FactSet Research Systems Inc.

Form 10-Q

For the Quarter Ended ~~May 31,~~November 30, 2020

Index


		Page
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2020 and 2019	34
	Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2020 and ~~2019~~	4
	~~Consolidated Balance Sheets at~~ ~~May 31, 2020~~ ~~and~~ ~~August 31,~~ 2019	5
	Consolidated ~~Statements of Cash Flows~~Balance Sheets at November 30, 2020 ~~for the~~and ~~nine~~ ~~months ended~~ ~~May~~August 31, 2020 ~~and~~ ~~2019~~	6
	Consolidated Statements of ~~Changes in Stockholders’ Equity~~Cash Flows for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2020 and 2019	7
	Consolidated Statements of Changes in Stockholders’ Equity for the three ~~and nine~~ months ended November 30, 2020	8
	Consolidated Statements of Changes in Stockholders’ Equity for the threemonths ended ~~May 31,~~November 30, 2019	8
	Notes to the Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2927
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4842
Item 4.	Controls and Procedures	5043
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	5144
Item 1A.	Risk Factors	5245
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5346
Item 3.	Defaults Upon Senior Securities	5346
Item 4.	Mine Safety Disclosures	5346
Item 5.	Other Information	5346
Item 6.	Exhibits	5447
	Signatures	5548

For additional information about FactSet Research Systems Inc. and access to its Annual Reports to Stockholders and Securities and Exchange Commission filings, free of charge, please visit FactSet’s website (https://investor.factset.com). Any information on or linked from the website is not incorporated by reference into this Quarterly Report on Form 10-Q.

Special Note Regarding Forward-Looking Statements

FactSet Research Systems Inc. has made statements under the captions Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1A. Risk Factors, and in other sections of this Quarterly Report on Form 10-Q for the quarter ended November 30, 2020, that are forward-looking statements. In some cases, you can identify these statements by words such as "may," "might," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "intends," "projects," "indicates," "predicts," "potential," or "continue," and similar expressions.

These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance and anticipated trends in our business. These statements are only predictions based on our current expectations, estimates, forecasts and projections about future events. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. There are many important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including the numerous factors discussed under Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended August 31, 2020, that should be specifically considered.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Forward-looking statements speak only as of the date they are made, and actual results could differ materially from those anticipated in forward-looking statements. We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, revised expectations, future events or risks, except to the extent required by applicable securities laws.

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.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF INCOME – Unaudited


		Three Months Ended						Nine Months Ended							Three Months Ended November 30,
(In thousands, except per share data)	(In thousands, except per share data)	May 31, 2020		May 31, 2019		May 31, 2020		May 31, 2019		(In thousands, except per share data)	2020		2019
Revenue	Revenue	$	374,083	$	364,533	$	1,110,521	$	1,071,068	Revenue	$	388,206	$	366,658
Operating expenses	Operating expenses									Operating expenses
Cost of services	Cost of services	170,703		163,832		511,878		495,716		Cost of services	188,088		164,957
Selling, general and administrative	Selling, general and administrative	81,740		83,461		257,560		248,885		Selling, general and administrative	79,087		88,515
Total operating expenses	Total operating expenses	252,443		247,293		769,438		744,601		Total operating expenses	267,175		253,472

Operating income	Operating income	121,640		117,240		341,083		326,467		Operating income	121,031		113,186

Other expenses	Other expenses									Other expenses
Interest expense, net	Interest expense, net	(2,211)		(4,377)		(8,003)		(13,046)		Interest expense, net	(1,029)		(3,131)
Other (expense) income, net		(289)		521		(2,090)		255
Other income (expense), net										Other income (expense), net	230		(1,314)
Income before income taxes	Income before income taxes	119,140		113,384		330,990		313,676		Income before income taxes	120,232		108,741

Provision for income taxes	Provision for income taxes	17,924		21,119		47,131		52,413		Provision for income taxes	19,026		14,784
Net income	Net income	$	101,216	$	92,265	$	283,859	$	261,263	Net income	$	101,206	$	93,957

Basic earnings per common share	Basic earnings per common share	$	2.67	$	2.41	$	7.49	$	6.85	Basic earnings per common share	$	2.66	$	2.47
Diluted earnings per common share	Diluted earnings per common share	$	2.63	$	2.37	$	7.36	$	6.73	Diluted earnings per common share	$	2.62	$	2.43

Basic weighted average common shares	Basic weighted average common shares	37,885		38,223		37,912		38,128		Basic weighted average common shares	38,007		37,978
Diluted weighted average common shares	Diluted weighted average common shares	38,481		38,993		38,548		38,807		Diluted weighted average common shares	38,697		38,587

The accompanying notes are an integral part of these ~~consolidated financial statements.~~

~~FactSet Research Systems Inc.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – Unaudited~~

Three Months Ended Nine Months Ended
(In thousands) May 31, 2020 May 31, 2019 May 31, 2020 May 31, 2019
Net income $ 101,216 $ 92,265 $ 283,859 $ 261,263
Other comprehensive (loss), net of tax
Net unrealized (loss) gain on cash flow hedges* (3,948) (160) (2,105) 1,405
Foreign currency translation adjustments (4,633) (11,326) 1,589 (15,804)
Other comprehensive (loss) (8,581) (11,486) (516) (14,399)
Comprehensive income $ 92,635 $ 80,779 $ 283,343 $ 246,864

* For the three and nine months ended May 31, 2020, the net unrealized loss on cash flow hedges were net of a tax benefit of $1,337 thousand and $696 thousand, respectively. For the three and nine months ended May 31, 2019, the net unrealized loss and gain on cash flow hedges were net of a tax benefit of $65 thousand and a tax expense of $702 thousand, respectively.

~~The accompanying notes are an integral part of theseconsolidated financial statements.~~

~~FactSet Research Systems Inc.~~

~~CONSOLIDATEDBALANCE SHEETS– Unaudited~~

(In thousands, except share data) May 31, 2020 August 31, 2019
ASSETS
Cash and cash equivalents $ 457,707 $ 359,799
Investments 22,606 25,813
Accounts receivable, net of reserves of $7,357 at May 31, 2020 and $10,511 at August 31, 2019 151,398 146,309
Prepaid taxes 42,250 15,033
Prepaid expenses and other current assets 34,468 36,858
Total current assets 708,429 583,812
Property, equipment and leasehold improvements, net 136,655 119,384
Goodwill 688,484 685,729
Intangible assets, net 127,207 133,691
Deferred taxes — 7,571
Lease right-of-use assets, net 254,391 —
Other assets 32,539 29,943
TOTAL ASSETS $ 1,947,705 $ 1,560,130
LIABILITIES
Accounts payable and accrued expenses $ 80,048 $ 79,620
Current lease liabilities 29,225 —
Accrued compensation 50,114 64,202
Deferred fees 58,725 47,656
Dividends payable 29,188 27,445
Total current liabilities 247,300 218,923
Long-term debt 574,309 574,174
Deferred taxes 15,502 16,391
Deferred fees 8,885 10,088
Taxes payable 26,816 26,292
Lease liabilities 276,019 —
Other non-current liabilities 5,916 42,006
TOTAL LIABILITIES $ 1,154,747 $ 887,874
Commitments and contingencies (see Note 16)

STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value, 10,000,000 shares authorized, NaN issued $ — $ —
Common stock, $0.01 par value, 150,000,000 shares authorized, 40,556,920 and 40,104,192 shares issued, 37,907,127 and 38,117,840 shares outstanding at May 31, 2020 and August 31, 2019, respectively 406 401
Additional paid-in capital 900,663 806,973
Treasury stock, at cost: 2,649,793 and 1,986,352 shares at May 31, 2020 and August 31, 2019, respectively (606,405) (433,799)
Retained earnings 573,354 373,225
Accumulated other comprehensive loss (75,060) (74,544)
TOTAL STOCKHOLDERS’ EQUITY $ 792,958 $ 672,256
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,947,705 $ 1,560,130

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~FactSet Research Systems Inc.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~–~~Unaudited~~

Nine Months Ended
(in thousands) May 31, 2020 May 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 283,859 $ 261,263
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 41,333 43,943
Stock-based compensation expense 28,372 24,135
Deferred income taxes 7,230 1,294
Loss on sale of assets 166 195
Changes in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of reserves (5,091) 3,112
Accounts payable and accrued expenses 10,400 (4,783)
Accrued compensation (14,154) (23,672)
Deferred fees 9,856 4,826
Taxes payable, net of prepaid taxes (27,088) (2,232)
Other, net 11,530 (2,757)
     Net cash provided by operating activities 346,413 305,324
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, equipment, leasehold improvements and intangible assets, net of proceeds from dispositions (62,909) (32,906)
Purchases of investments (2,736) (8,180)
Proceeds from maturity or sale of investments 4,199 11,543
     Net cash used in investing activities (61,446) (29,543)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchases of common stock (171,005) (158,294)
Dividend payments (81,438) (75,769)
Proceeds from employee stock plans 65,323 78,926
Repayment of debt — (575,000)
Proceeds from debt — 575,000
Other financing, net (1,592) (901)
     Net cash used by financing activities (188,712) (156,038)
Effect of exchange rate changes on cash and cash equivalents 1,653 (4,406)
Net (decrease) increase in cash and cash equivalents 97,908 115,337
Cash and cash equivalents at beginning of period 359,799 208,623
Cash and cash equivalents at end of period $ 457,707 $ 323,960

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~FactSet Research Systems Inc.~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY- Unaudited~~

~~For the Three Months Ended May 31, 2020~~

(in thousands, except share data) Common Stock Additional
Paid-in
Capital Treasury Stock Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders’
Equity
Shares Par Value Shares Amount
Balance as of February 29, 2020 40,452,351 $ 405 $ 875,488 2,603,104 $ (593,980) $ 501,326 $ (66,479) $ 716,760
Net income 101,216 101,216
Other comprehensive loss (8,581) (8,581)
Common stock issued for employee stock plans 104,388 1 14,832 32 (9) 14,824
Vesting of restricted stock 181 21 (6) (6)
Repurchases of common stock 46,636 (12,410) (12,410)
Stock-based compensation expense 10,343 10,343
Dividends declared (29,188) (29,188)
Balance as of May 31, 2020 40,556,920 $ 406 $ 900,663 2,649,793 $ (606,405) $ 573,354 $ (75,060) $ 792,958
For the Nine Months Ended May 31, 2020
(in thousands, except share data) Common Stock Additional
Paid-in
Capital Treasury Stock Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders’
Equity
Shares Par Value Shares Amount
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 283,859 283,859
Other comprehensive income (516) (516)
Common stock issued for employee stock plans 436,071 5 65,318 75 (20) 65,303
Vesting of restricted stock 16,657 6,230 (1,581) (1,581)
Repurchases of common stock 657,136 (171,005) (171,005)
Stock-based compensation expense 28,372 28,372
Dividends declared (83,730) (83,730)
Balance as of May 31, 2020 40,556,920 $ 406 $ 900,663 2,649,793 $ (606,405) $ 573,354 $ (75,060) $ 792,958

Consolidated Financial Statements.

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – Unaudited


	Three Months Ended November 30,
(In thousands)	2020		2019
Net income	$	101,206	$	93,957

Other comprehensive income, net of tax:
Net unrealized (loss) gain on cash flow hedges*	(116)		2,051
Foreign currency translation adjustments	333		7,787
Other comprehensive gain	217		9,838
Comprehensive income	$	101,423	$	103,795

*For the three months ended November 30, 2020, the net unrealized loss on cash flow hedges were net of a tax benefit of $39 thousand. For the three months ended November 30, 2019, the net unrealized gain on cash flow hedges were net of a tax expense of $714 thousand.

The accompanying notes are an integral part of theseConsolidated Financial Statements.

FactSet Research Systems Inc.

CONSOLIDATEDBALANCE SHEETS– Unaudited


(In thousands, except share data)	November 30, 2020		August 31, 2020
ASSETS
Cash and cash equivalents	$	560,137	$	585,605
Investments	18,166		19,572
Accounts receivable, net of reserves of $7,252 at November 30, 2020 and $7,987 at August 31, 2020	156,218		155,011
Prepaid taxes	25,908		38,067
Prepaid expenses and other current assets	43,660		43,675
Total current assets	804,089		841,930
Property, equipment and leasehold improvements, net	135,121		133,102
Goodwill	738,575		709,703
Intangible assets, net	134,896		121,095

Lease right-of-use assets, net	257,591		248,929
Other assets	29,154		28,629
TOTAL ASSETS	$	2,099,426	$	2,083,388
LIABILITIES
Accounts payable and accrued expenses	$	84,738	$	82,094
Current lease liabilities	30,954		29,056
Accrued compensation	36,486		81,873
Deferred fees	46,439		53,987
Dividends payable	29,266		29,283
Total current liabilities	227,883		276,293
Long-term debt	575,511		574,354
Deferred taxes	18,444		19,713
Deferred fees	9,147		9,319
Taxes payable	28,795		27,739
Long-term lease liabilities	279,723		272,269
Other non-current liabilities	7,350		7,326
TOTAL LIABILITIES	$	1,146,853	$	1,187,013
Commitments and Contingencies			0
0STOCKHOLDERS’ EQUITY
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, 40,884,113 and 40,767,708 shares issued, 38,008,129 and 38,030,252 shares outstanding at November 30, 2020 and August 31, 2020, respectively	409		408
Additional paid-in capital	968,375		939,067
Treasury stock, at cost: 2,875,984 and 2,737,456 shares at November 30, 2020 and August 31, 2020, respectively	(682,224)		(636,956)
Retained earnings	705,089		633,149
Accumulated other comprehensive loss	(39,076)		(39,293)
TOTAL STOCKHOLDERS’ EQUITY	$	952,573	$	896,375
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,099,426	$	2,083,388

The accompanying notes are an integral part of these Consolidated Financial Statements.

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS–Unaudited


	Three Months Ended November 30,
(in thousands)	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	101,206	$	93,957
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	15,290		14,390
Amortization of lease right-of-use assets	10,697		10,700
Stock-based compensation expense	11,317		9,814
Deferred income taxes	437		(6,624)

Changes in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of reserves	(342)		875
Accounts payable and accrued expenses	2,240		13,165
Accrued compensation	(45,858)		(45,780)
Deferred fees	(9,724)		(6,483)
Taxes payable, net of prepaid taxes	13,302		16,616
Lease liabilities, net	(10,007)		(3,761)
Other, net	718		(1,078)
Net cash provided by operating activities	89,276		95,791

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business, net of cash and cash equivalents acquired	(41,916)		0
Purchases of property, equipment, leasehold improvements and internal-use software	(18,333)		(26,780)
Purchases of investments	(250)		(2,620)
Proceeds from maturity or sale of investments	2,177		2,257
Net cash used in investing activities	(58,322)		(27,143)

CASH FLOWS FROM FINANCING ACTIVITIES
Repurchases of common stock	(43,144)		(84,423)
Dividend payments	(29,103)		(27,259)
Proceeds from employee stock plans	17,993		16,727


Other financing activities	(2,123)		0
Net cash used by financing activities	(56,377)		(94,955)

Effect of exchange rate changes on cash and cash equivalents	(45)		2,725
Net decrease in cash and cash equivalents	(25,468)		(23,582)
Cash and cash equivalents at beginning of period	585,605		359,799
Cash and cash equivalents at end of period	$	560,137	$	336,217

The accompanying notes are an integral part of these Consolidated Financial Statements.

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY- Unaudited

For the Three Months Ended ~~May 31,~~November 30, 2020


(in thousands, except share data)	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value				Shares	Amount
Balance as of August 31, 2020	40,767,708	$	408	$	939,067	2,737,456	$	(636,956)	$	633,149	$	(39,293)	$	896,375
Net income									101,206				101,206
Other comprehensive loss											217		217
Common stock issued for employee stock plans	98,459	1		17,991									17,992
Vesting of restricted stock	17,946	—				6,728	(2,124)						(2,124)
Repurchases of common stock						131,800	(43,144)						(43,144)
Stock-based compensation expense				11,317									11,317
Dividends declared									(29,266)				(29,266)
Balance as of November 30, 2020	40,884,113	$	409	$	968,375	2,875,984	$	(682,224)	$	705,089	$	(39,076)	$	952,573

For the Three Months Ended November 30, 2019


(in thousands, except share data)	(in thousands, except share data)	Common Stock							Additional Paid-in Capital	Treasury Stock Shares Amount						Retained Earnings				Accumulated Other Comprehensive Loss						Total Stockholders’ Equity	(in thousands, except share data)	Common Stock								Additional Paid-in Capital			Treasury Stock Shares Amount						Retained Earnings			Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
			Shares			Par Value				Shares		Amount																(in thousands, except share data)		Shares		Par Value			Additional Paid-in Capital				Shares		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of February 28, 2019		39,690,225		$	397		$	732,538	1,590,060	$	(324,167)	$	244,388	$	(53,635)						$	599,521
Balance as of August 31, 2019																		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											92,265				92,265		Net income																					93,957								93,957
Other comprehensive income	Other comprehensive income													(11,486)		(11,486)		Other comprehensive income																								9,838			9,838
Common stock issued for employee stock plans	Common stock issued for employee stock plans	292,598		3			41,172									41,175		Common stock issued for employee stock plans	119,740						1			19,181																	19,182
Vesting of restricted stock	Vesting of restricted stock															—		Vesting of restricted stock	15,376						—								5,778			(1,456)									(1,456)
Repurchases of common stock	Repurchases of common stock								175,000	(47,555)						(47,555)		Repurchases of common stock															343,000			(84,423)									(84,423)
Stock-based compensation expense	Stock-based compensation expense						7,995									7,995		Stock-based compensation expense										9,814																	9,814
Dividends declared	Dividends declared											(27,506)				(27,506)		Dividends declared																					(27,290)						(27,290)

Balance as of May 31, 2019		39,982,823		$	400		$	781,705	1,765,060	$	(371,722)	$	309,147	$	(65,121)	$	654,409
Balance as of November 30, 2019																		Balance as of November 30, 2019	40,239,308						$	402		$	835,968				2,335,130			$	(519,678)		$	439,892		$	(64,706)		$	691,878

For the Nine Months Ended May 31, 2019

(in thousands, except share data)		Common Stock							Additional Paid-in Capital	Treasury Stock Shares Amount						Retained Earnings				Accumulated Other Comprehensive Loss						Total Stockholders’ Equity
			Shares			Par Value				Shares		Amount
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												261,263				261,263
Other comprehensive loss														(14,399)		(14,399)
Common stock issued for employee stock plans		642,444		7			90,039									90,046
Vesting of restricted stock		75,530							27,852	(6,155)						(6,155)
Repurchases of common stock									664,945	(152,139)						(152,139)
Stock-based compensation expense							24,135									24,135
Dividends declared												(76,263)				(76,263)
Cumulative effect of adoption of accounting standards*												1,304		717		2,021
Balance as of May 31, 2019		39,982,823		$	400		$	781,705	1,765,060	$	(371,722)	$	309,147	$	(65,121)	$	654,409

*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 U.S. Tax Cuts and Jobs Act ("TCJA") providing for the reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects. See Note 4 for additional revenue recognition information.

The accompanying notes are an integral part of these ~~consolidated financial statements.~~Consolidated Financial Statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FactSet Research Systems Inc.

~~May 31,~~November 30, 2020

(Unaudited)


		Page
Note 1	Description of Business	9
Note 2	Basis of Presentation	9
Note 3	Recent Accounting Pronouncements	10
Note 4	Revenue Recognition	11
Note 5	Fair Value Measures	12
Note 6	Derivative Instruments	14
Note 7	Acquisition	16
Note 8	Goodwill	17
Note 9	Income Taxes	18
Note 10	Leases	18
Note 11	Debt	20
Note 12	Commitments and Contingencies	21
Note 13	Stockholders' Equity	22
Note 14	Earnings Per Share	24
Note 15	Stock-Based Compensation	24
Note 16	Segment Information	25

1. ~~ORGANIZATION AND NATURE~~DESCRIPTION OF BUSINESS

FactSet Research Systems Inc. ~~(the~~and its wholly-owned subsidiaries (collectively, the "Company" or "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 and reporting, in which the 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 an organization. FactSet is focused on growing the business through 3 segments: the Americas, EMEA ~~(formerly known as Europe)~~(Europe and Africa), and Asia Pacific. ~~The~~Within 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~~including but 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, an open marketplace and digital portals and application programming ~~interfaces (APIs)~~interface ("APIs"). The Company’s revenue is primarily derived from subscriptions to products and services such as workstations, portfolio analytics, enterprise data, and research management.

2. BASIS OF PRESENTATION

FactSet conducts business globally and isis managed on a geographic basis. The ~~accompanying~~accompanying unaudited ~~consolidated~~ ~~financial statements~~Consolidated Financial Statements and ~~notes of FactSet and its wholly-owned subsidiaries~~Notes to the Company's Consolidated Financial Statements included in this Quarterly Report on Form 10-Q are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all

information and footnotes required by GAAP for annual financial statements. The accompanying ~~consolidated financial statements~~Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany activity and balances have been eliminated.

In the opinion of management, the accompanying unaudited ~~consolidated financial statements~~Consolidated Financial Statements include all normal recurring adjustments, transactions or events discretely impacting the interim periods considered necessary to present fairly the Company’s results of operations, financial position, cash flows and equity. Certain notes and other information have been condensed or omitted in this Quarterly Report on Form 10-Q, therefore the information in this Quarterly Report on Form 10-Q should be read in conjunction with the audited ~~consolidated financial statements~~Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, ~~2019, filed with the Securities and Exchange Commission ("SEC") on October 30, 2019.~~2020.

The Company has evaluated subsequent events through the date the financial statements were issued.

