9 million of total unrecognized compensation expense related to82non-vested awards is expected to be recognized over a weighted average period of 2.9 years. There was 0 stock-based compensation capitalized as of August 31, 2020 and 2019, respectively.Stock OptionsOption AwardsA summary of stock option activity is as follows:Number Outstanding Weighted Average
Exercise Price Per ShareAggregate Intrinsic Value Weighted Average Remaining Contractual Life (years) Outstanding as of August 31, 2017 3,366 $ 139.29 Granted – non performance-based 575 $ 190.14 Granted – performance-based 17 $ 200.20 Granted – non-employee Directors grant 19 $ 197.75 Exercised (622) $ 113.73 Forfeited (212) $ 158.14 Outstanding as of August 31, 2018 3,143 $ 153.05 Granted – non performance-based 482 $ 224.35 Granted – non-employee Directors grant 20 $ 207.88 Exercised (705) $ 137.61 Forfeited (416) $ 170.54 Outstanding as of August 31, 2019 2,524 $ 168.50 Granted – non performance-based 424 $ 256.43 Granted – non-employee Directors grant 16 $ 271.51 Exercised (588) $ 145.54 Forfeited (122) $ 218.36 Outstanding as of August 31, 2020 2,254 $ 189.32 $ 129.6 6.6 Options vested and exercisable as of August 31, 2020 875 $ 155.58 $ 170.4 5.1 Options expected to vest as of August 31, 2020 1,264 $ 209.33 $ 178.4 7.5 The aggregate intrinsic value represents the difference between the Company’s closing stock price as of August 31, 2020 of $350.40 and the exercise price, multiplied by the number of options exercisable as of that date.The total pre-tax intrinsic value of stock options exercised during fiscal 2020, 2019 and 2018 was $85.0 million, $73.0 million and $50.1 million, respectively.Employee Stock Option AwardsThe FactSet Research Systems Inc. Stock Option and Award Plan, as amended and restated (the “Long"Long Term Incentive Plan”Plan" or “LTIP”"LTIP") provides for the grant of share-based awards, including stock options and restrictedperformance-based stock awardsoptions, to employees of FactSet. The expiration date of the Long Term Incentive Plan is December 19, 2027. Stock options granted under the LTIP expire not more than ten years from the date of grant and the majority vest ratably over a period of five years. years. Options become vested and exercisable, provided the employee continues employment with the Company through the applicable vesting date, and remain exercisable until expiration or cancellation. Options are not transferable or assignable other than by will orVesting of the laws of descent and distribution. Duringshares underlying the grantee’s lifetime, the options may be exercised only by the grantee.As of August 31,2019, a total of 2,524,304performance-based stock options were outstanding at a weighted average exercise price of $168.50. Unamortized stock-based compensation of $80.4 million is expectedare also subject to be recognized as stock-based compensation expense over the remaining weighted average vesting period of 3.0 years.Stock Option ActivityIn fiscal years 2019,2018 and 2017, FactSet granted 502,139, 610,628 and 1,026,984 stock options, respectively. These stock options have a weighted average exercise price of $223.68, $190.65 and $157.09 to existing employees of the Company, respectively.A summary of stock option activity is as follows: 3,364 $ 129.54 713 $ 152.89 291 $ 166.29 24 $ 170.24 (487 $ 86.17 (539 $ 160.31 3,366 $ 139.29 575 $ 190.14 17 $ 200.20 19 $ 197.75 (622 $ 113.73 (212 $ 158.14 3,143 $ 153.05 482 $ 224.35 20 $ 207.88 (705 $ 137.61 (416 $ 170.54 2,524 $ 168.50 Stock Options Outstanding and ExercisableThe following table summarizes ranges of outstanding and exercisable options as of August 31,2019 (in thousands, except per share data and the weighted average remaining years of contractual life): $87.26 - $92.22 184 2.98 $ 91.86 $ 33,175 184 $ 91.86 $ 33,175 $94.84 - $110.31 88 2.89 $ 99.70 $ 15,102 88 $ 99.70 $ 15,102 $131.31 - $148.52 280 5.01 $ 134.18 $ 38,636 156 $ 136.38 $ 21,134 $150.81 - $152.28 470 7.12 $ 152.25 $ 56,307 150 $ 152.25 $ 18,007 $159.14 - $170.24 299 6.09 $ 164.99 $ 32,050 98 $ 164.19 $ 10,612 $171.22 - $175.20 254 6.21 $ 175.04 $ 24,715 124 $ 175.04 $ 11,989 $189.98 - $200.20 475 8.21 $ 190.73 $ 38,637 73 $ 190.45 $ 5,985 $200.99 - $286.74 474 9.18 $ 223.79 $ 22,883 1 $ 221.88 $ 71 2,524 $ 261,505 874 $ 116,075 The following table summarizes outstanding and exercisable options as of August 31,2018 and 2017 (in thousands, except the weighted average exercise price per share): 3,143 $ 153.05 3,366 $ 139.29 1,022 $ 126.27 918 $ 105.14 The total number of in-the-money options exercisable as of August 31,2019 was 0.9 million with a weighted average exercise price $139.32. The aggregate intrinsic value of in-the-money stock options exercisable at August 31,2019 and 2018 was $116.1 million and $105.3 million, respectively. The aggregate intrinsic value represents the difference between the Company’s closing stock price as of August 31,2019 of $272.09 and the exercise price, multiplied by the number of options exercisable as of that date.The weighted average remaining contractual life of stock options exercisable at August 31,2019 and 2018 was 5.3 years and 5.6 years, respectively. The total pre-tax intrinsic value of stock options exercised during fiscal 2019,2018 and 2017 was $73.0 million, $50.1 million and $38.0 million, respectively.Performance-based Equity AwardsPerformance-based equity awards, whether in the form of stock options or restricted stock, require management to make assumptions regarding the likelihood of achieving Company performance targets. The number of performance-based awards that vest will be predicated on the Company achieving performance levels during the measurement period subsequent to the date of grant. Dependent on the financial performance levels attained by FactSet, a percentage of the performance-based awards will vest to the grantees. However, there is no current guarantee that such awards will vest in whole or in part.June 2017 Performance-based Option Grant ReviewIn connection with the acquisition of BISAM, FactSet granted 206,417 performance-based stock options in June 2017. These performance-based options were scheduled to vest 40% on the second anniversary date of the grant and 20% on each subsequent anniversary date, if certain BISAM revenue and operating income targets were achieved by March 31, 2019. In the third quarter of fiscal 2019, it was determined that the performance criteria were not achieved by March 31, 2019, and, as such, the options were forfeited, and 0 stock-based compensation expense was recorded for this performance-based option grant for fiscal 2019.Restricted Stock and Stock Unit AwardsThe Company’s Option Plan plans permit the issuance of restricted stock and restricted stock units. Restricted stock awards are subject to continued employment over a specified period.Restricted Stock and Stock Unit Awards ActivityIn fiscal years 2019,2018 and 2017, FactSet granted 73,047, 3,497 and 62,400 restricted stock awards to employees of the Company, respectively. These awards have a weighted average grant date fair value of $239.03, $189.28 and $158.26 for fiscal years 2019,2018 and 2017, respectively.As of August 31,2019, a total of 123,794 shares of restricted stock and restricted stock units were unvested and outstanding, which results in unamortized stock-based compensation of $21.8 million to be recognized as stock-based compensation expense over the remaining vesting period of 3.1 years.A summary of restricted stock award activity is as follows: 262 126.27 62 158.26 (132 123.28 (10 130.32 182 138.62 3 189.28 (27 155.95 (15 116.29 143 139.34 73 239.03 (85 125.04 (7 181.32 124 205.47 (1)The 132,194 restricted stock awards that vested during fiscal 2017 were comprised of:73,522 of awards relating to restricted stock granted on November 1, 2013, which cliff vested 60% after three years, 17,328 of awards relating to restricted stock granted on October 16, 2015, which vested 20% annually upon the anniversary date of the grant and 30,162 of awards relating to restricted stock granted on October 16, 2015, which were modified to accelerate vest 100% in conjunction with employee severance. Additionally, 11,182 awards vested related to other grants.(2)The26,599restricted stock awards that vested during fiscal 2018 were comprised of:9,765 of awards relating to restricted stock granted on October 16, 2015and8,600 of awards relating to restricted stock granted onJune 30, 2017 whichvestat a rate of20% annually upon the anniversary date of the grant, respectively.Additionally, 8,234 awards vested related to other grants.