FACTSET RESEARCH SYSTEMS INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page Management’s Statement of Responsibility for Financial Statements 50 Management’s Report on Internal Control over Financial Reporting 50 Reports of Independent Registered Public Accounting Firm 51 Consolidated Financial Statements: Consolidated Statements of Income for the years ended August 31, 2021, 2020 and 2019 54 Consolidated Statements of Comprehensive Income for the years ended August 31, 2021, 2020 and 2019 55 Consolidated Balance Sheets at August 31, 2021 and 2020 56 Consolidated Statements of Cash Flows for the years ended August 31, 2021, 2020 and 2019 57 Consolidated Statements of Changes in Stockholders’ Equity for the years ended August 31, 2021, 2020, and 2019 58 Notes to the Consolidated Financial Statements 59 Financial Statement Schedule: Schedule II – Valuation and Qualifying Accounts 94 49 Table of Contents Management’s Statement of Responsibility for Financial Statements FactSet’s Consolidated Financial Statements are prepared by management, which is responsible for their fairness, integrity and objectivity. The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America and include amounts based on management’s estimates and judgments. All financial information in this Report on Form 10-K has been presented on a basis consistent with the information included in the accompanying financial statements. FactSet’s policies and practices reflect corporate governance initiatives that are compliant with the listing requirements of the New York Stock Exchange, the NASDAQ Stock Market and the corporate governance requirements of the Sarbanes-Oxley Act of 2002. Management, with oversight by our Board of Directors, has established and maintains a strong ethical climate so that our affairs are conducted to the highest standards of personal and corporate conduct. FactSet maintains accounting systems, including internal accounting controls, designed to provide reasonable assurance of the reliability of financial records and the protection of assets. The concept of reasonable assurance is based on recognition that the cost of a system should not exceed the related benefits. The effectiveness of those systems depends primarily upon the careful selection of financial and other managers, clear delegation of authority and assignment of accountability, inculcation of high business ethics and conflict-of-interest standards, policies and procedures for coordinating the management of corporate resources, and the leadership and commitment of top management. In compliance with the Sarbanes-Oxley Act of 2002, FactSet assessed its internal control over financial reporting as of August 31, 2021 and issued a report (see below). Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for FactSet. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of FactSet; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of FactSet are being made only in accordance with authorizations of management and directors of FactSet; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management (with the participation of the Chief Executive Officer and Chief Financial Officer) conducted an evaluation of the effectiveness of FactSet’s internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that FactSet’s internal control over financial reporting was effective as of August 31, 2021. Ernst & Young LLP, an independent registered public accounting firm, has audited the effectiveness of FactSet’s internal control over financial reporting and has issued a report on FactSet’s internal control over financial reporting, which is included in their report on the subsequent page. /s/ F. PHILIP SNOW /s/ LINDA S. HUBER F. Philip Snow Linda S. Huber Chief Executive Officer Executive Vice President, Chief Financial Officer October 22, 2021 October 22, 2021 50 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of FactSet Research Systems Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of FactSet Research Systems Inc. (the Company) as of August 31, 2021 and 2020, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended August 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 8 (collectively referred to as the “Consolidated Financial Statements”). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company at August 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August 31, 2021, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated October 22, 2021 expressed an unqualified opinion thereon. Adoption of Accounting Standards Update (ASU) No. 2016-02 As discussed in Note 3, Summary of Significant Accounting Policies , to the Consolidated Financial Statements, the Company changed its method of accounting for leases in 2020 due to the adoption of ASU No. 2016-02, Leases (Topic 842). Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 51 Table of Contents Measurement of income tax provision Description of the Matter As discussed in Note 3, Summary of Significant Accounting Policies, and 11, Income Taxes, of the Consolidated Financial Statements, the Company serves international markets and is subject to income taxes in the U.S. and numerous foreign jurisdictions, which affect the Company’s provision for income taxes. The tax provision is an estimate based on management’s understanding of current enacted tax laws and tax rates of each tax jurisdiction and the use of subjective allocation methodologies to allocate taxable income to tax jurisdictions based upon the structure of the Company’s operations and customer arrangements. For the year-ended August 31, 2021, the Company recognized a consolidated provision for income taxes of $68 million with $41 million related to its U.S. operations and $27 million related to its non-U.S. operations. Management’s calculation of the provision for income taxes was significant to our audit because the provision for income taxes involved subjective estimation and complex audit judgement related to the evaluation of tax laws, including the methods used to allocate taxable income, and the amounts and disclosures are material to the financial statements. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over management’s calculation of its provision for income taxes. For example, we tested controls over management’s evaluation of the allocation methodologies and management’s review of the assumptions and data utilized in determining the allocation of income to applicable tax jurisdictions. Among other audit procedures performed, we evaluated the reasonableness of management’s allocation methodologies by analyzing the methodology based on the Company’s structure, operations and current tax law. We recalculated income tax expense using management’s methodology and agreed the data used in the calculations to the Company’s underlying books and records. We involved our tax professionals to evaluate the application of tax law to management’s allocation methodologies and tax positions. This included assessing the Company’s correspondence with the relevant tax authorities and evaluating third-party reports and advice obtained by the Company. We also performed a sensitivity analysis to evaluate the effect from changes in management’s allocation methodologies and assumptions. We have evaluated the Company’s income tax disclosures included in Note 11, Income Taxes , of the Consolidated Financial Statements in relation to these matters. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2013. Stamford, CT October 22, 2021 52 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of FactSet Research Systems Inc. Opinion on Internal Control over Financial Reporting We have audited FactSet Research System Inc.’s (the Company) internal control over financial reporting as of August 31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2021 Consolidated Financial Statements of the Company and our report dated October 22, 2021, expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Stamford, CT October 22, 2021 53 Table of Contents FactSet Research Systems Inc. Consolidated Statements of Income (in thousands, except per share data) For the years ended August 31, 2021 2020 2019 Revenues $ 1,591,445 $ 1,494,111 $ 1,435,351 Operating expenses Cost of services 786,400 695,446 663,446 Selling, general and administrative 331,004 359,005 333,870 Total operating expenses 1,117,404 1,054,451 997,316 Operating income 474,041 439,660 438,035 Other income (expense) Interest expense, net ( 6,394 ) ( 9,829 ) ( 16,624 ) Other income (expense), net ( 30 ) ( 2,697 ) 554 Total other expense, net ( 6,424 ) ( 12,526 ) ( 16,070 ) Income before income taxes 467,617 427,134 421,965 Provision for income taxes 68,027 54,196 69,175 Net income $ 399,590 $ 372,938 $ 352,790 Basic earnings per common share $ 10.56 $ 9.83 $ 9.25 Diluted earnings per common share $ 10.36 $ 9.65 $ 9.08 Basic weighted average common shares 37,856 37,936 38,144 Diluted weighted average common shares 38,570 38,646 38,873 The accompanying notes are an integral part of these Consolidated Financial Statements. 54 Table of Contents FactSet Research Systems Inc. Consolidated Statements of Comprehensive Income (in thousands) For the years ended August 31, 2021 2020 2019 Net income $ 399,590 $ 372,938 $ 352,790 Other comprehensive income, net of tax: Net unrealized (loss) gain on cash flow hedges* ( 504 ) 674 504 Foreign currency translation adjustments 835 34,577 ( 24,325 ) Other comprehensive income (loss) 331 35,251 ( 23,821 ) Comprehensive income $ 399,921 $ 408,189 $ 328,969 * For the fiscal years ended August 31, 2021, 2020 and 2019, the net unrealized (loss) gain on cash flow hedges disclosed above were net of a tax benefit of $ 162 thousand, tax expense of $ 251 thousand, and a tax expense of $ 387 thousand, respectively. The accompanying notes are an integral part of these Consolidated Financial Statements. 55 Table of Contents FactSet Research Systems Inc. Consolidated Balance Sheets (in thousands, except share data) August 31, 2021 2020 ASSETS Cash and cash equivalents $ 681,865 $ 585,605 Investments 35,984 19,572 Accounts receivable, net of reserves of $ 6,431 at August 31, 2021 and $ 7,987 at August 31, 2020 151,187 155,011 Prepaid taxes 13,917 38,067 Prepaid expenses and other current assets 50,625 43,675 Total current assets 933,578 841,930 Property, equipment and leasehold improvements, net 131,377 133,102 Goodwill 754,205 709,703 Intangible assets, net 134,986 121,095 Deferred taxes 2,250 — Lease right-of-use assets, net 239,064 248,929 Other assets 29,480 28,629 TOTAL ASSETS $ 2,224,940 $ 2,083,388 LIABILITIES Accounts payable and accrued expenses $ 85,777 $ 82,094 Current lease liabilities 31,576 29,056 Accrued compensation 104,403 81,873 Deferred revenue 63,104 53,987 Dividends payable 30,845 29,283 Total current liabilities 315,705 276,293 Long-term debt 574,535 574,354 Deferred taxes 14,752 19,713 Deferred revenue, non-current 8,394 9,319 Taxes payable 30,279 27,739 Long-term lease liabilities 259,980 272,269 Other liabilities 4,942 7,326 TOTAL LIABILITIES $ 1,208,587 $ 1,187,013 Commitments and contingencies (see Note 14) STOCKHOLDERS’ EQUITY Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, none issued $ — $ — Common stock, $ 0.01 par value, 150,000,000 shares authorized, 41,163,192 and 40,767,708 shares issued, 37,615,419 and 38,030,252 shares outstanding at August 31, 2021 and 2020, respectively 412 408 Additional paid-in capital 1,048,305 939,067 Treasury stock, at cost: 3,547,773 and 2,737,456 shares at August 31, 2021 and 2020, respectively ( 905,917 ) ( 636,956 ) Retained earnings 912,515 633,149 Accumulated other comprehensive loss ( 38,962 ) ( 39,293 ) TOTAL STOCKHOLDERS’ EQUITY $ 1,016,353 $ 896,375 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,224,940 $ 2,083,388 The accompanying notes are an integral part of these Consolidated Financial Statements. 56 Table of Contents FactSet Research Systems Inc. Consolidated Statements of Cash Flows (in thousands) Years ended August 31, 2021 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 399,590 $ 372,938 $ 352,790 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 64,476 57,614 60,463 Amortization of lease right-of-use assets 42,846 43,185 — Stock-based compensation expense 45,065 36,579 32,400 Deferred income taxes ( 4,602 ) 10,626 ( 2,278 ) Impairment Charge — 16,500 — Changes in assets and liabilities, net of effects of acquisitions Accounts receivable, net of reserves 3,646 ( 8,608 ) 10,205 Accounts payable and accrued expenses 2,068 12,427 ( 2,290 ) Accrued compensation 21,815 16,446 ( 1,743 ) Deferred fees 5,078 5,571 458 Taxes payable, net of prepaid taxes 26,298 ( 24,224 ) ( 19,238 ) Lease liabilities, net ( 42,750 ) ( 33,340 ) — Other, net ( 8,304 ) 126 ( 3,631 ) Net cash provided by operating activities 555,226 505,840 427,136 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, equipment, leasehold improvements and internal-use software ( 61,325 ) ( 77,642 ) ( 59,370 ) Acquisition of businesses, net of cash and cash equivalents acquired ( 58,056 ) — — Purchases of investments ( 18,787 ) ( 2,736 ) ( 11,135 ) Proceeds from maturity or sale of investments 2,176 6,746 14,405 Net cash used in investing activities ( 135,992 ) ( 73,632 ) ( 56,100 ) CASH FLOWS FROM FINANCING ACTIVITIES Repurchases of common stock ( 264,702 ) ( 199,625 ) ( 220,372 ) Dividend payments ( 117,927 ) ( 110,439 ) ( 100,052 ) Repayment of debt — — ( 575,000 ) Proceeds from debt — — 575,000 Proceeds from employee stock plans 64,177 95,520 107,051 Other financing activities ( 4,259 ) ( 3,531 ) ( 901 ) Net cash used by financing activities ( 322,711 ) ( 218,075 ) ( 214,274 ) Effect of exchange rate changes on cash and cash equivalents ( 263 ) 11,673 ( 5,586 ) Net increase in cash and cash equivalents 96,260 225,806 151,176 Cash and cash equivalents at beginning of period 585,605 359,799 208,623 Cash and cash equivalents at end of period $ 681,865 $ 585,605 $ 359,799 Supplemental Disclosure of Cash Flow Information Cash paid during the year for interest $ 8,021 $ 12,876 $ 19,509 Cash paid during the year for income taxes, net of refunds $ 46,588 $ 69,092 $ 89,997 Supplemental Disclosure of Non-Cash Transactions Dividends declared, not paid $ 30,845 $ 29,283 $ 27,445 The accompanying notes are an integral part of these Consolidated Financial Statements. 