Reclassification

The Company reclassified in the Consolidated Statement of Cash Flows certain prior year comparative figures from ~~Interest expense~~Other, net to ~~Other expense,~~Amortization of lease right-of-use assets and Lease liabilities, net ~~including non-operational foreign exchange gains and losses in the Consolidated Statement of Income~~within Net cash provided by operating activities 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 in the prior year comparative figures in the Consolidated Balance Sheets to conform to the current year's presentation.

COVID-19

A novel strain of coronavirus, now known as COVID-19 ~~(“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 transition to remote working has not significantly affected financial results for the three months ended November 30, 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 the three ~~and nine~~ months ended ~~May 31,~~November 30, 2020. The extent of the effect on the Company’s 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. RECENT ACCOUNTING PRONOUNCEMENTS

As of ~~May 31,~~November 30, 2020, the Company implemented all applicable new accounting standards and updates issued by the Financial Accounting Standards Board ("FASB") that were in effect. There were no new standards or updates adopted during the ~~first nine~~three months ~~of fiscal~~ended November 30, 2020 that had a material impact on the ~~consolidated financial statements other than the new lease accounting standard discussed below. Refer to Note 15 Leases for additional information.~~Consolidated Financial Statements.

New Accounting Standards or Updates Recently Adopted

~~Leases~~

~~In February 2016, the FASB issued an accounting standard update related to accounting for leases, ASC 842, Leases.~~ The update requires the recognition of lease right-of use (“ROU”) assets and liabilities on the balance sheet and the disclosure of qualitative and quantitative information about leasing arrangements. The guidance also eliminates the requirement for an entity to use bright-line tests in determining lease classification. FactSet adopted 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 were not restated and follow the Company's previous policy under ASC 840, Leases. Refer to FactSet’s Annual Report on Form 10-K for the fiscal year ended August 31, 2019, filed with the SEC on October 30, 2019, for further details of the Company’s policy prior to adoption of ASC 842.

FactSet elected the package of practical expedients permitted under the transition guidance, which permits the Company not to reassess 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. The Company has also elected to apply the short-term lease exception not to recognize lease liabilities and right-of-use assets for leases with a term of 12 months or less. FactSet will recognize lease payments on a straight-line basis over the lease term.

As of November 30, 2019, the Company recognized ROU assets, net of amortization of $217.0 million and corresponding current and non-current lease liabilities of $266.4 million, related primarily to the Company’s real estate leases. There was no material impact to the Company’s Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows and Consolidated Statement of Changes in Stockholders' Equity. Refer to Note 15 Leases for more information regarding the Company's lease accounting.

~~Hedge Accounting Simplification~~

During the first quarter of fiscal 2020, FactSet adopted the accounting standard updated issued by the FASB in August 2017, which focused on reducing the complexity of and simplifying 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. The adoption of this standard had no impact on the Company's consolidated financial statements.

~~Recent Accounting Standards or Updates Not Yet Effective~~

~~Credit Losses on Financial Instruments~~

In 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 2021. The Company is currently evaluating the impact of this accounting standard update, but it is not expected to have a material impact on the Company's consolidated financial statements.

Goodwill Impairment Test

In January 2017, the FASB issued ~~an accounting standard update~~ASU 2017-04, Intangibles—Goodwill and Other (Topic 350); Simplifying the Test for Goodwill Impairment, 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. The ~~accounting~~Company has adopted this 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~~September 1, ~~2017.~~2020. The adoption of this accounting standard update had no impact on the Company's Consolidated Financial Statements.

Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-03, Financial Instruments—Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments, which 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 replaces the "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. Subsequent to the adoption, the allowance for doubtful accounts is made when the financial asset is first recorded to the balance sheet (and periodically thereafter) and is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The Company has adopted this standard effective September 1, 2020. The adoption of this accounting standard update did not have a material impact on the Company's Consolidated Financial Statements.

Recent Accounting Standards or Updates Not Yet Effective

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848); Facilitation of the Effects of Reference Rate Reform on Financial Reporting, 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, but it is not expected to have a material impact on the ~~Company's consolidated financial statements.~~

Company’s Consolidated Financial Statements.

Income Tax Simplification

In December 2019, the FASB issued ~~an accounting standard update~~ASU 2019-12, Income Taxes (Topic 740); Simplifying the Accounting for Income Taxes, 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.~~

~~Facilitation of the Effects of Reference Rate Reform on~~Consolidated Financial ~~Reporting~~

In 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 the LIBOR rate. As a result of the reference rate reform initiative, certain widely used reference rates such as the LIBOR rate 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 the LIBOR rate 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, but it is not expected to have a material impact on the Company’s consolidated financial statements. Statements.

No other new accounting pronouncements issued or effective as of ~~May 31,~~November 30, 2020, have had or are expected to have a material impact on the Company’s ~~consolidated financial statements.~~Consolidated Financial Statements.

4. REVENUE RECOGNITION

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 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. 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 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 is satisfied. FactSet does not consider payment terms as a performance obligation for clients with contractual terms that are one year or less and the Company has elected the practical expedient.

Contracts with clients can include certain fulfillment costs, comprised of up-front costs to allow for the delivery of services and products, which are recoverable. In connection with the adoption of the revenue recognition standard, fulfillment costs are recognized as an asset, recorded in 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, and amortized consistent with the associated revenue for providing the 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 Revenue

The Company disaggregates revenue from contracts with clients by geographic region, which includes the Americas, EMEA and Asia Pacific. FactSet believes these regions are reflective of how the Company manages the business and the markets in which it serves. These regions best depict the nature, amount, timing and uncertainty of revenue and cash flows related to contracts with clients. Refer to Note 8 16, Segment Information, for further information on revenue by geographic region.

The following table presents this disaggregation of revenue by geography:


		Three Months Ended May 31,						Nine Months Ended May 31,							Three Months Ended November 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2020		2019
Americas	Americas	$	230,992	$	226,961	$	695,053	$	672,479	Americas	$	244,337	$	231,330
EMEA	EMEA	105,420		102,499		308,355		299,197		EMEA	105,777		100,830
Asia Pacific	Asia Pacific	37,671		35,073		107,113		99,392		Asia Pacific	38,092		34,498
Total Revenue	Total Revenue	$	374,083	$	364,533	$	1,110,521	$	1,071,068	Total Revenue	$	388,206	$	366,658

5. FAIR VALUE MEASURES

Fair 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") 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 isare 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 Hierarchy

The 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 its 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 the 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 Level 3 assets or liabilities held by the Company as of ~~May 31,~~November 30, 2020 or August 31, ~~2019.~~2020.

(a) Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables show, by level within the fair value hierarchy, the Company’s assets and liabilities that are measured at fair value on a recurring basis at ~~May 31,~~November 30, 2020 and August 31, ~~2019.~~2020. The Company did not have any transfers between ~~Level 1 and Level 2~~levels of fair value measurements during the periods presented.


		Fair Value Measurements at May 31, 2020															Fair Value Measurements at November 30, 2020
(in thousands)	(in thousands)	Level 1		Level 2		Level 3		Total		(in thousands)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Corporate money market funds ⁽¹⁾	Corporate money market funds ⁽¹⁾	$	211,752	$	—	$	—	$	211,752	Corporate money market funds (1)	$	201,803	$	0	$	0	$	201,803
Mutual funds ⁽²⁾	Mutual funds ⁽²⁾	—		17,599		—		17,599		Mutual funds (2)	0		18,166		0		18,166
Certificates of deposit ⁽³⁾	Certificates of deposit ⁽³⁾	—		5,007		—		5,007		Certificates of deposit (3)	0		0		0		0
Derivative instruments ⁽⁴⁾	Derivative instruments ⁽⁴⁾	—		418		—		418		Derivative instruments (4)	0		3,027		0		3,027
Total assets measured at fair value	Total assets measured at fair value	$	211,752	$	23,024	$	—	$	234,776	Total assets measured at fair value	$	201,803	$	21,193	$	0	$	222,996

Liabilities	Liabilities									Liabilities
Derivative instruments ⁽⁴⁾	Derivative instruments ⁽⁴⁾	$	—	$	6,274	$	—	$	6,274	Derivative instruments (4)	$	0	$	5,311	$	0	$	5,311
Total liabilities measured at fair value	Total liabilities measured at fair value	$	—	$	6,274	$	—	$	6,274	Total liabilities measured at fair value	$	0	$	5,311	$	0	$	5,311


		Fair Value Measurements at August 31, 2019															Fair Value Measurements at August 31, 2020
(in thousands)	(in thousands)	Level 1		Level 2		Level 3		Total		(in thousands)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Corporate money market funds ⁽¹⁾	Corporate money market funds ⁽¹⁾	$	75,849	$	—	$	—	$	75,849	Corporate money market funds (1)	$	276,852	$	0	$	0	$	276,852
Mutual funds ⁽²⁾	Mutual funds ⁽²⁾	—		18,583		—		18,583		Mutual funds (2)	0		17,257		0		17,257
Certificates of deposit ⁽³⁾	Certificates of deposit ⁽³⁾	—		7,090		—		7,090		Certificates of deposit (3)	0		2,315		0		2,315
Derivative instruments ⁽⁴⁾	Derivative instruments ⁽⁴⁾	—		520		—		520		Derivative instruments (4)	0		3,644		0		3,644
Total assets measured at fair value	Total assets measured at fair value	$	75,849	$	26,193	$	—	$	102,042	Total assets measured at fair value	$	276,852	$	23,216	$	0	$	300,068

Liabilities	Liabilities									Liabilities
Derivative instruments ⁽⁴⁾	Derivative instruments ⁽⁴⁾	$	—	$	3,575	$	—	$	3,575	Derivative instruments (4)	$	0	$	5,773	$	0	$	5,773
Total liabilities measured at fair value	Total liabilities measured at fair value	$	—	$	3,575	$	—	$	3,575	Total liabilities measured at fair value	$	0	$	5,773	$	0	$	5,773

1.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. As such, the Company’s corporate money market funds are classified as Level 1 assets and included in Cash and cash equivalents withinthe C~~onsolidated~~ the Consolidated Balance Sheets.

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 areclassified asInvestments (short-term) on the Consolidated Balance Sheets.

3.The Company’s certificates of deposit held for investmentare not debt ~~securities~~securities and are classified as Level 2 assets.These certificates of deposithave original maturities greater than three months but less than one year and, as such, are classified as Investments (short-term) within the Consolidated Balance Sheets.

4.The Company utilizes the income approach to measure fair value for its foreign exchange forward contracts. TheThe 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.

(b) Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to our tangible fixed assets, operating lease assets, goodwill and intangible ~~assets.~~assets, and investments. 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. ~~These non-financial assets and liabilities are remeasured in the event of an other-than temporary impairment.~~ The Company reviews goodwill and intangible assets for impairment annually, during the fourth quarter of each fiscal year, or as circumstances indicate the possibility for impairment. The Company monitors the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. During the ~~nine~~three months ended ~~May 31,~~November 30, 2020, no fair value adjustments or material fair value measurements were required for the Company’s non-financial assets or liabilities.

As of ~~May 31,~~November 30, 2020, and August 31, ~~2019,~~2020, the fair value of the Company’s 2019 Revolving Credit Facility (as defined below in Note 11, Debt), included in Long-term debt within the Consolidated Balance Sheets, was $575.0 million, which approximated its carrying amount given the application of a floating interest rate equal to ~~the~~ 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.

As part of the Truvalue Labs, Inc. ("TVL") acquisition, FactSet assumed an additional $1.1 million in debt included in Long-term debt within the Consolidated Balance Sheets. Refer to Note 7, Acquisition for further discussion on the TVL acquisition.

6. DERIVATIVE INSTRUMENTS

Cash Flow Hedges

Foreign Currency Forward Contracts

FactSet conducts business outside the U.S. in se~~veral~~several currencies including the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. As such, the 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. and limits counterparties to credit-worthy financial institutions. Refer to Note ~~16,~~ 12, Commitments and Contingencies – Concentrations of Credit ~~Risk,~~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~~Accumulated other comprehensive loss ("AOCL") and subsequently reclassified into ~~operating~~Operating expenses when the hedge is settled. There was 0 discontinuance of cash flow hedges during the first ~~nine~~three months of fiscal ~~2020~~2021 or ~~2019,~~2020, 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 ~~May 31,~~November 30, 2020, FactSet maintained foreign currency forward contracts to hedge a portion of its 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 ~~50%~~25% to 75% over their respective hedged periods. The current foreign currency forward contracts are set to mature at various points between the ~~fourth~~second quarter of fiscal ~~2020~~2021 through the first quarter of fiscal ~~2021.~~2022.

As of ~~May 31,~~November 30, 2020, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos and Indian Rupees with U.S. dollars was ~~₱466.8~~₱1.3 billion and ~~Rs830.6~~Rs2.4 billion, respectively. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros and British Pound Sterling was ~~€11.4~~€36.3 million and ~~£9.5~~£37.6 million, respectively.

Interest Rate Swap Agreement

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 on a portion of its outstanding debt under its 2019 Revolving Credit Facility (as defined below in Note 14 11, Debt). As of ~~May 31,~~November 30, 2020, FactSet has borrowed ~~$575.0~~$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 ~~rate~~ plus a spread using a debt leverage pricing grid, which was 0.875% as of ~~May 31, 2020~~.November 30, 2020. Refer to Note 11, Debt, for further discussion on the 2019 Revolving Credit Facility. The variable interest rate on FactSet’s long-term debt can expose the Company to interest rate volatility arising from changes in ~~the LIBOR rate.~~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 ~~rate~~ utilized to calculate the interest expense from the 2019 Revolving Credit Facility. The interest rate swap agreement matures on March ~~28,~~29, 2024. ~~Refer to Note 14 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. Realized gains or losses are subsequently reclassified into Other expenses in the Consolidated Statement of Income when settled.

The following is a summary of the gross notional values of the derivative instruments:


(in thousands, in U.S. dollars)	(in thousands, in U.S. dollars)	Gross Notional Value									(in thousands, in U.S. dollars)	Gross Notional Value
				May 31, 2020			August 31, 2019		(in thousands, in U.S. dollars)	November 30, 2020				August 31, 2020
Foreign currency forward contracts	Foreign currency forward contracts	$	45,242		$	113,700	Foreign currency forward contracts	$				$	129,649
Interest rate swap agreement	Interest rate swap agreement	287,500			—		Interest rate swap agreement	287,500				287,500
Total cash flow hedges	Total cash flow hedges	$	332,742		$	113,700	Total cash flow hedges	$	437,798			$	417,149

Fair Value of Derivative Instruments

The following is a summary of the fair values of the derivative instruments:


		Fair Value of Derivative Instruments																									Fair Value of Derivative Instruments
Derivatives designated as hedging instruments			Derivative Assets							Derivative Liabilities
					May 31, 2020		August 31, 2019			May 31, 2020		August 31, 2019			Derivatives designated as hedging instruments				Derivative Assets								Derivative Liabilities
			Balance Sheet Classification		Fair Value			Balance Sheet Classification		Fair Value						Balance Sheet Classification			November 30, 2020			August 31, 2020		Balance Sheet Classification			November 30, 2020			August 31, 2020
Foreign currency forward contracts	Foreign currency forward contracts	Prepaid expenses and other current assets	$	418	$	520	Accounts payable and accrued expenses	$	1,010	$	3,575	Foreign currency forward contracts		Prepaid expenses and other current assets		$	3,027		$	3,644		Accounts payable and accrued expenses		$	45		$	93
Interest rate swap agreement	Interest rate swap agreement	Prepaid expenses and other current assets	—		—		Accounts payable and accrued expenses	1,786		—		Interest rate swap agreement		Prepaid expenses and other current assets		0			0			Accounts payable and accrued expenses		1,447			1,861
														Other non-current liabilities		3,478			—			Interest rate swap agreement	Other Assets			0			0		Other non-current liabilities	3,819	3,819
Total cash flow hedges	Total cash flow hedges		$	418	$	520		$	6,274	$	3,575		Total cash flow hedges				$	3,027		$	3,644				$	5,311		$	5,773

All derivatives were designated as hedging instruments as of ~~May 31,~~November 30, 2020 and August 31, ~~2019.~~2020.

Derivatives in Cash Flow Hedging Relationships

The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for each of the three months ended ~~May 31,~~November 30, 2020 and ~~May 31,~~ 2019,, respectively:


(in thousands)	(in thousands)	Loss Recognized in AOCL on Derivatives					Location of Loss Reclassified from AOCL into Income		Loss Reclassified from AOCL into Income							(in thousands)	Gain (Loss) Recognized in AOCL on Derivatives						Location of Gain (Loss) Reclassified from AOCL into Income			Gain (Loss) Reclassified from AOCL into Income
											November 30,				Location of Gain (Loss) Reclassified from AOCL into Income		November 30,
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	2020		2019					Location of Loss Reclassified from AOCL into Income			2020		2019			Derivatives in Cash Flow Hedging Relationships		2020			Location of Gain (Loss) Reclassified from AOCL into Income				2019
Foreign currency forward contracts	Foreign currency forward contracts	$	(1,040)	$	(822)	SG&A	$	(597)				Foreign currency forward contracts	$	248			$	2,030		$	(734)
Interest rate swap agreement	Interest rate swap agreement	(5,264)		—		Interest expense, net	—		—			Interest rate swap agreement	(56)			0		Interest expense, net			0
Total cash flow hedges	Total cash flow hedges	$	(6,304)	$	(822)		$	(1,019)	$	(597)		Total cash flow hedges	$	192	$	2,030				$	347			$	(734)

The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the nine months ended May 31, 2020 and May 31, 2019, respectively:

(in thousands)		(Loss) Gain Recognized in AOCL on Derivatives					Location of Loss Reclassified from AOCL into Income		Loss Reclassified from AOCL into Income
Derivatives in Cash Flow Hedging Relationships		2020		2019					2020			2019
Foreign currency forward contracts		$	362	$	1,442	SG&A	$	(2,101)	$	(1,381)
Interest rate swap agreement		(5,264)		—		Interest expense, net	—		—
Total cash flow hedges		$	(4,902)	$	1,442		$	(2,101)	$	(1,381)

~~As of~~ ~~May 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~~Consolidated Statement of Income in Interest expense, net.

As of ~~May 31,~~November 30, 2020, the Company estimates that net pre-tax derivative ~~losses~~gains of ~~$2.4~~$1.1 million included in AOCL will be reclassified into earnings within the next 12 months.

~~Table~~ As of ~~Content~~s

November 30, 2020, FactSet's cash flow hedges were effective, with no amount of ineffectiveness 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.

Offsetting of Derivative Instruments

FactSet’s master netting and other similar arrangements with its respective counterparties allow for net settlement under certain conditions. As of ~~May 31,~~November 30, 2020, and August 31, ~~2019,~~2020, there were no material amounts recorded net on the Consolidated Balance Sheets.

7. ~~OTHER COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS~~ACQUISITION

Truvalue Labs, Inc.

On November 2, 2020, FactSet acquired all of the outstanding shares of TVL for a purchase price of $41.9 million, subject to working capital and other adjustments. TVL is a leading provider of environmental, social, and governance ("ESG") information derived from artificial intelligence. The acquisition of TVL further enhances FactSet's commitment to providing industry leading access to ESG data across its platforms. The TVL purchase price was in excess of the fair value of net assets acquired, resulting in the recognition of goodwill. FactSet expects to finalize the allocation of the purchase price for TVL as soon as possible, but in any event, no later than one year from the acquisition date.

The components of other comprehensive loss for the three months ended May 31, 2020 and May 31, 2019 are as follows:
May 31, 2020 May 31, 2019
(in thousands) Pre-tax Net of tax Pre-tax Net of tax
Foreign currency translation adjustments $ (4,633) $ (4,633) $ (11,326) $ (11,326)
Net unrealized loss on cash flow hedges recognized in AOCL (5,285) (3,948) (225) (160)
Other comprehensive loss $ (9,918) $ (8,581) $ (11,551) $ (11,486)
The components of other comprehensive loss for the nine months ended May 31, 2020 and May 31, 2019 are as follows:
May 31, 2020 May 31, 2019
(in thousands) Pre-tax Net of tax Pre-tax Net of tax
Foreign currency translation adjustments $ 1,589 $ 1,589 $ (15,804) $ (15,804)
Net unrealized (loss) gain on cash flow hedges recognized in AOCL (2,801) (2,105) 2,107 1,405
Other comprehensive loss $ (1,212) $ (516) $ (13,697) $ (14,399)
The components of AOCL are as follows:
(in thousands) May 31, 2020 August 31, 2019
Accumulated unrealized losses on cash flow hedges, net of tax $ (4,371) $ (2,266)
Accumulated foreign currency translation adjustments (70,689) (72,278)
Total accumulated other comprehensive loss $ (75,060) $ (74,544)

~~8. SEGMENTINFORMATION~~

Operating segments are defined as components of an enterprise that have the following characteristics: (i) it engages in business activities from which it may earn revenue and incur expense, (ii) its 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 internal financial reporting structure is based on 3 segments: the Americas, EMEA and Asia Pacific. The primary workflow solutions within the Americas, EMEA and Asia Pacific segments are ~~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), 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.