(3)The 85,401 restricted stock awards that vested during fiscal 2019 were comprised of: 42,276 of awards relating to restricted stock granted on November 1,2013 and 9,451 of awards relating to restricted stock granted on October 16, 2015, which vest at a rate of 20% annually upon the anniversary date of the grant, respectively, 18,691 of awards relating to restricted stock granted on February 9, 2015, which vest 100% upon the four year anniversary date of the grant, 8,924 of awards relating to restricted stock granted on June 30, 2017, which vest 60% after three years and 40% after five years. Additionally, there were 6,059 awards that vested related to other grants.Share-based Awards Available for GrantA summary of share-based awards available for grant is as follows: 1,491 66 (713 — (291 — — (24 (156 — 566 — 897 42 5,750 250 (575 — (17 — — (19 (9 — 252 9 6,298 282 (481 (20 (183 — 433 2 6,067 264 (1)Each restricted stock award granted is equivalent to 2.5 shares granted under the Company’sOption Plan.(2)Under the Company’sOptionPlan, for each restricted stock award canceled/forfeited, an equivalent of 2.5 shares is added back to the available share-based awards balance.Employee Stock Purchase PlanShares of FactSet common stock may be purchased by eligible employees under the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (the "ESPP") in three-month intervals. The purchase price is equal to 85% of the lesser of the fair market value of the Company’s common stock on either the first day or the last day of each three-month offering period. Employee purchases may not exceed 10% of their gross compensation and a $25,000 contribution limit during an offering period.During fiscal 2019, employees purchased 48,532 shares at a weighted average price of $205.64 as compared to 64,230 shares at a weighted average price of $160.34 for fiscal 2018. At August 31,2019, the ESPP had 220,410 shares reserved for future issuance.Employee Benefit PlansThe Company established its 401(k) Plan in fiscal 1993. The 401(k) Plan is a defined contribution plan covering all full-time, U.S. employees of the Company and is subject to the provisions of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 (“IRC”). Each year, participants may contribute up to 60% of their eligible annual compensation, subject to annual limitations established by the IRC. The Company matches up to 4% of employees’ earnings, capped at the Internal Revenue Service annual maximum. Company matching contributions are subject to a five-year graduated vesting schedule. All full-time, U.S. employees are eligible for the matching contribution by the Company. The Company contributed $10.9 million, $11.6 million, and $10.1 million in matching contributions to employee 401(k) accounts during fiscal 2019,2018 and 2017, respectively.16. STOCK-BASED COMPENSATIONThe Company recognized total stock-based compensation expense of $32.4 million, $31.5 million and $34.2 million in fiscal 2019,2018 and 2017, respectively. As of August 31,2019, $80.4 million of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a weighted average period of 3.0 years. There was 0 stock-based compensation capitalized as of August 31,2019 and 2018, respectively.The Company utilizes the lattice-binomial option-pricing model (“("binomial model”model") to estimate the fair value of new employee stock option grants. The binomial model is affected by the Company’s stock price, as well as, assumptions regarding several83variables, which include, but are not limited to the Company’s expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors, to determine the grant date stock option award fair value.Q12019454,598 non-performance-based employee stock options were granted at a weighted average exercise price of $221.93 and a weighted average estimated fair value of $56.77 per share.Q220196,115 non-performance-based employee stock options were granted at a weighted average exercise price of $207.84 and a weighted average estimated fair value of $53.18 per share.Q320192,320 non-performance-based employee stock options were granted at a weighted average exercise price of $267.02 and a weighted average estimated fair value of $68.33 per share.Q4201918,530 non-performance-based employee stock options were granted at a weighted average exercise price of $283.96 and a weighted average estimated fair value of $65.60 per share.Q12018553,942 non-performance-based employee stock options were granted at a weighted average exercise price of $189.98 and a weighted average estimated fair value of $48.27 per share.Q2201815,363 non-performance-based employee stock options were granted at a weighted average exercise price of $192.11 and a weighted average estimated fair value of $48.82 per share.Q32018There were 0 employee stock options granted during the three months ended May 31, 2018.Q420185,848 non-performance-based employee stock options and 16,512 performance-based employee stock options were both granted at a weighted average exercise price of $200.20 with a weighted average estimated fair value of $50.87 per share.Q12017671,263 non performance-based employee stock options and 22,460 performance-based employee stock options were both granted at a weighted average exercise price of $152.51 with a weighted average estimated fair value of $39.60 per share.Q2201761,744 performance-based employee stock options were granted at a weighted average exercise price of $169.16 and a weighted average estimated fair value of $43.81 per share.Q3201711,604 non performance-based employee stock options were granted at a weighted average exercise price of $163.05 and a weighted average estimated fair value of $42.23 per share.Q4201729,650 non performance-based employee stock options and 206,417 performance-based employee stock options were granted at a weighted average exercise price of $165.75 and a weighted average estimated fair value of $42.93 per share.2018 and 20172018 was determined using the binomial model with the following weighted average assumptions: 1.28% — 3.14% 1.28% — 2.41% 0.07% — 2.09% 7.1 — 7.1 7.4 — 7.4 7.4 — 8.1 18% — 29% 19% — 29% 21% — 30% 1.15% 1.32% 1.18% $57.12 $48.39 $40.68 $224.35 $190.42 $156.77 25.5% 25.4% 25.9% (Weighted average assumptions)2020 2019 2018 Term structure of risk-free interest rate 0.10 % — 1.79% 1.28 % — 3.14% 1.28 % — 2.41% Expected life (years) 7.2 — 7.2 7.1 — 7.1 7.4 — 7.4 Term structure of volatility 25 % — 25% 18 % — 29% 19 % — 29% Dividend yield 1.09% 1.15% 1.32% Weighted average estimated fair value $60.33 $57.12 $48.39 Weighted average exercise price $256.43 $224.35 $190.42 Fair value as a percentage of exercise price 23.5% 25.5% 25.4% The risk-free interest rate assumption for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on a combination of historical volatility of the Company’s stock and implied volatilities of publicly traded options to buy FactSet common stock with contractual terms closest to the expected life of options granted to employees. The approach to utilize a mix of historical and implied volatility was based upon the availability of actively traded options on the Company’s stock and the Company’s assessment that a combination of implied volatility and historical volatility is best representative of future stock price trends. The Company uses historical data to estimate option exercises and employee termination within the valuation model. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is a derived output of the binomial model. The binomial model estimates employees exercise behavior based on the option’s remaining vested life and the extent to which the option is in-the-money. The binomial model estimates the probability of exercise as a function of these two variables based on the entire history of exercises and cancellations of all past option grants made by the Company.Non-Employee DirectorDirectors' Stock Option Fair Value DeterminationsThe FactSet Research Systems Inc. Non-Employee Directors'Directors’ Stock Option and Award Plan as Amended and Restated (the "Director Plan"“Director Plan”), provides for the grant of share-based awards, including stock options, to non-employee directors of FactSet. The expiration date of the Director Plan is December 19, 2027. The non-qualified stock options granted to directors vest 100% after three years on the anniversary date of the grant and expire seven years from the date the options were granted. As of August 31,2019, 2020, shares available for future grant under the Director Plan was 263,956.249,886. The expiration date of the Director Plan is December 19, 2027.Non-Employee Director Stock Option Fair Value Determinations The Company utilizes the Black-Scholes model to estimate the fair value of new non-employee Director stock option grants. The Black-Scholes model is affected by the Company’s stock price, as well as, assumptions regarding several variables, which include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors, to determine the grant date stock-based payment award fair value.Fiscal 201984On January 15, 2019, FactSet granted 20,576 stock options to the Company’s non-employee Directors. These options have a weighted average estimated fair value of $42.77 per share, using the Black-Scholes option-pricing model with the following weighted average assumptions:Risk-free interest rate2.51%Expected life (years)5.4Expected volatility20.5% Dividend yield1.17%Fiscal 2018On 2020, January 15, 201stockstock options, to the Company’s non-employee Directors. These options have a weighted average estimated fair value of $38.76 per share, using the Black-Scholes option-pricing model with the following weighted average assumptions:Risk-free interest rate2.34%Expected life (years)5.4Expected volatility19.7% Dividend yield1.16% Fiscal 2017On January 13, 2017, FactSet granted 23,846 stock optionsrespectively, to the Company’s non-employee Directors including one-time new director grants of 2,104 for both Malcolm Frank and Sheila B. Jordan, who were elected to FactSet’s Board of Directors on December 20, 2016. Allusing the options granted on January 13, 2017, have a weighted average estimated fair value of $35.65 per share, using the Black-Scholes option-pricing model withvalues, based on the following weighted average assumptions:Risk-free interest rate1.95%Expected life (years)5.4Expected volatility22.7%Dividend yield1.24%(Weighted average assumptions)Years ended August 31, 2020 2019 2018 Fair value $ 54.74 $ 42.77 $ 38.76 Risk-free interest rate 1.64 % 2.51 % 2.34 % Expected life (years) 5.4 5.4 5.4 Expected volatility 22.0 % 20.5 % 19.7 % Dividend yield 1.11 % 1.17 % 1.16 % Restricted Stock Fair Value DeterminationsRestrictedand Performance Share Unit AwardsThe Company’s LTIP provides for the grant of share-based awards, including awards of restricted stock and performance share units ("PSUs"; restricted stock and PSUs, collectively, "Stock Awards"). The Stock Awards are subject to continued employment over a specified period. The Stock Awards granted to employees entitlesentitle the holderholders to shares of common stock as the award vestsStock Awards vest over time, but not to dividends declared on the underlying shares, while the restricted stock subject to the Stock Awards is unvested. Vesting of the shares underlying the PSUs are also subject to the Company achieving performance levels during the measurement period subsequent to the date of grant.The grant date fair value of restricted stock awardsStock Awards is measured by reducing the grant date price of FactSet’s sharecommon stock by the present value of the dividends expected to be paid on the underlying stock during the requisite service period, discounted at the appropriate risk-free interest rate. The expense associated with restricted stock awardsStock Awards is amortized over the vesting period. During fiscal 2019, thereAs of August 31, 2020, a total of 145,897 shares underlying Stock Awards were 73,047 unvested and outstanding, which results in unamortized stock-based compensation of $28.2 million to be recognized as stock-based compensation expense over the remaining vesting period of 2.7 years.A summary of Stock Award activity is as follows:(in thousands, except per award data) Number Outstanding Weighted Average Grant
Date Fair Value Per AwardBalance at August 31, 2017 182 138.62 Granted - restricted stock(1)3 189.28 Vested - restricted stock (27) 155.95 Forfeited (15) 116.29 Balance at August 31, 2018 143 139.34 Granted - restricted stock(1)73 239.03 Vested - restricted stock (85) 125.04 Forfeited (7) 181.32 Balance at August 31, 2019 124 205.47 Granted - restricted stock & PSUs(1)(2)74 252.17 Vested - restricted stock (33) 197.37 Forfeited (19) 198.53 Balance at August 31, 2020 146 231.55 (1)Each Stock Award granted is equivalent to 2.5 shares granted under the LTIP.(2)FactSet granted 36,709 awards of restricted stock and 36,888PSUs.Performance-based Equity AwardsPerformance-based equity awards, whether in the form of performance-based stock options or PSUs, require management to make assumptions regarding the likelihood of achieving Company performance targets. The number of performance-based85awards that vest will be predicated on the Company achieving performance levels during the measurement period subsequent to the date of grant. Dependent on the financial performance levels attained by FactSet, a percentage of the performance-based awards will vest to the grantees. However, there is no current guarantee that such awards will vest in whole or in part.Share-based Awards Available for GrantA summary of share-based awards available for grant is as follows:(in thousands) Share-based Awards
Available for Grant under the
Employee Stock Option PlanShare-based Awards
Available for Grant under the
Non-Employee Stock Option PlanBalance at August 31, 2017 897 42 Increase in the number of shares available for issuance 5,750 250 Granted – non performance-based options (575) 0 Granted – performance-based options (17) 0 Granted – non-employee Directors options 0 (19) Granted – restricted stock(1)(9) 0 Forfeited - Share-based awards(2)252 9 Balance at August 31, 2018 6,298 282 Granted – non performance-based options (481) 0 Granted – non-employee Directors options 0 (20) Granted – restricted stock(1)(183) 0 Forfeited - Share-based awards(2)433 2 Balance at August 31, 2019 6,067 264 Granted – non performance-based options (424) 0 Granted – non-employee Directors options 0 (16) Granted – restricted stock(1)(93) 0 Granted – PSUs(1)(91) 0 Forfeited – Share-based awards(2)167 2 Balance at August 31, 2020 5,626 250 (1)Each Stock Award granted with a weighted average grant date fair valueis equivalent to 2.5 shares granted under the LTIP.(2)Under the LTIP, for each Stock Award canceled/forfeited, an equivalent of $239.03 compared2.5 shares is added back to 3,497 restrictedthe available share-based awards balance.Employee Stock Purchase PlanShares of FactSet common stock awards granted with a weighted average grant date fair value of $189.28 in fiscal 2018.Q1201941,102 shares of restricted stock were granted at a weighted average estimated fair value of $212.66 per share.Q2201951 shares of restricted stock were granted at a weighted average estimated fair value of $210.67 per share.Q32019265 shares of restricted stock were granted at a weighted average estimated fair value of $255.95 per share.Q4201931,629 shares of restricted stock were granted at a weighted average estimated fair value of $273.19 per share.Q12018961 shares of restricted stock were granted at a weighted average estimated fair value of $182.17 per share.Q22018NaN restricted stock granted.Q32018NaN restricted stock granted.Q420182,536 shares of restricted stock were granted at a weighted average estimated fair value of $191.97 per share.Q120175,084 shares of restricted stock were granted at a weighted average estimated fair value of $151.63 per share.Q220177,843 shares of restricted stock were granted at a weighted average estimated fair value of $161.31 per share.Q32017NaN restricted stock granted.Q4201749,473 shares of restricted stock were granted at a weighted average estimated fair value of $158.46 per share.Fair Value DeterminationsDuring fiscal 2019,2020, employees purchased 42,606 shares at a weighted average price of $234.41 compared to 48,532 shares at a weighted average price of $205.64 compared toin fiscal 2019 and 64,230 shares at a weighted average price of $160.34 in fiscal 2018 and 75,372 shares at a weighted average price of $136.34 in fiscal 2017.2018. Stock-based compensation expense recorded during fiscal 2020, 20192018 and 20172018 relating to the employee stock purchase plan was $2.1 million, $2.0 million and $1.6 million, and $2.1 million, respectively.
