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 44 Management’s Report on Internal Control over Financial Reporting 44 Reports o f Independent Regis tered Public Accounting Firm Reports of Independent Registered Public Accounting Firm (PC AOB ID : 42 ) 46 Consolidated Financial Statements: Consolidated Statements of Income for the years end ed August 31, 2022, 2021 and 2020 50 Consolidated Statements of Comprehensive Income for the years ended August 31, 2022, 2021 and 2020 51 Consolidated Balance Sheets at August 31, 2022 and 2021 52 Consolidated Statements of Cash Flows for the years ended August 31, 2022, 2021 and 2020 53 Consolidated Statements of Changes in Stockholders’ Equity for the years ended August 31, 2022, 2021 and 2020 54 Notes to the Consolidated Financial Statements 55 Financial Statement Schedule: Schedule II – Valuation and Qualifying Accounts 92 43 Table of Contents Management’s Statement of Responsibility for Financial Statements Our management prepares and is responsible for the fairness, integrity and objectivity of our Consolidated Financial Statements. 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 our 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. Our 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. Our 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. We maintain 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, we assessed our internal control over financial reporting as of August 31, 2022 and issued a report (see below). Management’s Report on Internal Control over Financial Reporting Our 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 our assets; (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 our receipts and expenditures are being made only in accordance with authorizations of our management and directors; 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. Our management (with the participation of the Chief Executive Officer and Chief Financial Officer) conducted an evaluation of the effectiveness of our 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. In accordance with the guidance issued by the Securities and Exchange Commission, companies are permitted to exclude acquisitions from their first assessment of internal control over financial reporting following the date of acquisition. Based on those guidelines, our management's assessment of the effectiveness of our internal control over financial reporting excluded CUSIP Global Services ("CGS") , which we acquired in the third quarter of fiscal 2022. E xcluding goodwill and intangible assets, CGS represented 5% percent of our total assets as of August 31, 2022 and 5% percent of our consolidated revenues for fiscal year 2022 . Refer to Note 6, Acquisitions , for additional information on the CGS acquisition. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of August 31, 2022 . Ernst & Young LLP (PCAOBID: 42), an independent registered public accounting firm, has audited the 44 Table of Contents effectiveness of our internal control over financial reporting and has issued a report on our 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 21, 2022 October 21, 2022 45 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, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2022, 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, 2022, 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 21, 2022 expressed an unqualified opinion thereon. 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 Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 46 Table of Contents Measurement of income tax provision Description of the Matter As discussed in Note 2, Significant Accounting Policies, and Note 10, 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, 2022, the Company recognized a consolidated provision for income taxes of $46.7 million with $18.1 million related to its U.S. operations and $28.6 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 position. 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 10, Income Taxes , of the Consolidated Financial Statements in relation to these matters. 47 Table of Contents Valuation of Intangible Assets from Business Acquisition Description of the Matter As described in Note 6, Acquisitions , to the Consolidated Financial Statements, during the year ended August 31, 2022, the Company completed the CUSIP Global Services business acquisition for total consideration of $1.932 billion, inclusive of working capital adjustments. The transaction was accounted for under the acquisition method of accounting whereby the total purchase price was allocated to assets acquired and liabilities assumed based on the estimated fair value of such assets and liabilities with the residual being allocated to goodwill. Auditing the Company’s accounting for the CUSIP Global Services acquisition required complex auditor judgment due to the significant estimation uncertainty inherent in determining the fair value of identified intangible assets for the acquired ABA business process and customer relationships. The significant estimation uncertainty was primarily due to the judgmental nature of the inputs to the valuation techniques used to measure the fair value of the ABA business process and customer relationships as well as the sensitivity of the respective fair values to the underlying significant assumptions. The significant assumptions used to estimate the fair value of the ABA business process and customer relationships included revenue growth rates and operating margins. These significant assumptions are forward-looking and could be affected by future economic and market conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the valuation of intangible assets from the acquisition. For example, we tested controls over management’s review of the valuation models and the significant assumptions described above. To test the estimated fair value of the acquired ABA business process and customer relationships, we performed audit procedures that included, among others, assessing the appropriateness of the valuation methodologies and testing the significant assumptions discussed above. For example, we compared the revenue growth rates and operating margins to the historical results of the acquired business. We further performed sensitivity analyses to evaluate the changes in the fair value of the acquired ABA business process and customer relationships that would result from changes in the significant assumptions. In addition, we involved internal valuation specialists to assist us in our evaluation of the valuation methodologies and certain significant assumptions used by the Company. We have evaluated the Company’s business acquisition disclosures included in Note 6, Acquisitions, 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 21, 2022 48 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, 2022, 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, 2022, based on the COSO criteria. As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of CGS, which are included in the 2022 Consolidated Financial Statements of the Company and constituted 5% of total assets, excluding goodwill and other intangible assets, net, as of August 31, 2022 and 5% of consolidated total revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of CGS. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2022 Consolidated Financial Statements of the Company and our report dated October 21, 2022, 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 21, 2022 49 Table of Contents FactSet Research Systems Inc. Consolidated Statements of Income (in thousands, except per share data) For the years ended August 31, 2022 2021 2020 Revenues $ 1,843,892 $ 1,591,445 $ 1,494,111 Operating expenses Cost of services 871,106 786,400 695,446 Selling, general and administrative 433,032 331,004 342,505 Asset impairments 64,272 — 16,500 Total operating expenses 1,368,410 1,117,404 1,054,451 Operating income 475,482 474,041 439,660 Other income (expense), net Interest expense, net ( 29,522 ) ( 6,394 ) ( 9,829 ) Other income (expense), net ( 2,366 ) ( 30 ) ( 2,697 ) Total other income (expense), net ( 31,888 ) ( 6,424 ) ( 12,526 ) Income before income taxes 443,594 467,617 427,134 Provision for income taxes 46,677 68,027 54,196 Net income $ 396,917 $ 399,590 $ 372,938 Basic earnings per common share $ 10.48 $ 10.56 $ 9.83 Diluted earnings per common share $ 10.25 $ 10.36 $ 9.65 Basic weighted average common shares 37,864 37,856 37,936 Diluted weighted average common shares 38,736 38,570 38,646 The accompanying notes are an integral part of these Consolidated Financial Statements. 50 Table of Contents FactSet Research Systems Inc. Consolidated Statements of Comprehensive Income (in thousands) For the years ended August 31, 2022 2021 2020 Net income $ 396,917 $ 399,590 $ 372,938 Other comprehensive income (loss), net of tax Net unrealized gain (loss) on cash flow hedges* 5,245 ( 504 ) 674 Foreign currency translation adjustment gains (losses) ( 74,666 ) 835 34,577 Other comprehensive income (loss) ( 69,421 ) 331 35,251 Comprehensive income $ 327,496 $ 399,921 $ 408,189 * For the fiscal years ended August 31, 2022, 2021 and 2020, the net unrealized gain (loss) on cash flow hedges disclosed above were net of a tax expense of $ 1,657 thousand, tax benefit of $ 162 thousand, and a tax expense of $ 251 thousand, respectively. The accompanying notes are an integral part of these Consolidated Financial Statements. 51 Table of Contents FactSet Research Systems Inc. Consolidated Balance Sheets (in thousands, except share data) August 31, 2022 2021 ASSETS Cash and cash equivalents $ 503,273 $ 681,865 Investments 33,219 35,984 Accounts receivable, net of reserves of $ 2,776 at August 31, 2022 and $ 6,431 at August 31, 2021 204,102 151,187 Prepaid taxes 38,539 13,917 Prepaid expenses and other current assets 91,214 50,625 Total current assets 870,347 933,578 Property, equipment and leasehold improvements, net 80,843 131,377 Goodwill 965,848 754,205 Intangible assets, net 1,895,909 134,986 Deferred taxes 3,153 2,250 Lease right-of-use assets, net 159,458 239,064 Other assets 38,747 29,480 TOTAL ASSETS $ 4,014,305 $ 2,224,940 LIABILITIES Accounts payable and accrued expenses $ 108,395 $ 85,777 Current lease liabilities 29,185 31,576 Accrued compensation 114,808 104,403 Deferred revenues 152,039 63,104 Dividends payable 33,860 30,845 Total current liabilities 438,287 315,705 Long-term debt 1,982,424 574,535 Deferred taxes 8,800 14,752 Deferred revenues, non-current 7,212 8,394 Taxes payable 34,211 30,279 Long-term lease liabilities 208,622 259,980 Other liabilities 3,341 4,942 TOTAL LIABILITIES $ 2,682,897 $ 1,208,587 Commitments and contingencies (see Note 13) 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, 41,653,218 and 41,163,192 shares issued, 38,044,756 and 37,615,419 shares outstanding at August 31, 2022 and 2021, respectively 417 412 Additional paid-in capital 1,190,350 1,048,305 Treasury stock, at cost: 3,608,462 and 3,547,773 shares at August 31, 2022 and 2021, respectively ( 930,715 ) ( 905,917 ) Retained earnings 1,179,739 912,515 Accumulated other comprehensive loss ( 108,383 ) ( 38,962 ) TOTAL STOCKHOLDERS’ EQUITY $ 1,331,408 $ 1,016,353 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 4,014,305 $ 2,224,940 The accompanying notes are an integral part of these Consolidated Financial Statements. 52 Table of Contents FactSet Research Systems Inc. Consolidated Statements of Cash Flows (in thousands) Years ended August 31, 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 396,917 $ 399,590 $ 372,938 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 86,683 64,476 57,614 Amortization of lease right-of-use assets 43,032 42,846 43,185 Stock-based compensation expense 56,003 45,065 36,579 Deferred income taxes ( 8,715 ) ( 4,602 ) 10,626 Impairment charge 64,272 — 16,500 Changes in assets and liabilities, net of effects of acquisitions Accounts receivable, net of reserves ( 32,980 ) 3,646 ( 8,608 ) Accounts payable and accrued expenses 12,815 2,068 12,427 Accrued compensation 14,524 21,815 16,446 Deferred fees ( 6,100 ) 5,078 5,571 Taxes payable, net of prepaid taxes ( 19,275 ) 26,298 ( 24,224 ) Lease liabilities, net ( 48,628 ) ( 42,750 ) ( 33,340 ) Other, net ( 20,271 ) ( 8,304 ) 126 Net cash provided by operating activities 538,277 555,226 505,840 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, equipment, leasehold improvements and internal-use software ( 51,156 ) ( 61,325 ) ( 77,642 ) Acquisition of businesses, net of cash and cash equivalents acquired ( 1,981,641 ) ( 58,056 ) — Purchases of investments ( 878 ) ( 18,787 ) ( 2,736 ) Proceeds from maturity or sale of investments — 2,176 6,746 Net cash used in investing activities ( 2,033,675 ) ( 135,992 ) ( 73,632 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from debt 2,238,355 — — Repayment of debt ( 825,000 ) — — Payments of debt issuance costs ( 9,736 ) — — Dividend payments ( 125,934 ) ( 117,927 ) ( 110,439 ) Proceeds from employee stock plans 86,047 64,177 95,520 Repurchases of common stock ( 18,639 ) ( 264,702 ) ( 199,625 ) Other financing activities ( 5,859 ) ( 4,259 ) ( 3,531 ) Net cash provided by/(used in) financing activities 1,339,234 ( 322,711 ) ( 218,075 ) Effect of exchange rate changes on cash and cash equivalents ( 22,428 ) ( 263 ) 11,673 Net (decrease) increase in cash and cash equivalents ( 178,592 ) 96,260 225,806 Cash and cash equivalents at beginning of period 681,865 585,605 359,799 Cash and cash equivalents at end of period $ 503,273 $ 681,865 $ 585,605 Supplemental Disclosure of Cash Flow Information Cash paid during the year for interest $ 29,525 $ 8,021 $ 12,876 Cash paid during the year for income taxes, net of refunds $ 76,252 $ 46,588 $ 69,092 Supplemental Disclosure of Non-Cash Transactions Dividends declared, not paid $ 33,860 $ 30,845 $ 29,283 The accompanying notes are an integral part of these Consolidated Financial Statements. 