1716

~~Expenditures associated with~~The preliminary estimated acquisition date fair values of major classes of assets acquired and liabilities assumed are as follows:

Estimated Acquisition Date Fair Value

Estimated Acquisition Date Useful Life

Amortization Method

(in thousands)

(in years)

Current assets

811

Amortizable intangible assets

Software technology

10,700

13 years

Straight-line

Client relationships

900

12 years

Straight-line

Trade names

2,800

15 years

Straight-line

Goodwill

29,342

Other non-current assets

5,299

Current liabilities

(3,184)

Other non-current liabilities

(4,753)

Total purchase price

41,915

Goodwill totaling $29.3 million represents the ~~Company’s data centers, third-party data costs~~excess of the TVL purchase price over the fair value of net assets acquired and ~~corporate headquarters charges are recorded by~~is included in the Americas ~~segment and are~~segment. Goodwill generated from the TVL acquisition is not ~~allocated to the other segments.~~deductible for income tax purposes. 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 tables reflect the~~ results of operations of TVL have been included in the ~~Company's segments:~~

(in thousands)
For the three months ended May 31, 2020 Americas EMEA Asia Pacific Total
Revenue $ 230,992 $ 105,420 $ 37,671 $ 374,083
Operating income $ 54,019 $ 43,638 $ 23,983 $ 121,640
Capital expenditures $ 8,160 $ 520 $ 2,330 $ 11,010
(in thousands)
For the three months ended May 31, 2019 Americas EMEA Asia Pacific Total
Revenue $ 226,961 $ 102,499 $ 35,073 $ 364,533
Operating income $ 51,012 $ 44,793 $ 21,435 $ 117,240
Capital expenditures $ 8,664 $ 439 $ 2,321 $ 11,424

(in thousands)
For the nine months ended May 31, 2020 Americas EMEA Asia Pacific Total
Revenue $ 695,053 $ 308,355 $ 107,113 $ 1,110,521
Operating income $ 144,952 $ 127,520 $ 68,611 $ 341,083
Capital expenditures $ 47,234 $ 2,037 $ 13,638 $ 62,909
(in thousands)
For the nine months ended May 31, 2019 Americas EMEA Asia Pacific Total
Revenue $ 672,479 $ 299,197 $ 99,392 $ 1,071,068
Operating income $ 140,549 $ 127,130 $ 58,788 $ 326,467
Capital expenditures $ 20,022 $ 2,136 $ 10,748 $ 32,906

~~The following table reflects~~Company’s Consolidated Financial Statements, within the ~~total assets for~~Americas segment, since the ~~Company's segments:~~

(in thousands)
Segment Assets May 31, 2020 August 31, 2019
Americas $ 1,106,646 $ 851,014
EMEA 633,398 588,911
Asia Pacific 207,661 120,205
Total assets $ 1,947,705 $ 1,560,130

completion of the acquisition on November 2, 2020. Pro forma information has not been presented because the effect of the TVL acquisition is not material to the Company’s Consolidated Financial Statements.

9.8. GOODWILL

Changes in the carrying amount of goodwill by segment for the ~~nine~~three months ended ~~May 31,~~November 30, 2020 are as follows:

(in thousands)
Americas EMEA Asia Pacific Total
Balance at August 31, 2019 $ 386,195 $ 296,459 $ 3,075 $ 685,729
Foreign currency translations — 2,803 (48) 2,755
Balance at May 31, 2020 $ 386,195 $ 299,262 $ 3,027 $ 688,484


(in thousands)	Americas		EMEA		Asia Pacific		Total
Balance at August 31, 2020	$	386,195	$	320,427	$	3,081	$	709,703
Acquisitions	29,342		0		0		29,342
Foreign currency translations	0		(519)		49		(470)
Balance at November 30, 2020	$	415,537	$	319,908	$	3,130	$	738,575

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 Americas, 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 reported operating segments 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 no impairment charge was required.

~~10. COMMON STOCK AND EARNINGS PER SHARE~~

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. The cash dividend of $29.0 million was paid on June 18, 2020 to common stockholders of record at the close of business on May 29, 2020.

~~Shares of common stock outstanding were as follows:~~

Nine Months Ended
May 31, May 31,
(in thousands) 2020 2019
Balance, beginning of year at September 1, 2019 and 2018, respectively 38,118 38,192
Common stock issued for employee stock plans 452 719
Repurchase of common stock from employees⁽¹⁾
(6) (28)
Repurchase of common stock under the share repurchase program (657) (665)
Balance at May 31, 2020 and May 31, 2019, respectively 37,907 38,218

~~(1)For the nine months endedMay 31, 2020and May 31, 2019, the Companyrepurchased6,305and27.852shares, or $1.6 million and$6.2 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock and exercise of stock options.~~

~~A 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 three months ended May 31, 2020
Basic EPS
Income available to common stockholders $ 101,216 37,885 $ 2.67
Diluted EPS
Dilutive effect of stock options and restricted stock 596
Income available to common stockholders plus assumed conversions $ 101,216 38,481 $ 2.63
For the three months ended May 31, 2019
Basic EPS
Income available to common stockholders $ 92,265 38,223 $ 2.41
Diluted EPS
Dilutive effect of stock options and restricted stock 770
Income available to common stockholders plus assumed conversions $ 92,265 38,993 $ 2.37
For the nine months ended May 31, 2020
Basic EPS
Income available to common stockholders $ 283,859 37,912 $ 7.49
Diluted EPS
Dilutive effect of stock options and restricted stock 636
Income available to common stockholders plus assumed conversions $ 283,859 38,548 $ 7.36
For the nine months ended May 31, 2019
Basic EPS
Income available to common stockholders $ 261,263 38,128 $ 6.85
Diluted EPS
Dilutive effect of stock options and restricted stock 679
Income available to common stockholders plus assumed conversions $ 261,263 38,807 $ 6.73

Dilutive potential common shares consist of stock options and unvested performance-based awards. There were 38,987 stock options excluded from the calculation of diluted EPS for the nine months ended May 31, 2020, because their inclusion would have been anti-dilutive. For the nine months ended May 31, 2019, the number of stock options excluded from calculation of diluted EPS was 1,810.

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. For the nine months ended May 31, 2020, there were 36,888 performance-based awards excluded from the calculation of diluted EPS. For the nine months ended May 31, 2019, there were 206,417 performance-based awards excluded from the calculation of diluted EPS.

~~11.STOCKHOLDERS’ EQUITY~~

~~Share Repurchase Program~~

Repurchases of shares of common stock are made from time to time in the open market and privately negotiated transactions, subject to market conditions. For the three months ended May 31, 2020 and May 31, 2019, the Company repurchased 46,636 shares for $12.4 million and 175,000 shares for $47.6 million, respectively. For the nine months ended May 31, 2020 and May 31, 2019, the Company repurchased 657,136 shares for $171.0 million and 664,945 shares for $152.1 million, respectively.

On March 24, 2020, the Board of Directors of FactSet approved a $220.0 million increase to the existing share repurchase program. Subsequent to this expansion, a total of $287.6 million remained authorized for future share repurchases as of May 31, 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 Stock~~

Restricted stock awards entitle the holders to receive shares of common stock as the awards vest over time. During the first nine months of fiscal 2020, 16,657 shares of previously granted restricted stock vested and were included in common stock outstanding as of May 31, 2020 (recorded net of 6,230 shares repurchased from employees at a cost of $1.6 million to cover their cost of taxes upon vesting of the restricted stock). During the comparable period a year ago, 75,530 shares of previously granted restricted stock vested and were included in common stock outstanding as of May 31, 2019 (recorded net of 27,852 shares repurchased from employees at a cost of $6.2 million to cover their cost of taxes upon vesting of the restricted stock).

~~Dividends~~

~~The Company’s Board of~~ ~~Directors declared the following dividends for the first nine months of fiscal 2020 and 2019 respectively:~~

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 $ 29,188 June 18, 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

Future cash dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Company and are subject to final determination by the Company’s Board of Directors.

~~12. EMPLOYEE AND NON-EMPLOYEE DIRECTOR STOCK OPTION AND RETIREMENT PLANS~~

~~Stock Compensation Activity~~

~~Employee Stock Option Awards~~

~~During the nine months ended May 31, 2020~~, FactSet granted 422,346 stock options with a weighted average exercise price of $256.05 to existing employees of the Company. The majority of the stock options granted during the first nine months of fiscal 2020 related to the annual employee grant on November 1, 2019 under the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (the "LTIP"). On November 1, 2019, FactSet granted 412,098 non-performance-based employee stock options, using the lattice-binomial option-pricing model. These stock option awards vest 20% annually on the anniversary date of the grant and are fully vested after five years, expiring ten years from the date of grant.

~~The estimated fair value of employee stock options granted on November 1, 2019 was determined with the following assumptions:~~


~~November 1, 2019 Grant Details~~
~~Risk-free interest rate~~						~~1.59% - 1.79%~~

~~Expected life (years)~~						~~7.22~~

~~Expected volatility~~						~~23% - 26%~~

~~Dividend yield~~						~~1.09%~~

~~Estimated fair value~~						~~$60.19~~
~~Exercise price~~						~~$255.87~~
~~Fair value as a percentage of exercise price~~						~~23.5%~~

~~Non-Employee Director Stock Option Grant~~

The Non-Employee Directors' Stock Option and Award Plan, as Amended and Restated (the "Director Plan"), provides for the grant of share-based awards, including stock options, to non-employee directors of FactSet. As of ~~May 31, 2020, shares available for future grant under the Director Plan were 247,876. The expiration date of the Director Plan is December 19, 2027.~~

On January 15, 2020, FactSet granted 16,080 stock options to the Company's non-employee directors. These stock options cliff vest on the third anniversary of the date of grant and expire seven years from the date of grant. The Company used the Black-Scholes option-pricing model with the following assumptions:

~~January 15, 2020 Grant Details~~

~~Risk-free interest rate~~

~~1.64%~~

~~Expected life (years)~~

~~5.4~~

~~Expected volatility~~

~~22.0%~~

~~Dividend yield~~

~~1.11%~~

~~Estimated Fair Value~~

~~$54.74~~

~~Exercise price~~

~~$271.51~~

~~Fair value as a percentage of exercise price~~

~~20.2%~~

~~Restricted Stock Units~~

During the first nine months of fiscal 2020, FactSet granted 30,766 non-performance based restricted stock units ("RSUs") and 36,909 performance-based restricted stock units ("PRSUs"). The majority of the RSUs and PRSUs granted were related to the annual employee grant on November 1, 2019. FactSet granted 29,817 RSUs and 36,501 PRSUs with a weighted average grant date fair value of $245.48 under the LTIP. The RSUs and PRSUs granted to employees entitle the holders to shares of common stock as the units vest over time or the performance period, but not to dividends declared on the underlying shares while the restricted stock is unvested. The grant date fair value of restricted stock units is measured by reducing the grant date price of FactSet's common 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 RSUs vest 20% annually on the anniversary date of grant and are fully vested after five years and the PRSUs cliff vest on the ~~third~~ ~~anniversary of the grant date, subject to the achievement of certain performance metrics.~~

~~Employee Stock Purchase Plan~~

Shares 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 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.

During the three months ended May 31, 2020, employees purchased 11,084 shares at a weighted average price of $238.81 compared to 13,350 shares at a weighted average price of $201.54 for the three months ended May 31, 2019. During the nine months ended May 31, 2020, employees purchased 33,735 shares at a weighted average price of $226.79 compared to 39,069 shares at a weighted average price of $199.43 for the nine months ended May 31, 2019. At May 31, 2020, the ESPP had 186,675 shares reserved for future issuance.

~~Stock-based Compensation~~

The Company recognized total stock-based compensation expense of $10.3 million and $8.0 million during the three months ended May 31, 2020 and May 31, 2019, respectively. During the nine months ended May 31, 2020 and May 31, 2019, the Company recognized total stock-based compensation expense of $28.4 million and $24.1 million, respectively. As of May 31, 2020, $89.1 million of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of 3.1 years. Stock-based compensation expense related to the ESPP was $0.6 million for both the three months ended May 31, 2020 and May 31, 2019. Stock-based compensation expense related to the ESPP was $1.6 million for both the nine months ended May 31, 2020 and May 31, 2019.

~~As of May 31, 2020, FactSet had 5.6 million share-based awards available for grant under the LTIP and 0.2 million share-based awards available for grant under the Director Plan.~~

~~13.~~9. INCOME TAXES

Income 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 the tax bases of assets and liabilities using currently enacted tax rates.

Provision for Income Taxes

The provision for income taxes is as follows:


		Three Months Ended May 31,									Nine Months Ended May 31,										Three Months Ended November 30,
(in thousands)	(in thousands)	2020			2019			2020			2019			(in thousands)	2020			2019
Income before income taxes	Income before income taxes	$	119,140		$	113,384		$	330,990		$	313,676		Income before income taxes	$	120,232		$	108,741
Provision for income taxes	Provision for income taxes	$	17,924		$	21,119		$	47,131		$	52,413		Provision for income taxes	$	19,026		$	14,784
Effective tax rate	Effective tax rate	15.0		%	18.6		%	14.2		%	16.7		%	Effective tax rate	15.8		%	13.6		%

FactSet’s effective tax rate is based on recurring factors and nonrecurring events, including the taxation of foreign income. 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. FactSet’s effective tax rate is lower than the applicable U.S. corporate income tax rate for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2020 ~~due to~~driven mainly by research and development ("R&D") tax ~~benefits,~~credits and a foreign derived intangible income ("FDII") ~~deduction, and excess~~deduction. The effective tax rate for the three months ended November 30, 2020 is further reduced by windfall tax benefits ~~associated with share-based payments.~~from stock-based compensation.

For the three months ended ~~May 31,~~November 30, 2020, the provision for income taxes was ~~$17.9~~$19.0 million, compared to ~~$21.1~~$14.8 million from the same period a year ago. The provision ~~decreased~~increased due ~~mainly~~ to higher operating income and a ~~lower effective~~reduction in income tax ~~rate as of May 31,~~benefits for the three months ended November 30, 2020, compared to the same period a year ~~ago, primarily driven by higher R&D tax credits and a higher FDII deduction, coupled with the effect of applying the lower effective tax rate to the first half of fiscal 2020.~~ago. The ~~three months ended May 31, 2019 included a $5.8 million~~ income tax ~~expense from finalizing the prior year’s tax returns with no similar event~~benefit for the three months ended ~~May 31, 2020. The decrease~~November 30, 2020 was $3.0 million related to ~~the provision was partially offset by increased income tax expense from higher operating income for the three months ended May 31, 2020 compared to the prior year period and $3.3 million in higher~~ windfall tax benefits from stock-based compensation ~~recognized during~~compared to $5.9 million for the three months ended ~~May 31,~~November 30, 2019 ~~compared~~related to the ~~three~~remeasurement of a foreign net deferred tax position due to changes in the jurisdiction's tax rate, finalizing prior years' tax returns, and windfall tax benefits from stock-based compensation.

10. LEASES

FactSet primarily leases real estate for office space under various operating lease agreements. 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 right-of-use ("ROU") asset are recognized on the lease commencement date. As of November 30, 2020, the Company’s leases have remaining terms of less than one year to just over 15 years.

In 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 FactSet recognizes 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 ~~ended May 31, 2020.~~or less. FactSet will recognize these lease payments on a straight-line basis over the lease term in Occupancy costs (a component of SG&A expense).

The adoption of the lease standard primarily related to the Company’s real estate operating leases. As of November 30, 2020, the Company recognized $257.6 million of Lease right-of-use assets, net(initially measured as the lease liabilities, adjusted for deferred rent and lease incentives) and combined Current and Long-term lease liabilities of $310.7 million in the Consolidated Balance Sheet. 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.

Lease liabilities are measured as the present value of the future minimum lease payments, which includes fixed lease payments and certain qualifying index-based variable payments, over the lease term. The present value is calculated using FactSet’s incremental borrowing rate ("IBR") within the geography where the leased asset is located as there is no rate implicit in the

2318

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 any modification to the lease arrangement.

The 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 November 30, 2020:


(in thousands)	Minimum Lease Payments
Fiscal Years Ended August 31,
2021 (remaining nine months)	$	32,134
2022	41,942
2023	38,317
2024	36,510
2025	35,815
Thereafter	198,108
Total	$	382,826
Less: Imputed interest	72,149
Present value	$	310,677

The components of lease cost related to the operating leases were as follows:


	Three Months Ended November 30,
(in millions)	2020		2019
Operating lease cost1	$	10.7	$	10.6
Variable lease cost2	$	3.4	$	5.0

1.Operating lease costs include fixed lease payments and qualifying index-based variable payments that qualified for lease accounting under ASC 842, Leases and complied with the practical expedients and exceptions elected by FactSet.

2.Variable lease costs were not included in the measurement of the lease liabilities and are primarily related to variable 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 and are not dependent on an index or rate. These cost relate to utilities, real estate taxes, insurance and maintenance.

The following table summarizes the Company's lease term and discount rate assumptions related to the operating leases recorded on the Consolidated Balance Sheets:


	November 30, 2020		August 31, 2020
Weighted average remaining lease term (in years)	10.0		10.1
Weighted average discount rate (IBR)	4.3	%	4.2	%

The following table summarizes supplemental cash flow information related to the Company's operating leases:


	Three Months Ended November 30,
(in thousands)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities	$	9.7	$	10.5
Lease ROU assets obtained in exchange for lease liabilities	$	1.1	$	2.1

For the nine months ended May 31, 2020, the provision for income taxes was $47.1 million, compared to $52.4 million from the same period a year ago. The provision decreased due mainly to a lower effective tax rate as of May 31, 2020 compared to the same period a year ago, primarily driven by higher R&D tax credits and a higher FDII deduction, coupled with the effect of applying the lower effective tax rate to the first half of fiscal 2020. The nine months ended May 31, 2019 included a$5.8 million tax expense from finalizing the prior year’s tax returns with no similar event for the nine months ended May 31, 2020. The decrease to the provision was partially offset by increased income tax expense from higher operating income for the nine months ended May 31, 2020 compared to the prior year period. The decrease to the provision was also offset by $3.3 million in higher windfall tax benefits from stock-based compensation recognized during the nine months ended May 31, 2019 compared to the nine months ended May 31, 2020 and an income tax benefit from the revision of the one-time transition tax permitted by the TCJA recognized during the nine months ended May 31, 2019.

FactSet finalized the accounting for the tax effects of the TCJA with respect to the one-time transition tax; however the tax effects may be affected by changes in interpretations at the federal and state levels and any additional regulatory guidance that may be issued.

~~14.~~11. DEBT

FactSet’s debt obligations at November 30, 2020 and August 31, 2020 consisted of the following:


(in thousands)	(in thousands)	May 31, 2020		August 31, 2019		(in thousands)	November 30, 2020		August 31, 2020
2019 Revolving Credit Facility (maturity date of March 29, 2024)		$	575,000	$	575,000
2019 Revolving Credit Facility						2019 Revolving Credit Facility	$	575,000	$	575,000
2019 Revolving Credit Facility loan origination fees						2019 Revolving Credit Facility loan origination fees	(600)		(646)
Other Long-term debt1						Other Long-term debt1	1,111		0
Long-term debt						Long-term debt	$	575,511	$	574,354

1This debt was acquired as part of the TVL acquisition, refer to Note 7, Acquisition, for more information on the acquisition.

On March 29, 2019, the Company entered into ~~the 2019 Credit Agreement~~a credit agreement between FactSet, as the borrower, and PNC Bank, National Association ("PNC"), as the administrative agent and lender (the "2019 Credit Agreement"). 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.

~~As of May 31, 2020,~~ FactSet ~~has~~ 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 ~~which was~~currently at 0.10% ~~as of May 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 Sheets at ~~May 31, 2020 and August 31, 2019.~~November 30, 2020. The principal balance is payable in full on the maturity date.

The fair value of the Company's long-term debt under the 2019 Revolving Credit Facility was $575.0 million as of ~~May 31,~~November 30, 2020, which the Company believes approximates the carrying amount as the terms and ~~bears~~interest rates approximate market rates given its floating interest rate basis. Borrowings under the 2019 Revolving Credit Facility 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, ~~which was~~currently at 0.875% as. For the three months ended November 30, 2020 and 2019, FactSet recorded interest expense on its outstanding debt, including the amortization of ~~May 31, 2020. FactSet believes the carrying value~~debt issuance costs of $2.1 million and $4.2 million, respectively, net of the ~~debt approximates fair value as the interest rate is a floating rate equal to the LIBOR rate plus a spread, which is representative of market rates for similar instruments.~~

The variable interest rate on FactSet’s long-term debt can expose the Company to interest rate volatility due to changes in the LIBOR rate. 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 on a portion of its outstanding balance under the 2019 Revolving Credit Facility. Under the termseffects 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 rate utilized to calculate the interest expense from the 2019 Revolving Credit Facility. The interest rate swap agreement matures on March 28, 2024.

For the three months ended May 31, 2020 and May 31, 2019, the Company recorded interest expense of $2.9 million and $5.2 million, respectively, on its outstanding debt amounts. For the nine months ended May 31, 2020 and May 31, 2019, the Company recorded interest expense of $10.9 million and $15.1 million, respectively, on its outstanding debt amounts.agreement. Including the effects of the interest rate swap agreement, the year-to-date weighted average interest rate on amounts outstanding under the Company's ~~credit facilities~~2019 Revolving Credit Facility was ~~2.47%~~1.40% and 2.20% as of November 30, 2020 and August 31, 2020, respectively. Refer to Note 6, Derivative Instruments for further discussion on the~~nine months ended~~ ~~May 31, 2020. The weighted average~~ interest rate ~~for the fiscal year ended 2019 was 3.35%.~~swap agreement. Interest on the loan outstanding under the 2019 Revolving Credit Facility is payable quarterly, in arrears, and on the maturity date.

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 cash flow hedge with the unrealized gains or losses on the interest rate swap agreement recorded in AOCL in the Consolidated Balance Sheets.

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 ~~maintains~~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 was in compliance with all the covenants and requirements within the 2019 Credit Agreement as of ~~May 31,~~November 30, 2020.