At August 31, 2020, the ESPP had 177,804 shares reserved for future issuance.86The Company uses the Black-Scholes model to calculate the estimated fair value for the employee stock purchase plan. The weighted average estimated fair value of employee stock purchase plan grants during fiscal years 2020, 20192018 and 2017,2018, was $50.69, $41.06 $31.83 and $28.16$31.83 per share, respectively, with the following weighted average assumptions: 2.33 1.55 0.69 3 3 3 10.89 10.19 8.60 1.12 1.27 1.25 Accuracy of Fair Value Estimates(Weighted average assumptions)2020 2019 2018 Risk-free interest rate 0.95 % 2.33 % 1.55 % Expected life (months) 3 3 3 Expected volatility 20.04 % 10.89 % 10.19 % Dividend yield 1.08 % 1.12 % 1.27 % 17. EMPLOYEE BENEFIT PLANSDefined Contribution PlanThe Company established its 401(k) Plan in fiscal 1993. The 401(k) Plan is responsiblea defined contribution plan covering all full-time, U.S. employees of the Company and is subject to the provisions of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 ("IRC"). Each year, participants may contribute up to 60% of their eligible annual compensation, subject to annual limitations established by the IRC. The Company matches up to 4% of employees’ earnings, capped at the Internal Revenue Service annual maximum. Company matching contributions are subject to a five-year graduated vesting schedule. All full-time, U.S. employees are eligible for determining the assumptions usedmatching contribution by the Company. The Company contributed $11.3 million, $10.9 million, and $11.6 million in estimatingmatching contributions to employee 401(k) accounts during fiscal 2020, 2019 and 2018, respectively.18. SEGMENT INFORMATIONOperating segments are defined as components of an enterprise that have the fair value offollowing characteristics: (i) it engages in business activities from which it may earn revenue and incur expense, (ii) its share-based payment awards.operating results are regularly reviewed by the company’s chief operating decision maker ("CODM") for resource allocation decisions and performance assessment, and (iii) its discrete financial information is available. The Company's Chief Executive Officer functions as the CODM.The Company's operating segments are aligned with how the Company, including its CODM, manages the business and the geographic markets in which it serves, with a primary focus on providing integrated global financial and economic information. The Company’s determinationinternal financial reporting structure is based on 3 segments: the Americas, EMEA and Asia Pacific. Withing each of fair valuethe segments, the Company primarily delivers insight and information through four workflow solutions including Research, Analytics and Trading, CTS and Wealth. These workflow solutions provide global financial and economic information to investment managers, investment banks and other financial services professionals.The Americas segment serves our clients throughout North, Central, and South America. The EMEA segment serves our clients in countries in Europe and Africa. The Asia Pacific segment serves our clients in countries in Asia and Australia. Segment revenue reflects direct sales to clients based in these respective geographic locations.Each segment records compensation expense (including stock-based compensation), depreciation of share-based payment awards on the datefurniture and fixtures, amortization of grant using an option-pricing model is affected by the Company’s stock price,lease ROU assets, leasehold improvements and intangible assets, as well as assumptions regarding several highly complexcommunication costs, professional fees, rent expense, travel, office and subjective variables. These variables include butother direct expenses. Expenditures associated with the Company’s data centers, third-party data costs and corporate headquarters charges are recorded by the Americas segment and are not limited allocated to the other segments. The content collection centers, located in India, the Philippines, and Latvia, benefit all the Company’s expected stock price volatility overoperating segments and thus the termexpenses incurred at these locations are allocated to each segment based on a percentage of revenue.87Segment InformationSegment Results of OperationsThe following tables reflect the results of operations of the awards, interest rates, option forfeiture rates and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimatingCompany's segments:(in thousands) Year Ended August 31, 2020 Americas EMEA Asia Pacific Total Revenue from clients $ 929,444 $ 422,203 $ 142,464 $ 1,494,111 Segment operating profit 168,909 179,831 90,920 439,660 Depreciation and amortization 36,128 14,338 7,148 57,614 Stock-based compensation 28,780 6,576 1,223 36,579 Capital expenditures 60,204 2,079 15,359 77,642 Year Ended August 31, 2019 Americas EMEA Asia Pacific Total Revenue from clients $ 894,554 $ 408,084 $ 132,713 $ 1,435,351 Segment operating profit 179,374 179,258 79,403 438,035 Depreciation and amortization 40,018 14,703 5,742 60,463 Stock-based compensation 26,152 5,320 928 32,400 Capital expenditures 43,647 2,595 13,128 59,370 Year Ended August 31, 2018 Americas EMEA Asia Pacific Total Revenue from clients $ 841,908 $ 387,589 $ 120,648 $ 1,350,145 Segment operating profit 148,095 148,977 69,132 366,204 Depreciation and amortization 37,453 15,710 4,122 57,285 Stock-based compensation 26,014 4,857 645 31,516 Capital expenditures 20,358 3,140 10,022 33,520 Segment Total AssetsThe following table reflects the value of traded options that have no vesting or hedging restrictions and are fully transferable.17. INCOME TAXESIncome tax expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes are recordedtotal assets for the temporary differences betweenCompany's segments:As of August 31, (in thousands) 2020 2019 Segment Assets Americas $ 1,111,600 $ 851,014 EMEA 757,524 588,911 Asia Pacific 214,264 120,205 Total assets $ 2,083,388 $ 1,560,130 Geographic InformationThe following tables reflect FactSet revenues and long-lived assets, split geographically by the financial statement and tax basesCompany's country of assets and liabilities using currently enacted tax rates.Provision for Income TaxesThe provision for income taxes is as follows: (in thousands) $ 288,860 $ 199,654 $ 218,650 133,105 152,184 125,662 $ 421,965 $ 351,838 $ 344,312 $ 55,824 $ 65,778 $ 65,403 13,351 18,975 20,650 $ 69,175 $ 84,753 $ 86,053 16.4 24.1 25.0 The components of the provision for income taxes consist of the following: (in thousands) $ 35,688 $ 58,835 $ 58,057 18,389 5,159 5,659 17,376 22,669 17,458 $ 71,453 $ 86,663 $ 81,174 $ 1,813 $ 2,079 $ 4,320 (217 (295 (77 (3,874 (3,694 636 $ (2,278 $ (1,910 $ 4,879 $ 69,175 $ 84,753 $ 86,053 The provision for income taxes differs from the amount of income tax determined by applying the U.S. statutory federal income tax rate to income before income taxes as a result of the following factors: 21.0 25.7 35.0 4.0 2.9 1.8 (1.4 (3.2 (7.0 (3) (1.7 — — — (1.6 (2.1 (3.5 (3.7 (3.3 — — (0.3 (3.2 (2.7 — (0.4 6.6 (2) — 1.6 0.1 0.9 16.4 24.1 25.0 (1)During the first quarter of fiscal 2018, FactSet adoptedanaccounting standardthat requiresall excess tax benefits or deficiencies related to share-based paymentsto bereported within the consolidated statement of incomethat were previously reported within equity. The adoption of this standard resulted in the recognition of $9.5 million of excess tax benefits to FactSet’s provision for income taxes during fiscal 2018.(2)The enactment of the TCJA resulted in a one-time transition tax expense of $23.2 million during the second quarter of fiscal 2018.(3)Includesa 200 basispoint benefit as a result ofFactSet’sglobal realignment. Effective September 1, 2016, FactSet realigned certain aspects of its global operations from FactSet Research Systems Inc., its U.S. parent company, to FactSet UK Limited, a U.K. operating company, to better position the Company to serve its growing client base outside the U.S. This realignment allows the Company to further implement strategic corporate objectives and helps achieve operational and financial efficiencies, while complementing FactSet’s increasing global growth and reach.The fiscal 2019 provision for income taxes was $69.2 million, a decrease of 18.4% from the same period a year ago. The decrease was primarily attributable to the enactment of the TCJA. The TCJA imposed a one-time transition tax expense, which resulted in a $23.2 million impact to the income tax provision for fiscal 2018, without a comparable impact in fiscal 2019. This transition tax impact was revised during fiscal 2019, resulting in a net benefit of $3.4 million upon finalizing the accounting for the tax effects of the TCJA. The TCJA also lowered the statutory U.S corporate income tax rate from 35% to 21%, effective January 1, 2018, which was fully applicable for fiscal 2019 compared to the lower tax rate being phased in for the prior year comparable period. The reduction in the U.S. corporate income tax rate required a remeasurement of FactSet's net U.S. deferred tax position, which resulted in a non-recurring tax charge of $2.2 million during fiscal 2018. The decrease in the income tax provision was partially offset by a $3.3 million income tax expense from finalizing prior years’ tax returnsdomicile (the United States) and other discrete items for fiscal 2019.Duecountries where major subsidiaries are domiciled.88Geographic RevenueThe following table sets forth revenue by geography, attributed to the changes in taxation of undistributed foreign earnings under the TCJA, FactSet will continue to analyze foreign subsidiary earnings, as well as global working capital requirements, and may repatriate earnings when the amounts are remitted substantially free of additional tax.Deferred Tax Assets and LiabilitiesThe significant components of deferred tax assets that recorded within the Consolidated Balance Sheets were as follows: (in thousands) $ 1,517 $ 599 2,858 1,032 9,454 7,711 13,755 14,827 (27,116 (24,059 7,103 9,606 $ 7,571 $ 9,716 The significant components of deferred tax liabilities recorded within the Consolidated Balance Sheets were as follows: (in thousands $ (1,067 $ (946 17,188 22,429 270 (293 $ 16,391 $ 21,190 Unrecognized Tax PositionsApplicable accounting guidance prescribes a comprehensive model for the financial statement recognition, measurement, classification and disclosure of uncertain tax positions that a company has taken or expects to take on a tax return. FactSet recognizes the financial effect of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained based on its technical merits of the tax position. Otherwise, no benefit or expense can be recognized in the consolidated financial statements. The tax benefits recognized are measuredcountries based on the largest benefit that has a greater than 50% likelihoodlocation of being realized upon effective settlement with a taxing authority. Additionally, FactSet accrues interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws.The determination of liabilities related to unrecognized tax benefits, including associated interest and penalties, requires significant estimates. There can be no assurance that the Company will accurately predict the audit outcomes, however, FactSet has no reason to believe that such audits will result in the payment of additional taxes and/or penalties that would have a material adverse effect on the Company’s results of operations or financial position, beyond current estimates. For this reason and due to ongoing audits by multiple tax authorities, FactSet will regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The Company does not currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next 12 months.