57 Table of Contents FactSet Research Systems Inc. Consolidated Statements of Changes in Stockholders’ Equity (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 September 1, 2018 39,264,849 $ 393 $ 667,531 1,072,263 $ ( 213,428 ) $ 122,843 $ ( 51,439 ) $ 525,900 Net income 352,790 352,790 Other comprehensive loss ( 23,821 ) ( 23,821 ) Common stock issued for employee stock plans 753,942 7 107,043 107,050 Vesting of restricted stock 85,401 1 ( 1 ) 31,644 ( 7,241 ) ( 7,241 ) Repurchases of common stock 882,445 ( 213,130 ) ( 213,130 ) Stock-based compensation 32,400 32,400 Dividends declared ( 103,710 ) ( 103,710 ) Cumulative effect of adoption of accounting standards* 1,302 716 2,018 Balance as of August 31, 2019 40,104,192 $ 401 $ 806,973 1,986,352 $ ( 433,799 ) $ 373,225 $ ( 74,544 ) $ 672,256 Net income 372,938 372,938 Other comprehensive loss 35,251 35,251 Common stock issued for employee stock plans 630,520 7 95,515 75 ( 21 ) 95,501 Vesting of restricted stock 32,996 11,945 ( 3,511 ) ( 3,511 ) Repurchases of common stock 739,084 ( 199,625 ) ( 199,625 ) Stock-based compensation 36,579 36,579 Dividends declared ( 113,014 ) ( 113,014 ) 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 399,590 399,590 Other comprehensive income 331 331 Common stock issued for employee stock plans 360,877 4 64,173 318 ( 104 ) 64,073 Vesting of restricted stock 34,607 — 12,614 ( 4,155 ) ( 4,155 ) Repurchases of common stock 797,385 ( 264,702 ) ( 264,702 ) Stock-based compensation 45,065 45,065 Dividends declared ( 120,224 ) ( 120,224 ) Balance as of August 31, 2021 41,163,192 $ 412 $ 1,048,305 3,547,773 $ ( 905,917 ) $ 912,515 $ ( 38,962 ) $ 1,016,353 * 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. The accompanying notes are an integral part of these Consolidated Financial Statements. 58 Table of Contents Notes to the Consolidated Financial Statements Page Note 1 Description of Business 59 Note 2 Basis of Presentation 60 Note 3 Summary of Significant Accounting Policies 60 Note 4 Revenue Recognition 66 Note 5 Fair Value Measures 67 Note 6 Derivative Instruments 69 Note 7 Acquisition 71 Note 8 Property, Equipment and Leasehold Improvements 71 Note 9 Goodwill 72 Note 10 Intangible Assets 72 Note 11 Income Taxes 73 Note 12 Leases 76 Note 13 Debt 78 Note 14 Commitments and Contingencies 78 Note 15 Stockholders' Equity 80 Note 16 Earnings Per Share 81 Note 17 Stock Based Compensation 82 Note 18 Employee Benefit Plans 86 Note 19 Segment Information 86 Note 20 Risks and Concentrations of Credit Risk 88 Note 21 Subsequent Events 90 1. DESCRIPTION OF BUSINESS FactSet Research Systems Inc. and its wholly-owned subsidiaries (collectively, "we," "our," "us," the "Company" or "FactSet") is a global financial data and analytics company with open and flexible technology and a purpose to drive the investment community to see more, think bigger, and do their best work. Our strategy is to become the leading open content and financial analytics platform in the industry that delivers differentiated advantage for our clients’ success. For over 40 years, the FactSet platform has delivered expansive data, sophisticated analytics, and flexible technology that global financial professionals need to power their critical investment workflows. Over 160,000 asset managers and owners, bankers, wealth managers, corporate firms, including private equity and venture capital firms, and others, use our personalized solutions to identify opportunities, explore ideas, and gain a competitive advantage, in areas spanning investment research, portfolio construction and analysis, trade execution, performance measurement, risk management, and reporting across the investment lifecycle. We provide financial data and market intelligence on securities, companies and industries to enable our clients to research investment ideas, as well as offering them the capabilities to analyze, monitor and manage their portfolios. We combine dedicated client service with open and flexible technology offerings, such as a configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions, and application programming interfaces ("APIs"). Our revenue is primarily derived from subscriptions to our products and services such as workstations, portfolio analytics, and market data. We advance our industry by comprehensively understanding our clients’ workflows, solving their most complex challenges, and helping them achieve their goals. By providing them with the leading open content and analytics platform, an expansive universe of concorded data they can trust, next-generation workflow support designed to help them grow and see their next best action, and the industry’s most committed service specialists, FactSet puts our clients in a position to outperform. We are focused on growing our business through three reportable segments ("segments"): the Americas, EMEA and Asia Pacific. Refer to Note 19, Segment Information, in the Notes to the Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K for further discussion. Within each of our segments, we primarily deliver insight and 59 Table of Contents information through our three workflow solutions: Research & Advisory; Analytics & Trading; and Content & Technology ("CTS"). 2. BASIS OF PRESENTATION We conduct business globally and manage our business on a geographic basis. The accompanying Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for annual financial information and the instructions to Form 10-K and Article 10 of Regulation S-X. The accompanying Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries; all intercompany activity and balances have been eliminated. Use of Estimates The preparation of our Consolidated Financial Statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates may have been made in areas that include income taxes, stock-based compensation, the valuation of goodwill and allocation of purchase price to acquired assets and liabilities, useful lives and impairments of long-lived tangible and intangible assets and reserves for litigation and other contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are summarized below. Revenue Recognition The majority of our revenue is derived from client access to our hosted proprietary data and analytics platform, which can include various combinations of products and services available over the contractual term. The hosted platform is a subscription-based service that consists primarily of providing access to products and services including workstations, analytics, enterprise data, research management, and trade execution. We determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. Based on the nature of the services and products offered by us, we apply an output time-based measure of progress as the client is simultaneously receiving and consuming the benefits of the platform. We record revenue for our contracts using the over-time revenue recognition model as a client is invoiced or performance is satisfied. A provision for billing adjustments and current expected credit losses is estimated and accounted for as a reduction to revenue, with a corresponding reduction to accounts receivable. Cost of Services Cost of services is comprised of compensation for our employees within the content collection, consulting, product development, software and systems engineering groups in addition to data costs, computer maintenance and depreciation expenses, amortization of identifiable intangible assets, and client-related communication costs. Selling, General and Administrative Selling, general and administrative expenses include compensation for the sales and various other support and administrative departments in addition to travel and entertainment expenses, rent, professional fees, depreciation of furniture and fixtures, amortization of lease right-of-use ("ROU") assets and leasehold improvements, as well as marketing costs, office expenses,, travel and entertainment expenses, and other miscellaneous expenses. Stock-Based Compensation Accounting guidance requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including stock options, restricted stock units, performance share units, and common shares acquired under employee stock purchases based on estimated fair values of the share awards that are scheduled to vest during the period. We use the straight-line attribution method for all awards with graded vesting features and service conditions only. Under this method, the amount of compensation expense that is recognized on any date is at least equal to the vested portion of the award on that date. For all stock-based awards with performance conditions, the graded vesting attribution method is used by us to determine the monthly stock-based compensation expense over the applicable vesting periods. 60 Table of Contents As stock-based compensation expense recognized is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based primarily on historical experience. Windfall tax benefits, defined as tax deductions that exceed recorded stock-based compensation, are classified as cash inflows from operations. Performance-based equity awards require management to make assumptions regarding the likelihood of achieving company performance targets on a quarterly basis. The number of performance share units that vest will be predicated on us achieving certain performance levels. A change in the financial performance levels we achieve could result in changes to our current estimate of the vesting percentage and related stock-based compensation. Research and Product Development Costs Research and product development ("R&D") costs are expensed as incurred, unless they qualify as internal-use software development costs and are then capitalized and amortized over the estimated useful life. These costs primarily consist of personnel-related expenses, such as salaries and related benefits for our product development, software engineering and technical support departments and, if not capitalized, are included in employee compensation (found within of Cost of services expense and SG&A in the Consolidated Statements of Income). We also utilize certain third parties to develop internal-use software. These costs are capitalized and amortized over the estimated useful life. If not capitalized, these costs are included in SG&A in the Consolidated Statements of Income. We do not have a separate research and product development department, but rather rely on these departments to work closely with our strategists, product managers, sales and other client-facing specialists to develop new products and process innovations and enhance existing products. We incurred research and product development costs of $ 250.1 million and $ 224.0 million during fiscal years 2021 and 2020, respectively. 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 tax bases of assets and liabilities using current enacted tax rates. We recognize the financial effect of an income tax position only if it is more likely than not (greater than 50%) that the tax position will prevail upon tax examination, based solely on the technical merits of the tax position as of the reporting date. Otherwise, no benefit or expense can be recognized in the Consolidated Financial Statements. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Additionally, we accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. Interest is classified as income tax expense in the financial statements. As of August 31, 2021, we had gross unrecognized tax benefits totaling $ 14.9 million, including $ 1.3 million of accrued interest, recorded as Taxes payable (non-current) on the Consolidated Balance Sheets. Earnings per Share Basic earnings per share ("EPS") is computed by dividing net income by the number of weighted average common shares outstanding during the period. Diluted EPS is computed, using the treasury stock method, by dividing net income by the number of weighted average common shares outstanding and issuable upon the exercise of outstanding share-based compensation awards (including stock options and awards of restricted stock units) during the period. 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. Comprehensive Income We disclose comprehensive income in accordance with applicable standards for the reporting and display of comprehensive income in a set of financial statements. Comprehensive income is defined as the change in net assets of a business enterprise during a period from transactions generated from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds that are available for withdrawal without restriction and are carried at cost, which approximates fair value. 