~~15. LEASES~~

In February 2016, the FASB issued an accounting standard update related to accounting for leases. The update requires the recognition of ROU assets and liabilities on the balance sheet and the disclosure of qualitative and quantitative information about leasing arrangements. FactSet adopted the standard 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 ROU asset are recognized on the lease commencement date which includes fixed lease payments and certain qualifying index-based variable payments.

In determining the amount of lease payments used in measuring ROU assets and lease liabilities, 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. The Company has also elected to apply the short-term lease exception to not recognize lease liabilities and ROU 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 in O~~ccupancy costs (a component of SG&A expense)~~.

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 lease liabilities~~ ~~and~~ ~~Lease liabilities~~ ~~on the Consolidated Balance Sheet. The Company also recognized ROU assets (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~~ ~~May 31, 2020, the ROU assets balance was $254.4 million and the Lease liabilities balance was $305.2 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~~ ~~May 31, 2020~~, the Company’s leases have remaining terms of less than one year to just over 15 years. The ROU assets and lease liabilities recognized did not include any renewal or termination options that were not yet reasonably certain to be exercised. FactSet’s net operating lease expense for the three and nine months ended ~~May 31, 2020~~ ~~was $11.9 million and $32.3 million, respectively.Charges related to FactSet's operating leases that are variable, and therefore not included in the measurement of the lease liabilities for the three and nine months ended~~ ~~May 31, 2020~~ ~~were $4.0 million and $13.5 million, respectively.~~

~~The following table reconciles FactSet’s future undiscounted cash flows related to the Company’s operating leases and the reconciliation to the operating lease liability as of~~ ~~May 31, 2020~~:

(in thousands)
Minimum Lease
Payments
Fiscal Years Ended August 31,
2020 (remaining three months) $ 9,684
2021 41,951
2022 39,546
2023 36,041
2024 34,238
Thereafter 216,710
Total undiscounted lease payments 378,170
Less: imputed interest 72,926
Present value of total lease payments $ 305,244

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. The rental space that FactSet has not taken possession of as of May 31, 2020 is not included in the table above nor included in the lease ROU assets and liabilities as of May 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 May 31, 2020 is approximately $18 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~~ ~~May 31, 2020~~:


			~~As of May 31, 2020~~
~~Weighted average remaining lease term~~ ~~(in years)~~			~~10.3~~
~~Weighted average discount rate~~ ~~(IBR)~~			~~4.2%~~

~~The following table summarizes supplemental cash flow information related to the Company's operating leases:~~


~~(in thousands)~~			~~Nine Months Ended May 31, 2020~~
~~Cash paid for amounts included in the measurement of operating lease liabilities~~			~~$29.9~~
~~Operating lease ROU assets obtained in exchange for operating lease liabilities~~			~~$48.5~~

~~16.~~12. COMMITMENTS AND CONTINGENCIES

Commitments 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 Suppliers and Vendors

Purchase ~~commitments~~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,~~2020, the Company had total purchase commitments with suppliers of ~~$69.9~~$226.0 million. During the three months ended November 30, 2020, FactSet entered into a software subscription agreement with total purchase commitments of approximately $10.0 million with a contract term of three years. There were no other material changes in the Company’s purchase commitments during the ~~nine~~three months ended ~~May 31,~~November 30, 2020.

Letters of Credit

~~Approximately~~From time to time, FactSet is required to obtain letters of credit in the ordinary course of business, with approximately $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~~outstanding as of ~~May 31,~~November 30, 2020. These standby letters of credit utilize the same covenants included in the 2019 Credit Agreement. Refer to Note 14 11, Debt for more information on these covenants.

Contingencies

Income Taxes

Uncertain income tax positions are accounted for in accordance with applicable accounting guidance,, refer to Note 13 9, 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 Matters

FactSet 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 ~~May 31,~~November 30, 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 Matters

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 (the "Commonwealth") 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 the 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 ~~May 31,~~November 30, 2020. FactSet believes that it will ultimately prevail if the Company is presented with a formal assessment; however, 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.

Indemnifications

As 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.

Concentrations of Credit Risk

Cash equivalents

~~Cash~~Financial instruments that potentially subject FactSet to concentrations of credit risk consist primarily of cash, cash equivalents and investment securities. The Company is exposed to credit risk for cash and cash equivalents held in financial institutions in the event of a default, to the extent that such amounts are ~~maintained primarily with~~ 5in excess of applicable insurance limits. To mitigate associated concentration risk, FactSet utilizes credit-worthy financial institutions. ~~Depos~~its 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 bear minimal credit risk. The Company also seeks to mitigate its credit risks by spreading such risks across multiple counterparties and monitoring the risk profiles of these counterparties.

Accounts Receivable

Accounts receivable are unsecured and are derived from revenue earned from clients located around the globe. The Company 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 more than 3% ~~or more~~ of FactSet’s total subscription revenue in any period presented. At May 31, 2020, the Company’s largest individual client accounted for just above 2.5% of total annual subscriptions, and subscriptions from FactSet's ten largest clients did not surpass 15% of total annual subscriptions, consistent with the level at August 31, 2019. As of ~~May 31,~~November 30, 2020, the receivable reserve was ~~$7.4~~$7.3 million compared to ~~$10.5~~$8.0 million as of August 31, ~~2019.~~2020.

Derivative Instruments

~~As a result of the~~FactSet's use of derivative instruments exposes the Company ~~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") as quoted by publicly available information. Counterparty risk is represented by CDS spreads related to the ~~senior secured debt~~extent that the counterparties may be unable to meet the terms of ~~the respective bank with whom the Company has executed these derivative transactions.~~their agreements. To mitigate ~~counterparty~~ credit risk, the Company ~~enters into contracts with large~~limits counterparties to credit-worthy financial institutions and ~~regularly reviews its~~distributes contracts among these institutions to reduce the concentration of credit ~~exposure balances as well as the creditworthiness of the counterparties. For the Company’s liabilities, as CDS spread information is not available for~~risk. FactSet ~~the Company’s credit risk is determined based on using a simple average of CDS spreads for peer companies. The Company~~ does not expect any losses as a result of default of its counterparties.

Concentrations of Other Risk

Data Content Providers

FactSet relies on certain data sets where there are a limited number of suppliers. The Company makes every effort to assure that, where reasonable, alternative sources are available. FactSet is not dependent on any one 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 its clients access to perform their analysis. No single vendor or data supplier represented more than 10% of FactSet's total data costs for the ~~nine~~three months ended ~~May 31,~~November 30, 2020 or ~~May 31,~~November 30, 2019.

13.STOCKHOLDERS’ EQUITY

Shares of common stock outstanding were as follows:


	Three Months Ended November 30,
(in thousands)	2020	2019
Balance, beginning of year at September 1, 2020 and 2019, respectively	38,030	38,118
Common stock issued for employee stock plans	117	135
Repurchase of common stock from employees(1)	(7)	(6)
Repurchase of common stock under the share repurchase program	(132)	(343)
Balance at November 30, 2020 and November 30, 2019, respectively	38,008	37,904

(1)For the three months ended November 30, 2020 and November 30, 2019, the Company repurchased 6,728 and 5,778 shares, or $2.1 million and $1.5 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock and exercise of stock options.

Share Repurchase Program

On March 24, 2020, the Board of Directors of FactSet approved a $220.0 million increase to the existing share repurchase program. As of November 30, 2020, $215.9 million remained authorized for future share repurchases. 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 Stock

Restricted stock awards entitle the holders to receive shares of common stock as the awards vest over time. For the three months ended November 30, 2020, 17,946 shares of previously granted restricted stock vested and were included in common stock outstanding as of November 30, 2020 (recorded net of 6,728 shares repurchased from employees at a cost of $2.1 million to cover their cost of taxes upon vesting of the restricted stock). During the three months ended November 30, 2019, 15,376 shares of previously granted restricted stock vested and were included in common stock outstanding as of November 30, 2019 (recorded net of 5,778 shares repurchased from employees at a cost of $1.5 million to cover their cost of taxes upon vesting of the restricted stock).

Dividends

The Company’s Board of Directors declared the following dividends for the first three months of fiscal 2021 and 2020 respectively:

Year Ended

Dividends per
Share of
Common Stock

Record Date

Total $ Amount
(in thousands)

Payment Date

Fiscal 2021

First Quarter

0.77

November 30, 2020

29,266

December 17, 2020

Fiscal 2020

First Quarter

0.72

November 29, 2019

27,291

December 19, 2019

Accumulated Other Comprehensive Loss

The components of AOCL are as follows:


(in thousands)	November 30, 2020		August 31, 2020
Accumulated unrealized losses on cash flow hedges	$	(1,707)	$	(1,591)
Accumulated foreign currency translation adjustments	(37,369)		(37,702)
Total AOCL	$	(39,076)	$	(39,293)

14.EARNINGS PER SHARE

A 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 three months ended November 30, 2020
Basic EPS
Income available to common stockholders	$	101,206	38,007	$	2.66
Diluted EPS
Dilutive effect of stock options and restricted stock			690
Income available to common stockholders plus assumed conversions	$	101,206	38,697	$	2.62
For the three months ended November 30, 2019
Basic EPS
Income available to common stockholders	$	93,957	37,978	$	2.47
Diluted EPS
Dilutive effect of stock options and restricted stock			609
Income available to common stockholders plus assumed conversions	$	93,957	38,587	$	2.43

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 for the three months ended November 30, 2020, because their inclusion would have been anti-dilutive. For the three months ended November 30, 2019, the number of stock options excluded from calculation of diluted EPS was 20,128.

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. For the three months ended November 30, 2020, there were 72,090 performance-based awards excluded from the calculation of diluted EPS. For the three months ended November 30, 2019, there were 36,501 performance-based awards excluded from the calculation of diluted EPS.

15. STOCK-BASED COMPENSATION

Stock-based Compensation

The Company recognized total stock-based compensation expense of $11.3 million and $9.8 million during the three months ended November 30, 2020 and 2019, respectively. As of November 30, 2020, $117.0 million of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of 3.4 years. Stock-based compensation expense related to the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (the "ESPP") was $0.5 million for both the three months ended November 30, 2020 and 2019.

As of November 30, 2020, FactSet had 5.1 million share-based awards available for grant under the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (the "LTIP") and 0.2 million share-based awards available for grant under the FactSet Research Systems Inc. Non-Employee Directors' Stock Option and Award Plan, as Amended and Restated (the "Director Plan").

Employee Stock Option Awards

During the three months ended November 30, 2020, FactSet granted 408,093 stock options with a weighted average exercise price of $316.71 to existing employees of the Company, using the lattice-binomial option-pricing model. The majority of the stock options granted during the first three months of fiscal 2021 related to the annual employee grant on November 9, 2020 under the LTIP. These stock option awards vest 20% annually on the anniversary date of the grant and are fully vested after five years, expiring ten years from the date of grant.

The estimated fair value of employee stock options granted on November 9, 2020 was determined with the following assumptions:


November 9, 2020 Grant Details
Risk-free interest rate	0.10% - 0.80%

Expected life (years)	7.13

Expected volatility	27.5	%

Dividend yield	0.91	%

Estimated fair value	$78.23
Exercise price	$316.71
Fair value as a percentage of exercise price	24.7	%

Non-Employee Director Stock Option Grant

The Director Plan provides for the grant of share-based awards, including stock options, to non-employee directors of FactSet. As of November 30, 2020, shares available for future grant under the Director Plan were 249,886. The expiration date of the Director Plan is December 19, 2027.

Restricted Stock Units

During the first three months of fiscal 2021, FactSet granted 41,358 non-performance based restricted stock units ("RSUs") and 36,424 performance-based restricted stock units ("PRSUs"). RSUs and PRSUs granted during the period were related to the annual employee grant on November 9, 2020. The RSUs and PRSUs granted had a weighted average grant date fair value of $306.37 under the LTIP. The RSUs and PRSUs granted to employees entitle the holders to shares of common stock as the units vest over time or the performance period, but not to dividends declared on the underlying shares while the restricted stock is unvested. The grant date fair value of restricted stock units is measured by reducing the grant date price of FactSet's common 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 majority of the RSUs granted vest 20% annually on the anniversary date of grant and are fully vested after five years and the majority of the granted PRSUs cliff vest on the third anniversary of the grant date, subject to the achievement of certain performance metrics. The remaining RSUs and PRSUs were granted to TVL employees as part of their transition to FactSet and vest 50% on the second anniversary of grant and 25% percent on each of the third and fourth anniversaries of grant, subject to the achievement of certain performance metrics for the PRSUs.

Employee Stock Purchase Plan

Shares of FactSet common stock may be purchased by eligible employees under 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.

During the three months ended November 30, 2020, employees purchased 9,269 shares at a weighted average price of $286.58 compared to 11,159 shares at a weighted average price of $220.70 for the three months ended November 30, 2019. At November 30, 2020, the ESPP had 168,535 shares reserved for future issuance.

16. SEGMENTINFORMATION

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 internal financial reporting structure is based on 3 segments: the Americas, EMEA and Asia Pacific. Within each of the 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.

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 Americas 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 tables reflect the results of operations of the Company's segments for the three months ended November 30, 2020 and November 30, 2019:


(in thousands)	Americas		EMEA		Asia Pacific		Total
For the three months ended November 30, 2020
Revenue	$	244,337	$	105,777	$	38,092	$	388,206
Operating income	$	56,376	$	40,634	$	24,021	$	121,031
Capital expenditures	$	9,560	$	319	$	8,454	$	18,333

For the three months ended November 30, 2019
Revenue	$	231,330	$	100,830	$	34,498	$	366,658
Operating income	$	49,623	$	41,218	$	22,345	$	113,186
Capital expenditures	$	24,024	$	1,168	$	1,588	$	26,780

The following table reflects the total assets for the Company's segments:


Segment Assets (in thousands)	November 30, 2020		August 31, 2020
Americas	$	1,071,502	$	1,111,600
EMEA	807,156		757,524
Asia Pacific	220,768		214,264
Total assets	$	2,099,426	$	2,083,388

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and related notes included in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the fiscal year ended August 31, 2020, our Current Reports on Form 8-K and our other filings with the Securities and Exchange Commission. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause such differences include, but are not limited to, those identified below and those discussed in Item 1A. Risk Factors of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended August 31, 2020.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

•Executive Overview

•Key Metrics

•Results of Operations

•~~Liquidity~~Non-GAAP Financial Measures

•Liquidity and Capital Resources

•~~Foreign Currency~~

•Off-Balance Sheet Arrangements

•~~Share Repurchase Program~~Foreign Currency

•~~Contractual Obligations~~

•~~Dividends~~

•~~Significant~~Critical Accounting Policies and ~~Critical Accounting~~ Estimates

•New Accounting Pronouncements

•~~Market Trends~~

•~~Forward-Looking Factors~~

The MD&A should be read in conjunction with our 2019 Form 10-K, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission, and the consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.

Executive Overview

FactSet Research Systems Inc. ~~(the “Company”~~and its wholly-owned subsidiaries (collectively, "we," "our," "us" 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 our content and multi-asset class solutions across each stage of the investment process. Our goal is to provide a seamless user experience spanning idea generation, research, portfolio construction and analysis, trade execution, performance measurement, risk management, and reporting, in which we serve the front, middle, and back offices to drive productivity and improved performance. Our flexible, open data and technology solutions can be implemented both across the investment portfolio lifecycle or as standalone components serving different workflows in anthe organization. We are focused on growing our business through three segments: the Americas, EMEA ~~(formerly known as Europe),~~(Europe and Africa) and Asia Pacific. WeWithin each of our segments, we primarily deliver insight and information through ~~the~~our four workflow solutions of Research, Analytics and Trading, Content and Technology Solutions ("CTS") and Wealth.

We currently serve a wide range of financial professionals, ~~which include~~including but not limited to portfolio managers, investment research professionals, investment bankers, risk and performance analysts, wealth advisors, and corporate clients. We provide 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. We combine dedicated client service with open and flexible technology offerings, such as a configurable desktop and mobile platform, comprehensive data feeds, an open marketplace, digital portals and application programming ~~interfaces (APIs)~~interface ("APIs"). Our revenue is primarily derived from subscriptions to our products and services such as workstations, portfolio analytics, enterprise data, and research management.

Business Strategy

Current technology trends are leading to a greater demand to deliver a fully digital and 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 environmental, social, and governance ("ESG") data. 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 ~~lifecycle to create an open and scalable platform.~~portfolio lifecycle. We bring the front, middle and back ~~office~~offices together to drive productivity and performance ~~throughout~~at every step of the ~~portfolio lifecycle.~~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 Asia Pacific. We believe this geographical strategic alignment helps us better

manage our ~~resources and concentrate on markets that demand our products.~~resources. To execute on our business strategy of broad-based growth across each geographical segment, we continue to look at ways to create value for our clients by offering data, products and analytical applications within our ~~key~~four workflow solutions of Research, Analytics and Trading, CTS and Wealth.

Fiscal ~~2020Third~~2021 First Quarter in Review

Revenue in the ~~third~~first quarter of fiscal ~~2020~~2021 was ~~$374.1~~$388.2 million, an increase of ~~2.6%~~5.9% from the prior ~~year comparable period, fully attributed~~year. Revenue increased across our geographic segments, primarily in the Americas, followed by EMEA and Asia Pacific, supported by increased revenue from each of our workflow solutions, mainly in Analytics and Trading and CTS, followed by Wealth. Organic revenue contributed to ~~organic revenue growth.~~5.1% of the growth during the first quarter of fiscal 2021, compared to the prior year. Organic revenue excludes the effects of acquisitions and dispositions completed in the last 12 months, ~~changes in~~the effects of foreign currency ~~rates in all periods presented~~movements on the current year period and the deferred revenue fair value adjustments from purchase accounting. ~~Revenue increased across our geographic segments primarily driven by~~Refer to Non-GAAP Financial Measures in Item 2. of this Quarterly Report for a reconciliation between revenue ~~growth in Analytics~~ and Trading, followed by CTS and Wealth. The revenue growth was driven by increased demand for our risk management, portfolio analytics and reporting solutions, core and premium data feeds, and traditional and web-based wealth workstations. organic revenue.

As of ~~May 31,~~November 30, 2020, organic annual subscription value ("organic ASV") plus professional services totaled ~~$1.52~~$1.56 billion, an increase of 5.0% over ~~the prior year comparable period.~~November 30, 2019. Organic 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 ASV from acquisitions and dispositions completed within the last 12 months, the effects of foreign currency movements on the current year period and professional services. Organic ASV increased across all our geographic segments with the majority of the increase related to the Americas, followed by EMEA and Asia Pacific.

Operating income grew ~~3.8%~~6.9% and diluted earnings per share ("EPS") increased ~~11.0%~~7.8% for the three months ended November 30, 2020, compared to the prior year period. Operating margin increased to 31.2% during the three months ended November 30, 2020 compared to 30.9% in the prior year period. This increase in operating ~~income~~margin on a year-over-year basis was primarily ~~driven by~~due to higher revenue, ~~growth of 2.6% and~~ a decrease in non-compensatory ~~employee related~~employee-related expenses, ~~mainly due to restrictions~~occupancy costs and ~~impacts related to the COVID-19 pandemic. This operating income increase was~~computer depreciation, partially offset by ~~an increase in~~higher computer-related expenses, ~~on a year-over-year basis, primarily driven by increased technology investments~~employee compensation expenses, including ~~cloud-based hosting and licensed software arrangements. Additionally, EPS benefited from a reduction in the income tax provision, interest~~stock-based compensation expense, and ~~diluted weighted average shares outstanding, compared to the prior year period.~~amortization of intangible assets, when expressed as a percentage of revenue.

As of ~~May 31,~~November 30, 2020, our employee ~~count~~headcount was ~~10,065,~~10,622, up ~~7.5%~~7.7% in the past 12 months, due primarily to an increase in net new employees of ~~9.0%~~8.8% in Asia Pacific, ~~6.7% in EMEA, and 3.9%~~6.0% in the ~~Americas.~~Americas and 5.6% in EMEA. Of our total ~~employees, 6,372~~employee headcount at November 30, 2020, 6,736 were located in Asia Pacific, ~~2,367~~2,505 were located in the Americas, and ~~1,326~~1,381 were located in EMEA.

COVID-19 Update

We are closely monitoring pandemic-related developments, and our highest priority is the health and safety of our employees, clients, vendors and stakeholders. We have taken, and continue to take, numerous steps to address the COVID-19 pandemic. We have implemented a business continuity plan with a dedicated incident management team to respond quickly and effectively to changes in our environment to continue offering our clients uninterrupted products, services and support while also protecting our employees. We ~~will~~ continue to coordinate our COVID-19 response based on guidance from global health organizations, relevant governments and pandemic response best practices.

We have required the vast majority of our employees at our offices across the globe (including our corporate headquarters) to work remotely on a temporary basis and have implemented global travel restrictions for our employees. Nearly all our employees are currently working remotely. We believe our transition to remote working has been successful and has not significantly affected our financial results ~~for the three or nine months ended May 31,~~as of November 30, 2020.

We are planning to re-open many of our offices during fiscal 2021, utilizing a three-phased approach to provide flexibility for employees with a focus on social distancing and safety. Our offices will not re-open until local authorities permit us to do so and our own criteria and conditions to ensure employee health and safety are satisfied. There can be no assurances as to when we re-open our offices or that there will be no negative impacts arising from the return to the office environment.

As of ~~May 31,~~November 30, 2020, there has been minimal interruptions in our ability to provide our products, services and support to our clients. Working remotely has had relatively little impact on the productivity of our employees, including our ability to gather content. We continue to work closely with our clients to provide consistent access to our products and services and have remained flexible to achieve client priorities as many implement their own contingency plans. WeSince the start of the pandemic,

we have increased our support desk resources to manage increased volumes and have extended additional web IDs to our clients in need of immediate remote access to financial data.