client:(in thousands) Years ended August 31, 2020 2019 2018 Revenues United States $ 885,082 $ 854,675 $ 806,426 United Kingdom 179,966 166,944 157,346 Other European Countries 242,237 241,140 230,243 All Other Countries 186,826 172,592 156,130 Total revenue $ 1,494,111 $ 1,435,351 $ 1,350,145 Geographic Long-Lived AssetsFactSet classifies the liability for unrecognized tax benefits as Taxes Payable (non-current) and to the extent that the Company anticipates payment of cash within one year, the benefit will be classified as Taxes Payable (current). Additionally, the Company accrues interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. This interest is classified as income tax expense in the financial statements. As of August 31,2019, FactSet had gross unrecognized tax benefits totaling $10.9 million, including $1.1 million of accrued interest, recorded as Taxes Payable (non-current) within the Consolidated Balance Sheets.The following table summarizes the changes in the balancesets forth long-lived assets by geographic area. Long-lived assets consist of gross unrecognized tax benefits: $ 8,782 3,896 628 (1,822 $ 11,484 2,954 531 (3,146 (2,600 $ 9,223 3,133 507 (1,979 — $ 10,884 (in thousands) At August 31, 2020 2019 Long-lived Assets United States $ 205,929 $ 86,238 Philippines 53,124 4,188 India 42,923 15,051 United Kingdom 32,184 5,347 All Other Countries 47,871 8,560 Total long-lived assets $ 382,031 $ 119,384 19. RISKS AND CONCENTRATIONS OF CREDIT RISKFinancial Risk ManagementForeign Currency Exchange RiskIn the normal course of business, the Company’s tax filings are subject to audit by federal, state and foreign tax authorities. At August 31,2019, the Company remained subject to examination in the following major tax jurisdictions for the tax years as indicated below:Major Tax JurisdictionsOpen Tax YearsU.S.Federal2016through2018State (various)2016through2018EuropeUnited Kingdom2017through2018France2017through2018Germany2016through201818. DEBTFactSet’s debt obligations consisted of the following: (in thousands) $ — $ 575,000 $ 575,000 $ — 2019 Credit AgreementOn March 29, 2019, the Company entered into the 2019 Credit Agreement (the "2019 Credit Agreement") between FactSet, as the borrower, and PNC Bank, National Association ("PNC"), as the administrative agent and lender. The 2019 Credit Agreement provides for a $750.0 million revolving credit facility (the "2019 Revolving Credit Facility"). FactSet may request borrowings under the 2019 Revolving Credit Facility until its maturity date of March 29, 2024. The 2019 Credit Agreement also allows FactSet, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount up to $500.0 million, provided that any such request for additional borrowings must be in a minimum amount of $25.0 million.FactSet borrowed $575.0 million of the available $750.0 million provided by the 2019 Revolving Credit Facility, resulting in $175.0 million available to be withdrawn. FactSet is requiredexposed to pay a commitment fee using a pricing grid currently at 0.10% based on the daily amount by which the available balance in the 2019 Revolving Credit Facility exceeds the borrowed amount. All outstanding loan amounts are reported as Long-term debt within the consolidated balance sheets at August 31,2019. The principal balance is payable in full on the maturity date.The fair value of our long-term debt was $575.0 million as of August 31,2019, which the Company believe approximates carrying amountforeign currency exchange risk as the terms and interest rates approximate market rates given its floating interest rate basis. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid, currently at 0.875%. During fiscal years 2019,2018 and 2017, FactSet recorded interest expense of $19.8 million, $15.9 million and $8.4 million, respectively, on its outstanding debt amounts. The weighted average interest rate on amounts outstanding under our credit facilities was 3.35% and 2.69% as of August 31, 2019 and 2018, respectively. Interest on the loan outstanding is payable quarterly, in arrears, and on the maturity date.During fiscal 2019, FactSet incurred approximately $0.9 million in debt issuance costs related to the 2019 Credit Agreement. These costs were capitalized as loan origination fees and are amortized into interest expense ratably over the term of the 2019 Credit Agreement.The 2019 Credit Agreement contains covenants and requirements restricting certain FactSet activities, which are usual and customary for this type of loan. In addition, the 2019 Credit Agreement requires that FactSet maintain a consolidated net leverage ratio, as measured by total net funded debt/EBITDA below a specified level as of the end of each fiscal quarter. The Company was in compliance with all the covenants and requirements within the 2019 Credit Agreement as of August 31,2019.The borrowings from the 2019 Credit Agreement were used to retire all outstanding debt under the previous 2017 Credit Agreement between FactSet, as the borrower, and PNC as the lender on March 29, 2019. The total principal amount of the debt outstanding at the time of retirement was $575.0 million and there were no prepayment penalties.2017 Credit AgreementOn March 17, 2017, the Company entered into a Credit Agreement (the "2017 Credit Agreement") between FactSet, as the borrower, and PNC Bank, National Association ("PNC"), as the administrative agent and lender. The 2017 Credit Agreement provided for a $575.0 million revolving credit facility (the "2017 Revolving Credit Facility"). FactSet could have requested borrowings under the 2017 Revolving Credit Facility until its maturity or retirement date. The 2017 Credit Agreement also allowed FactSet, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount of up to $225.0 million, provided that any such request for additional borrowings was in a minimum amount of $25.0 million. Borrowings under the loan were subject to interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus 1.00%. Interest on the loan outstanding was payable quarterly in arrears and on the maturity date. The principal balance was also payable in full on the maturity date. There were no prepayment penalties when the Company elected to prepay the outstanding loan amounts on March 29, 2019.19. COMMITMENTS AND CONTINGENCIESCommitments represent obligations, such as those for future purchases of goods or services that are not yet recorded on the balance sheet as liabilities. FactSet records liabilities for commitments when incurred (i.e., when the goods or services are received).Lease CommitmentsIncluding new lease agreements executed during fiscal 2019, the Company's worldwide leased office space increased to approximately 1,860,000 square feet of office space under various non-cancelable operating leases which expire on various dates through 2035. Total minimum rental payments associated with the leases are recorded as occupancy expense (a component of Selling, General & Administrative, "SG&A" expense) on a straight-line basis over the periods of the respective non-cancelable lease terms. Future minimum commitments for the Company's operating leases in place as of August 31,2019 are as follows:
Years ended August 31, $ 41,414 40,051 36,011 33,890 33,072 215,523 $ 399,961 During fiscal 2019,2018 and 2017, rent expense (including operating costs) for all operating leases amounted to $56.7 million, $54.6 million and $48.4 million, respectively. At August 31,2019 and 2018, deferred rent reported within the Consolidated Balance Sheets totaled $42.6 million and $39.4 million, of which $39.1 million and $33.6 million, respectively, was reported as a non-current liability within the line item Deferred Rent and Other Non-Current Liabilities.Approximately $2.8 million of standby letters of credit have been issued during the ordinary course of business in connection with the Company’s current leased office space as of August 31,2019. These standby letters of credit contain covenants that, among other things, require FactSet to maintain minimum levels of consolidated net worth and certain leverage and fixed charge ratios. As of August 31,2019 and 2018, FactSet was in compliance with all covenants contained in the standby letters of credit.Purchase Commitments with SuppliersPurchase obligations represent payments due in future periods in respect of commitments to the Company’s various data vendors as well as commitments to purchase goods and services such as telecommunication and computer maintenance services. These purchase commitments are agreements that are enforceable and legally binding on FactSet, and they specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. As of August 31,2019 and 2018, the Company had total purchase commitments with suppliers of $83.3 million and $79.0 million, respectively. There were no material changes in the Company’s purchase commitments with suppliers during fiscal 2019.ContingenciesIncome TaxesUncertain income tax positions are accounted for in accordance with applicable accounting guidance, refer to Note 17 Income Taxes for further details. FactSet is currently under audit by tax authorities and has reserved for potential adjustments to