61 Table of Contents Accounts Receivable and Deferred Fees Amounts that have been earned but not yet paid are reflected on the Consolidated Balance Sheets as Accounts receivable, net of reserves. Amounts invoiced in advance of client payments that are in excess of earned subscription revenue are reflected on the Consolidated Balance Sheets as Deferred fees. As of August 31, 2021, the amount of accounts receivable that was unbilled totaled $ 18.3 million, which will be billed in fiscal 2022. As of August 31, 2020, the amount of accounts receivable that was unbilled totaled $ 17.1 million, which were billed in fiscal 2021. Accounts receivable are recorded net of an allowance for credit losses based on a variety of factors, including our historical write-off activity, current economic environment, customer-specific information and expectations of future economic conditions. We write-off account balances against our reserve when we have exhausted our collection efforts. In accordance with this policy, our receivable reserves were $ 6.4 million and $ 8.0 million as of August 31, 2021 and 2020, respectively, recorded as a reduction to Accounts receivable, within the Consolidated Balance Sheets. Property, Equipment and Leasehold Improvements Property, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Property and equipment is depreciated based on the straight-line method over the estimated useful lives of the assets, ranging from three to five years for computers and related equipment and seven years for furniture and fixtures. Leasehold improvements are amortized on a straight-line basis over the shorter of their respective useful lives or the related lease term. Repairs and maintenance expenditures, which are not considered leasehold improvements and do not extend the useful life of the property and equipment, are expensed as incurred. We perform a test for impairment whenever events or changes in circumstances indicate that the carrying amount of an individual asset or asset group may not be recoverable. Should projected undiscounted future cash flows be less than the carrying amount of the asset or asset group, an impairment charge reducing the carrying amount to fair value is required. Fair value is determined based on the most appropriate valuation technique, including discounted cash flows. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. The new cost basis will be depreciated (amortized) over the remaining useful life of that asset. Goodwill Goodwill at the reporting unit level is reviewed for impairment annually, and more frequently if impairment indicators exist. Goodwill is deemed to be impaired and written-down in the period in which the carrying value of the reporting unit exceeds its fair value. We have three reporting units, Americas, EMEA and Asia Pacific, which are consistent with the operating segments reported, as discrete financial information is not available for subsidiaries within the operating segments. We may elect to perform a qualitative analysis for the reporting units to determine whether it is more likely than not the fair value of the reporting unit is greater than its carrying value. In performing a qualitative assessment, we consider such factors as macro-economic conditions, industry and market conditions in which we operate, including the competitive environment and significant changes in demand for our services. We also consider the share price both in absolute terms and in relation to peer companies. If the qualitative analysis indicates that it is more likely than not the fair value of a reporting unit is less than its carrying amount or if we elect not to perform a qualitative analysis, a quantitative analysis is performed to determine whether a goodwill impairment exists. The quantitative goodwill impairment analysis is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount using an income approach, along with other relevant market information, derived from a discounted cash flow model to estimate the fair value of our reporting units. The annual review of carrying value of goodwill requires us to develop estimates of future business performance. These estimates are used to derive expected cash flows and include assumptions regarding future sales levels and the level of working capital needed to support a given business. The discounted cash flow model also includes a determination of our weighted average cost of capital by reporting unit. Cost of capital is based on assumptions about interest rates, as well as a risk-adjusted rate of return required by our equity investors. Changes in these estimates can impact present value of expected cash flows used in determining fair value of a reporting unit. An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any, would be recognized. The loss recognized would not exceed total amount of goodwill allocated to that reporting unit. We performed our annual goodwill impairment test during the fourth quarter of fiscal 2021 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. 62 Table of Contents Intangible Assets Acquired Intangible Assets Our identifiable intangible assets consist of acquired content databases, client relationships, software technology, non-compete agreements and trade names resulting from previous acquisitions, which have been fully integrated into our operations. We amortize intangible assets over their estimated useful lives, which are evaluated quarterly to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of the remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. Amortizable Intangible assets are tested for impairment, if indicators of impairment are present, based on undiscounted cash flows, and, if impaired, written down to fair value based on discounted cash flows. No impairment of intangible assets has been identified during any of the fiscal years presented. The intangible assets have no assigned residual values. Internally Developed Software We capitalize internal and external costs related to developing, modifying or obtaining software for internal use, incurred during the application development stage in accordance with ASC 350-40, Internal-Use Software. Costs related to software upgrades and enhancements are capitalized if it is determined that these upgrades or enhancements provide additional functionality to the software. The capitalized software is amortized using the straight-line method over the estimated useful life of the software, generally three to five years . These assets are subject to the impairment test guidance specified in the acquired intangible assets above. Leases We adopted the standard, ASC 842-10, Leases ("ASC 842") as of September 1, 2019, using a modified retrospective approach. Refer to Note 12, Leases , for further details. We review new arrangements at inception to evaluate whether we obtain substantially all the economic benefits of and have the right to control the use of an asset. If we determine that an arrangement qualifies as a lease, with a lease term of greater than one year, we assess whether the leased asset is an operating or financing lease. Our lease portfolio is primarily related to our office space, under various operating lease agreements. We record a lease ROU asset and lease liability as the present value of the future minimum lease payments (including fixed lease payments and certain qualifying index-based variable payments) over the reasonably certain lease term, beginning at the lease commencement date. As there is no rate implicit in our operating lease arrangements, these balances are initially recorded using our incremental borrowing rate ("IBR") within the geography where the leased asset is located. As we do not have any outstanding public debt, we estimate the IBR based on our estimated credit rating and available market information. The IBR is determined at lease commencement and subsequently reassessed upon a modification to the lease arrangement. Certain adjustments to our lease ROU assets may be required for items such as initial direct costs paid or incentives received. We elected to not record operating lease right-of-use assets or operating lease liabilities for leases with an initial term of 12 months or less. We elected the practical expedient not to separate lease components from non-lease components but, rather, to combine them into one single lease component, which we recognize over the expected term on a straight-line expense basis in occupancy costs (a component of SG&A expense). As of August 31, 2021, our leases have remaining terms of less than one year to just over 14 years. The lease ROU assets and lease liabilities recognized did not include any renewal or termination options that were not yet reasonably certain to be exercised. Accrued Liabilities Accrued liabilities include estimates relating to employee compensation, operating expenses and tax liabilities. At the end of each fiscal year, we conduct a review of both the performance of the Company and individual performance within each department to determine the amount of discretionary employee compensation. We also review compensation throughout the year to determine how overall performance tracks against management’s expectations. Management takes these and other factors, including historical performance, into account in reviewing accrued compensation estimates quarterly and adjusting accrual rates as appropriate. The majority of variable employee compensation recorded within accrued compensation related to the annual performance bonus, which was $ 75.1 million and $ 54.4 million as of August 31, 2021 and 2020, respectively. 63 Table of Contents Derivative Instruments Foreign Currency Forward Contracts We conduct business outside the U.S. in several currencies including the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. As such, we are exposed to movements in foreign currency exchange rates relative to the U.S. dollar. We utilize 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. We do not enter into foreign exchange forward contracts for trading or speculative purposes. In designing a specific hedging approach, we consider several factors, including offsetting exposures, significance of exposures, forecasting risk and potential effectiveness of the hedge. These transactions are designated and accounted for as cash flow hedges in accordance with applicable accounting guidance. The gains and losses on foreign currency forward contracts mitigate the variability in operating expenses associated with currency movements. Interest Rate Swap Agreement On March 29, 2019, we entered into a credit agreement with PNC Bank, National Association ("PNC") (the "2019 Credit Agreement"), which provides for a $ 750.0 million revolving credit facility (the "2019 Revolving Credit Facility"). The outstanding principal balance of $ 575.0 million bears interest at a rate equal to LIBOR plus a spread, using a debt leverage pricing grid. The variable rate of interest on our long-term debt can expose us to interest rate volatility due to changes in LIBOR. To mitigate this exposure, on March 5, 2020, we entered into an interest rate swap agreement with a notional amount of $ 287.5 million to hedge the variable interest rate obligation, effectively converting the floating interest rate to fixed for the hedged portion. Thus, we are only exposed to base interest rate risk on floating rate borrowings in excess of any amounts that are not hedged, or $ 287.5 million of the outstanding principal balance. Derivative Instrument Classification The changes in fair value for these cash flow hedges are initially reported as a component of accumulated other comprehensive loss ("AOCL") and subsequently reclassified into operating expenses when the hedged exposure affects earnings. All derivatives are assessed for effectiveness at each reporting period. Treasury Stock We account for repurchased common stock under the cost method and includes such treasury stock as a component of our Stockholders’ equity. We account for the formal retirement of treasury stock by deducting its par value from common stock, reducing additional paid-in capital ("APIC") by the average amount recorded in APIC when the stock was originally issued and any remaining excess of cost deducted from retained earnings. Fair Value Measurements 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 is permissible. We consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability. 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. Our cash equivalents are classified as Level 1 while our derivative instruments (foreign exchange forward contracts and interest rate swap) and certificates of deposit are classified as Level 2. There were no Level 3 assets or liabilities held by us as of August 31, 2021 or 2020. Refer to Note 5, Fair Value Measures for the definition of the fair value hierarchy. Foreign Currency Translation Certain wholly-owned subsidiaries operate under a functional currency different from the U.S. dollar, such as the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. The financial statements of these foreign subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates for the period for revenues and expenses. Translation gains and losses that arise from translating assets, liabilities, revenue and expenses of foreign operations are recorded in AOCL as a component of stockholders’ equity. The accumulated foreign currency translation loss totaled $ 36.9 million and $ 37.7 million at August 31, 2021 and 2020, respectively. 