Our revenue, earnings, and ASV are relatively stable and predictable as a result of our subscription-based business model. To date, we have not seen the COVID-19 pandemic having a material impact on our revenue or ASV, although we anticipate that there may be some level of revenue and ASV weakness going forward due to longer sales cycles and lower incremental client billings. The COVID-19 pandemic could curtail our clients’ spending and lead them to delay or defer purchasing decisions or product and service implementations or may cause them to cancel or reduce their spending with us. In determining the possible revenue and ASV impact from the COVID-19 pandemic, we are considering the potential delay in decision making causing longer sales cycles (or conversely delayed cancellations from clients);, as well as possible implementation risk due to restrictions on being able to work onsite at our clients' ~~facilities; and possible reduced seasonal hiring at investment banks, which are some of our largest clients, over the summer months.~~facilities.

We have incurred, and ~~expect to~~may continue to incur, additional expenses in response to the COVID-19 pandemic, including costs to enable our employees to support our clients while working remotely. These additional expenses were not material to our ~~third~~first quarter fiscal ~~2020~~2021 results, and reductions in discretionary spending, particularly travel and entertainment, have more than offset these increased expenses. We believe that ~~implementing~~we have the ability to implement additional cost reduction efforts ~~will help us~~if necessary to mitigate the impact that any reduced revenues may have on our future operating ~~income. We may consider reducing expenses further~~income, through such methods as ~~reduction of discretionary spending, including travel and entertainment;~~ tighter management of headcount spending; ~~and~~ reduction in variable third-party content costs in a manner consistent with client ~~demand.~~demand; and reduction of discretionary spending, including travel and entertainment.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ~~(“CARES”~~("CARES") Act was signed into law to address the economic impact of the COVID-19 pandemic. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law and includes further relief and stimulus provisions to address economic concerns related to the COVID-19 pandemic. We continue to monitor any effects that may result from ~~the CARES Act~~these Acts and other similar legislation or actions in geographies in which our business operates.

~~Refer to “Risk Factors” for further discussion of the impact of the COVID-19 pandemic on our business.~~

Key Metrics

~~The following is a review of our key metrics:~~

As of and for the
Three Months Ended Change
(in thousands, except client and user counts and per share data)
May 31, 2020 May 31, 2019
Revenue $ 374.1 $ 364.5 2.6 %
Operating income $ 121.6 $ 117.2 3.8 %
Net income $ 101.2 $ 92.3 9.7 %
Diluted EPS $ 2.63 $ 2.37 11.0 %
Clients 5,743 5,455 5.3 %
Users 131,095 122,951 6.6 %

~~The table below provides a reconciliation of ASV to organic ASV:~~

As of Change
(in millions) May 31, 2020 May 31, 2019
As reported ASV⁽¹⁾
$ 1,493.8 $ 1,423.0
Currency impact to ASV (0.1) —
Organic ASV⁽²⁾
$ 1,493.7 $ 1,423.0 5.0 %

~~(1)~~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. The professional service fees are $24.5 million and $23.1 million as of May 31, 2020 and May 31, 2019, respectively.

~~(2)~~Organic ASV ~~excludes ASV from acquisitions and dispositions completed within the last 12 months, the effects of foreign currency movements on the current year period and professional services.~~

~~Organic Annual Subscription Value Growth~~

Organic 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 ASV from acquisitions and dispositions completed within the last 12 months, the effects of foreign currency movements on the current year period and professional services. With proper notice provided ~~to us,~~as contractually required, our clients can add to, delete portions of, or terminate service, subject to certain ~~contractual~~ limitations.

As of ~~May 31,~~November 30, 2020, our organic ASV totaled ~~$1.49~~$1.53 billion, up 5.0% over ~~the prior year comparable period.~~November 30, 2019. As of ~~May 31,~~November 30, 2020, organic ASV plus professional services was ~~$1.52~~$1.56 billion, an increase of 5.0% compared to ~~the prior year period.~~

November 30, 2019. The increase in year-over-year organic ASV was ~~due~~largely attributed to ~~growth~~increased sales and price increases partially offset by cancellations by existing clients and increased sales to new clients.

Organic ASV increased across all of our geographic segments ~~from increased sales of products and solutions to new and existing clients. The~~with the majority of the ~~ASV~~ increase related to the Americas, followed by ~~growth in~~EMEA and Asia ~~Pacific and EMEA, as well as the benefit from our annual price~~Pacific. This increase ~~partially offset by cancellations. The increase in ASV~~ was driven by ~~growth~~additional sales in ~~all~~ our workflow solutions, primarily ~~from an increase~~ in Analytics and Trading, ~~and CTS, followed by Wealth and Research. The ASV increase in Analytics and Trading was~~ mainly due to increased sales ~~for~~in our portfolio reporting, risk management, performance and portfolio analytics ~~and reporting solutions. The increase in ASV from~~solutions, CTS ~~was primarily driven by~~with increased sales infrom core and premium content sets, specifically related to company financial data and ~~core~~ data ~~feeds, while the ASV increase in~~management solutions, and Wealth ~~was mainly due to~~from increased ~~traditional and web-based~~ workstation sales. ~~The~~

Segment ASV ~~increase in Research was mainly due to price increases from the existing client base.~~

As of ~~May 31,~~November 30, 2020, ASV from the Americas was ~~$931.5~~$958.5 million, an increase of ~~5.0%~~5.6% from ~~the prior year period.~~November 30, 2019. ASV from EMEA was ~~$411.9~~$422.0 million, ~~as of May 31, 2020,~~ an increase of ~~3.7% compared to the prior year period.~~4.7% from November 30, 2019, and Asia Pacific ASV was ~~$150.4~~$156.5 million, ~~as of May 31, 2020,~~ an increase of ~~8.9%~~9.5% compared to November 30, 2019. The increase in ASV across all our geographic segments was largely driven by increased sales and price increases partially offset by cancellations by existing clients and increased sales to new clients. The increased ASV in the ~~prior year period.~~ Americas was primarily driven by Analytics and Trading, followed by CTS. The EMEA ASV increase was mainly driven by CTS and Analytics and Trading and the Asia Pacific ASV increase was primarily due to Analytics and Trading and CTS.

Combined EMEA and Asia Pacific ASV represented 37.6% of total ASV as of ~~May 31,~~November 30, 2020, consistent with ~~the prior year period.~~November 30, 2019.

Buy-side and Sell-side Organic ASV in the Americas as of May 31, 2020, increased compared to the prior year period, primarily from Analytics and Trading, CTS and Wealth, as well as the benefit from our annual price increase, partially offset by cancellations. As of May 31, 2020, ASV increased in Asia Pacific mainly due to Analytics and Trading, Research, CTS, and the benefit from our annual price increase. The ASV increase in EMEA was primarily driven by Analytics and Trading, CTS and the benefit from our annual price increase, as well as decreased cancellations in the region compared to the prior year period.Growth

Buy-side and sell-side organic ASV growth rates ~~for the third quarter of fiscal~~at November 30, 2020 were ~~4.8%~~5.1% and ~~5.6%~~4.4%, respectively, compared to ~~the prior year period.~~November 30, 2019. Buy-side clients account for approximately 84% of our organic ASV, ~~which include~~consistent with the prior year period, and primarily includes portfolio managers, analysts, traders, wealth managers, performance teams and risk and compliance teams at a variety of firms, such as traditional asset managers, wealth advisors, corporations, hedge funds, insurance companies, plan sponsors and fund of funds. The remainder of our organic ASV is derived from sell-side firms, ~~that perform M&A advisory work, capital markets services~~primarily including investment bankers and private equity ~~research.~~

and research analysts.

Client and User Additions

The table below presents our total clients and users:


	As of November 30,
	2020	2019	Change
Clients	5,939	5,601	6.0	%
Users	138,238	126,785	9.0	%

Our total client count was ~~5,743~~5,939 as of ~~May 31,~~November 30, 2020, representing a net increase of ~~288~~338 or ~~5.3%~~6.0% in the last 12 months. The increase was primarily due to an increase in ~~corporate and~~ wealth management and corporate clients. As part of ~~May 31,~~our long-term growth strategy, we continue to focus on expanding and cultivating relationships with our existing client base through sales of workstations, applications, services and content.

As of November 30, 2020, there were ~~131,095~~138,238 professionals using FactSet, representing a net increase of ~~8,144~~11,453 or ~~6.6%~~9.0% in the last 12 months, driven primarily by an increase in corporate and wealth management ~~corporate, and banking clients.~~professionals.

Annual client retention was greater than 95% of ASV ~~retention~~ for the ~~periods ending May 31,~~period ended November 30, 2020 and ~~May 31, 2019 exceeded 95%. Client~~November 30, 2019. When expressed as a percentage of clients, annual retention ~~was~~increased to approximately 90% for the period ended November 30, 2020, compared to approximately 89% for the period ended May 31, 2020, compared to retention of 90% in the prior year period. Client retention was lower primarily due to continued cost pressures among institutional asset managers and sell-side clients. As of May 31, 2020, our largest individual client accounted for just above 2.5% of total subscriptions, and annual subscriptions from our ten largest clients did not surpass 15% of total client subscriptions.November 30, 2019.

Returning Value to Stockholders

On ~~May 5,~~November 4, 2020, ~~FactSet’s~~our Board of Directors approved a ~~7% increase in the~~ regular quarterly dividend ~~from $0.72 to~~of $0.77 per share. The cash dividend of ~~$29.0~~$29.1 million was paid on ~~June 18,~~December 17, 2020 to common stockholders of record at the close of business on ~~May 29,~~November 30, 2020. We repurchased ~~46,636~~131,800 shares of common stock for ~~$12.4~~$43.1 million during the ~~third~~first quarter of fiscal ~~2020~~2021 under our existing share repurchase program. For the ~~nine~~three months ended ~~May 31,~~November 30, 2020, we returned ~~$252.4~~$72.2 million to stockholders in the form of share repurchases and dividends. Over the last 12 months, we returned ~~$341.8~~$270.6 million to stockholders in the form of share repurchases and dividends.

On March 24, 2020, our Board of Directors approved a $220.0 million increase to the existing share repurchase program. As a result of this expansion, ~~$287.6~~$215.9 million is available for future share repurchases as of ~~May 31,~~November 30, 2020.

Capital Expenditures

Capital expenditures infor the ~~third quarter of fiscal~~three months ended November 30, 2020 were ~~$11.0~~$18.3 million, compared to ~~$11.4~~$26.8 million for the three months ended November 30, 2019. The majority of our capital expenditures during the three months ended November 30, 2020 related to the development of internal-use software and the build-out of our office space in the Philippines. The decrease from the prior year ~~period. Capital~~period was mainly due to capital expenditures ~~of $5.9 million, or 54%, were~~incurred during the three months ended November 30, 2019 related to ~~facilities investments, primarily for~~ the build-out of our new corporate headquarters in Norwalk, Connecticut, ~~and office space~~partially offset by an increase in capitalized internal-use software during the ~~Philippines. The remainder of our capital expenditures, $5.1 million, was primarily related to investment in technology and development costs related to internal-use software.~~three months ended November 30, 2020.

Results of Operations

For an understanding of the significant factors that influenced our performance for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2020 and ~~May 31,~~November 30, 2019, the following discussion should be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements and related notes presented in this Quarterly Report on Form 10-Q.


		Three Months Ended May 31,										Nine Months Ended May 31,									Three Months Ended November 30,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		Change		2020		2019		Change		(in thousands, except per share data)	2020		2019		Change
Revenue	Revenue	$	374,083	$	364,533	2.6	%	$	1,110,521	$	1,071,068	3.7	%	Revenue	$	388,206	$	366,658	5.9	%
Cost of services	Cost of services	$	170,703	$	163,832	4.2	%	$	511,878	$	495,716	3.3	%	Cost of services	$	188,088	$	164,957	14.0	%
Selling, general and administrative	Selling, general and administrative	$	81,740	$	83,461	(2.1)	%	$	257,560	$	248,885	3.5	%	Selling, general and administrative	$	79,087	$	88,515	(10.7)	%
Operating income	Operating income	$	121,640	$	117,240	3.8	%	$	341,083	$	326,467	4.5	%	Operating income	$	121,031	$	113,186	6.9	%
Net income	Net income	$	101,216	$	92,265	9.7	%	$	283,859	$	261,263	8.6	%	Net income	$	101,206	$	93,957	7.7	%
Diluted earnings per common share	Diluted earnings per common share	$	2.63	$	2.37	11.0	%	$	7.36	$	6.73	9.4	%	Diluted earnings per common share	$	2.62	$	2.43	7.8	%
Diluted weighted average common shares	Diluted weighted average common shares	38,481		38,993				38,548		38,807				Diluted weighted average common shares	38,697		38,587

Revenue

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

Revenue for the three months ended ~~May 31,~~November 30, 2020 was ~~$374.1~~$388.2 million, an increase of ~~2.6%, consistent with the organic revenue increase of 2.6% compared to the prior year period.~~5.9%. The increase in revenue was ~~due~~largely attributed to ~~growth~~increased sales and price increases partially offset by cancellations by existing clients and increased sales to new clients. This was driven by increased revenue across all our ~~operating~~geographic segments ~~for~~primarily from the ~~three months ended May 31, 2020~~Americas, followed by EMEA and Asia Pacific. The increase in segment revenue was due to increased revenue in our workflow solutions, most notably by Analytics and Trading and CTS, followed by Wealth, compared to the prior ~~year period, with the majority~~year. The revenue growth of ~~the increase in revenue driven by the Americas, as well as the benefit from our annual price increase, partially offset by cancellations.~~

~~Nine months ended May 31, 2020 compared to nine months ended May 31, 2019~~

~~Revenue for the nine months ended May 31, 2020~~5.9% was ~~$1,110.5 million, an increase~~reflective of ~~3.7%, comparable with the~~ organic revenue growth of 5.1% or $386.7 million in organic revenue, a 50 basis point increase ~~of 3.6% over the same period~~from deferred revenue fair value adjustments from purchase accounting and acquisition-related revenue and a ~~year ago. The~~30 basis point increase in revenue was due to growth across all our operating segments for the nine months ended May 31, 2020 compared to the prior year period, with the increase in revenue primarily related to the Americas and the benefit from ~~our annual price increase, partially offset by cancellations.~~foreign currency exchange rate fluctuations.

Revenue by Operating Segment


		Three Months Ended May 31,																Nine Months Ended May 31,									Three Months Ended November 30,

(in thousands)	(in thousands)	2020			2019			Change		2020			2019			Change		(in thousands)	2020			2019			Change
Americas	Americas	$	230,992		$	226,961		1.8	%	$	695,053		$	672,479		3.4	%	Americas	$	244,337		$	231,330		5.6	%
% of revenue	% of revenue	61.7		%	62.3		%			62.6		%	62.8		%			% of revenue	62.9		%	63.1		%
EMEA	EMEA	$	105,420		$	102,499		2.8	%	$	308,355		$	299,197		3.1	%	EMEA	$	105,777		$	100,830		4.9	%
% of revenue	% of revenue	28.2		%	28.1		%			27.8		%	27.9		%			% of revenue	27.2		%	27.5		%
Asia Pacific	Asia Pacific	$	37,671		$	35,073		7.4	%	$	107,113		$	99,392		7.8	%	Asia Pacific	$	38,092		$	34,498		10.4	%
% of revenue	% of revenue	10.1		%	9.6		%			9.6		%	9.3		%			% of revenue	9.8		%	9.4		%

Consolidated	Consolidated	$	374,083		$	364,533		2.6	%	$	1,110,521		$	1,071,068		3.7	%	Consolidated	$	388,206		$	366,658		5.9	%

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

Revenue from our Americas segment increased ~~1.8%~~5.6% to ~~$231.0~~$244.3 million during the three months ended ~~May 31,~~November 30, 2020, compared to ~~$227.0~~$231.3 million from the same period a year ago. This year-over-year revenue ~~growth~~increase was ~~due mainly~~largely attributed to increased sales and price increases partially offset by cancellations by existing clients and increased sales to new clients. This increase was driven by increased sales of ~~products and~~our workflow solutions, ~~to clients~~ primarily in Analytics and Trading and CTS, followed by ~~CTS~~Wealth. The revenue growth of 5.6% was reflective of organic revenue growth of 5.1% and ~~Wealth, along with the benefit~~a 50 basis point increase from ~~our annual price increase, partially offset by cancellations. Organic~~deferred revenue ~~in the Americas also increased 1.8% compared to the same period a year ago.~~fair value adjustments from purchase accounting and acquisition-related revenue. Revenue from our Americas operations accounted for ~~61.7%~~62.9% of our consolidated revenue for the three months ended ~~May 31,~~November 30, 2020, ~~compared to 62.3%~~down from 63.1% in the prior year period.

EMEA revenue increased ~~2.8%~~4.9% to ~~$105.4~~$105.8 million during the three months ended ~~May 31,~~November 30, 2020, compared to ~~$102.5~~$100.8 million from the same period a year ago. This year-over-year revenue ~~growth~~increase was ~~mainly due~~largely attributed to increased sales and price increases partially offset by cancellations by existing clients and increased sales to new clients. This increase was driven by increased sales of ~~products and~~our workflow solutions, ~~to clients primarily~~mainly in Analytics and Trading and ~~CTS, partially offset by cancellations.~~CTS. The ~~EMEA~~revenue growth of 4.9% was reflective of organic revenue growth ~~rate was 3.0% for the three months ended May 31, 2020, compared to the same period~~of 3.4%, a ~~year ago. Foreign~~100 basis point increase from foreign currency exchange rate fluctuations ~~decreased our EMEA~~and a 50 point basis point increase from deferred revenue ~~growth rate by 20 basis points.~~fair value adjustments from purchase accounting.

Asia Pacific revenue increased ~~7.4%~~10.4% to ~~$37.7~~$38.1 million during the three months ended ~~May 31,~~November 30, 2020, compared to ~~$35.1~~$34.5 million from the same period a year ago. This year-over-year revenue ~~growth~~increase was largely due ~~mainly~~ to increased sales ~~of products~~ and ~~solutions to clients primarily in Analytics and Trading, CTS and Research,~~price increases partially offset by ~~cancellations. Asia Pacific organic revenue~~cancellations by existing clients and increased ~~7.0% for the three months ended May 31, 2020, compared~~sales to ~~the same period a year ago. Foreign currency exchange rate fluctuations increased our Asia Pacific revenue growth rate~~new clients. This increase was driven by ~~40 basis points.~~

~~Nine months ended May 31, 2020 compared to nine months ended May 31, 2019~~

Revenue from our Americas segment increased 3.4% to $695.1 million during the nine months ended May 31, 2020, compared to $672.5 million from the same period a year ago. This revenue growth was due mainly to increased sales of ~~products and~~our workflow solutions, to clients primarily in Analytics and Trading, CTS and Wealth, partially offset by cancellations. Organic revenue in the Americas increased 3.3% compared to the same period a year ago. Revenue from our Americas operations accounted for 62.6% of our consolidated revenue for the nine months ended May 31, 2020, compared to 62.8% in the prior year period.

EMEA revenue increased 3.1% to $308.4 million during the nine months ended May 31, 2020, compared to $299.2 million from the same period a year ago. This revenue growth was due mainly to increased sales of products and solutions to clients primarily in Analytics and Trading and ~~CTS, partially offset by cancellations.~~CTS. The ~~EMEA~~revenue growth of 10.4% was reflective of organic revenue growth ~~rate was 3.0% for the nine months ended May 31, 2020, compared to the same period~~of 9.8% and a ~~year ago. Foreign~~60 basis point increase from foreign currency exchange rate ~~fluctuations decreased our EMEA revenue growth rate by 10 basis points.~~

Asia Pacific revenue increased 7.8% to $107.1 million during the nine months ended May 31, 2020, compared to $99.4 million from the same period a year ago. This revenue growth was due mainly to increased sales of products and solutions to clients primarily in Analytics and Trading, CTS and Research, partially offset by cancellations. Asia Pacific organic revenue increased 7.6% for the nine months ended May 31, 2020, compared to the same period a year ago. Foreign currency exchange rate fluctuations increased our Asia Pacific revenue growth rate by 20 basis points.fluctuations.

Revenue by Workflow Solution

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

The revenue growth of ~~2.6%~~5.9% across our operating segments was primarily driven by increased revenue from Analytics and Trading and CTS followed by Wealth for the three months ended ~~May 31,~~November 30, 2020, compared to the same period a year ~~ago was primarily driven by Analytics and Trading, CTS, and Wealth, along with the benefit from our annual price increase. Revenue growth~~ago. The revenue increase from Analytics and Trading was primarily due to increased demand for our risk management, portfolio ~~analytics~~reporting, performance and ~~reporting~~portfolio analytics solutions. The ~~growth~~increase in CTS revenue was driven mainly by ~~increased~~higher sales of core and premium content sets, specifically related to company financial data ~~feeds.~~and data management solutions. Wealth also experienced ~~growth~~an increase in revenue mainly due to higher sales of our ~~traditional and web-based~~ workstation product. ~~Offsetting these positive growth factors were cancellations resulting from continued industry-wide cost pressures and firm consolidations.~~

~~Nine months ended May 31, 2020 compared to nine months ended May 31, 2019~~

The revenue growth of 3.7% across our operating segments for the nine months ended May 31, 2020 compared to the same period a year ago was primarily driven by Analytics and Trading, CTS, and Wealth, along with the benefit from our annual price increase. Revenue growth from Analytics and Trading was mainly due to increased sales of risk and portfolio analytics products. CTS revenue growth was driven mainly by increased sales of core and premium data feeds. The revenue growth from Wealth was primarily due to higher sales of our traditional and web-based workstation product. Offsetting these positive growth factors were cancellations resulting from continued industry-wide cost pressures and firm consolidations.