its provision for income taxes that may result from examinations by, or any negotiated settlements with, these tax authorities. The Company believes that the final outcome of these examinations or settlements will not have a material effect on its results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of tax benefits in the period FactSet determines the liabilities are no longer necessary. If the Company’s estimates of the federal, state, and foreign income tax liabilities are less than the ultimate assessment, a further charge to expense would result.Legal MattersFactSet accrues non income-tax liabilities for contingencies when management believes that a loss is probable, and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. The Company is engaged in various legal proceedings, claims and litigation that have arisen in the ordinary course of business, including employment matters, commercial and intellectual property litigation. The outcome of all the matters against the Company is subject to future resolution, including the uncertainties of litigation. Based on information available at August 31,2019, FactSet’s management believes that the ultimate outcome of these unresolved matters against the Company, individually or in the aggregate, will not have a material adverse effect on the Company's consolidated financial position, its results of operations or its cash flows.Sales TaxMattersIn August 2019, FactSet received a Notice of Intent to Assess (the “Notice”) additional sales taxes, interest and underpayment penalties from the Commonwealth of Massachusetts Department of Revenue relating to prior tax periods. The Notice follows FactSet’s previously disclosed response to a letter from the Commonwealth requesting additional sales information. Based upon the Notice, it is the Commonwealth's intention to assess sales/use tax, interest and penalties on previously recorded sales transactions. The Company filed an appeal to the Notice and intends to contest any such assessment, if assessed, and continues to cooperate with the Commonwealth’s inquiry. Due to uncertainty surrounding the assessment process, the Company is unable to reasonably estimate the ultimate outcome of this matter and, as such, has not recorded a liability as of August 31,2019. While FactSet believes that it will ultimately prevail if the Company is presented with a formal assessment; if FactSet does not prevail, the amount could have a material impact on the Company’s consolidated financial position, cash flows and results of operations.IndemnificationsAs permitted or required under Delaware law and to the maximum extent allowable under that law, FactSet has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at FactSet’s request in such capacity. These indemnification obligations are valid as long as the director or officer acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The maximum potential amount of future payments FactSet could be required to make under these indemnification obligations is unlimited; however, FactSet has a director and officer insurance policy that it believes mitigates FactSet's exposure and may enable FactSet to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification obligations is immaterial.20. RISKS AND CONCENTRATIONS OF CREDIT RISKFinancial Risk ManagementForeign Currency Exchange RiskThe Company conducts business outside the U.S. in several currencies including the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso, British Pound Sterling, and Japanese Yen. The financial statements of these foreign subsidiaries are translatedPeso. Changes in the exchange rates for such currencies into U.S. dollars using period-end ratescan affect our revenues, earnings, and the carrying values of exchange forour assets and liabilities and average rates for the period for revenues and expenses. in our consolidated balance sheet, either positively or negatively.To manage the exposures related to the effects of foreign exchange rate fluctuations, the Company utilizes derivative instruments (foreign currency forward contracts). The changes in fair value for these foreign currency forward contracts are initially reported as a component of AOCL and subsequently reclassified into operating expenses when the hedged exposure affects earnings.By their nature, all derivative instruments involve, to varying degrees, elements of market and credit risk. The market risk associated with these instruments resulting from currency exchange movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. FactSet does not believe there is significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions are executed with a major financial institution.institutions. Further, the Company’s policy is to deal with counterparties having a minimum investment grade89or better creditcredit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties. FactSet’s primary objective in holding derivatives is to reduce the volatility of earnings associated with changes in foreign currency.Refer to Note 6, Derivative Instruments for more information on our foreign currency exposures and our foreign currency forward contracts.Interest Rate RiskCash and Cash Equivalentsand InvestmentsThe fair market value of FactSet’sour cash and cash equivalents and investments at August 31,2019 2020 was $385.6$605.2 million. The Company’sOur cash and cash equivalents consist of demand deposits and money market funds with original maturities of three months or less and are reported at fair value. The Company’s investments consistWe are exposed to interest rate risk through fluctuations of both mutual funds and certificates of deposit as both are part of the Company’s investment strategy. These mutual funds and certificates of deposit are included as Investments (short term)interest rates on the Company’s Consolidated Balance Sheets as the mutual funds can be liquidated at our discretion and the certificates of depositinvestments. As we have original maturities greater than three months, but less than one year. The mutual funds and certificates of deposit are held for investment and are not considered debt securities. It is anticipated that the fair market value of the Company’s cash and cash equivalents and investments will continue to be immaterially affected by fluctuations in interest rates. Preservation of principal is the primary goal of FactSet’s cash and cash equivalents and investment policy. Pursuant to the FactSet's established investment guidelines, the Company tries to achieve high levels of credit quality, liquidity and diversification. The Company's investment guidelines do not permit FactSet to invest in puts, calls, strips, short sales, straddles, options, commodities, precious metals, futures or investments on margin. As the Company has a restrictive investment policy, itsour financial exposure to fluctuations in interest rates is expected to remain low. The Company does not believe that the value or liquidityRefer to Note 3, Summary of itsSignificant Accounting Policies for more information on our cash and cash equivalents and investments have been significantly impacted by current market events.DebtAs of August 31,2019, 2020, the fair valueCompany had long term debt outstanding under the 2019 Revolving Credit Facility, with a principal balance of FactSet’s long-term$575.0 million. The debt was $575.0 million, which approximated its carrying amount. The application ofbears interest on the outstanding principle at a floating interest rate equal to the daily LIBOR rate plus a spread, using a debt leverage pricing grid, approximates the current marketgrid. The variable rate for similar transactions. It is anticipated that the fair market value of FactSet’s debt will continue to be immaterially affected by fluctuations in interest rates and the Company does not believe that the value of its debt has been significantly impacted by current market events. The debt bears interest on our long-term debt can expose us to interest rate volatility due to changes in LIBOR. To mitigate this exposure, on March 5, 2020, we entered into an interest rate swap agreement with a notional amount of $287.5 million to hedge the variable interest rate obligation, effectively converting the floating interest rate to fixed for the hedged portion. Thus, we are only exposed to base interest rate risk on floating rate borrowings in excess of any amounts that are not hedged, or $287.5 million of our outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at 0.875%. During fiscal 2019 and fiscal 2018, the Company recorded interest expense of $19.8 million and $15.9 million, respectively, on its outstanding debt amounts.balance. Assuming all terms of the Company’s outstanding long-term debt remained the same, a hypothetical 25 basis point change (up or down) in the one-monthone-month LIBOR rate would result in a $1.4$0.7 million change in its annual interest expense.Refer to Note 12, Debt for additional information regarding our outstanding debt obligations.Current market events have not required the Company to modify materially or change its financial risk management strategies with respect to its exposures to foreign currency exchange risk and interest rate risk.Cash equivalentsCash and cash equivalents are maintained primarily with five financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand and are maintained with financial institutions, with reputable credit, and therefore, bear minimal credit risk. The Company seeks to mitigate its credit risks by spreading such risks across multiple counterparties and monitoring the risk profiles of these counterparties.Accounts ReceivableAccounts receivable are unsecured and are derived from revenue earned from clients located around the globe. FactSet does not require collateral from its clients but performs credit evaluations on an ongoing basis. The Company maintains reserves for potential write-offs and evaluates the adequacy of the reserves periodically. These losses have historically been within expectations. No single client represented 10% or more of FactSet's total revenue in any fiscal year presented. At August 31,2019, 2020, the Company’s largest individual client accounted for approximately 3% of total annual subscriptions, and subscriptions from the ten largest clients did not surpass 15% of total annual subscriptions, consistent with August 31,2018. 