64 Table of Contents Concentrations of Risk Refer to Note 20, Risks and Concentrations of Credit Risk for areas that potentially subject us to a significant concentration of risk and credit risk. New Accounting Standards or Updates Recently Adopted As of the beginning of fiscal 2021, we 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 last three fiscal years that had a material impact on our Consolidated Financial Statements other than the adoption of ASC 842. Goodwill Impairment Test In January 2017, the FASB issued 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. We have adopted this standard effective September 1, 2020. The adoption of this accounting standard update had no impact on our Consolidated Financial Statements. Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, 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 collectability of the reported amount. We have adopted this standard effective September 1, 2020. The adoption of this accounting standard update did not have a material impact on our Consolidated Financial Statements. Leases In February 2016, the FASB issued an accounting standard update related to accounting for leases, ASC 842. The update requires the recognition of lease ROU assets and lease liabilities on the balance sheet and the disclosure of qualitative and quantitative information about leasing arrangements. The guidance also eliminates the requirement for an entity to use bright-line tests in determining lease classification. We 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. As such, our historical Consolidated Financial Statements were not restated and follow our previous policy under ASC 840, Leases. Refer to our Annual Report on Form 10-K for the fiscal year ended August 31, 2019 for further details of the Company’s policy prior to adoption of ASC 842. We have elected the package of practical expedients permitted under the transition guidance, which permits us to not reassess the prior conclusions about lease identification, lease classification, and initial direct costs. We did not elect the use-of-hindsight practical expedient in determining the lease term and in assessing impairment. We elected the practical expedient not to separate lease components from non-lease components but, rather, to combine them into one single lease component. We have also elected to apply the short-term lease exception not to recognize lease ROU assets and lease liabilities for leases with a term of 12 months or less. We will recognize lease payments on a straight-line basis over the lease term. As of November 30, 2019, the Company recognized Lease ROU assets, net of amortization of $ 217.0 million and corresponding Current and Long-term lease liabilities of $ 266.4 million, related primarily to the 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 12, Leases for more information regarding the Company's lease accounting. Hedge Accounting Simplification During the first quarter of fiscal 2020, we 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 non-financial risk components, eliminates the need to separately measure and report 65 Table of Contents 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 our 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 Reportin g, 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. We are currently evaluating the impact of this accounting standard, but it is not expected to have a material impact on our Consolidated Financial Statements. Income Tax Simplification In December 2019, the FASB issued 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 us 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. We have evaluated the impact of adopting this accounting standard and have determined that adoption will not have a material impact on our Consolidated Financial Statements. No other new accounting pronouncements issued or effective as of August 31, 2021 have had or are expected to have a material impact on our Consolidated Financial Statements. 4. REVENUE RECOGNITION We derive most of our revenue by providing client access to our 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. We 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. We 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 us, we apply an output time-based measure of progress as the client is simultaneously receiving and consuming the benefits of the platform. We record revenue for our contracts using the over-time revenue recognition model as a client is invoiced or performance is satisfied. We do not consider payment terms as a performance obligation for clients with contractual terms that are one year or less and we have 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 we are entitled to receive corresponds directly with the value of performance obligations completed to date, and therefore, we do not disclose the value of the remaining unsatisfied performance obligations. Disaggregated Revenue We disaggregate revenue from contracts with clients by our reportable segments ("segments"), which consist of the Americas, EMEA and Asia Pacific. We believe these segments are reflective of how we manage our business and the markets in which we serve and best depict the nature, amount, timing and uncertainty of revenue and cash flows related to contracts with clients. Refer to Note 19, Segment Information for further information. 66 Table of Contents The following table presents this disaggregation by segment: August 31, (in thousands) 2021 2020 2019 Americas $ 1,008,046 $ 943,649 $ 885,854 EMEA $ 427,700 $ 406,498 $ 420,884 Asia Pacific $ 155,699 $ 143,964 $ 128,613 Total Revenue $ 1,591,445 $ 1,494,111 $ 1,435,351 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 is permissible. We consider the principal or most advantageous market in which we 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. Our 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. We have categorized our 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 our 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. Our 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. We held no Level 3 assets or liabilities as of August 31, 2021 or 2020. 67 Table of Contents (a) Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables show, by level within the fair value hierarchy, our assets and liabilities that are measured at fair value on a recurring basis at August 31, 2021 and 2020. We did not have any transfers between levels of fair value measurement during the periods presented. (in thousands) Fair Value Measurements at August 31, 2021 Level 1 Level 2 Total Assets Corporate money market funds (1) $ 232,519 $ — $ 232,519 Mutual Funds (2) — 35,984 35,984 Derivative instruments (4) — 1,384 1,384 Total assets measured at fair value $ 232,519 $ 37,368 $ 269,887 Liabilities Derivative instruments (4) $ — $ 4,181 $ 4,181 Total liabilities measured at fair value $ — $ 4,181 $ 4,181 (in thousands) Fair Value Measurements at August 31, 2020 Level 1 Level 2 Total Assets Corporate money market funds (1) $ 276,852 $ — $ 276,852 Mutual funds (2) — 17,257 17,257 Certificates of deposit (3) — 2,315 2,315 Derivative instruments (4) — 3,644 3,644 Total assets measured at fair value $ 276,852 $ 23,216 $ 300,068 Liabilities Derivative instruments (4) $ — $ 5,773 $ 5,773 Total liabilities measured at fair value $ — $ 5,773 $ 5,773 (1) Our 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. Our corporate money market funds are classified as Level 1 assets and are included in Cash and cash equivalents within the Consolidated Balance Sheets. (2) Our 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. Our mutual funds are classified as Level 2 and are included in Investments (short-term) within the Consolidated Balance Sheets. (3) Our certificates of deposit held for investment are classified as Level 2 assets. These certificates of deposit have original maturities greater than three months but less than one year and are included in Investments (short-term) within the Consolidated Balance Sheets. (4) We utilize the income approach to measure fair value for our foreign exchange forward contracts. The income approach uses pricing models that rely on market observable inputs such as spot, 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, we utilize 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 our derivative instruments designed as cash flow hedges and their classification within the Consolidated Balance Sheets. (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 right-of-use ("ROU") assets, goodwill and intangible assets. The fair values of these non-financial assets and 68 Table of Contents 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. We review goodwill and intangible assets for impairment annually, during the fourth quarter of each fiscal year, or as circumstances indicate the possibility for impairment. We monitor the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. During fiscal 2021 and 2020, no fair value adjustments or material fair value measurements were required for our non-financial assets or liabilities. (c) Assets and Liabilities Measured at Fair Value for Disclosure Purposes Only As of August 31, 2021 and 2020, the fair value of our 2019 Revolving Credit Facility (as defined below in Note 13, 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 LIBOR plus a spread using a debt leverage pricing grid. As the interest rate is a variable rate, adjusted based on market conditions, it approximates the current market-rate for similar instruments available to companies with comparable credit quality and maturity, and therefore, the long-term debt is categorized as Level 2 in the fair value hierarchy. 6. DERIVATIVE INSTRUMENTS Cash Flow Hedges Foreign Currency Forward Contracts We conduct business outside the U.S. in several currencies including the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. As such, we are exposed to movements in foreign currency exchange rates compared with the U.S. dollar. We utilize 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. We do not enter into foreign currency forward contracts for trading or speculative purposes and limit counterparties to credit-worthy financial institutions. Refer to Note 20, Risks and Concentrations of Credit Risk , for further discussion on counterparty credit risk. In designing a specific hedging approach, we considered several factors, including offsetting exposures, the significance of exposures, the forecasting of risk and the potential effectiveness of the hedge. The gains and losses on foreign currency forward contracts offset the variability in operating expenses associated with currency movements. The changes in fair value for these foreign currency forward contracts are initially reported as a component of Accumulated other comprehensive loss ("AOCL") and subsequently reclassified into Operating expenses when the hedge is settled. There was no discontinuance of cash flow hedges during fiscal 2021 or fiscal 2020, and as such, no corresponding gains or losses related to changes in the value of our contracts were reclassified into earnings prior to settlement. As of August 31, 2021 , we maintained foreign currency forward contracts to hedge a portion of our British Pound Sterling, Euro, Indian Rupee, and Philippine Peso exposures. We entered into a series of forward contracts to mitigate our currency exposure ranging from 25 % to 75 % over their respective hedged periods. The current foreign currency forward contracts are set to mature at various points between the first quarter of fiscal 2022 through the fourth quarter of fiscal 2022 . As of August 31, 2021, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos and Indian Rupees with U.S. dollars was ₱ 1.4 billion and Rs 2.6 billion, respectively. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros and British Pound Sterling was € 33.8 million and £ 37.7 million, respectively. Interest Rate Swap Agreement 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 debt under our 2019 Revolving Credit Facility (as defined below in Note 13, Debt ). As of August 31, 2021 , we have borrowed $ 575.0 million of the available $ 750.0 million under the 2019 Revolving Credit Facility, which bears interest on the outstanding principal amount at a rate equal to a contractual one month LIBOR plus a spread using a debt leverage pricing grid, which was 0.875 % as of August 31, 2021. Refer to Note 13, Debt, for further discussion on the 2019 Revolving Credit Facility The variable interest rate on our long-term debt can expose us to interest rate volatility arising from changes in LIBOR. 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 utilized to calculate the interest expense from the 2019 Revolving Credit Facility. The interest rate swap agreement matures on March 29, 2024. 