3432

Operating Expenses


		Three Months Ended May 31,																Nine Months Ended May 31,										Three Months Ended November 30,

(in thousands)	(in thousands)	2020			2019			Change		2020			2019			Change			(in thousands)	2020			2019			Change
Cost of services	Cost of services	$	170,703		$	163,832		4.2	%	$	511,878		$	495,716		3.3	%		Cost of services	$	188,088		$	164,957		14.0	%
Selling, general and administrative	Selling, general and administrative	81,740			83,461			(2.1)	%	257,560			248,885			3.5	%		Selling, general and administrative	79,087			88,515			(10.7)	%
Total operating expenses	Total operating expenses	$	252,443		$	247,293		2.1	%	$	769,438		$	744,601		3.3	%		Total operating expenses	$	267,175		$	253,472		5.4	%

Operating Income	Operating Income	$	121,640		$	117,240		3.8	%	$	341,083		$	326,467		4.5	%		Operating Income	$	121,031		$	113,186		6.9	%
Operating Margin	Operating Margin	32.5		%	32.2		%			30.7		%	30.5		%				Operating Margin	31.2		%	30.9		%

Cost of Services

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

~~For~~Cost of services increased 14.0% to $188.1 million for the three months ended ~~May 31,~~November 30, 2020, ~~cost of services increased 4.2% to $170.7 million~~ compared to ~~$163.8~~$165.0 million in the same period a year ago, primarily due to an increase in employee compensation expense and computer-related expenses.

Cost of services, when expressed as a percentage of revenue, was ~~45.6% during~~48.5% for the ~~third quarter of fiscal~~three months ended November 30, 2020, an increase of 70350 basis points compared to the same period a year ago. This increase was primarily due to an increase in computer-related expenses, employee compensation expense and intangible asset amortization, partially offset by a reduction in ~~compensation costs,~~computer depreciation, when expressed as a percentage of revenue.

Computer-related expenses ~~as a percentage of revenue,~~ increased ~~120~~190 basis points, primarily driven by increased technology investments ~~including~~related to our migration to cloud-based hosting services and licensed software arrangements. Employee compensation expense ~~when expressed as a percentage of revenue, decreased 50~~increased 170 basis points, ~~in the third quarter of fiscal 2020, compared to the same period~~primarily driven by a ~~year ago. This decrease~~net increase in employee headcount of 757 employees, most of whom are located in lower cost locations, with the majority of their salaries included in cost of services. Employee compensation expense ~~was primarily driven~~also increased due to higher annual base salaries and an increase in year-over-year variable compensation, partially offset by higher capitalization of compensation costs related to development of our internal-use software ~~projects, as well as a shift in headcount distribution from higher~~projects. Intangible asset amortization increased 30 basis points due to lower cost locations. This employee compensation expense decrease was partially offset by higher annual base salaries, a net increase in employee headcount, with the majority of the compensation from new employee headcount included in cost of services, and a higher ~~vacation accrual expense.~~

~~Nine months ended May 31, 2020 compared to nine months ended May 31, 2019~~

~~For the nine months ended May 31, 2020, cost of services increased 3.3% to $511.9 million compared to $495.7 million~~investment in ~~the same period a year ago, primarily~~capitalized internal-use software that has been placed in service. Computer depreciation decreased 30 basis points mainly due to an increase in computer-related expenses and stock-based compensation. Cost of services, when expressed as a percentage of revenue, was 46.1% for the nine months ended May 31, 2020, a decrease of 20 basis points compared to the same period a year ago. This decrease was primarily driven by aoverall reduction in ~~employee compensation, partially offset by higher computer-related expenses, when expressed~~computer equipment as ~~a percentage of revenue.~~

~~Employee compensation expense, when expressed as a percentage of revenue, decreased 110 basis points, primarily driven by higher capitalization of compensation costs related~~we migrate to development of our internal-use software projects, as well as a shift in headcount distribution from higher to lower cost locations. This employee compensation expense decrease was partially offset by higher annual base salaries, a net increase in employee headcount of 699 employees, with the majority of the compensation from new employee headcount included in cost of services, and higher vacation accrual expense. Computer-related expenses, when expressed as a percentage of revenue, increased 120 basis points, primarily driven by increased technology investments including cloud-based hosting ~~and licensed software arrangements.~~services.

Selling, General and Administrative

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

~~For~~Selling, general and administrative ("SG&A") expenses decreased 10.7% to $79.1 million for the three months ended ~~May 31,~~November 30, 2020, ~~SG&A expenses decreased 2.1% to $81.7 million,~~ compared to ~~$83.5~~$88.5 million for the same period a year ago, primarily due to a decrease in non-compensatory ~~employee related expenses, partially offset by an increase in compensation expense.~~ employee-related expenses.

SG&A expenses, when expressed as a percentage of revenue, were ~~21.9% during~~20.4% for the ~~third quarter of fiscal~~three months ended November 30, 2020, a decrease of ~~100~~380 basis points over the prior year period. ~~When expressed as a percentage of revenue, this~~This decrease was primarily driven by a decrease in non-compensatory ~~employee related~~employee-related expenses and ~~bad debt expense,~~a reduction in occupancy costs, partially offset by ~~an increase in employee~~higher stock-based compensation ~~expense including stock-based compensation.~~

costs. Non-compensatory ~~employee related~~employee-related expenses, inclusive of travel, entertainment and office expenses, ~~when expressed as a percentage of revenue,~~ decreased ~~170~~230 basis points mainly due to restrictions and impacts related to the COVID-19 ~~pandemic. Bad debt~~pandemic as most employees continue to work from home. Occupancy costs decreased 4060 basis points, ~~compared~~as the three months ended November 30, 2019 included costs related to ~~the~~concurrent lease expenses of our new and prior ~~year period, when expressed as a percentage of revenue. Employee compensation expense, including stock-based~~corporate headquarters in Norwalk, Connecticut. Stock-based compensation increased 8050 basis points ~~when expressed as a percentage of revenue, due to higher annual base salaries, a net increase in employee headcount, higher vacation accrual expense, and incremental employee-based stock grants.~~

~~Nine months ended May 31, 2020 compared to nine months ended May 31, 2019~~

~~For the nine months ended May 31, 2020, SG&A expenses increased 3.5% to $257.6 million, compared to $248.9 million for the same period a year ago,~~ primarily due to ~~an increase~~the accelerated recognition of expense associated with certain retirement provisions in our employee ~~compensation, professional fees,~~equity award plan. For these employees, the ~~effects~~amortization of foreign currency fluctuations, and occupancy costs, partially offset by a decrease in non-compensatory employee related expenses and bad debt expense. SG&A expenses, expressed as a percentage of revenue, were 23.2% fornew grants was recognized over the ~~nine months ended May 31, 2020, consistent with~~period from the ~~prior year period. An increase in professional fees and employee compensation expense, partially offset by a decrease in non-compensatory employee related expenses and bad debt expense, attributed~~grant date to the ~~consistent year over year SG&A costs, when expressed as a percentage of revenue.~~

Professional fees, when expressed as a percentage of revenue, increased 40 basis points in support of our technology plan and business transformation activities. Employee compensation expense, when expressed as a percentage of revenue, increased 30 basis points, primarily driven by higher annual base salaries, a net increase in employee headcount and higher vacation accrual expense. Non-compensatory employee related expenses, inclusive of travel, entertainment and office expenses, when expressed as a percentage of revenue, decreased 90 basis points mainly due to restrictions and impacts related toretirement-eligible date if such period was shorter than the ~~COVID-19 pandemic. Bad debt decreased 50 basis points compared to the prior year period when expressed as a percentage of revenue.~~standard vesting schedule.

Operating Income and Operating Margin

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

Operating income increased ~~3.8%~~6.9% to ~~$121.6~~$121.0 million for the three months ended ~~May 31,~~November 30, 2020 compared to ~~$117.2~~$113.2 million in the prior ~~year period.~~year. Operating income increased due to higher revenue and a reduction in non-compensatory ~~employee related~~employee-related expenses, partially offset by an increase in ~~computer-related expenses and~~ employee compensation expense and computer-related expenses compared to the prior year period. ~~The impact of foreign currency increased operating income by $1.5 million year over year.~~ Operating margin increased to ~~32.5%~~31.2% during the ~~third quarter of fiscal~~three months ended November 30, 2020 compared to ~~32.2%~~30.9% in the prior year period. ~~The~~This increase in operating margin on a year-over-year basis was primarily due to higher revenue and a decrease in non-compensatory ~~employee related~~employee-related expenses, occupancy costs and ~~bad debt expense,~~computer depreciation, partially offset by ~~an increase in~~

higher computer-related expenses, ~~and~~ employee compensation ~~expense including~~expenses, stock-based compensation expense and amortization of intangible assets, when expressed as a percentage of revenue.

Segment Information

~~Nine months ended May 31, 2020 compared to nine months ended May 31, 2019~~Reportable Segments

Operating income increased 4.5% to $341.1 million for the nine months ended May 31, 2020 compared to $326.5 million in the prior year period. Operating income increased due to increased revenue and a reduction in non-compensatory employee related expenses and bad debt expense, partially offset by an increase in computer-related expenses, employee compensation expense including stock-based compensation, and professional fees. The impact of foreign currency increased operating income by $2.7 million year over year. Operating margin increased to 30.7% for the nine months ended May 31, 2020 compared to 30.5% in the prior year period. The increase in operating margin on a year-over-year basis was primarily due to revenue growth and a reduction in non-compensatory employee related costs, employee compensation expense and bad debt expense, partially offset by an increase in computer-related expenses and professional fees, when expressed as a percentage of revenue.

~~Operating Income by Segment~~

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands) 2020 2019 Change 2020 2019 Change
Americas $ 54,019 $ 51,012 5.9 % $ 144,952 $ 140,549 3.1 %
EMEA 43,638 44,793 (2.6) % 127,520 127,130 0.3 %
Asia Pacific 23,983 21,435 11.9 % 68,611 58,788 16.7 %
Total Operating Income $ 121,640 $ 117,240 3.8 % $ 341,083 $ 326,467 4.5 %

Table of compensation costs related to development of our internal-use software projects. This decrease in employee compensation expense was partially offset by annual base salary increases year-over-year, a net increase in employee headcount, higher vacation accrual expense and incremental employee-based stock grants. Computer-related expenses increased primarily due to increased technology investments including costs from cloud-based hosting and licensed software arrangements.Contents

Our operating segments are aligned with how we manage the business, the geographic markets we serve, and how our chief operating decision maker ("CODM"), our Chief Executive Officer, assesses performance. Our internal financial reporting structure is based on three reportable segments, the Americas, EMEA and Asia ~~Pacific, which~~Pacific. Within each of our segments, we ~~believe helps us better manage the business~~primarily deliver insight and ~~view the markets we serve. Sales, consulting, data collection, product development~~information through our four workflow solutions of Research, Analytics and ~~software engineering are the primary functional groups within each segment.~~ Trading, CTS and Wealth.

Each segment records ~~its respective~~ compensation expense ~~including~~(including stock-based ~~compensation, amortization of intangible assets,~~compensation), depreciation of furniture and fixtures, amortization of lease right-of-use ("ROU") assets, leasehold improvements and intangible assets, as well as communication costs, professional fees, rent expense, travel, office and other direct expenses. Expenditures associated with our data centers, third-party data costs and corporate headquarters charges are recorded by the Americas segment and are not allocated to the other segments. The content collection centers, ~~of excellence,~~ located in India, ~~and~~ the Philippines, ~~primarily focus on content collection that~~and Latvia, benefit all our ~~segments. The~~operating segments, and thus the expenses incurred at these locations are allocated to each segment based on a percentage of revenue. Refer to Note 16, Segment Information for financial information, including revenues, operating income and long-lived assets for each of our segments.

Operating Income by Segment


	Three Months Ended November 30,

(in thousands)	2020		2019		Change
Americas	$	56,376	$	49,623	13.6	%
EMEA	40,634		41,218		(1.4)	%
Asia Pacific	24,021		22,345		7.5	%
Total Operating Income	$	121,031	$	113,186	6.9	%

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

Americas operating income increased ~~5.9%~~13.6% to ~~$54.0~~$56.4 million during the three months ended ~~May 31,~~November 30, 2020 compared to ~~$51.0~~$49.6 million in the same period a year ago. The increase in Americas operating income was primarily due to revenue growth of ~~1.8%, inclusive of our annual price increase,~~5.6% and a decrease in non-compensatory ~~employee related~~employee-related expenses, ~~and a decrease in employee compensation expense,~~ partially offset by an increase in computer-related ~~expenses.~~expenses and employee compensation expense. 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. Computer-related expenses increased primarily due to increased technology investments related to our migration to cloud-based hosting services and licensed software arrangements. Employee compensation expense increased mainly due to a net increase in employee headcount of 142 employees, higher annual base salaries and an increase in year-over-year variable compensation, partially offset by higher capitalization of compensation costs related to development of our internal-use software projects.

EMEA operating income decreased 1.4% to $40.6 million during the three months ended November 30, 2020 compared to $41.2 million in the same period a year ago. The decrease in EMEA operating income was primarily due to revenue growth of 4.9%, partially offset by an increase in employee compensation expense. Employee compensation expense increased mainly due to a net increase in employee headcount of 73 employees, higher annual base salaries and an increase in year-over-year variable compensation.

Asia Pacific operating income increased 7.5% to $24.0 million during the three months ended November 30, 2020, compared to $22.3 million in the same period a year ago. The increase in the Asia Pacific operating income was mainly due to revenue growth of 10.4% and a decrease in non-compensatory employee-related expenses, partially offset by an increase in employee compensation expense. 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. Employee compensation expense ~~decreased mainly due to higher capitalization~~

EMEA operating income decreased 2.6% to $43.6 million during the three months ended May 31, 2020 compared to $44.8 million in the same period a year ago. The decrease in EMEA operating income was primarily due to an increase in employee compensation expense partially offset by revenue growth of 2.8%, inclusive of our annual price increase. The impact of foreign currency increased operating income by $1.5 million year over year. Employee compensation expense increased due to higher vacation accrual expense, a net increase in employee headcount and annual base salary increases year-over-year.

Asia Pacific operating income increased 11.9% to $24.0 million during the three months ended May 31, 2020, compared to $21.4 million in the same period a year ago. The increase in the Asia Pacific operating income was mainly due to revenue growth of 7.4%, inclusive of our annual price increase, and a decrease in non-compensatory employee related expenses, partially offset by an increase in employee compensation expense. 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. Employee compensation expense increased mainly due to a net increase in employee headcount of 542 employees and annual base salary increases year-over-year.

~~Nine months ended May 31, 2020 compared to nine months ended May 31, 2019~~

Americas operating income increased 3.1% to $145.0 million during the nine months ended May 31, 2020 compared to $140.5 million in the same period a year ago. The increase in Americas operating income was primarily due to revenue growth of 3.4%, inclusive of our annual price increase, and decreases in bad debt expense, non-compensatory employee related costs, and employee compensation expense, partially offset by an increase in computer-related expenses and professional fees. 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. Employee compensation expense decreased mainly due to higher capitalization of compensation costs related to development of our internal-use software projects. This decrease in employee compensation expense was partially offset by higher annual base salaries, a net increase in employee headcount of 3.9% over the past 12 months, higher vacation accrual expense and incremental employee-based stock grants. Computer-related expenses increased primarily due to increased technology investments including costs from cloud-based hosting and licensed software arrangements. Professional fees increased to support our technology investment plan and business transformation activities.

EMEA operating income increased 0.3% to $127.5 million during the nine months ended May 31, 2020 compared to $127.1 million in the same period a year ago. The increase in EMEA operating income was primarily due to revenue growth of 3.1%, inclusive of our annual price increase, partially offset by an increase in employee compensation expense. The impact of foreign currency increased operating income by $4.8 million year over year. Employee compensation increased primarily due to higher vacation accrual expense, a net increase in employee headcount of 6.7% over the past 12 months and annual base salary increases year-over-year.

Asia Pacific operating income increased 16.7% to $68.6 million during the nine months ended May 31, 2020, compared to $58.8 million in the same period a year ago. The increase in Asia Pacific operating income was mainly due to revenue growth of 7.8%, inclusive of our annual price increase, partially offset by an increase in employee compensation expense and occupancy costs. The impact of foreign currency decreased operating income by $2.3 million year over year. Employee compensation expense increased as a result of a 9.0% increase in our Asia Pacific workforce in the last 12 months and annual base salary increases year-over-year. Occupancy costs increased mainly due to facility costs in the Philippines.

Income Taxes, Net Income and Diluted Earnings per Share


		Three Months Ended May 31,												Nine Months Ended May 31,							Three Months Ended November 30,

(in thousands, except for per share data)	(in thousands, except for per share data)	2020		2019		Change		2020		2019		Change		(in thousands, except for per share data)	2020		2019		Change
Provision for income taxes	Provision for income taxes	$	17,924	$	21,119	(15.1)	%	$	47,131	$	52,413	(10.1)	%	Provision for income taxes	$	19,026	$	14,784	28.7	%
Net income	Net income	$	101,216	$	92,265	9.7	%	$	283,859	$	261,263	8.6	%	Net income	$	101,206	$	93,957	7.7	%
Diluted earnings per common share	Diluted earnings per common share	$	2.63	$	2.37	11.0	%	$	7.36	$	6.73	9.4	%	Diluted earnings per common share	$	2.62	$	2.43	7.8	%

Income Taxes

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

Our effective tax rate is lower than the applicable U.S. corporate income tax rate for the three months ended November 30, 2020 driven mainly by research and development ("R&D") tax credits and a foreign derived intangible income ("FDII") deduction. Our effective tax rate for the three months ended November 30, 2020 is further reduced by windfall tax benefits from stock-based compensation.

For the three months ended ~~May 31,~~November 30, 2020, the provision for income taxes was ~~$17.9~~$19.0 million, compared to ~~$21.1~~$14.8 million from the same period a year ago. The provision ~~decreased~~increased due ~~mainly~~ to higher operating income and a ~~lower effective~~reduction in income tax ~~rate as of May 31,~~benefits for the three months ended November 30, 2020, compared to the same period a year ago, primarily driven by higher research and development ("R&D") tax credits and a higher foreign-derived intangible income ("FDII") deduction, coupled with the effect of applying the lower effective tax rate to the first half of fiscal 2020.ago. The ~~three months ended May 31, 2019 included a $5.8 million~~ income tax ~~expense from finalizing the prior year’s tax returns with no similar event~~benefit for the three months ended ~~May 31, 2020. The decrease~~November 30, 2020 was $3.0 million related to ~~the provision was partially offset by increased income tax expense from higher operating income for the three months ended May 31, 2020 compared to the prior year period and $3.3 million in higher~~ windfall tax benefits from stock-based compensation ~~recognized during~~compared to $5.9 million for the three months ended ~~May 31,~~November 30, 2019 ~~compared~~related to the ~~three months ended May 31, 2020.~~

~~Nine months ended May 31, 2020 compared~~remeasurement of a foreign net deferred tax position due to ~~nine months ended May 31, 2019~~

~~For~~changes in the ~~nine months ended May 31, 2020, the provision for income taxes was $47.1 million, compared to $52.4 million from the same period a year ago. The provision decreased due mainly to a lower effective~~jurisdiction's tax rate, as of May 31, 2020 compared to the same period a year ago, primarily driven by higher R&D tax credits and a higher FDII deduction, coupled with the effect of applying the lower effective tax rate to the first half of fiscal 2020. The nine months ended May 31, 2019 included a $5.8 million tax expense from finalizing ~~the~~ prior ~~year’s~~years' tax returns, with no similar event for the nine months ended May 31, 2020. The decrease to the provision was partially offset by increased income tax expense from higher operating income for the nine months ended May 31, 2020 compared to the prior year period. The decrease to the provision was also offset by $3.3 million in higherand windfall tax benefits from stock-based compensation recognized during the nine months ended May 31, 2019 compared to the nine months ended May 31, 2020 and an income tax benefit from the revision of the one-time transition tax permitted by the U.S. Tax Cuts and Jobs Act recognized during the nine months ended May 31, 2019.compensation.

Net Income and Diluted Earnings per Share

Three months ended ~~May 31,~~November 30, 2020 compared to three months ended ~~May 31,~~November 30, 2019

Net income increased ~~9.7%~~7.7% to $101.2 million and diluted earnings per share ("EPS") increased ~~11.0%~~7.8% to ~~$2.63~~$2.62 for the three months ended ~~May 31,~~November 30, 2020, compared to the same period a year ago. Net income and diluted EPS increased primarily due to ~~revenue growth outpacing the growth of~~increased operating ~~expenses, a decrease in the~~ income ~~tax provision~~ and ~~reduced interest expense on a year-over-year basis. Interest expense decreased compared to the prior year period primarily due to~~ a reduction in the LIBOR rate. Diluted EPS also benefited from a 0.5 million share reduction in our diluted weighted average shares outstanding, compared to the same period a year ago, mainly due to share repurchases,interest expense, net, partially offset by ~~the impact from stock option exercises.~~

~~Nine months ended May 31, 2020 compared to nine months ended May 31, 2019~~

Net income increased 8.6% to 283.9 million and diluted EPS increased 9.4% to $7.36 for the nine months ended May 31, 2020, compared to the same period a year ago. Net income and diluted EPS increased primarily due to revenue growth outpacing the growth of operating expenses, a decreasean increase in the provision for income tax provision and reduced interest expense on a year-over-year basis. Interest expense decreased compared to the prior year period, primarily due to a reduction in the LIBOR rate. Diluted EPS also benefited from a 0.3 million share reduction in our diluted weighted average shares outstanding, compared to the same period a year ago, mainly due to share repurchases, partially offset by the impact from stock option exercises.taxes.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures including organic revenue, adjusted operating margin, adjusted net income and adjusted diluted ~~earnings per share.~~EPS. The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are show in the tables below. These non-GAAP financial measures should not be considered in isolation from, as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently that we do, limiting the usefulness of those measures for comparative purposes.