53 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 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 loss 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 Net income 396,917 396,917 Other comprehensive income ( 69,421 ) ( 69,421 ) Common stock issued for employee stock plans 450,527 5 86,042 260 ( 128 ) 85,919 Vesting of restricted stock 39,499 — 14,229 ( 6,031 ) ( 6,031 ) Repurchases of common stock 46,200 ( 18,639 ) ( 18,639 ) Stock-based compensation 56,003 56,003 Dividends declared ( 129,693 ) ( 129,693 ) Balance as of August 31, 2022 41,653,218 $ 417 $ 1,190,350 3,608,462 $ ( 930,715 ) $ 1,179,739 $ ( 108,383 ) $ 1,331,408 The accompanying notes are an integral part of these Consolidated Financial Statements. 54 Table of Contents Notes to the Consolidated Financial Statements Page Not e 1 Description of Business 55 Not e 2 Significant Accounting Policies 56 Note 3 Revenue Recognition 62 Note 4 Fair Value Measures 62 Note 5 Derivative Instruments 65 Not e 6 Acquisitio ns 67 Note 7 Property, Equipment and Leasehold Improvements 69 Note 8 Goodwill 70 Note 9 Intangible Assets 70 Note 10 Income Taxes 71 Note 11 Leases 74 Note 12 Debt 76 Note 13 Commitments and Contingencies 79 Note 14 Stockholders' Equity 80 Note 15 Earnings Per Share 82 Note 16 Stock - Based Compensation 82 Note 17 Employee Benefit Plans 86 Note 18 Segment Information 86 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 an open and flexible digital platform that drives the investment community to see more, think bigger, and do its best work. Our strategy is to build the leading open content and analytics platform to deliver a differentiated advantage for our clients’ success. For more than 40 years, the FactSet platform has delivered expansive data, sophisticated analytics, and flexible technology used by global financial professionals to power their critical investment workflows. As of August 31, 2022, we had more than 7,500 clients comprised of approximately 180,000 investment professionals, including asset managers, bankers, wealth managers, asset owners, channel partners, hedge funds, corporate users, private equity and venture capital professionals. Our on- and off-platform solutions span the investment lifecycle to include investment research, portfolio construction and analysis, trade execution, performance measurement, risk management and reporting. Our revenues are primarily derived from subscriptions to our multi-asset class data and solutions powered by our connected content ("content refinery"). Our products and services include workstations, portfolio analytics and enterprise solutions. We provide financial data and market intelligence on securities, companies, industries and people to enable our clients to research investment ideas, as well as to analyze, monitor and manage their portfolios. We combine dedicated client service with open and flexible technology offerings, including a configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions and application programming interfaces ("APIs"). Our CGS business supports security master files relied on by the investment industry for critical front, middle and back office functions. We drive our business based on our detailed understanding of our clients’ workflows, which helps us to solve their most complex challenges. We provide them with an open digital platform, connected and reliable data, next-generation workflow solutions and highly committed service specialists. We operate our business through three reportable segments ("segments"): the Americas, EMEA and Asia Pacific. Refer to Note 18, Segment Information , for further discussion. For each of our segments, we execute our strategy through three workflow solutions: Research & Advisory; Analytics & Trading; and Content & Technology Solutions ("CTS"). 55 Table of Contents 2. SIGNIFICANT ACCOUNTING POLICIES 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. The Company has evaluated subsequent events through the date that the financial statements were issued. Reclassification We reclassified a fiscal 2020 comparative figure related to the impairment of an investment in a company from Selling, general and administrative to Asset impairments in the Consolidated Statement of Income to conform to the current year's presentation. 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 revenues and expenses during the reporting period. Significant estimates may have been made in areas that include income taxes, stock-based compensation, goodwill and intangible assets, business combinations, long-live assets and 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. Revenue Recognition The majority of our revenues are derived from client access to our multi-asset solutions powered by our suite of connected content available over the contractual term (referred to as the "hosted platform"). The hosted platform is a subscription-based service that provides client access to various combinations of products and services including workstations, portfolio analytics, and enterprise solutions. We also provide subscription access to a database of universally recognized identifiers reflecting differentiating characteristics for issuers and their financial instruments (referred to as the "identifier platform"). We determined that the majority of each of our hosted platform and identifier platform services represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. The primary nature of the promise to the client is to provide daily access to each of these data and analytics platforms, with