2019. As of August 31,2019 2020 and 2018,2019, the receivable reserve was $8.0 million and $10.5 million, and $3.5 million, respectively.Derivative InstrumentsAs a result of the use of derivative instruments, FactSet is exposed to counterparty credit risk. The Company has incorporated counterparty credit risk into the fair value of its derivative assets and its own credit risk into the value of the Company’s derivative liabilities, when applicable. For derivative instruments, the Company calculates credit risk from observable data related to credit default swaps (“CDS”("CDS") as quoted by publicly available information. Counterparty risk is represented by CDS spreads related to the senior secured debt of the respective bank with whom the Company has executed these derivative transactions. To mitigate counterparty credit risk, the Company enters into contracts with large financial institutions and90regularly reviews its credit exposure balances as well as the creditworthiness of the counterparties. For the Company's liabilities, as CDS spread information is not available for FactSet, the Company's credit risk is determined based on using a simple averageaverage of CDS spreads for peer companies. The Company does not expect any losses as a result of default of its counterparties.Concentration of Other RiskData Content ProvidersCertain data sets that FactSet relies on have a limited number of suppliers, although the Company makes every effort to assure that, where reasonable, alternative sources are available. FactSet is not dependent on any onethird-party third-party data supplier in order to meet the needs of its clients. FactSet combines the data from these commercial databases into its own dedicated single online service, which the client accesses to perform their analysis. No single vendor or data supplier represented more than 10% of FactSet's total data costs during fiscal 2019,2020, except for 1one vendor, which is a supplier of risk models and portfolio optimizer data to FactSet and represented 11% of FactSet’s data costs in fiscal 2019.2020. 21.20. UNAUDITED QUARTERLY FINANCIAL DATAThe following table presents selected unaudited financial information for each of the quarterly periods in the years ended August 31,2019 2020 and 2018.2019. The results for any quarter are not necessarily indicative of future quarterly results and, accordingly, period-to-period comparisons should not be relied upon as an indication of future performance.Fiscal 2020 (in thousands, except per share data) First
QuarterSecond
QuarterThird
QuarterFourth
QuarterRevenue $ 366,658 $ 369,780 $ 374,083 $ 383,590 Cost of services $ 164,957 $ 176,218 $ 170,703 $ 183,568 Selling, general and administrative $ 88,515 $ 87,305 $ 81,740 $ 101,445 Operating income $ 113,186 $ 106,257 $ 121,640 $ 98,577 Net income $ 93,957 $ 88,686 $ 101,216 $ 89,079 Diluted EPS(1)$ 2.43 $ 2.30 $ 2.63 $ 2.29 Diluted weighted average common shares 38,587 38,576 38,481 38,940 Fiscal 2019 (in thousands, except per share data) First
QuarterSecond
QuarterThird
QuarterFourth
QuarterRevenue $ 351,640 $ 354,895 $ 364,533 $ 364,283 Cost of services $ 166,776 $ 165,108 $ 163,832 $ 167,730 Selling, general and administrative $ 84,325 $ 81,099 $ 83,461 $ 84,985 Operating income $ 100,539 $ 108,688 $ 117,240 $ 111,568 Net income $ 84,296 $ 84,702 $ 92,265 $ 91,527 Diluted EPS(1)$ 2.17 $ 2.19 $ 2.37 $ 2.34 Diluted weighted average common shares 38,809 38,619 38,993 39,056 $ 329,141 $ 335,231 $ 339,911 $ 345,861 $ 161,524 $ 163,232 $ 165,073 $ 169,467 $ 78,519 $ 76,514 $ 81,573 $ 88,038 $ 89,098 $ 95,485 $ 93,265 $ 88,356 $ 70,379 $ 53,137 $ 74,746 $ 68,823 $ 1.77 $ 1.33 $ 1.91 $ 1.77 39,680 39,846 39,104 38,879 (1)Diluted earnings per common share is calculated independently for each of the periods presented. Accordingly, the sum ofthe quarterly EPSamounts may not equal the total for thefiscalyear.(1)Diluted earnings per common share is calculated independently for each of the periods presented. Accordingly, the sum ofthe quarterly EPSamounts may not equal the total for thefiscalyear.21. SUBSEQUENT EVENTSAs previously announced, effective September 21, 2020, the Company entered into an Amendment to the 2019 Credit Agreement (the “Amendment”). The Amendment provides, among other things, that the Company may make an investment in91a person that is not a subsidiary of FactSet, so long as no potential default has occurred and is continuing or would result from such an investment.As previously announced, on October 20, 2020, FactSet entered into a definitive agreement to acquire all of the issued and outstanding shares of Truvalue Labs, Inc. ("TVL"). The acquisition of TVL further enhances FactSet's commitment to providing industry leading environmental, social, and governance ("ESG") data.Revenue from TVL will be recognized based on geographic business activities in accordance with how the Company’s operating segments are currently aligned. The Company expects the majority of the TVL purchase price to be allocated to goodwill and acquired intangible assets. The transaction is expected to close during 2020 and is not expected to have a material impact on FactSet’s fiscal 2021 results.92ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresUnder the supervision and with the participation of ourThe Company's management, including theits principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the annual period covered by this report. Based on that evaluation, the principal executive officer and principal financial officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) are effective to ensure that information required to be disclosedas of the end of the annual period covered by us in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.Changes in Internal Control over Financial ReportingDuring the first and third quarters of fiscal 2020, the Company implemented a new general ledger and financial reporting system and a new purchase to payables system, respectively, as part of a multi-year global project to design, configure and install an integrated suite of enterprise software. The implementations have involved changes to certain processes and related internal controls over financial reporting. The Company has reviewed the system and the controls affected and made appropriate changes as necessary.There have been no other changes in ourthe Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company's fourth quarter of fiscal 20192020 that have materially affected, or are reasonably likely to materially affect, ourthe Company's internal control over financial reporting.Management’s Report on Internal Control over Financial ReportingSee Item 8. Management’s Report on Internal Control over Financial Reporting under Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.Report of Independent Registered Public Accounting FirmSee Item 8. Report of Independent Registered Public Accounting Firm under Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.ITEM 9B. OTHER INFORMATIONNone.93PARTPart IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required to be furnished by this item relating to our directors and nominees, relating to compliance with Section 16(a) of the Securities Act of 1934, and relating to our Audit Committee is included under the captions “Corporate Governance” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the definitive Proxy Statement dated October 30, 2019, and all such informationItem 10. is incorporated herein by reference.Pursuant to General Instruction G(3) of Form 10-K, the information required by this item relating to our executive officers is included under the caption “Executivein Item 1. Executive Officers of the Registrant” in Part IRegistrant of this Annual Report on Form 10-K.The Company has adopted a Code of Business Conduct and Ethics that applies to all employees, including the Company’s principal executive officer, principal financial officer and principal accounting officer, all other officers