Despite the limitations of these non-GAAP financial measures, we believe these adjusted financial measures, and the information they provide, are useful in viewing our performance using the same tools that management uses to gauge progress in achieving our goals. Adjusted measures may also facilitate comparisons to our historical performance.

The table below provides an unaudited reconciliation of revenue to organic revenue.


		Three Months Ended May 31,											Three Months Ended November 30,

(In thousands)	(In thousands)	2020		2019		Change		(In thousands)	2020		2019		Change
Revenue	Revenue	$	374,083	$	364,533	2.6	%	Revenue	$	388,206	$	366,658	5.9	%
Deferred revenue fair value adjustment⁽¹⁾	Deferred revenue fair value adjustment⁽¹⁾	1,169		1,274				Deferred revenue fair value adjustment(1)	60		1,216
Acquired revenue(2)								Acquired revenue(2)	(375)		—
Currency impact	Currency impact	84		—				Currency impact	(1,240)		—
Organic revenue	Organic revenue	$	375,336	$	365,807	2.6	%	Organic revenue	$	386,651	$	367,874	5.1	%

(1)Deferred revenue fair value adjustment from purchase ~~accounting.~~accounting

(2)Acquired revenues from acquisitions completed within the last 12 months

3936

The table below provides an unaudited reconciliation of operating income, operating margin, net income and diluted EPS to adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted EPS.


		Three Months Ended May 31,												Three Months Ended November 30,

(In thousands, except per share data)	(In thousands, except per share data)	2020⁽¹⁾			2019⁽²⁾			Change		(In thousands, except per share data)	2020(1)			2019(2)			Change
Operating income	Operating income	$	121,640		$	117,240		3.8	%	Operating income	$	121,031		$	113,186		6.9	%
Intangible asset amortization	Intangible asset amortization	5,107			5,928					Intangible asset amortization	5,699			5,152
Deferred revenue fair value adjustment	Deferred revenue fair value adjustment	1,169			1,274					Deferred revenue fair value adjustment	60			1,216
Other items	Other items	5,464			(1,647)					Other items	6,213			5,168
Adjusted operating income	Adjusted operating income	$	133,380		$	122,795		8.6	%	Adjusted operating income	$	133,003		$	124,722		6.6	%
Adjusted operating margin	Adjusted operating margin	35.5		%	34.0		%			Adjusted operating margin	34.3		%	33.9		%

Net income	Net income	$	101,216		$	92,265		9.7	%	Net income	$	101,206		$	93,957		7.7	%
Intangible asset amortization⁽³⁾	Intangible asset amortization⁽³⁾	4,204			4,797					Intangible asset amortization(3)	4,797			4,181
Deferred revenue fair value adjustment⁽⁴⁾	Deferred revenue fair value adjustment⁽⁴⁾	963			1,031					Deferred revenue fair value adjustment(4)	51			987
Other items⁽⁵⁾	Other items⁽⁵⁾	4,436			(1,333)					Other items(5)	5,229			4,011
Income tax items	Income tax items	(734)			5,296					Income tax items	—			(3,481)
Adjusted net income	Adjusted net income	$	110,085		$	102,056		7.9	%	Adjusted net income	$	111,283		$	99,655		11.7	%

Diluted earnings per common share	Diluted earnings per common share	$	2.63		$	2.37		11.0	%	Diluted earnings per common share	$	2.62		$	2.43		7.8	%
Intangible asset amortization	Intangible asset amortization	0.11			0.12					Intangible asset amortization	0.12			0.11
Deferred revenue fair value adjustment	Deferred revenue fair value adjustment	0.03			0.02					Deferred revenue fair value adjustment	—			0.03
Other items	Other items	0.12			(0.03)					Other items	0.14			0.10
Income tax items	Income tax items	(0.03)			0.14					Income tax items	—			(0.09)
Adjusted diluted earnings per common share	Adjusted diluted earnings per common share	$	2.86		$	2.62		9.2	%	Adjusted diluted earnings per common share	$	2.88		$	2.58		11.6	%
Weighted average common shares (Diluted)	Weighted average common shares (Diluted)	38,481			38,993					Weighted average common shares (Diluted)	38,697			38,587

(1)Operating income, net income and diluted EPS infor the~~thirdquarter of fiscal~~ three months ended November 30, 2020 were adjusted to exclude (i) acquired intangible asset amortization, (ii) deferred revenue fair value adjustments from purchase accounting, and (iii) other items primarily related to professional fees associated with the ongoing content and technology investment plan and facilities costs.

(2)Operating income, net income and diluted EPS infor the~~thirdquarter of fiscal~~ three months ended November 30, 2019 were adjusted to exclude (i) acquired intangible asset amortization, (ii) deferred revenue fair value adjustments from purchase accounting, and (iii) other items ~~including non-core transaction~~primarily related ~~revenue, offset by~~to severance, ~~stock-based compensation acceleration, transformation~~professional fees related to infrastructure upgrade activities and ~~occupancy~~facilities costs.

(3)The acquired intangible asset amortization was recorded net of a tax provision of $0.9 million infor the~~thirdquarter of fiscal~~ three months ended November 30, 2020, compared to ~~$1.1~~$1.0 million ~~for~~during the~~thirdquarter of fiscal 2019.~~ same period in the prior year.

(4)The deferred revenue fair value adjustment was recorded net of a tax provision of ~~$0.2~~zero ~~million~~ for the ~~thirdquarters of both fiscal~~three months ended November 30, 2020, ~~and 2019.~~compared to $0.2 million for the same period in the prior year.

(5)~~The other~~Other items were recorded net of a tax provision of $1.0 million for the ~~thirdquarter offiscal~~three months ended November 30, 2020, compared to a ~~$0.3~~$1.2 million tax benefit for the ~~third quarter of 2019.~~same period in the prior year.

4037

Liquidity

~~The table below, for the periods indicated, provides selected cash flow information:~~

Nine Months Ended May 31,
(in thousands) 2020 2019
Net cash provided by operating activities $ 346,413 $ 305,324
Capital expenditures⁽¹⁾
(62,909) (32,906)
Free cash flow $ 283,504 $ 272,418
Net cash used in investing activities⁽¹⁾
$ (61,446) $ (29,543)
Net cash used in financing activities $ (188,712) $ (156,038)
Cash and cash equivalents at end of period 457,707 323,960

~~(1)Capital expenditures are included in net cash used in investing activities during each fiscal period reported.~~

~~Cash~~ and cash equivalents aggregated to $457.7 million as of May 31, 2020, compared to $359.8 million as of August 31, 2019. Our cash and cash equivalents increased $97.9 million during the first nine months of fiscal 2020, primarily due to cash inflows of $346.4 million of net cash provided by operating activities and $65.3 million in proceeds from the exercise of employee stock options, partially offset by cash outflows of $171.0 million in share repurchases, $81.4 million in dividend payments, and $62.9 million of capital expenditures.

Net cash used in investing activities was $61.4 million in the first nine months of fiscal 2020, representing a $31.9 million increase from the same period a year ago. This increase was due primarily to $30.0 million of higher capital expenditures.

Net cash used by financing activities was $188.7 million in the first nine months of fiscal 2020, representing a $32.7 million increase in cash used by financing activities from the same period a year ago. The increase was primarily due to a $12.7 million increase in share purchases and a $5.7 million increase in dividend payments, partially offset by a $13.6 million decrease in proceeds from employee stock plans.

As of May 31, 2020, our total Cash and cash equivalents worldwide was $457.7 million. The total available cash and cash equivalents within the Americas was $235.8 million, within EMEA was $171.1 million (predominantly within the UK, France, and Germany) and the remaining $50.8 million was held in Asia Pacific.

As of May 31, 2020, we have borrowed $575.0 million of the available $750.0 million provided under our 2019 revolving credit facility which we entered into on March 29, 2019, resulting in $175.0 million available for additional borrowings. 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") also allows us, subject to certain requirements, to arrange for additional borrowings with an aggregate amount up to $500.0 million. Refer to Capital Resources ~~- Capital Needs - Long Term Debt for additional information on the 2019 Credit Agreement.~~

~~We believe~~Our primary sources of liquidity have been our ~~liquidity (including cash on hand, cash from operating activities, other~~ cash flows ~~that we expect to generate and availability under~~generated from our operations, existing credit facilities) within each geographic segment will be sufficient to meet our short-term and long-term operating requirements, as they occur, including working capital needs, capital expenditures, dividend payments, stock repurchases, growth objectives and other financing activities. In addition, we expect existing foreign cash and cash equivalents and, ~~cash flows from~~when needed, our credit capacity under our existing credit facility. We have primarily used these sources of liquidity to, among other things, service our existing and future debt obligations, fund our working capital requirements for operations ~~to continue to be sufficient~~and capital expenditures, investments, acquisitions, dividend payments and repurchases of our common stock. Based on past performance and current expectations, we believe our liquidity, along with other financing alternatives, will provide us the necessary capital to fund these transactions and achieve our ~~foreign operating activities and cash commitments~~planned growth for ~~investing activities, such as capital expenditures, for at least~~ the next 12 months and ~~thereafter, for~~ the foreseeable future.

~~We have not observed any significant client loss, deterioration in the collectability~~Sources of receivables, reduction in liquidity, or decline in subscription renewal rates as a result of the COVID-19 pandemic. While the COVID-19 pandemic did not have a material impact on our financial results or cash flows for the three and nine months ended May 31, 2020, our future business and cash flows may be adversely affected. The situation surrounding the COVID-19 pandemic remains fluid, and we are actively managing our response and assessing potential impacts to our financial position, including our balance sheet and liquidity position. However, the COVID-19 pandemic has caused disruption in the capital markets, and could adversely affect our ability to access these markets on acceptable terms or at all and/or increase our cost of borrowing should we desire to access additional capital.

Free cash flow generated in the nine months ended May 31, 2020 was $283.5 million, an increase of 4.1% compared to a year ago. Free cash flow was generated from $346.4 million of net cash provided by operating activities, less $62.9 million in capital expenditures. Free cash flow increased $11.1 million year-over-year due to a $41.1 million increase in operating cash flows primarily due to higher net income, partially offset by the timing of income tax payments. This increase was partially offset by higher capital expenditures for the build-out of new and existing office space for some of our locations and increased investments in technology compared to the prior year period.

~~Capital Resources~~

~~Capital Expenditures~~

Capital expenditures in the third quarter of fiscal 2020 were $11.0 million, compared to $11.4 million in the prior year period. Capital expenditures of $5.9 million, or 54%, were related to facilities investments, primarily for the build-out of our new corporate headquarters in Norwalk, Connecticut and office space in the Philippines. The remainder of our capital expenditures, $5.1 million, was primarily related to investment in technology and development costs related to internal-use software.

Capital expenditures during the first nine months of fiscal 2020 were $62.9 million, compared to $32.9 million in the same period a year ago. Capital expenditures of $40.7 million, or 65%, were related to facilities investments, primarily for the build-out of our new corporate headquarters in Norwalk, Connecticut and office space in India and the Philippines. The remainder of our capital expenditures, $22.2 million, was primarily related to investment in technology and development costs related to internal-use software.

~~Capital Needs~~Liquidity

Long-Term Debt

~~2019 Credit Agreement~~

On March 29, 2019, we entered into ~~the 2019~~a credit agreement with PNC Bank, National Association ("PNC") (the "2019 Credit ~~Agreement with PNC,~~Agreement"), which provides for a $750.0 million revolving credit facility (the "2019 Revolving Credit Facility"). We may request borrowings under the 2019 Revolving Credit Facility until its maturity date of March 29, 2024. The 2019 Credit Agreement also allows us, 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.

As of ~~May 31,~~November 30, 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. We are required to pay a commitment fee using a pricing grid which was 0.10% as of ~~May 31,~~November 30, 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 Sheets at ~~May 31,~~November 30, 2020 and August 31, ~~2019.~~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 May 31, 2020, which we believe approximates the carrying amount as the terms and interest rate 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~~ LIBOR ~~rate~~ plus a spread using a debt leverage pricing grid, which was 0.875% as of ~~May 31,~~November 30, 2020. The variable rate of interest on ~~our long-term debt~~the 2019 Revolving Credit Facility can expose us to interest rate volatility due to changes in ~~the LIBOR rate.~~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 receive variable interest payments based on the same one-month LIBOR ~~rate~~ utilized to calculate the interest expense from the 2019 Revolving Credit Facility. The interest rate swap agreement matures on March ~~28,~~29, 2024.

For the three months ended May 31, 2020 and May 31, 2019, we recorded interest expense of $2.9 million and $5.2 million, respectively, on our outstanding debt amounts. For the nine months ended May 31, 2020 and May 31, 2019, we recorded interest expense of $10.9 million and $15.1 million, respectively, on our outstanding debt amounts. Including the effects of the interest rate swap agreement, the weighted average interest rate on amounts outstanding under our ~~credit facilities~~2019 Revolving Credit Facility was ~~2.47%~~1.40% for the ~~nine~~three months ended ~~May 31,~~November 30, 2020. The weighted average interest rate for the fiscal year ended ~~2019~~August 31, 2020 was ~~3.35%~~2.20%. Interest on the ~~loan~~ outstanding balance under the 2019 Revolving Credit Facility is payable quarterly, in arrears, and on the maturity date.

As the terms for the interest rate swap agreement align with the 2019 Revolving Credit Facility, we do not expect any hedge ineffectiveness. We have 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.

During fiscal 2019, we 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 activities, which are usual and customary for this type of loan. In addition, the 2019 Credit Agreement requires that we 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. We were in compliance with all the covenants and requirements within the 2019 Credit Agreement as of ~~May 31,~~November 30, 2020.

~~Letters~~As part of ~~Credit~~

~~From time to time, we are required to obtain letters of credit~~the Truvalue Labs, Inc. ("TVL") acquisition, FactSet assumed an additional $1.1 million in the ordinary course of business. Approximately $2.9 million of standby letters of credit have been issued in connection with our leased office spaces as of May 31, 2020. These standby letters of credit utilize the same covenants included in the 2019 Credit Agreement.long-term debt. Refer to Note ~~14, Debt,~~7, Acquisition for further discussion on the TVL acquisition.

Uses of ~~the Notes~~Liquidity

Returning Value to ~~the Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information on these covenants.~~Shareholders

~~Foreign Currency~~

~~Foreign Currency Exposure~~

Certain 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 as a component of stockholders’ equity.

Our foreign currency exchange exposure is related to our operating expenses in countries outside the Americas, where approximately 76% of our employees were located as of May 31, 2020. During the third quarter of fiscal 2020, foreign currency movements increased operating income by $1.5 million, compared to a $3.0 million increase to operating income a year ago. During the first nine months of fiscal 2020, foreign currency movements increased operating income by $2.7 million, compared to an increase in operating income of $8.6 million in the same period a year ago.

As of May 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 50% to 75% over their respective hedged periods. The current foreign currency forward contracts are set to mature at various points between the fourth quarter of fiscal 2020 through the first quarter of fiscal 2021.

As of May 31, 2020, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos and Indian Rupees with U.S. dollars was ₱466.8 billion and Rs830.6 billion, respectively. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros and British Pound Sterling was €11.4 million and £9.5 million, respectively.

~~A loss on derivatives of $1.0 million was recorded into operating income for~~For the three months ended ~~May 31,~~November 30, 2020, ~~compared~~we returned $72.2 million to ~~a loss on derivatives of $0.6 million~~stockholders in the ~~same period a year ago. For~~form of share repurchases and dividends. Over the ~~nine~~last 12 months, ~~ended May 31, 2020, a loss on derivatives of $2.1~~we returned $270.6 million ~~was recorded into operating income, compared~~ to ~~a loss on derivatives of $1.4 million~~stockholders in the ~~prior year period.~~

~~Off-Balance Sheet Arrangements~~

~~At May 31, 2020~~form of share repurchases and August 31, 2019, 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, other debt arrangements, or other contractually limited purposes.

dividends.

Share Repurchase Program

Repurchases of shares of our common stock are made from time to time in the open market and privately negotiated transactions, subject to market conditions. In the ~~third quarter of fiscal~~three months ended November 30, 2020, we repurchased ~~46,636~~131,800 shares for ~~$12.4~~$43.1 million

under our existing share repurchase program compared to ~~175,000~~343,000 shares for ~~$47.6~~$84.4 million in the same period a

year ago. ~~During~~As of November 30, 2020, $215.9 million remains available under the ~~first nine months~~share repurchase program for future share repurchases. There is no defined number of ~~fiscal 2020, we~~shares to be repurchased ~~657,136 shares for $171.0 million compared to 664,945 shares for $152.1 million in~~over a specified timeframe through the ~~prior year comparable period. For~~life of the ~~nine months ended May 31, 2020, we have returned $252.4 million to stockholders in the form of~~share repurchase program. It is expected that share repurchases will be paid using existing and ~~dividends. Over the last 12 months, we have returned $341.8 million to stockholders in the form of share repurchases and dividends.~~future cash generated by operations.

Dividends

On ~~March 24,~~November 4, 2020, our Board of Directors approved a ~~$220.0~~regular quarterly dividend of $0.77 per share. The cash dividend of $29.1 million was paid on December 17, 2020, to common stockholders of record at the close of business on November 30, 2020. Future cash dividends will depend on our earnings, capital requirements, financial condition and other factors considered relevant by us and is subject to final determination by our Board of Directors.

Acquisitions

On November 2, 2020, FactSet acquired all of the outstanding shares of TVL for a purchase price of $41.9 million, subject to working capital and other adjustments. TVL is a leading provider of ESG information derived from artificial intelligence, and the acquisition of TVL further enhances FactSet's commitment to providing industry leading access to ESG data across its platforms. Refer to Note 7, Acquisition for further discussion on the TVL acquisition.

Summary of Cash Flows

The table below, for the periods indicated, provides selected cash flow information:


	Three months ended November 30,
(in thousands)	2020		2019
Net cash provided by operating activities	$	89,276	$	95,791
Net cash used in investing activities	(58,322)		(27,143)
Net cash used by financing activities	(56,377)		(94,955)
Effect of exchange rate changes on cash and cash equivalents	(45)		2,725
Net decrease in cash and cash equivalents	$	(25,468)	$	(23,582)

Cash and cash equivalents aggregated to $560.1 million as of November 30, 2020, compared to $585.6 million as of August 31, 2020. Our cash and cash equivalents decreased $25.5 million during the first three months of fiscal 2021, primarily due to cash outflows of $43.1 million in share repurchases, $41.9 million for the acquisition of a business, $29.1 million in dividend payments, and $18.3 million of capital expenditures, partially offset by inflows of $89.3 million of net cash provided by operating activities and $18.0 million in proceeds from the exercise of employee stock options.

Our cash and cash equivalents are held in numerous locations throughout the world, with $229.0 million within the Americas, $281.5 million within EMEA (predominantly within the UK, France, and Germany) and the remaining $49.6 million within Asia Pacific (predominantly within the Philippines and India) as of November 30, 2020. We intend to reinvest substantially all of our accumulated undistributed foreign earnings, except in instances where repatriation would result in minimal additional tax.

Operating

For the three months ended November 30, 2020, net cash provided by operating was $89.3 million compared to $95.8 million during the same period a year ago, a decrease of $6.5 million. This decrease was primarily driven by the timing of lease incentive payments and certain working capital changes, offset by higher net income and cash generated from the operations of the business.

Investing

Net cash used in investing activities was $58.3 million in the three months ended November 30, 2020, representing a $31.2 million increase from the same period a year ago. This increase was due primarily to the ~~existing~~acquisition of TVL for approximately $41.9 million in cash, net of cash acquired, partially offset by an $8.4 million decrease in capital expenditures. Capital expenditures decreased due to increased spend during the three months ended November 30, 2019, primarily related to the build-out of our new corporate headquarters in Norwalk, Connecticut compared to reduced spend during the three months ended November 30, 2020 primarily related to the build-out of our office space in the Philippines and capitalized internal-use software.

Financing

Net cash used by financing activities was $56.4 million in the three months ended November 30, 2020, representing a $38.6 million decrease in cash used by financing activities from the same period a year ago. The decrease was primarily due to a $41.3 million decrease in share ~~repurchase program. As~~purchases and a ~~result~~$1.3 million increase in proceeds from employee stock plans, partially offset by a $1.8 million increase in dividend payments.

Free Cash Flow

We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities less purchases of ~~this expansion, $287.6~~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:


	Three months ended November 30,
(in thousands)	2020		2019
Net cash provided by operating activities	$	89,276	$	95,791
Capital expenditures(1)	(18,333)		(26,780)
Free cash flow	$	70,943	$	69,011

(1) Capital expenditures are included in net cash used in investing activities during each fiscal period reported.

Free cash flow generated in the three months ended November 30, 2020 was $70.9 million, ~~is available for future share repurchases as~~an increase of ~~May 31, 2020.~~2.8% compared to a year ago. Free cash flow increased $1.9 million year-over-year due to an $8.4 million decrease in capital expenditures, partially offset by a $6.5 million decrease in operating cash flows.

Contractual Obligations

Fluctuations 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 mentioned here. As of August 31, ~~2019,~~2020, we had total purchase commitments of ~~$69.9~~$226.0 million. ~~There were no material changes in our purchase commitments during~~During the ~~nine~~three months ended ~~May 31, 2020.~~November 30, 2020 we entered into a software subscription agreement with total purchase commitment of approximately $10.0 million with a contract term of three years.