revenue recognized over-time as performance is satisfied on an output time-based measure of progress, as the client is simultaneously receiving and consuming the benefits of the platform. We record deferred revenues when cash payments are received or we have a contractual right to bill in advance. Stock-Based Compensation We measure compensation expense for all stock-based awards made to employees and members of our board of directors ("non-employees"), using the Black-Scholes model or the lattice-binomial option-pricing model ("binomial model") to calculate the grant-date fair value. Both models involve several assumptions, including the expected term of the awards, volatility of our common stock, risk-free interest rates and our dividend yield. We rely on the Black-Scholes model for our non-employee options, non-employee restricted stock units and common stock acquired under our employee stock purchase plan and the binomial model for our employee stock options, employee restricted stock units and employee performance share units. The binomial model incorporates market conditions, vesting restrictions and exercise patterns. For restricted stock units and performance share units, the grant date fair value 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. For stock-based awards with service conditions, we use the straight-line method to recognize compensation expense over the requisite service period. For stock-based awards that also include performance conditions, the graded vesting method is used to 56 Table of Contents determine compensation expense over the requisite service period if achievement of the performance condition is determined to be probable, which is reviewed on a quarterly basis. Compensation expense for all stock-based awards is recorded net of estimated forfeitures which are based on historical forfeiture rates and revised if actual forfeitures differ from those estimates. For our employee stock purchase plan, compensation expense is recognized on a straight-line basis over the offering period. Research and Product Development Costs We do not have a separate research and product development ("R&D") department, but rather these costs primarily consist of non-compensatory employee expenses, such as salaries and related benefits for our product development, software engineering and technical support departments and certain third parties, collaborating with our strategists, product and content managers, technologists, sales and other team members to develop new products and process innovations and enhance existing products. Our R&D costs are expensed as incurred and are primarily recorded in employee compensation costs (included in our Cost of services and SG&A expenses in the Consolidated Statements of Income). We incurred research and product development costs of $ 255.1 million, $ 250.1 million and $ 224.0 million during fiscal years 2022, 2021 and 2020, respectively. Income Taxes We account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which they are expected to be realized or settled. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the amount that is more likely than not to be realized. We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such posit ions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. 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) in the Consolidated Balance Sheets. We accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws, and classify this interest as income tax expense in the Consolidated Statements of Income. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments including demand deposits and money market funds available for withdrawal without restriction or with original maturities of 90 days or less. The carrying value of our cash and cash equivalents approximates fair value. Accounts Receivable Accounts receivable are recorded at the invoiced amount, net of an allowance for any pote ntial uncollectible amounts. Our accounts receivable includes unbilled receivables that are short-term in nature and expected to be billed and earned within one year. We evaluate our allowance to include expected credit losses and collectability trends based on a variety of factors, including our historical write-off activity, current economic environment, customer-specific information and expectations of future economic conditions. Our allowance is recorded to SG&A in the Consolidated Statements of Income and w e assess the adequacy of the allowance on a quarterly basis. Recoveries of accounts previously reserved are recognized as a reversal to SG&A when payment is received. We write-off account balances when we have exhausted our collection ef forts. 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. 57 Table of Contents We perform a qualitative review of the carrying amount of our property, equipment and leasehold improvements on a quarterly basis. 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. Goodwill Goodwill at the reporting unit level is tested 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 our operating segments. We may first elect to perform a qualitative analysis for the reporting units to determine whether it is more likely (a likelihood of more than 50 percent) than not the fair value of the reporting unit is less 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 carrying amount of a reporting unit with its fair value, by applying the income approach, utilizing the discounted cash flow method, along with other relevant market information. 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 2022 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. Intangible Assets Acquired Intangible Assets Our identifiable intangible assets are classified as an ABA business process, client relationships, software technology, developed technology, acquired databases, data content and trade names resulting from previous acquisitions. We amortize intangible assets over their estimated useful lives, which are evaluated annually 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 li fe. Amortizable intangible assets are tested for impairment qualitatively on a quarterly basis, based on undiscounted cash flows, and, if impaired, written down to fair value based on discounted cash flows. The intangible assets have no assigned residual values. Internally Developed Software Our developed technology intangible also includes capitalized internal and external costs incurred during the application development stage related to developing, modifying or obtaining software for internal-use. 