69 Table of Contents 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. Realized gains or losses are subsequently reclassified into Interest expense, net 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) Gross Notional Value August 31, 2021 August 31, 2020 Foreign currency forward contracts $ 154,728 $ 129,649 Interest rate swap agreement 287,500 287,500 Total cash flow hedges $ 442,228 $ 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 Derivative Assets Derivative Liabilities Derivatives designated as hedging instruments Balance Sheet Classification August 31, 2021 August 31, 2020 Balance Sheet Classification August 31, 2021 August 31, 2020 Foreign currency forward contracts Prepaid expenses and other current assets $ 1,384 $ 3,644 Accounts payable and accrued expenses $ 1,201 $ 93 Interest rate swap agreement Prepaid expenses and other current assets — — Accounts payable and accrued expenses 1,934 1,861 Other assets — — Other liabilities 1,045 3,819 Total cash flow hedges $ 1,384 $ 3,644 $ 4,181 $ 5,773 All derivatives were designated as hedging instruments as of August 31, 2021 and 2020, respectively. 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 fiscal years ended August 31, 2021, 2020 and 2019: (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 Derivatives in Cash Flow Hedging Relationships 2021 2020 2019 2021 2020 2019 Foreign currency forward contracts $ 1,660 $ 5,049 $ ( 187 ) SG&A $ 5,027 $ ( 1,556 ) $ ( 1,794 ) Interest rate swap agreement 745 ( 6,138 ) — Interest expense, net ( 1,956 ) ( 458 ) — Total cash flow hedges $ 2,405 $ ( 1,089 ) $ ( 187 ) $ 3,071 $ ( 2,014 ) $ ( 1,794 ) As of August 31, 2021 , we estimate that net pre-tax derivative losses of $ 1.8 million included in AOCL will be reclassified into earnings within the next 12 months. No amount of ineffectiveness was recorded in the Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. 70 Table of Contents Offsetting of Derivative Instruments We enter into master netting arrangements designed to permit net settlement of derivative transactions among the respective counterparties, settled on the same date and in the same currency. As of August 31, 2021 and 2020, there were no material amounts recorded net on the Consolidated Balance Sheets. 7. ACQUISITION Truvalue Labs, Inc. On November 2, 2020, we acquired all of the outstanding shares of Truvalue Labs, Inc. ("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. TVL applies artificial intelligence driven technology to over 100,000 unstructured text sources in multiple languages, including news, trade journals, and non-governmental organizations and industry reports, to provide daily signals that identify positive and negative ESG behavior. The acquisition of TVL further enhances our commitment to providing industry leading access to ESG data across our platforms. The TVL purchase price was in excess of the fair value of net assets acquired, resulting in the recognition of goodwill. We finalized the purchase accounting for the TVL acquisition during the third quarter of fiscal 2021 and did not record any material changes to the preliminary purchase price allocation. The acquisition date fair values of major classes of assets acquired and liabilities assumed are as follows: Acquisition Date Fair Value Acquisition Date Useful Life Amortization Method (in thousands) (in years) Current assets $ 812 Amortizable intangible assets Software technology 8,100 7 years Straight-line Client relationships 900 12 years Straight-line Trade names 2,800 15 years Straight-line Goodwill 30,058 Other assets 5,299 Current liabilities ( 3,069 ) Other liabilities ( 2,984 ) Total purchase price $ 41,916 Goodwill totaling $ 30.1 million represents the excess of the TVL purchase price over the fair value of net assets acquired and is included in the Americas segment. Goodwill generated from the TVL acquisition is not deductible for income tax purposes. The results of TVL's operations have been included in our Consolidated Financial Statements, within the Americas segment, beginning with its acquisition on November 2, 2020. Pro forma information has not been presented because the effect of the TVL acquisition is not material to our Consolidated Financial Statements. 8. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Property, equipment and leasehold improvements consist of the following: (in thousands) August 31, 2021 2020 Leasehold improvements $ 197,719 $ 182,899 Computers and related equipment 136,213 127,794 Furniture and fixtures 58,212 56,269 Subtotal $ 392,144 $ 366,962 Less accumulated depreciation and amortization ( 260,767 ) ( 233,860 ) Property, equipment and leasehold improvements, net $ 131,377 $ 133,102 Depreciation expense was $ 30.4 million, $ 32.2 million and $ 35.4 million for fiscal years 2021, 2020 and 2019, respectively. 71 Table of Contents 9. GOODWILL Changes in the carrying amount of goodwill by segment for fiscal years ended August 31, 2021 and 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 — 23,968 6 23,974 Balance at August 31, 2020 $ 386,195 $ 320,427 $ 3,081 $ 709,703 Acquisitions 43,893 — — 43,893 Foreign currency translations — 723 ( 114 ) 609 Balance at August 31, 2021 $ 430,088 $ 321,150 $ 2,967 $ 754,205 Goodwill is not amortized as it is estimated to have an indefinite life. At least annually, we are required to test goodwill at the reporting unit level, which is consistent with our segments, for potential impairment, and, if impaired, write down to fair value based on the present value of discounted cash flows. We performed our annual goodwill impairment test during the fourth quarter of fiscal 2021 utilizing a qualitative analysis, consistent with the timing of previous years. We concluded it was more likely than not that the fair value of each of our segments was greater than its respective carrying value and no impairment charge was required. 10. INTANGIBLE ASSETS Our identifiable intangible assets consist of acquired content databases, client relationships, acquired software technology, internally developed software, non-compete agreements and trade names resulting from previous acquisitions, which have been fully integrated into our operations. We amortize intangible assets on a straight line basis over their estimated useful lives. The estimated useful life, gross carrying amounts and accumulated amortization totals related to our identifiable intangible assets are as follows: August 31, 2021 August 31, 2020 (in thousands, except useful lives) Estimated Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Data content 4 to 20 $ 36,681 $ 26,835 $ 9,846 $ 35,872 $ 24,847 $ 11,025 Client relationships 8 to 18 101,077 49,139 51,938 100,316 43,026 57,290 Software technology 3 to 9 121,556 87,207 34,349 108,384 72,396 35,988 Developed technology 3 to 5 57,666 21,278 36,388 30,276 13,689 16,587 Non-compete agreements 2 to 4 — — — 1,388 1,355 33 Trade names 15 to 15 6,900 4,435 2,465 4,106 3,934 172 Total $ 323,880 $ 188,894 $ 134,986 $ 280,342 $ 159,247 $ 121,095 The weighted average useful life of our intangible assets at August 31, 2021 was 9.1 years. We assess intangible assets for indicators of impairment on a quarterly basis, including an evaluation of our useful lives to determine if events and circumstances warrant a revision to the remaining period of amortization. If indicators of impairment are present, amortizable intangible assets are tested for impairment by comparing the carrying value to undiscounted cash flows and, if impaired, written down to fair value based on discounted cash flows. We have no t identified a material impairment, nor a material change to the estimated remaining useful lives of our intangible assets during fiscal years 2021 and 2020. The intangible assets have no assigned residual values. Amortization expense recorded for intangible assets was $ 31.5 million, $ 25.4 million, and $ 25.1 million during fiscal years 2021, 2020, and 2019 , respectively. 72 Table of Contents As of August 31, 2021, estimated intangible asset amortization expense for each of the next five years and thereafter are as follows: Fiscal Year (in thousands) Estimated Amortization Expense 2022 $ 34,433 2023 28,910 2024 19,375 2025 10,586 2026 9,179 Thereafter 32,503 Total $ 134,986 11. 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: (in thousands) Years ended August 31, 2021 2020 2019 U.S. operations $ 311,767 $ 280,283 $ 288,860 Non-U.S. operations 155,850 146,851 133,105 Income before income taxes $ 467,617 $ 427,134 $ 421,965 U.S. operations $ 40,595 $ 31,926 $ 55,824 Non-U.S. operations 27,432 22,270 13,351 Total provision for income taxes $ 68,027 $ 54,196 $ 69,175 Effective tax rate 14.5 % 12.7 % 16.4 % The components of the provision for income taxes consist of the following: (in thousands) Years ended August 31, 2021 2020 2019 Current U.S. federal $ 26,734 $ 9,332 $ 35,688 U.S. state and local 13,894 8,034 18,389 Non-U.S. 32,001 27,640 17,376 Total current taxes $ 72,629 $ 45,006 $ 71,453 Deferred U.S. federal $ 1,031 $ 11,896 $ 1,813 U.S. state and local ( 1,064 ) 2,665 ( 217 ) Non-U.S. ( 4,569 ) ( 5,371 ) ( 3,874 ) Total deferred taxes $ ( 4,602 ) $ 9,190 $ ( 2,278 ) Total provision for income taxes $ 68,027 $ 54,196 $ 69,175 73 Table of Contents Our effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as discrete and other non-recurring events that may not be predictable. The provision for income taxes differs from the amount of income tax determined by applying the U.S. statutory federal income tax rate to income before income taxes as a result of the following recurring factors and non-recurring events, including the taxation of foreign income: Years ended August 31, (expressed as a percentage of income before income taxes) 2021 2020 2019 Tax at U.S. Federal statutory tax rate 21.0 % 21.0 % 21.0 % Increase (decrease) in taxes resulting from: State and local taxes, net of U.S. federal income tax benefit 2.1 3.1 4.0 Foreign income at other than U.S. rates ( 1.0 ) ( 1.4 ) ( 1.4 ) Foreign derived intangible income ("FDII") deduction ( 1.9 ) ( 1.8 ) ( 1.7 ) Income tax benefits from R&D tax credits ( 3.9 ) ( 3.8 ) ( 3.5 ) Share-based payments ( 2.2 ) ( 3.7 ) ( 3.2 ) One-time transition tax from TCJA — — ( 0.4 ) (1) Other, net 0.4 ( 0.7 ) 1.6 Effective tax rate 14.5 % 12.7 % 16.4 % 1. The enactment of the TCJA resulted in a $ 3.4 million net benefit revision recorded during fiscal 2019 associated with finalizing the accounting for the tax effects of the TCJA during fiscal 2019. The fiscal 2021 provision for income taxes was $ 68.0 million, compared with $ 54.2 million in fiscal 2020, an increase of 25.5 %. The increase was primarily due to net changes in jurisdictional pre-tax book income in fiscal 2021, compared with the same period in the prior year. Additionally, the increase was driven by a $ 4.4 million lower windfall tax benefit from stock-based compensation for fiscal 2021, compared with fiscal 2020, changes in tax rates in certain jurisdictions, and a lower benefit from finalizing prior year tax returns of $ 1.2 million. The increase was partially offset by the impact of the true-up of certain foreign deferred tax balances, and higher research and development tax credits. Due to the changes in taxation of undistributed foreign earnings under the TCJA, we will continue to analyze foreign subsidiary earnings, as well as global working capital requirements, and may repatriate earnings when the amounts are remitted substantially free of additional tax. Deferred Tax Assets and Liabilities The significant components of deferred tax assets recorded within the Consolidated Balance Sheets were as follows: (in thousands) At August 31, 2021 2020 Deferred tax assets: Lease Liabilities $ 55,416 $ 56,280 Stock-based compensation 22,847 16,341 Unrealized tax loss on investment 4,135 4,172 Other 11,199 8,840 Total deferred tax assets $ 93,597 $ 85,633 74 Table of Contents The significant components of deferred tax liabilities recorded within the Consolidated Balance Sheets were as follows: (in thousands) At August 31, 2021 2020 Deferred tax liabilities: Depreciation on property, equipment and leasehold improvements $ 17,133 $ 15,291 Purchased intangible assets, including acquired technology 44,773 43,088 Lease right-of-use assets 43,904 45,344 Other 289 1,623 Total deferred tax liabilities $ 106,099 $ 105,346 Unrecognized Tax Positions Applicable accounting guidance prescribes a comprehensive model for the financial statement recognition, measurement, classification and disclosure of uncertain tax positions that a company has taken or expects to take on a tax return. We recognize the financial effect of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained based on its technical merits of the tax position. Otherwise, no benefit or expense can be recognized in the Consolidated Financial Statements. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon effective settlement with a taxing authority . Additionally, we accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. The determination of liabilities related to unrecognized tax benefits , including associated interest and penalties, requires significant estimates. There can be no assurance that we will accurately predict the audit outcomes, h owever, we have no reason to believe that such audits will result in the payment of additional taxes and/or penalties that would have a material adverse effect on our results of operations or financial position, beyond current estimates. For this reason and due to ongoing audits by multiple tax authorities, we will regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. We do not currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next 12 months. We classify the liability for unrecognized tax benefits as Taxes Payable (non-current) and to the extent that we anticipate payment of cash within one year, the benefit will be classified as Taxes Payable (current). Additionally, we accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. This interest is classified as income tax expense in the financial statements. As of August 31, 2021 , we had gross unrecognized tax benefits totaling $ 14.9 million, including $ 1.3 million of accrued interest, recorded as Taxes Payable (non-current) within the Consolidated Balance Sheets. 75 Table of Contents The following table summarizes the changes in the balance of gross unrecognized tax benefits: (in thousands) Unrecognized income tax benefits at August 31, 2018 $ 9,223 Additions based on tax positions related to the current year 3,133 Additions for tax positions of prior years 507 Statute of limitations lapse ( 1,979 ) Unrecognized income tax benefits at August 31, 2019 $ 10,884 Additions based on tax positions related to the current year 3,533 Release for tax positions of prior years ( 2,086 ) Unrecognized income tax benefits at August 31, 2020 $ 12,331 Additions based on tax positions related to the current year 4,259 Release for tax positions of prior years ( 1,720 ) Unrecognized income tax benefits at August 31, 2021 $ 14,870 In the normal course of business, our tax filings are subject to audit by federal, state and foreign tax authorities. At August 31, 2021, we remained subject to examination in the following major tax jurisdictions for the tax years as indicated below: Major Tax Jurisdictions Open Tax Years U.S. Federal 2018 through 2020 State (various) 2018 through 2020 Europe United Kingdom 2018 through 2020 France 2018 through 2020 Germany 2017 through 2020 12. LEASES On September 1, 2019, we adopted ASC 842, Leases ("ASC 842"). As part of this adoption, w e elected to not record operating lease right-of-use assets or operating lease liabilities for leases with an initial term of 12 months or less. We elected the practical expedient not to separate lease components from non-lease components but, rather, to combine them into one single lease component, which we recognize over the expected term on a straight-line expense basis in occupancy costs (a component of SG&A expense). We review new arrangements at inception to evaluate whether we obtain substantially all the economic benefits of and have the right to control the use of an asset. Our lease portfolio is primarily related to our office space, under various operating lease agreements. Our lease ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments at lease commencement (which includes fixed lease payments and certain qualifying index-based variable payments) over the reasonably certain lease term. leveraging an estimated IBR. Certain adjustments to our lease ROU assets may be required for items such as initial direct costs paid or incentives received. As of August 31, 2021 , we recognized $ 239.1 million of Lease right-of-use assets, net and $ 291.6 million of combined Current and Long-term lease liabilities in the Consolidated Balance Sheets. Such leases have a remaining lease term ranging from less than one year to just over 14 years and did not include any renewal or termination options that were not yet reasonably certain to be exercised. 76 Table of Contents The following table reconciles our future undiscounted cash flows related to our operating leases and the reconciliation to the Current and Long-term lease liabilities as of August 31, 2021: (in thousands) Minimum Lease Payments Fiscal Years Ended August 31, 2022 $ 43,177 2023 39,892 2024 38,050 2025 36,203 2026 35,541 Thereafter 161,849 Total 354,712 Imputed Interest 63,156 Present Value $ 291,556 (in thousands) The components of lease cost related to the operating leases were as follows: At August 31, (in millions) 2021 2020 Operating lease cost 1 $ 42.8 $ 43.0 Variable lease cost 2 $ 14.6 $ 17.9 1. Operating lease costs included costs associated with fixed lease payments and index-based variable payments that qualified for lease accounting under ASC 842, Leases and complied with the practical expedients and exceptions elected by us. 2. Variable lease costs were not included in the measurement of lease liabilities. These costs primarily included variable non-lease costs and leases that qualified for the short-term lease exception. Our 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 costs relate to utilities, real estate taxes, insurance and maintenance. The following table summarizes our lease term and discount rate assumptions related to the operating leases recorded on the Consolidated Balance Sheets: At August 31, 2021 2020 Weighted average remaining lease term (in years) 9.4 10.1 Weighted average discount rate (IBR) 4.3 % 4.2 % The following table summarizes supplemental cash flow information related to our operating leases: At August 31, (in millions) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities $ 42.1 $ 39.7 Lease ROU assets obtained in exchange for lease liabilities $ 5.7 $ 43.7 77 Table of Contents 13. DEBT Our debt obligations consisted of the following: (in thousands) At August 31, 2021 2020 2019 Revolving Credit Facility $ 575,000 $ 575,000 2019 Revolving Credit Facility debt issuance costs ( 465 ) ( 646 ) Long-term debt $ 574,535 $ 574,354 2019 Credit Agreement On March 29, 2019, we entered into a credit agreement, as the borrower, with 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"). 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. We 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 currently at 0.10 % based on the daily amount by which the available balance in the 2019 Revolving Credit Facility exceeds the borrowed amount. All outstanding loan amounts are reported as Long-term debt within the Consolidated Balance Sheets at August 31, 2021. The principal balance is payable in full on the maturity date. Borrowings under the 2019 Revolving Credit Facility bear interes t on the outstanding principal amount at a rate equal to the daily LIBOR plus a spread using a debt leverage pricing grid, currently at 0.875 %. During fiscal 2021 and 2020, we recorded interest expense on our outstanding debt, including the amortization of debt issuance costs, net of the effects of the interest rate swap agreement of $ 8.1 million and $ 12.9 million, respectively. Including the effects of the interest rate swap agreement, the year-to-date weighted average interest rate on amounts outstanding under our 2019 Revolving Credit Facility was 1.38 % and 2.20 % as of August 31, 2021 and August 31, 2020, respectively. Refer to Note 6, Derivative Instruments for further discussion on the interest rate swap agreement. Interest on the loan outstanding under the 2019 Revolving Credit Facility is payable quarterly, in arrears, and on the maturity date. During fiscal 2019, we incurred approximately $ 0.9 million in debt issuance costs related to the 2019 Credit Agreement. These costs were capitalized as debt issuance costs 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 of our 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 covenants and requirements within the 2019 Credit Agreement as of August 31, 2021. 14. 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. We record liabilities for commitments when incurred (i.e., when the goods or services are received). Purchase Commitments with Suppliers and Vendors Purchase obligations represent payments due in future periods in respect of commitments to our various data vendors as well as commitments to purchase goods and services. These purchase commitments are agreements that are enforceable and legally binding on us, 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, 2021 and 2020, we had total purchase commitments with suppliers of $ 191.9 million and $ 226.0 million, respectively. We also have contractual obligations related to our lease liabilities and outstanding debt. Refer to Note 12, Leases and Note 13, Debt for information regarding lease commitments and outstanding debt obligations, respectively. 78 Table of Contents Letters of Credit From time to time, we are required to obtain letters of credit in the ordinary course of business. As of August 31, 2021 we had approximately $ 2.8 million of standby letters of credit outstanding. These standby letters of credit utilize the same covenants included in the 2019 Credit Agreement. Refer to Note 13, 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 11, Income Taxes for further details. We are currently under audit by tax authorities and have reserved for potential adjustments to our provision for income taxes that may result from examinations by, or any negotiated settlements with, these tax authorities. We believe that the final outcome of these examinations or settlements will not have a material effect on our results of operations nor our cash flows. 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 we determine the liabilities are no longer necessary. If our estimates of the federal, state, and foreign income tax liabilities are less than the ultimate assessment, additional expense would result. Legal Matters We accrue non-income-tax liabilities for contingencies when management believes that a loss is probable, and the amounts can be reasonably estimated. Contingent gains are recognized only when realized. We are 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 us are subject to future resolution, including the uncertainties of litigation. Based on information available at August 31, 2021, our management believes that the ultimate outcome of these unresolved matters against us, individually or in the aggregate, will not have a material adverse effect on our consolidated financial position, our results of operations or our cash flows. Sales Tax Matters On August 8, 2019, we received a Notice of Intent to Assess (the "First Notice") additional sales taxes, interest and underpayment penalties from the Commonwealth of Massachusetts Department of Revenue (the "Commonwealth") relating to the tax periods from January 1, 2006 through December 31, 2013. On July 20, 2021, we received a Notice of Intent to Assess (the "Second Notice", cumulatively with the First Notice, the "Notices") additional sales taxes, interest and underpayment penalties from the Commonwealth relating to the tax periods from January 1, 2014 through December 31, 2018. Based upon the Notices, it is the Commonwealth's intention to assess sales tax, interest and underpayment penalties on previously recorded sales transactions. We have filed an appeal to the Notices and intend to contest any such assessment, if assessed. We continue to cooperate with the Commonwealth's inquiry with respect to the Notices. On August 10, 2021, we received a letter (the “Letter”) from the Commonwealth relating to the tax periods from January 1, 2019 through June 30, 2021, requesting additional sales information to determine if a notice of intent to assess should be issued to FactSet with respect to these tax periods. Based upon a preliminary review of the Letter, we believe the Commonwealth might seek to assess sales tax, interest and underpayment penalties on previously recorded sales transactions. We are cooperating with the Commonwealth's inquiry with respect to the Letter. Due to the uncertainty surrounding the assessment process for both the Notices and Letter, we are unable to reasonably estimate the ultimate outcome of these matters and, as such, have not recorded a liability for any of these matters as of August 31, 2021. We believe that we will ultimately prevail if we are presented with a formal assessment for any of these matters; however, if we do not prevail, the amount of any assessment could have a material impact on our consolidated financial position, results of operations and cash flows. Indemnifications As permitted or required under Delaware law and to the maximum extent allowable under that law, we have certain obligations to indemnify our current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at our 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 FactSet, 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 we could be required to make under these indemnification obligations is unlimited; however, we have a director and officer insurance policy that we believe mitigates our exposure and may enable us 79 Table of Contents to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification obligations is immaterial. 