As disclosed earlier in the Liquidity and Capital Resources section of this MD&A, we entered into the 2019 Credit Agreement on March 29, 2019 and borrowed $575.0 million. The loan balance of $575.0 million remains outstanding as of ~~May 31,~~November 30, 2020. Refer to Note 11, Debt, in the ~~Capital Resources section~~notes to the Consolidated Financial Statements included in Part I, Item 1, Financial Information, of ~~the MD&A~~this Quarterly Report on Form 10-Q for a discussion of our Long-term debt borrowings.

There were no other significant changes to our contractual obligations during the first ~~nine~~three months of fiscal ~~2020.~~2021.

~~Dividends~~Off-Balance Sheet Arrangements

~~On May 5,~~At November 30, 2020 and August 31, 2020, 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, other debt arrangements, or other contractually limited purposes.

Foreign Currency

Foreign Currency Exposure

Our investments in certain wholly-owned subsidiaries within the EMEA and Asia Pacific segments, where approximately 76% of our ~~Board~~employees are located, are exposed to volatility in currency exchange rates through translation of ~~Directors approved~~the foreign subsidiaries'

net assets or liabilities from their respective functional currencies into U.S. dollars, using an end of period exchange rate. The net translation gains and losses are recorded in accumulated other comprehensive loss as a ~~regular quarterly dividend~~component of ~~$0.77 per share.~~stockholders’ equity.

During the three months ended November 30, 2020, foreign currency movements increased operating income by $0.6 million, compared to a $1.0 million increase to operating income a year ago. To mitigate the foreign currency exposure, we entered into a series of forward contracts to hedge a portion of our British Pound Sterling, Euro, Indian Rupee, and Philippine Peso exposures ranging from 25% to 75% over their respective hedged periods as of November 30, 2020. The ~~$0.05 per share or 7% increase~~current foreign currency forward contracts are set to mature at various points between the second quarter of fiscal 2021 through the first quarter of fiscal 2022.

As of November 30, 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 Rs2.4 billion, respectively. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros and British Pound Sterling was €36.3 million and £37.6 million, respectively.

A gain on derivatives of $0.3 million was recorded into operating income for the three months ended November 30, 2020, compared to a loss on derivatives of $0.7 million in the ~~amount of our quarterly dividend marked the 15th consecutive~~same period a year we have increased dividends, highlighting our continued commitment to returning value to shareholders. The cash dividend of $29.0 million was paid on June 18, 2020, to common stockholders of record at the close of business on May 29, 2020. Future cash dividends will depend on our earnings, capital requirements, financial condition and other factors considered relevant by us and is subject to final determination by our Board of Directors.ago.

~~Significant~~Critical Accounting Policies and~~Critical Accounting~~Estimates

We describe our significant accounting policies in Note 3, Summary of Significant Accounting Policies, of the notes to our ~~consolidated financial statements~~Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2019.~~2020. The accounting policies used in preparing our ~~consolidated financial statements~~Consolidated Financial Statements for the first ~~nine~~three months of fiscal ~~2020~~2021 are applied consistently with those described in our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2019,~~2020, with the exception of the accounting guidance adopted in the first quarter of fiscal ~~2020~~2021 related to ~~accounting for leases.~~the adoption of ASU 2016-03, Financial Instruments—Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments. Refer to Note ~~15, Leases,~~3, Recent Accounting Pronouncements of ~~the Notes to the Consolidated Financial Statements in~~ this Quarterly Report ~~on Form 10-Q~~ for further ~~details on the adoption of the new lease standard.~~discussion.

We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2019.~~2020. There were no significant changes in our ~~accounting policies or~~ critical accounting estimates during the first ~~nine~~three months of fiscal ~~2020.~~2021.

New Accounting Pronouncements

See Note 3, Recent Accounting Pronouncements, in the notes to the ~~consolidated financial statements~~Consolidated Financial Statements included in Part I, Item 1, Financial Information, of this Quarterly Report on Form 10-Q for a full description of recent accounting pronouncements, including the expected dates of adoption, which we include herein by reference.

~~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 84% of our organic 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% of our organic ASV. A significant portion of this revenue relates 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. Regardless, the size of banks in general is shrinking as they deleverage their balance sheets and adjust their expense bases to future revenue opportunities. 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 in the current economic environment.

~~Brexit~~

On January 31, 2020, the UK formally left the European Union when the UK-EU Withdrawal Agreement became effective. Under the Withdrawal Agreement, a transition period began and will run until December 31, 2020. During this transition period, many existing arrangements will remain in place. The UK will still follow all the EU's rules and regulations, will remain in the single market and the customs union, and will continue to permit the free movement of people. On March 2, 2020 formal UK-EU negotiations on the future relationship commenced. On March 18, 2020, the European Commission published a draft legal agreement for the future EU-UK partnership, covering all areas of the negotiations, including trade and economic cooperation, law enforcement and participation in European Union programs. The UK and the EU are currently in the process of negotiating a UK-EU free trade deal and the terms of their future relationship. Although March negotiations were affected by the COVID-19 pandemic, the EU and the UK resumed the Brexit discussions on April 15, 2020. The deadline for these negotiations is the expiry of the transition period and the UK has consistently made it clear that it will not ask to extend the transition period. At this time, we cannot predict the impact that the future UK-EU arrangements will have on our business, as it will depend on the longer-term outcome of tariff, trade, regulatory and other negotiations. Although the results of these negotiations are currently unknown, 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 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 and plan to work with our clients to navigate through them.

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~~Forward-Looking Factors~~

~~Forward-Looking Statements~~

In addition to current and historical information, this Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q 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; the impact of the COVID-19 pandemic on our operating results and our employees' health and safety; 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.

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 this MD&A above and those listed in Part 1 Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2019. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this Quarterly Report to reflect actual results or future events or circumstances.

~~Business Outlook~~

We provided an annual outlook for certain key metrics for fiscal 2020 on September 26, 2019 and most recently updated it on June 25, 2020. Given the number of risk factors, uncertainties and assumptions discussed in Part 1 Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2019, and particularly the ongoing uncertainty surrounding the duration, magnitude, and impact of the novel coronavirus pandemic, actual results may differ materially from these expectations. We currently do not intend to update our forward-looking statements.

~~Fiscal 2020Expectations:~~

– Organic ASV plus professional services is now expected to increase in the range of $60 million and $75 million over fiscal 2019. The change in the range reflects the current anticipated business impacts resulting from the coronavirus pandemic.

~~– GAAP revenue is now expected to be in the range of $1.485 billion and $1.490 billion.~~

~~– GAAP operating margin is now expected to be in the range of 30.0% and 30.5%.~~

~~– Adjusted operating margin is now expected to be in the range of 33.0% and 33.5%.~~

~~– Annual effective tax rate is now expected to be in the range of 15.5% and 16.5%.~~

~~– GAAP diluted EPS is now expected to be in the range of $9.60 and $9.80. Adjusted diluted EPS is now expected to be in the range of $10.40 and $10.60.~~

~~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.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we are exposed to foreign currency exchange risk and interest rate risk that could impact our financial position and results of operations.

Foreign Currency Exchange Risk

WeIn the normal course of business, we are exposed to foreign currency exchange risk as we conduct business outside the U.S. in several currencies including British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. ~~We translate foreign~~Changes in the exchange rates for such currencies into U.S. dollars ~~using period-end rates~~can affect our revenues, earnings, and the carrying values of ~~exchange for~~our assets and liabilities ~~and average rates for the period for revenue and expenses. To the extent that~~in 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.

To manage the exposures related to the effects of foreign exchange rate fluctuations, we utilize derivative instruments (foreign currency forward contracts). 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. We do 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 major financial institutions. Further, our policy is to deal with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties. Our primary objective in holding derivatives is to reduce the volatility of earnings associated with changes in foreign currency.

As of May 31, 2020, FactSet maintained foreign currency forward contracts to hedge a portion of the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso exposures. FactSet entered into a series of forward contracts to mitigate our currency exposure ranging from 50% to 75% over their respective hedged periods. The current foreign currency forward contracts are set to mature at various points between the fourth quarter of fiscal 2020 through the first quarter of fiscal 2021.

A loss on derivatives of $1.0 million was recorded into operating income for the three months ended May 31, 2020, compared to a loss on derivatives of $0.6 million in the same period a year ago. For the nine months ended May 31, 2020, a loss on derivatives of $2.1 million was recorded into operating income, compared to a loss on derivatives of $1.4 million in the prior year period. 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~~Accumulated other comprehensive loss ("AOCL") 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.~~

A sensitivity analysis was performed based on the estimated fair value of all foreign currency forward contracts outstanding at ~~May 31,~~November 30, 2020. If the U.S. dollar had been 10% weaker, the fair value of outstanding foreign currency forward contracts would have increased by ~~$4.7~~$14.8 million, which would have had an immaterial impact on our Consolidated Balance Sheet. Such a change in fair value of our financial instruments would be substantially offset by changes in our expense base. If we had no hedges in place as of ~~May 31,~~November 30, 2020, a hypothetical 10% weaker U.S. dollar against all foreign currencies from the quoted foreign currency exchange rates at ~~May 31,~~November 30, 2020, with operating results held constant in local currencies, would result in a decrease in operating income by ~~$28.7~~$40.5 million over the next 12 months. A hypothetical 10% weaker U.S. dollar against all foreign currencies at ~~May 31,~~November 30, 2020 would have increased the fair value of total assets by ~~$116.2~~$68.5 million and equity by ~~$25.2~~$42.2 million.

Volatility in the British Pound Sterling exchange rate ~~is expected to continue~~remains a possibility in the short term as the UK ~~negotiates~~continues the transition resulting from its exit from the European Union. In the longer term, any impact from Brexit will depend on, in part, on the outcome of tariff, regulatory, and other negotiations. Refer to ~~Management's Discussion~~Part II, Item 1A, Risk Factors of this Quarterly Report on Form 10-Q and ~~Analysis~~ Item 1A, Risk Factors of ~~Financial Condition and Results of Operations - Market Trends - Brexit~~our Annual Report on Form 10-K for further discussion on Brexit.

Refer to Note 6, Derivative Instruments in the Notes to the Company’s Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on ~~Brexit.~~

~~Table of Content~~sour foreign currency exposures and our foreign currency forward contracts.

Interest Rate Risk

Cash and Cash Equivalents

The fair market value of our Cash and cash equivalents and Investments at ~~May 31,~~November 30, 2020 was ~~$480.3~~$578.3 million. Our 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. ~~Our investments consist~~We are exposed to interest rate risk through fluctuations of ~~both mutual funds and certificates of deposit as both are part of our investment strategy. These mutual funds and certificates of deposit are included as Investments (short-term)~~interest rates on our Consolidated Balance Sheets as the mutual funds can be liquidated at our discretion and the certificates of deposit 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 our 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 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.investments. As we have a restrictive investment policy, our financial exposure to fluctuations in interest rates is expected to remain low. ~~We do not believe that~~Refer to Note 3, Summary of Significant Accounting Policies, in the ~~value or liquidity~~Notes to the Company’s Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for more information on our cash and cash equivalents and investments ~~have been significantly impacted by current market events.~~policies.

Debt

As of ~~May 31,~~November 30, 2020, ~~the fair value of our~~we had long-term debt ~~was~~outstanding of $575.5 million, which included a principal balance of $575.0 million ~~and~~related to the 2019 Revolving Credit Facility. The 2019 Revolving Credit Facility bears interest on the outstanding ~~principal amount~~principle at a rate equal to ~~the~~ LIBOR ~~rate~~ plus a spread, using a debt leverage pricing grid, which was 0.875% as of May 31, 2020. We believe the carrying value of the debt approximates fair value as the interest rate is a floating rate equal to the LIBOR rate plus a spread, which is representative of market rates for similar instruments. It is anticipated that the fair market value of our debt will continue to be immaterially affected by fluctuations in interest rates and we do not believe that the value of our debt has been significantly impacted by current market events.

grid. The variable rate of interest on our ~~long-term debt~~2019 Revolving Credit Facility can expose us to interest rate volatility due to changes in ~~the LIBOR rate.~~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 ~~a portion~~floating rate borrowings in excess of any amounts that are not hedged, or $287.5 million of our outstanding principal 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 receive variable interest payments based on the same one-month LIBOR rate utilized to calculate the interest expense from the 2019 Revolving Credit Facility. The interest rate swap agreement matures on March 28, 2024.

During the three months ended May 31, 2020 and May 31, 2019, we recorded interest expense of $2.9 million and $5.2 million, respectively, on our outstanding debt amounts. During the nine months ended May 31, 2020 and May 31, 2019, we recorded interest expense of $10.9 million and $15.1 million, respectively, on our outstanding debt amounts. Assuming all terms of our outstanding long-term debt remained the same, a hypothetical 25 basis point change (up or down) in the one-month LIBOR ~~rate~~ would result in a $0.7 million change to our annual interest expense for the portion of the long-term debt not hedged by the interest rate swap ~~agreement.~~

~~Technology Risk~~

Our clients rely on us for the delivery of time-sensitive, up-to-date data and applications. Our business is dependent on our ability to process substantial volumes of data and transactions rapidly and efficiently on our computer-based networks and systems. Our computer operations, as well as our other business centers, and those of our suppliers and clients are vulnerable to interruption by fire, natural disaster, power loss, telecommunications failures, terrorist attacks, acts of war, civil unrest, public health crises, Internet failures, computer viruses and security breaches, and other events beyond our reasonable control. We maintain back-up facilities and certain other redundancies for each of our major data centers to minimize the risk that any such event will disrupt those operations. However, a loss of our services involving our significant facilities may materially disrupt our business and may induce our clients to seek alternative data suppliers. Any such losses or damages we incur could have a material adverse effect on our business. Although we seek to minimize these risks through security measures, controls, back-up data centers and emergency planning, there can be no assurance that such efforts will be successful or effective.

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agreement. Refer to Note 11, Debt, in the Notes to the Company’s Consolidated Financial Statements included in Item 1. of this Quarterly Report on Form 10-Q for additional information regarding our outstanding debt obligations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, including its principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s 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”~~"Exchange Act"), as of the end of the period covered by this report, and the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

During 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 the 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 third quarter of fiscal~~three months ended November 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth under "Contingencies" in Note ~~16,~~ 12, Commitments and Contingencies,, contained in the ~~notes~~Notes to the ~~consolidated financial statements~~Consolidated Financial Statements of this Quarterly Report on Form 10-Q is incorporated by reference in answer to this Item.

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ITEM 1A. RISK FACTORS

There were no material changes during the first ~~nine~~three months of fiscal ~~2020~~2021 to the risk factors identified in the ~~Company’s fiscal 2019 Annual Report on Form 10-K, except as noted below.~~

~~The current COVID-19 pandemic and other global public health epidemics may adversely impact our business, our future results of operations and our overall financial performance.~~

Our business could be materially and adversely affected by the risk, or the public perception of risk, related to a pandemic or widespread health crisis, such as the current COVID-19 pandemic. A significant outbreak, epidemic or pandemic of contagious diseases in the human population could result in a widespread health crisis adversely affecting the broader economies, financial markets and overall demand for our products. In addition, any preventative or protective actions that governments implement or that we take in respect of a global health crisis such as COVID-19, such as travel restrictions, quarantines or site closures, may interfere with the ability of our employees, vendors, and data suppliers to perform their respective responsibilities and obligations relative to the conduct of our business, including our ability to gather content. Such results could have a material adverse effect on our operations, business, financial condition, results of operations, or cash flows.

Our operations have been affected by a range of external factors related to the COVID-19 pandemic that are not within our control. For example, many jurisdictions have imposed a wide range of restrictions on the physical movement of our employees and vendors to limit the spread of COVID-19. If the COVID-19 pandemic has a substantial impact on our employees' or vendors' attendance or productivity, our operations, including our ability to gather content, may suffer, and in turn our results of operations and overall financial performance may be impacted. Furthermore, if our employees incur substantial medical expenses due to COVID-19, our expenses may increase due to our self-funded employee medical insurance model. Our management is focused on mitigating the effects of COVID-19 on our business, which has required and will continue to require a substantial investment of their time and may delay their other efforts. The impact of COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, may also increase the severity or likelihood of other risks discussed in Item 1A. Risk Factors in ourCompany's Annual Report on Form 10-K for the fiscal year ended August 31, ~~2019,~~2020, except for the "Brexit" section in the "Legal & Regulatory Risks" risk factor, as set out below.

Legal & Regulatory Risks

Legislative and regulatory changes in the environments in which we and our clients operate

As a business, we are 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 or conflict, 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. Uncertainty caused by political change globally, and complex relationships across countries, including the U.S. and nations in Europe and Asia, heightens the risk of regulatory uncertainty.

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 the 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 ~~could have~~would adversely affect our revenue. Recent regulatory changes that we believe might materially impact us and our clients include:

MiFID

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. 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 ~~material effect on us.~~

greater consistency of regulatory standards. MiFID originally became effective in 2007. We believe that compliance with MiFID II requirements is time-consuming and costly for the investment managers who are ~~closely monitoring~~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. We continue to monitor the impact of MiFID II on the ~~COVID-19 pandemic~~investment process and ~~continually assessing~~trade lifecycle. We also continue to review the application of key MiFID II requirements and plan to work with our clients to navigate through them.

Brexit

On January 31, 2020, the United Kingdom (the "UK") formally left the European Union (the "EU") when the UK-EU Withdrawal Agreement became effective. Under the Withdrawal Agreement, a transition period began that ran until December 31, 2020. On January 1, 2021, the UK left the EU Single Market and Customs Union, as well as all EU policies and international agreements. As a result, the free movement of persons, goods, services and capital between the UK and the EU ended, and the EU and the UK formed two separate markets and two distinct regulatory and legal spaces. On December 24, 2020, the European Commission reached a trade agreement with the UK on the terms of its ~~potential effects~~future cooperation with the EU (the "Trade Agreement"). The Trade Agreement offers UK and EU companies preferential access to each other’s markets, ensuring imported goods will be free of tariffs and quotas; however, economic relations between the UK and the EU will now be on ~~our business. Given the dynamic nature of these circumstances,~~more restricted terms than existed previously. The Trade Agreement does not incorporate the full ~~impact~~scope of the ~~COVID-19 pandemic~~services sector, and businesses such as banking and finance face a more uncertain future. The UK and EU plan to put in place a regulatory dialogue on financial services based on a separate memorandum of understanding by March 2021. At this time, we cannot be reasonably estimated at this time. The extent to which our business, financial condition, results of operations, or cash flows are affected by COVID-19 will largely depend on future developments which cannot be accurately predicted and are uncertain, as there are no comparable recent events that provide guidance as to the potential effect of the spread of a global pandemic. The impact of the COVID-19 pandemic will depend upon various uncertainties, including the ultimate geographic spread of the virus, the severity of the virus, the duration of the outbreak, and actions that may be taken by governmental authorities to contain the virus. This situation is changing continually, and additional effects may arise that we are not presently aware of or that we currently do not consider to be significant risks to our operations. If we are not able to respond to and managepredict the impact ~~of such events effectively,~~that the Trade Agreement and any future agreements on services, particularly financial services, will have on our business and our clients, and it is possible that new terms may adversely affect our operations and financial ~~condition could be~~results. We continue to evaluate our own risks and uncertainty related to Brexit and partner with our clients to help them navigate the possible changes in the UK-EU market. This uncertainty may have an impact on our clients’ expansion or spending plans, which may in turn negatively ~~impacted. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations - COVID-19 Update for additional information.~~impact our revenue or growth.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Items 2(a) and (b) are not applicable as there have been no unregistered sales of equity securities.

(i)Issuer Purchases of Equity Securities (in thousands, except share and per share data)

The following table provides a month-to-month summary of the share repurchase activity during the three months ended ~~May 31,~~November 30, 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⁽²⁾
Maximum Number of Shares (or Approximate Dollar Value)
that May Yet be Purchased Under the Plans or Programs (in US$)⁽²⁾
March 2020 7,922 $ 261.28 7,922 $ 299,256
April 2020 29,126 $ 265.82 29,121 $ 290,329
May 2020 9,641 $ 270.85 9,593 $ 287,616
Total 46,689 46,636


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(2)	Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Plans or Programs (in US$)(2)
September 2020	14,000	$	333.72	14,000	$	254,323
October 2020	82,662	$	327.08	80,800	$	227,916
November 2020	41,866	$	323.79	37,000	$	215,851
Total	138,528			131,800

(1)Includes ~~46,636~~131,800 shares purchased under the existing stock repurchase program, as well as 536,728 shares repurchased from employees to cover their cost of taxes upon vesting of restricted stock and exercise of stock options.

(2)Repurchases may be made from time to time in the open market and privately negotiated transactions, subject to market conditions. No minimum number of shares to be repurchased has been fixed. There is no timeframe to complete the repurchase program and it is expected that share repurchases will be paid using existing and future cash generated by operations.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(a)EXHIBITS

The information required by this Item is set forth below.

Incorporated by Reference
Exhibit Number
Exhibit
Description
Form File No. Exhibit No. Filing Date
Filed
Herewith
10.1
Separation Agreement and General Release of Claims with Franck A.R. Gossieaux 8-K 001-11869 10.1 6/9/2020
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended X
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended X
32.1
Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X
32.2
Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X
101.INS XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document X
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Incorporated by Reference

Exhibit Number

Exhibit

Description

Form

File No.

Exhibit No.

Filing Date

Filed

Herewith

31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

101.SCH

XBRL Taxonomy Extension Schema

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase

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(1) Indicates a management contract or compensatory plan or arrangement

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