and the Company’s directors. A copy of this code is available on the Company’s website at https://investor.factset.com on the Leadership and Corporate Governance page. The Company intends to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website at the address and general location specified above.The Corporate Governance Guidelines and the charters of the committees of our Board of Directors, including the Audit Committee, Compensation and Talent Committee and Nominating and Corporate Governance Committee, are also available on our website at https://investor.factset.com on the Leadership and Corporate Governance page. The guidelines, charters and code of ethics are also available in print free of charge to any stockholder who submits a written request to our Investor Relations department at our corporate headquarters at 601 Merritt 7, Norwalk, CT 06851 prior to January 1, 2020 and 45 Glover Avenue Norwalk, CT 06850.ITEM 11. EXECUTIVE COMPENSATIONThe information required to be furnished by this item relating to compensation is included under the captions “Executive Compensation,” “Compensation Discussion and Analysis,” “Compensation and Talent Committee Report,” “Director Compensation Program,” including “Equity Compensation,” and “Director Compensation Table” of the definitive Proxy Statement dated October 30, 2019, and all such informationItem 11. is incorporated herein by reference.reference to our Proxy Statement.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe information required to be furnished by this item relating to security ownership of certain beneficial owners and management is included under the caption “Security Ownership of Certain Beneficial Owners and Management”, in the definitive Proxy Statement dated October 30, 2019, and such informationItem 12. is incorporated herein by reference.reference to our Proxy Statement.The following table summarizes as of August 31, 2019,2020, the number of outstanding equity awards granted to employees and non-employee directors, as well as the number of equity awards remaining available for future issuance, under FactSet’s equity compensation plans: 2,648 (1) $ 168.50 (2) 6,551 (3) — — — 2,648 (1) $ 168.50 (2) 6,551 (3) (1)Includes shares of FactSet common stock subject to outstanding restricted stock that will entitle each holder to the issuance of one share of common stock as they vest.(2)Calculated without taking into account shares of FactSet common stock subject to outstanding restricted stock that will become issuable as they vest, without any cash consideration or other payment required for such shares.(3)Includes 263,956 shares available for future issuance under the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restatedand 220,410shares available forpurchaseunder theFactSet Research Systems Inc.2008 Employee Stock Purchase Plan,asAmended and Restated.(In thousands, except per share data) Plan category
Number of securities
to be issued upon exercise
of outstanding options, warrants and rights
(a)Weighted-average
exercise price of
outstanding options, warrants and rights
(b)Number of securities remaining
available for future issuances under
equity compensation plans (excluding
securities reflected in column (a))
(c)Equity compensation plans approved by security holders 2,400 (1) $ 189.32 (2) 6,053 (3) Equity compensation plans not approved by security holders — — — Total 2,400 (1) $ 189.32 (2) 6,053 (3) (1)Includes 2,254 shares issuable upon exercise of outstanding options, 109 shares issuable upon vesting of awards of restricted stock and 37 shares issuable upon the conversion of outstanding performance share units.(2)Calculated without taking into account shares of FactSet common stock subject to outstanding stock awards that will become issuable as they vest, without any cash consideration or other payment required for such shares.94(3)Includes 5,625,791 shares available for future issuance under the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated, 249,886 shares available for future issuance under the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated,and 177,804shares available forpurchaseunder theFactSet Research Systems Inc.2008 Employee Stock Purchase Plan,asAmended and Restated.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required to be furnished by this item relating to review, approval or ratification of transactions with related persons is included under the caption “Certain Relationships and Related Transactions” and all the information required by this item relating to director independence is included under the caption “Corporate Governance” contained in the definitive Proxy Statement dated October 30, 2019, all of which informationItem 13. is incorporated herein by reference.reference to our Proxy Statement.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required to be furnished by this item is included under the caption “Proposal 2: Ratification of Independent Registered Public Accounting Firm” in the definitive Proxy Statement dated October 30, 2019, all of which informationItem 14. is incorporated herein by reference.reference to our Proxy Statement.95PARTPart IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a)Documents filed as part of this Annual Report on Form 10-K:1.Financial StatementsThe information required by this item is included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K which is incorporated herein.2.Financial Statements ScheduleSchedule II – Valuation and Qualifying AccountsYears ended August 31, 2020, 2019 and 2018 (in thousands):Receivable reserve
and billing adjustmentsBalance at Beginning of Year Charged to Expense/Against Revenue(1)Write-offs,
Net of RecoveriesBalance at
End of Year2020 $ 10,511 $ 754 $ (3,278) $ 7,987 2019 $ 3,490 $ 11,474 $ (4,453) $ 10,511 2018 $ 2,738 $ 4,737 $ (3,985) $ 3,490 (1)Additions to the receivable reserve for doubtful accounts are charged to bad debt expense. Additions to the receivable reserve for billing adjustments are charged against revenue.Additional financial statement schedules are omitted since they are either not required, not applicable, or the information is otherwise included.3.ExhibitsThe information required by this Item is set forth below.Incorporated by Reference Exhibit
NumberExhibit
DescriptionForm File No. Exhibit No. Filing Date Filed
Herewith3.1 Restated Certificate of Incorporation S-1/A 333-04238 3.1 6/26/1996 3.2 Certificate of Amendment of Certificate of Incorporation 10-K 333-22319 3.12 11/20/2001 3.3 Second Amendment to the Restated Certificate of Incorporation 8-K 001-11869 3.1 12/16/2011 3.4 Amended and Restated By-laws of FactSet Research Systems Inc. as amended September 1, 2018 8-K 001-11869 3.1 9/6/2018 4.0 Form of Common Stock S-1/A 333-04238 4.1 6/26/1996 DEF-14A 001-11869 Exhibit A 11/10/2004 DEFR-14A 001-11869 Appendix A 12/6/2010 8-K 001-11869 10.1 12/21/2017 DEF-14A 001-11869 Appendix A 10/30/2008 968-K 001-11869 10.2 12/21/2017 10-Q 001-11869 10.1 4/9/2018 8-K 001-11869 10.1 3/29/2019 8-K 001-11869 10.1 9/25/2020 8-K 001-11869 10.1 3/5/2020 8-K 001-11869 10.2 3/5/2020 8-K 001-11869 10.1 6/9/2020 X X X X X X 101.INS XBRL Instance Document X 101.SCH XBRL Taxonomy Extension Schema X 101.CAL XBRL Taxonomy Extension Calculation Linkbase X 101.DEF XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB XBRL Taxonomy Extension Label Linkbase X 97(a)Documents filed as part of this Report on Form 10-K:1.Financial Statements101.PRE XBRL Taxonomy Extension Presentation Linkbase X 104 The information required by this item is includedCover page Interactive Data File (formatted as Inline XBRL and contained in Item 8, Financial Statements and Supplementary Data, which is incorporated herein.Exhibit 101 2.Financial Statements ScheduleX Schedule II – Valuation and Qualifying AccountsYears ended August 31,2019,2018 and 2017 (in thousands): $ 3,490 $ 11,474 $ (4,453 $ 10,511 $ 2,738 $ 4,737 $ (3,985 $ 3,490 $ 1,521 $ 3,381 $ (2,164 $ 2,738 (1)Additions to the receivable reserve for doubtful accounts are charged to bad debt expense. Additions to the receivable reserve for billing adjustments are charged against revenue.Additional financial statement schedules are omitted since they are either not required, not applicable, or the information is otherwise included.(1)Indicates a management contract or compensatory plan or arrangement3.ExhibitsThe information required by this Item is set forth below. (2)Confidential treatment has been granted for portions of this exhibit. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) (1)Indicates a management contract or compensatory plan or arrangement(2)Confidential treatment has been granted for portions of this exhibit.ITEM 16. FORM 10-K SUMMARYNone.98SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.FACTSET RESEARCH SYSTEMS INC. 30, 2019Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.NameTitleDateTitle Date /s/ F. PHILIP SNOW 30, 201930, 201930, 2019/s/ PHILIP A. HADLEYChairmanOctober 30, 2019Philip A. HadleyDirector30, 201930, 2019Director October 29, 2020 Siew Kai Choy /s/ MALCOLM FRANK 30, 201930, 201930, 2019Director October 29, 2020 Lee Shavel /s/ LAURIE SIEGEL 30, 201930, 201910299