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 disclosure above. Leases Our lease portfolio consists of operating leases primarily related to our office space. We determine if an arrangement qualifies as a lease at inception by evaluating if there is an identified asset and whether we obtain substantially all the economic benefits of and have the right to control th e use of an asset. For operating leases with a term greater than one year, we recognize operating lease assets and lease liabilities as the present value of future minimum lease payments (including fixed lease payments and certain qualifying index-based variable payments) over the reasonably certain lease term beginning at the 58 Table of Contents commencement date. Certain adjustments to our lease right-of-use ("ROU") assets may be required due to prepayments, lease incentives received and initial direct costs incurred. Operating leases are included in operating Lease right-of-use assets, net , Current lease liabilities and Long-term lease liabilities on our Consolidated Balance Sheets. Our leases generally do not have a readily determinable implicit rate, therefore we use our incremental borrowing rate ("IBR") at the lease commencement date in determining the present value of future payments and subsequently reassessed upon a modification to the lease arrangement. Our IBR is derived by selecting U.S. corporate yield curves observed for public companies that are reflective of our credit rating adjusted to approximate a secured rate of borrowing. We also consider revisions to the rate to reflect the geographic location where the leased asset is located. Certain of our lease agreements include options to extend and options to terminate the lease, which we do not include in our minimum lease terms unless management is reasonably certain to exercise. We account for the lease and non-lease components as a 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). Variable lease payments are not included in the calculation of the lease ROU asset and lease li ability and are recognized as occupancy costs and expensed as incurred. We review our lease assets for impairment when there is an indication that the asset may no longer be recoverable. The impairment assessment re quires significant judgments and estimates, including estimated subtenant rental income, discount rates and future cash flows based on our experience and knowledge of the market in which the property is located, previous efforts to dispose of similar assets and the assessment of existing market conditions. Impairments are recognized as a reduction to the carrying value of the Lease right-of-use assets, net with a corresponding increase to Asset impairments on our Consolidated Balance Sheets and Consolidated Statements of Income, respectively. Accrued Compensation Compensation costs primarily include costs related to salaries, incentive compensation and sales commissions, equity compensation costs, benefits, employment taxes, and any applicable restructuring costs. A significant portion of these costs are discretionary. We review our accrued compensation estimates on a quarterly basis to adjust our accruals, taking into account, among other thing, our financial results, how our overall performance tracks against management’s expectations, the individual employee's performance and historical performance. Derivative Instruments Foreign Currency Forward Contracts We conduct business outside the U.S. in several currencies. Our primary currency exposures include 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 in our operating expenses and reduce the volatility of earnings and cash flows associated with changes in foreign currency. In designing a specific hedging approach, we consider several factors, including offsetting exposures, significance of exposures, forecasting risk and potential effectiveness of the hedge. Interest Rate Swap Agreement We use interest rate swap agreements to hedge the variability of our cash flows resulting from floating interest rates on our debt. We pay interest at a fixed interest rate at specified intervals in exchange for receiving interest based on a floating interest rate that we are hedging per the contractual terms of our debt agreement, throughout the life of the interest rate swap agreement. Derivative Instrument Classification For derivative instruments that we designate at inception and that qualify as a cash flow hedge in accordance with applicable accounting guidance, 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 to the Consolidated Statements of Income within SG&A for the foreign currency forward contract and interest expense for the interest rate swap agreements, when the hedged exposure affects earnings. All derivatives are assessed for effectiveness at each reporting period and we do not have any derivatives not designated as hedging instruments. We do not enter into cash flow hedges for trading or speculative purposes. Treasury Stock We account for repurchased common stock at the market price on the trade date under the cost method, with the treasury shares included as a reduction of our Stockholders’ equity. Repurchased shares of our common stock are held as treasury shares until 59 Table of Contents they are reissued or retired. When treasury shares are reissued, if the issuance price is higher than the average price paid to acquire the shares ("the cost"), the excess of the issuance price over the cost is credited to additional paid-in capital ("APIC"). If the issuance is lower than the cost, the difference is first charged against any credit balance in APIC from treasury stock, with the remaining balance charged to Retained earnings. We account for the formal retirement of treasury shares by deducting its par value from common stock, reflecting any excess of over par value as a reduction to APIC (to the extent created by previous issuances of the shares) and then 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. Foreign Currency Translation and Remeasurement Certain wholly-owned subsidiaries operate under a functional currency different from the U.S. dollar, including our primary currency exposures of the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. The financial statements of our foreign subsidiaries that are local currency functional 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. The resulting translation gains and losses that arise from translating these assets, liabilities, revenue and expenses of our foreign operations are recorded in AOCL as a component of stockholders’ equity. For the financial statements of our foreign subsidiaries that are U.S. dollar functional, but maintain their books of record in their respective local currency, we remeasure our revenues and expenses into U.S. dollars at the average rates of exchange for the period, monetary assets and liabilities using period-end rates and non-monetary assets and liabilities at their historical rates. The resulting remeasurement gains and losses that arise from remeasuring these assets and liabilities of our foreign operations are recorded to SG&A in the Consolidated Statements of Income. Concentrations of Credit Risks 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, 2022 and 2021, the receivable reserve was $ 2.8 million and $ 6.4 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. 