15. STOCKHOLDERS’ EQUITY Shares of common stock outstanding were as follows: (in thousands) Years ended August 31, 2021 2020 2019 Balance, beginning of year at September 1, 2020, 2019 and 2018, respectively 38,030 38,118 38,193 Common stock issued for employee stock plans 395 663 839 Repurchase of common stock from employees (1) ( 13 ) ( 12 ) ( 32 ) Repurchase of common stock under the share repurchase program ( 797 ) ( 739 ) ( 882 ) Balance, end of year at August 31, 2021, 2020, and 2019 respectively 37,615 38,030 38,118 (1) For fiscal years 2021, 2020 and 2019 , we repurchased 12,932 , 11,945 and 31,644 shares, or $ 4.3 million, $ 3.5 million and $ 7.2 million, of common stock, respectively, primarily to satisfy tax withholding obligations due upon the vesting of stock-based awards. Share Repurchase Program Under our share repurchase program, we may repurchase shares of our common stock from time-to-time in the open market and privately negotiated transactions, subject to market conditions. For the year ended August 31, 2021, we repurchased 0.8 million shares for $ 264.7 million compared with 0.7 million shares for $ 199.6 million for the year ended August 31, 2020. On March 23, 2021, our Board of Directors approved a $ 205.6 million increase to our existing share repurchase program. As of August 31, 2021, a total of $ 199.9 million remained authorized for future share repurchases under this 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 year ended August 31, 2021, 34,607 shares of previously granted restricted stock vested and were included in common stock outstanding as of August 31, 2021 (recorded net of 12,932 shares repurchased from employees at a cost of $ 4.3 million to cover their cost of taxes upon vesting of the restricted stock). For the year ended August 31, 2020, 32,996 shares of previously granted restricted stock vested and were included in common stock outstanding as of August 31, 2020 (recorded net of 11,945 shares repurchased from employees at a cost of $ 3.5 million to cover their cost of taxes upon vesting of the restricted stock). 80 Table of Contents Dividends Our Board of Directors declared dividends on our common stock for the full years ended August 31, 2021 and August 31, 2020 as follows: 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 Second Quarter $ 0.77 February 26, 2021 $ 29,141 March 18, 2021 Third Quarter $ 0.82 May 31, 2021 $ 30,972 June 17, 2021 Fourth Quarter $ 0.82 August 31, 2021 $ 30,845 September 16, 2021 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 Fourth Quarter $ 0.77 August 31, 2020 $ 29,283 September 17, 2020 Future cash dividend payments will depend on our earnings, capital requirements, financial condition and other factors considered relevant by us and are subject to final determination by our Board of Directors. On May 5, 2021, our Board of Directors approved a 6.5 % increase in the regular quarterly dividend from $ 0.77 to $ 0.82 per share. Accumulated Other Comprehensive Loss The components of AOCL are as follows: (in thousands) August 31, 2021 August 31, 2020 Accumulated unrealized losses on cash flow hedges, net of tax $ ( 2,095 ) $ ( 1,591 ) Accumulated foreign currency translation adjustments ( 36,867 ) ( 37,702 ) Total AOCL $ ( 38,962 ) $ ( 39,293 ) 16. EARNINGS PER SHARE A reconciliation of the weighted average shares outstanding used in the basic and diluted earnings per share ("EPS") computations. Twelve Months Ended August 31, (in thousands, except per share data)) 2021 2020 2019 Numerator Net income used for calculating basic and diluted income per share $ 399,590 $ 372,938 $ 352,790 Denominator Weighted average common shares used in the calculation of basic income per share 37,856 37,936 38,144 Common stock equivalents associated with stock-based compensation plan 714 710 729 Shares used in the calculation of diluted income per share 38,570 38,646 38,873 Basic income per share $ 10.56 $ 9.83 $ 9.25 Diluted income per share $ 10.36 $ 9.65 $ 9.08 81 Table of Contents Dilutive potential common shares consist of stock options and unvested performance-based awards. There were 1,750 stock options excluded from the calculation of diluted EPS as of August 31, 2021 and 2020, because their inclusion would have been anti-dilutive. Performance-based awards are omitted from the calculation of diluted EPS until it is determined that the performance criteria has been met at the end of the reporting period. As of August 31, 2021, there were 68,990 performance-based awards excluded from the calculation of diluted EPS. As of August 31, 2020 there were 35,666 performance-based awards excluded from the calculation of diluted EPS. 17. STOCK-BASED COMPENSATION We recognized total stock-based compensation expense of $ 45.1 million, $ 36.6 million and $ 32.4 million in fiscal 2021, 2020 and 2019, respectively. As of August 31, 2021, $ 89.8 million of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a weighted average period of 2.9 years. There was no stock-based compensation capitalized as of August 31, 2021 and 2020, respectively. Stock Option Awards A summary of stock option activity is as follows: Number Outstanding Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (years) Outstanding as of August 31, 2018 3,143 $ 153.05 Granted – non-performance-based 482 $ 224.35 Granted – non-employee Directors grant 20 $ 207.88 Exercised ( 705 ) $ 137.61 Forfeited ( 416 ) $ 170.54 Outstanding as of August 31, 2019 2,524 $ 168.50 Granted – non-performance-based 424 $ 256.43 Granted – non-employee Directors grant 16 $ 271.51 Exercised ( 588 ) $ 145.54 Forfeited ( 122 ) $ 218.36 Outstanding as of August 31, 2020 2,254 $ 189.32 Granted – non-performance-based 418 $ 317.17 Granted – non-employee Directors grant 12 $ 318.20 Exercised ( 322 ) $ 166.36 Forfeited ( 85 ) $ 237.23 Outstanding as of August 31, 2021 2,277 $ 214.89 $ 161.9 6.4 Options vested and exercisable as of August 31, 2021 1,019 $ 170.25 $ 214.0 4.9 Options expected to vest as of August 31, 2021 1,148 $ 248.91 $ 150.8 7.6 The aggregate intrinsic value represents the difference between our closing stock price as of August 31, 2021 of $ 380.22 and the exercise price, multiplied by the number of options exercisable as of that date. The total pre-tax intrinsic value of stock options exercised during fiscal 2021, 2020 and 2019 was $ 54.3 million, $ 85.0 million and $ 73.0 million, respectively. 82 Table of Contents Employee Stock Option Awards During the twelve months ended August 31, 2021, we granted 417,546 stock options under the FactSet Research Systems Inc. Stock Option and Award Plan as Amended and Restated (the "LTIP") with a weighted average exercise price of $ 317.17 to existing employees of FactSet, using the lattice-binomial option-pricing model. The majority of the stock options granted during the twelve months ended August 31, 2021 are related to the annual employee grant on November 9, 2020 under the LTIP. The stock option awards granted on November 9, 2020 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. Employee Stock Option Fair Value Determinations We utilize the lattice-binomial option-pricing model ("binomial model") to estimate the fair value of new employee stock option grants. The binomial model is affected by our stock price, as well as, assumptions regarding several variables, which nclude, but are not limited to our expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors, to determine the grant date stock option award fair value. The weighted average estimated fair value of employee stock options granted during fiscal 2021, 2020 and 2019 was determined using the binomial model with the following weighted average assumptions: (Weighted average assumptions) 2021 2020 2019 Term structure of risk-free interest rate 0.04 % — 1.67 % 0.10 % — 1.79 % 1.28 % — 3.14 % Expected life (years) 7.1 — 7.1 7.2 — 7.2 7.1 — 7.1 Term structure of volatility 26 % — 27 % 25 % — 25 % 18 % — 29 % Dividend yield 0.12 % 1.09 % 1.15 % Weighted average estimated fair value $ 78.31 $ 60.33 $ 57.12 Weighted average exercise price $ 317.17 $ 256.43 $ 224.35 Fair value as a percentage of exercise price 24.7 % 23.5 % 25.5 % The risk-free interest rate assumption for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on a combination of historical volatility of our stock and implied volatilities of publicly traded options to buy FactSet common stock with contractual terms closest to the expected life of options granted to employees. The approach to utilize a mix of historical and implied volatility was based upon the availability of actively traded options on our stock and our assessment that a combination of implied volatility and historical volatility is best representative of future stock price trends. We use historical data to estimate option exercises and employee termination within the valuation model. The dividend yield assumption is based on our history and expectation of dividend payouts. The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is a derived output of the binomial model. The binomial model estimates employees exercise behavior based on the option’s remaining vested life and the extent to which the option is in-the-money. The binomial model estimates the probability of exercise as a function of these two variables based on the entire history of exercises and cancellations of all past option grants made by us. Non-Employee Directors' Stock Option Awards The FactSet Research Systems Inc. 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. The expiration date of the Director Plan is December 19, 2027. The non-qualified stock options granted to directors vest 100% after three years on the anniversary date of the grant and expire seven years from the date the options were granted. As of August 31, 2021, shares available for future grant under the Director Plan was 237,749 . Non-Employee Director Stock Option Fair Value Determinations We utilize the Black-Scholes model to estimate the fair value of new non-employee Director stock option grants. The Black-Scholes model is affected by our stock price, as well as, assumptions regarding several variables, which include, but are not limited to, our expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors, to determine the grant date stock-based payment award fair value. 83 Table of Contents On January 15, 2021, January 15, 2020 and January 15, 2019 , we granted 12,137 , 16,080 , and 20,576 stoc k options, respectively, to our non-employee Directors using the weighted average fair values, based on the following weighted average assumptions used in the Black-Scholes option-pricing model: (Weighted average assumptions) Years ended August 31, 2021 2020 2019 Fair value $ 82.01 $ 54.74 $ 42.77 Risk-free interest rate 0.77 % 1.64 % 2.51 % Expected life (years) 6.9 5.4 5.4 Expected volatility 27.2 % 22.0 % 20.5 % Dividend yield 0.93 % 1.11 % 1.17 % Restricted Stock Units Our LTIP provides for the grant of share-based awards, including awards of restricted stock units ("RSUs") and performance share units ("PSUs"; RSUs and PSUs, collectively, "Restricted Stock Awards"). The Restricted Stock Awards are subject to continued employment over a specified period. The Restricted Stock Awards granted to employees entitle the holders to shares of common stock as the Restricted Stock Awards vest over time, but not to dividends declared on the underlying shares, while the stock subject to the Restricted Stock Awards is unvested. Vesting of the shares underlying the PSUs are also subject to achieving certain specified performance levels during the measurement period subsequent to the date of grant. The grant date fair value of Restricted Stock Awards is measured by reducing the grant date price of our 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 expense associated with Restricted Stock Awards is amortized over the vesting period. As of August 31, 2021, a total of 196,621 shares underlying Restricted Stock Awards were unvested and outstanding, which results in unamortized stock-based compensation of $ 37.8 million to be recognized as stock-based compensation expense over the remaining vesting period of 2.6 years. A summary of Stock Award activity is as follows: (in thousands, except per award data) Number Outstanding Weighted Average Grant Date Fair Value Per Award Balance at August 31, 2018 143 $ 139.34 Granted - RSUs (1) 73 $ 239.03 Vested - RSUs ( 85 ) $ 125.04 Forfeited ( 7 ) $ 181.32 Balance at August 31, 2019 124 $ 205.47 Granted - Restricted Stock Awards (1) (2) 74 $ 252.17 Vested - RSUs ( 33 ) $ 197.37 Forfeited ( 19 ) $ 198.53 Balance at August 31, 2020 146 $ 231.55 Granted - Restricted Stock Awards (1)(2) 99 $ 312.86 Vested - Restricted Stock Awards ( 35 ) $ 208.67 Forfeited ( 13 ) $ 267.23 Balance at August 31, 2021 197 $ 274.1 (1) Each Restricted Stock Award granted is equivalent to 2.5 shares granted under the LTIP. (2) During the fiscal year ended August 31, 2021 we granted 62,960 RSUs and 36,424 PSUs, During the fiscal year ended August 31, 2020 we granted 36,709 RSUs and 36,888 PSUs. 84 Table of Contents Performance-based Equity Awards Performance-based equity awards require management to make assumptions regarding the likelihood of achieving our performance targets. The number of performance-based awards that vest will be predicated on us achieving performance levels during the measurement period subsequent to the date of grant. Dependent on the financial performance levels attained, a percentage of the performance-based awards will vest to the grantees. However, there is no current guarantee that such awards will vest in whole or in part. Share-based Awards Available for Grant A summary of share-based awards available for grant is as follows: (in thousands) Share-based Awards Available for Grant under the Employee Stock Option Plan Share-based Awards Available for Grant under the Non-Employee Stock Option Plan Balance at August 31, 2018 6,298 282 Granted – non-performance-based options ( 481 ) — Granted – non-employee Directors options — ( 20 ) Granted – RSUs (1) ( 183 ) — Forfeited - Share-based awards (2) 433 2 Balance at August 31, 2019 6,067 264 Granted – non-performance-based options ( 424 ) — Granted – non-employee Directors options — ( 16 ) Granted – RSUs (1) ( 93 ) — Granted – PSUs(1) ( 91 ) — Forfeited – Share-based awards (2) 167 2 Balance at August 31, 2020 5,626 250 Granted – non-performance-based options ( 418 ) — Granted – non-employee Directors options — ( 12 ) Granted – RSUs (1) ( 157 ) — Granted – PSUs (1) ( 91 ) — Forfeited – Share-based awards (2) 120 — Balance at August 31, 2021 5,080 238 (1) Each Restricted Stock Award granted is equivalent to 2.5 shares granted under the LTIP. (2) Under the LTIP, for each Restricted Stock Award canceled/forfeited, an equivalent of 2.5 shares is added back to the available share-based awards balance. Employee Stock Purchase 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 our 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 fiscal 2021, employees purchased 38,848 shares at a weighted average price of $ 273.59 compared with 42,606 shares at a weighted average price of $ 234.41 in fiscal 2020 and 48,532 shares at a weighted average price of $ 205.64 in fiscal 2019. Stock-based compensation expense recorded during fiscal 2021, 2020 and 2019 relating to the ESPP was $ 2.0 million, $ 2.1 million and $ 2.0 million, respectively. At August 31, 2021, the ESPP had 138,956 shares reserved for future issuance. 