60 Table of Contents Concentrations of 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 each representing more than 10 % of our total data costs for the year ended August 31, 2022. Recently Adopted Accounting Pronouncements As of the beginning of fiscal 2022, we implemented all applicable new accounting standards and updates issued by the Financial Accounting Standards Board ("FASB") that were in effect. 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. We have adopted this standard effective September 1, 2021. The adoption of this standard did not have an impact on our Consolidated Financial Statements. Business Combinations In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) rather than adjust them to fair value at the acquisition date. We elected to early adopt this accounting standard in the second quarter of fiscal 2022, with retrospective application to business combinations that occurred in the current fiscal year. Results of operations for quarterly periods prior to September 1, 2021 remain unchanged as a result of the adoption of ASU No. 2021-08. The acquisitions of CGS and Cobalt Software, Inc. were accounted for in accordance with ASU 2021-08. Refer to Note 6 , Acquisitions for further information. The adoption of this standard did not have a material impact on our Consolidated Financial Statements. Accounting Pronouncements Not Yet Adopted 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 the London Interbank Offered Rate ("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. On March 1, 2022, we repaid in full and terminated the 2019 Credit Agreement, which bore interest based on the LIBOR rate. Concurrently, on March 1, 2022, we entered into the 2022 Credit Agreement, which bears interest based on rates other than LIBOR. As such, the adoption of this standard will not have an impact on our Consolidated Financial Statements. Refer to Note 12, Debt for definitions of these terms and more information on the 2019 Credit Agreement and 2022 Credit Agreement. Inflation Reduction Act of 2022 On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law. The IRA contains several revisions to the Internal Revenue Code effective in taxable years beginning after December 31, 2022, including a 15% corporate minimum income tax of certain large corporations and a 1% excise tax on corporate stock repurchases by publicly traded U.S. corporations. We are in the process of evaluating the impact of the IRA; however, we do not expect this law to have a material impact on our Consolidated Financial Statements. No other new accounting pronouncements issued or effective as of August 31, 2022 have had or are expected to have a material impact on our Consolidated Financial Statements. 61 Table of Contents 3. REVENUE RECOGNITION We derive most of our revenues by providing client access to our multi-asset solutions powered by our suite of connected content available over the contractual term (referred to as the "hosted platform"). The hosted platform is a subscription-based service that provides client access to various combinations of products and services including workstations, portfolio analytics, and enterprise solutions. We also provide subscription access to a database of universally recognized identifiers reflecting differentiating characteristics for issuers and their financial instruments (referred to as the "identifier platform"). We determined that the majority of each of our hosted platform and identifier platform services 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 primary nature of the promise to the client is to provide daily access to each of these data and analytics platforms. These platforms provide 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 revenues for these 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. Fulfillment costs are recognized as an asset, with the current portion recorded in the Prepaid expenses and other current assets and the non-current portion recorded in Other assets, based on the term of the license period. The fulfillment costs are amortized consistent with the associated revenues 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 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 Revenues We disaggregate revenues from contracts with clients by our 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 revenues and cash flows related to contracts with clients. Segment revenues reflect sales to our clients based on their respective geog raphic locations. Refer to Note 18, Segment Information , for further information. The following table presents this disaggregation by segment: August 31, (in thousands) 2022 2021 2020 Americas $ 1,173,946 $ 1,008,046 $ 943,649 EMEA $ 484,279 $ 427,700 $ 406,498 Asia Pacific $ 185,667 $ 155,699 $ 143,964 Total Revenue $ 1,843,892 $ 1,591,445 $ 1,494,111 4. 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 consider 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 62 Table of Contents 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 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. (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 as of August 31, 2022 and 2021. We did not have any transfers between levels of fair value measuremen ts during the periods presented. We held no Level 3 assets or liabilities measured at fair value on a recurring basis as of August 31, 2022 and 2021. (in thousands) Fair Value Measurements at August 31, 2022 Level 1 Level 2 Total Assets Corporate money market funds (1) $ 179,330 $ — $ 179,330 Mutual Funds (2) — 33,219 33,219 Derivative instruments (3) — 12,412 12,412 Total assets measured at fair value $ 179,330 $ 45,631 $ 224,961 Liabilities Derivative instruments (3) $ — $ 8,307 $ 8,307 Total liabilities measured at fair value $ — $ 8,307 $ 8,307 (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 (3) — 1,384 1,384 Total assets measured at fair value $ 232,519 $ 37,368 $ 269,887 Liabilities Derivative instruments (3) $ — $ 4,181 $ 4,181 Total liabilities measured at fair value $ — $ 4,181 $ 4,181 (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. 63 Table of Contents (3) Our derivative instruments include our foreign exchange forward contracts and interest rate swap agreements. 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 our interest rate swap agreements, 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 5 , 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 non-recurring basis relate primarily to our tangible fixed assets, lease ROU assets, goodwill and intangible assets. The fair values of these non-financial assets and liabilities are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparable information, and discounted cash flow projections. These non-financial assets are required to be assessed for impairment whenever events or circumstances indicate their carrying value may not be fully recoverable, and at least annually for goodwill. During the twelve months ended August 31, 2022, we incurred an impairment charge of $ 62.2 million related to our lease ROU assets and property, equipment and leasehold improvements associated with vacating certain leased office space. For those locations we anticipate subleasing, we estimated the fair value of the lease ROU assets as of the cease use date, using a market approach, based on expected future cash flows from sublease income. To complete this assessment we relied on certain assumptions, which included estimates of the rental rate, period of vacancy, incentives and annual rent increases. We fully impaired the lease ROU assets for locations we will not sublease and substantially all the property, equipment and leasehold improvements associated with the related vacated leased office space as there are no expected cash flows related to these items. Due to the subjective nature of the unobservable inputs used, the fair value measurement for the asset impairments are classified within Level 3 of the fair value hierarchy. (c) Assets and Liabilities Measured at Fair Value for Disclosure Purposes Only We elected not to carry our Long-term debt at fair value. The carrying value of our Long-term debt is net of related unamortized discount and debt issuance costs. The fair value of our Senior Notes is estimated based on quoted prices in active markets as of the reporting date, given that the Senior Notes are publicly traded, which are considered Level 1 inputs. The fair value of our 2022 Credit Facilities is estimated based on quoted market prices for similar instruments, adjusted for unobservable inputs to ensure comparability to our investment rating, maturity terms and principal outstanding, which are considered Level 3 inputs. The fair value of our 2019 Revolving Credit Facility approximated its carrying value as it bore interest at a floating interest rate, which is considered a Level 2 input. On March 1, 2022, we repaid in full and terminated the 2019 Credit Agreement. Refer to Note 12, Debt for definitions of these terms and more information on the Senior Notes, 2022 Credit Facilities, 2019 Revolving Credit Facility and 2019 Credit Agreement. The following table summarizes the outstanding principal amount, estimated fair value and related hierarchy level, unamortized discounts debt issuance costs and net carrying value of our debt as of August 31, 2022 and 2021. August 31, 2022 August 31, 2021 (in thousands) Fair Value Hierarchy Principal Amount Estimated Fair Value Principal Amount Estimated Fair Value 2027 Notes Level 1 $ 500,000 $ 470,525 $ — $ — 2032 Notes Level 1 500,000 438,205 — — 2022 Term Facility Level 3 750,000 750,975 — — 2022 Revolving Facility Level 3 250,000 249,075 — — 2019 Revolving Credit Facility Level 2 — — 575,000 575,000 Total principal amount $ 2,000,000 $ 1,908,780 $ 575,000 $ 575,000 Total unamortized discounts and debt issuance costs ( 17,576 ) ( 465 ) Total net carrying value of debt $ 1,982,424 $ 574,535 64 Table of Contents 5. 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. 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. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes. We limit counterparties to credit-worthy financial institutions. Refer to Note 2, Significant Accounting Policies – 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 foreign currency cash flow hedges during fiscal 2022 or fiscal 2021, 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, 2022, we maintained foreign currency forward contracts to hedge a portion of our exposures related to the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso. 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 2023 through the fourth quarter of fiscal 2023. The following table summarizes the gross notional value of foreign currency forward contracts to purchase British Pound Sterling, Euros, Indian Rupees and Philippine Pesos with U.S. dollars as of August 31, 2022 and 2021. August 31, 2022 August 31, 2021 (in thousands) Local Currency Amount Notional Contract Amount (USD) Local Currency Amount Notional Contract Amount (USD) British Pound Sterling £ 44,200 $ 55,567 £ 37,700 $ 51,754 Euro € 37,500 40,679 € 33,800 40,674 Indian Rupee Rs 2,667,928 33,600 Rs 2,585,198 33,800 Philippine Peso ₱ 1,462,060 27,000 ₱ 1,414,928 28,500 Total $ 156,846 $ 154,728 Refer to Foreign Currency Exchange Risk in Part II, Item 7A of this Annual Report on Form 10-K for further discussion of our exposure to foreign exchange rate fluctuations. Swap Agreement 2020 Swap Agreement On March 5, 2020, we entered into an interest rate swap agreement ("2020 Swap Agreement") with a notional amount of $ 287.5 million. The 2020 Swap Agreement hedged a portion of our then outstanding floating LIBOR rate debt with a fixed interest rate of 0.7995 % to mitigate our interest rate exposure. On March 1, 2022, we terminated the 2020 Swap Agreement, which resulted in a one-time benefit of $ 3.5 million recognized in Interest expense, net in the Consolidated Statements of Income during the third quarter of fiscal 2022, based on its fair market value. 