85 Table of Contents We use the Black-Scholes model to calculate the estimated fair value for the ESPP shares. The weighted average estimated fair value of the ESPP shares during fiscal years 2021, 2020 and 2019, was $ 54.00 , $ 50.69 and $ 41.06 per share, respectively, with the following weighted average assumptions: (Weighted average assumptions) 2021 2020 2019 Risk-free interest rate 0.26 % 0.95 % 2.33 % Expected life (months) 3 3 3 Expected volatility 11.69 % 20.04 % 10.89 % Dividend yield 1.00 % 1.08 % 1.12 % 18. EMPLOYEE BENEFIT PLANS Defined Contribution Plan We established our 401(k) Plan in fiscal 1993. The 401(k) Plan is a defined contribution plan covering all full-time, U.S. employees of FactSet and is subject to the provisions of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 ("IRC"). Each year, participants may contribute up to 60 % of their eligible annual compensation, subject to annual limitations established by the IRC. We matched up to 4 % of employees’ earnings, capped at the Internal Revenue Service annual maximum. Company matching contributions are subject to a five-year graduated vesting schedule. All full-time, U.S. employees are eligible for the matching contribution by FactSet. We contributed $ 11.6 million, $ 11.3 million, and $ 10.9 million in matching contributions to employee 401(k) accounts during fiscal 2021, 2020 and 2019, respectively. 19. SEGMENT INFORMATION Operating segments are defined as components of an enterprise that have the following characteristics: (i) they engage in business activities from which they may earn revenue and incur expense, (ii) their operating results are regularly reviewed by the chief operating decision maker ("CODM") for resource allocation decisions and performance assessment, and (iii) their discrete financial information is available. At FactSet, our Chief Executive Officer functions as our CODM. Our operating segments are consistent with our reportable segments and are how we, including our CODM, manage our business and the geographic markets in which we serve. Our internal financial reporting structure is based on three segments: the Americas; EMEA; and Asia Pacific. Within each of the segments, we primarily deliver insight and information through four workflow solutions: Research; Analytics & Trading; Content & Technology Solutions ("CTS"); and Wealth. Commencing with the our 2022 fiscal year, we have reorganized our workflows into three solutions: Research & Advisory; Analytics & Trading; and CTS, to better align our products and go-to-market strategy. These workflow solutions provide global financial and economic information to asset 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 Europe, the Middle East, and Africa. The Asia Pacific segment serves our clients in Asia and Australia. Segment revenue reflects sales to clients based in these respective geographic locations. Each segment records expenses related to its individual operations with the exception of expenditures associated with our data centers, third-party data costs and corporate headquarters charges, which 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 our segments and the expenses incurred at these locations are allocated to each segment based on a percentage of revenue. 86 Table of Contents The following tables reflect the results of operations of our segments: (in thousands) Year Ended August 31, 2021 Americas EMEA Asia Pacific Total Revenue $ 1,008,046 $ 427,700 $ 155,699 $ 1,591,445 Operating income $ 218,180 $ 159,704 $ 96,157 $ 474,041 Depreciation and amortization $ 39,415 $ 14,847 $ 10,214 $ 64,476 Stock-based compensation $ 35,113 $ 8,401 $ 1,551 $ 45,065 Capital expenditures $ 38,146 $ 1,424 $ 21,755 $ 61,325 Year Ended August 31, 2020 Americas EMEA Asia Pacific Total Revenue $ 943,649 $ 406,498 $ 143,964 $ 1,494,111 Operating income $ 182,037 $ 165,317 $ 92,306 $ 439,660 Depreciation and amortization $ 36,128 $ 14,338 $ 7,148 $ 57,614 Stock-based compensation $ 28,780 $ 6,576 $ 1,223 $ 36,579 Capital expenditures $ 60,204 $ 2,079 $ 15,359 $ 77,642 Year Ended August 31, 2019 Americas EMEA Asia Pacific Total Revenue $ 885,854 $ 420,884 $ 128,613 $ 1,435,351 Operating income $ 171,237 $ 191,230 $ 75,568 $ 438,035 Depreciation and amortization $ 40,018 $ 14,703 $ 5,742 $ 60,463 Stock-based compensation $ 26,152 $ 5,320 $ 928 $ 32,400 Capital expenditures $ 43,647 $ 2,595 $ 13,128 $ 59,370 Segment Total Assets The following table reflects the total assets for our segments: As of August 31, (in thousands) 2021 2020 Segment Assets Americas $ 1,144,693 $ 1,111,600 EMEA 842,652 757,524 Asia Pacific 237,595 214,264 Total assets $ 2,224,940 $ 2,083,388 Geographic Information The following tables reflect our revenues and long-lived assets, split geographically by our country of domicile (the United States) and other countries where major subsidiaries are domiciled. 87 Table of Contents Geographic Revenue The following table sets forth revenue by geography, attributed to countries based on the location of the client: (in thousands) Years ended August 31, 2021 2020 2019 Revenues United States $ 952,423 $ 898,609 $ 846,362 United Kingdom 190,044 179,966 166,944 Other European Countries 237,656 226,532 253,940 All Other Countries 211,322 189,004 168,105 Total revenue $ 1,591,445 $ 1,494,111 $ 1,435,351 Geographic Long-Lived Assets The following table sets forth long-lived assets by geographic area. Long-lived assets consist of Property, equipment and leasehold improvements, net and Lease right-of-use assets, net and excludes goodwill, intangible assets, deferred taxes and other assets. (in thousands) At August 31, 2021 2020 Long-lived Assets United States $ 179,864 $ 205,929 Philippines 80,320 53,124 India 36,902 42,923 United Kingdom 30,976 32,184 All Other Countries 42,379 47,871 Total long-lived assets $ 370,441 $ 382,031 20. RISKS AND CONCENTRATIONS OF CREDIT RISK Financial Risk Management Foreign Currency Exchange Risk In the normal course of business, we are exposed to foreign currency exchange risk as we conducts business outside the U.S. in several currencies including the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. Changes in the exchange rates for such currencies into U.S. dollars can affect our revenues, earnings, and the carrying values of our assets and liabilities in our 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). The changes in fair value for these foreign currency forward contracts are initially reported as a component of AOCL and subsequently reclassified into operating expenses when the hedged exposure affects earnings. By their nature, all derivative instruments involve, to varying degrees, elements of market and credit risk. The market risk associated with these instruments resulting from currency exchange movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. 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 a 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. Refer to Note 6, Derivative Instruments for more information on our foreign currency exposures and our foreign currency forward contracts. 88 Table of Contents Interest Rate Risk Cash and Cash Equivalents and Investments The fair market value of our cash and cash equivalents and investments at August 31, 2021 was $ 717.8 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. We are exposed to interest rate risk through fluctuations of interest rates on our investments. As we have a restrictive investment policy, our financial exposure to fluctuations in interest rates is expected to remain low. Refer to Note 3, Summary of Significant Accounting Policies for more information on our cash and cash equivalents. Debt As of August 31, 2021, we had long term debt outstanding under the 2019 Revolving Credit Facility with a principal balance of $ 575.0 million. The debt bears interest on the outstanding principle at a rate equal to LIBOR plus a spread, using a debt leverage pricing grid. The variable rate of interest on our long-term debt can expose us to interest rate volatility due to changes in LIBOR. To mitigate this exposure, on March 5, 2020, we entered into an interest rate swap agreement with a notional amount of $ 287.5 million to hedge the variable interest rate obligation, effectively converting the floating interest rate to fixed for the hedged portion. Thus, we are only exposed to base interest rate risk on floating rate borrowings in excess of any amounts that are not hedged, or $ 287.5 million of our outstanding principal balance. 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 would result in a $ 0.7 million change in our annual interest expense. Refer to Note 13, Debt for additional information regarding our outstanding debt obligations. Current market events have not required us to modify materially or change our financial risk management strategies with respect to our exposures to foreign currency exchange risk and interest rate risk. Concentrations of Credit Risk Cash equivalents Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents. We are 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 in excess of applicable insurance limits. We have not experienced any losses from maintaining cash accounts in excess of such limits. We do not believe our concentration of cash and cash equivalents present a significant credit risk as the counterparties to the instruments consist of multiple high-quality, credit-worthy financial institutions. Accounts Receivable Our accounts receivable are subject to collection risk as they are unsecured and derived from revenue earned from clients located around the globe. We do not require collateral from our clients. We maintain reserves for potential write-offs and evaluate the adequacy of the reserves periodically. These losses have historically been within expectations. No single client represented more than 3 % of our total subscription revenue in any period presented. As of August 31, 2021 and 2020, the receivable reserve was $ 6.4 million and $ 8.0 million, respectively. Derivative Instruments Our use of derivative instruments exposes us to credit risk to the extent counterparties may be unable to meet the terms of their agreements. To mitigate credit risk, we limit counterparties to credit-worthy financial institutions and distribute contracts among these institutions to reduce the concentration of credit risk. We do not expect any losses as a result of default by our counterparties. 89 Table of Contents Concentration of Other Risk Data Content Providers We integrate data from various third-party sources into our hosted propriety data and analytics platform, which our clients access to perform their analyses. As certain data sources have a limited number of suppliers, we make every effort to assure that, where reasonable, alternative sources are available. We are not dependent on any individual third-party data supplier in order to meet the needs of our clients, with only two data suppliers representing more than 10 % of our total data costs for the year ended August 31, 2021. 21. SUBSEQUENT EVENTS As previously announced, on October 12, 2021, we completed our acquisition of Cobalt Software, Inc. (“Cobalt”), and its subsidiaries, for approximately $ 51.0 million, subject to certain post-closing adjustments. Cobalt is a leading portfolio monitoring solutions provider for the private capital industry. The acquisition of Cobalt advances our strategy to scale our data and workflow solutions and expands our private market offering. Results of Operations from Cobalt will be recognized based on geographic business activities in accordance with how our operating segments are currently aligned. We expect the majority of the Cobalt purchase price to be allocated to goodwill and acquired intangible assets. 90 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.