2022 Swap Agreement On March 1, 2022, we entered into an interest rate swap agreement ("2022 Swap Agreement") with a notional amount of $ 800.0 million to hedge a portion of our outstanding floating Secured Overnight Financing Rate ("SOFR") rate debt with a fixed 65 Table of Contents interest rate of 1.162 %. The notional amount of the 2022 Swap Agreement declines by $ 100.0 million on a quarterly basis as of May 31, 2022 and is maturing on February 28, 2024. As of August 31, 2022, the notional amount of the 2022 Swap Agreement was $ 600.0 million. We have designated and accounted for the 2022 Swap Agreement as a cash flow hedge with the unrealized gains or losses recorded in AOCL, net of tax, in the Consolidated Balance Sheets. Realized gains or losses resulting from settlement are subsequently reclassified into Interest expense, net in the Consolidated Statements of Income. Since its inception on March 1, 2022 and through August 31, 2022, the interest rate swap was considered highly effective. Refer to Note 12, Debt , for further discussion of the 2022 Credit Facilities. Refer to Interest Rate Risk in Part II, Item 7A of this Annual Report on Form 10-K for further discussion of our exposure to interest rate risk on our long-term debt outstanding. Gross Notional Value and Fair Value of Derivative Instruments The following is a summary of the gross notional values of the derivative instruments: (in thousands) Gross Notional Value August 31, 2022 August 31, 2021 Foreign currency forward contracts $ 156,846 $ 154,728 Interest rate swap agreement 600,000 287,500 Total cash flow hedges $ 756,846 $ 442,228 The following is a summary of the fair values of the derivative instruments: Fair Value of Derivative Instruments (in thousands) Derivative Assets Derivative Liabilities Derivatives designated as hedging instruments Balance Sheet Classification August 31, 2022 August 31, 2021 Balance Sheet Classification August 31, 2022 August 31, 2021 Foreign currency forward contracts Prepaid expenses and other current assets $ — $ 1,384 Accounts payable and accrued expenses $ 8,307 $ 1,201 Interest rate swap agreement Prepaid expenses and other current assets 10,621 — Accounts payable and accrued expenses — 1,934 Other assets 1,791 — Other liabilities — 1,045 Total cash flow hedges $ 12,412 $ 1,384 $ 8,307 $ 4,181 All derivatives were designated as hedging instruments as of August 31, 2022 and 2021, 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, 2022, 2021 and 2020: (in thousands) Gain (Loss) Reclassified 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 2022 2021 2020 2022 2021 2020 Foreign currency forward contracts $ ( 16,356 ) $ 1,660 $ 5,049 SG&A $ ( 7,867 ) $ 5,027 $ ( 1,556 ) Interest rate swap agreement 17,245 745 ( 6,138 ) Interest expense, net 1,854 ( 1,956 ) ( 458 ) Total cash flow hedges $ 889 $ 2,405 $ ( 1,089 ) $ ( 6,013 ) $ 3,071 $ ( 2,014 ) 66 Table of Contents As of August 31, 2022, we estimate that net pre-tax derivative gains of $ 2.3 million included in AOCL will be reclassified into earnings within the next 12 months. As of August 31, 2022, our cash flow hedges were effective with no amount of ineffectiveness recorded in the Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. Offsetting of Derivative Instruments 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, 2022 and 2021, there were no material amounts recorded net on the Consolidated Balance Sheets. 6. ACQUISITIONS During fiscal 2022 and 2021, we completed acquisitions of several businesses, with the most significant cash flows related to the acquisitions of CUSIP Global Services ("CGS"), Cobalt Software, Inc. ("Cobalt") and Truvalue Labs, Inc. ("TVL"). CUSIP Global Services On March 1, 2022, we completed the acquisition of CGS, previously operated by S&P Global Inc. on behalf of the American Bankers Association ("ABA"), for a cash purchase price of $ 1.932 billion, inclusive of working capital adjustments. C GS manages a database of 60 different data elements uniquely identifying more than 50 million global financial instruments. It is the foundation for security master files relied on by critical front, middle and back office functions. CGS is the exclusive provider of Committee on Uniform Security Identification Procedures ("CUSIP") and CUSIP International Number System ("CINS") identifiers globally and also acts as the official numbering agency for International Securities Identification Number ("ISIN") identifiers in the United States and as a substitute number agency for more than 35 other countries. We believe that the CGS acquisition will significantly expand our critical role in the global capital markets. The CGS 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 CGS acquisition during the fourth quarter of fiscal 2022 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 1 $ 29,728 Amortizable intangible assets ABA business process 1,583,000 36 years Straight-line Client relationships 164,000 26 years Straight-line Acquired databases 46,000 15 years Straight-line Goodwill 214,970 Current liabilities 2 ( 104,691 ) Deferred revenues, long-term ( 1,481 ) Total purchase price $ 1,931,526 1. Includes an accounts receivable balance of $ 29.5 million. 2. Includes a deferred revenues balance of $ 99.4 million. The CGS acquisitio n was accounted for in accordance with our adoption of ASU No. 2021-08; as such, the deferred revenues did not include a fair value adjustment. Refer to Note 2, Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Item 8. of this Annual Report on Form 10-K for more information on ASU No. 2021-08. Goodwill totaling $ 215.0 million represents the excess of the CGS purchase price over the fair value of net assets acquired, representing future economic benefits that we expect to achieve as a result of the acquisition, and is included in the Americas segment. Goodwill generated from the CGS acquisition is deductible for income tax purposes. The majority of the net assets acquired relate to an ABA business process intangible which is a renewable license agreement with the ABA to manage the issuance, maintenance and access to the CUSIP numbering system and related database of CUSIP identifiers. This intangible asset's valuation and associated useful life considers the nature of the business relationship, multi-year term of the current 67 Table of Contents agreement and the likelihood of long-term renewals. The useful life assigned to the Client relationships intangible asset considers the strong historical client retention and client renewals as a basis for expected future retention. The useful life assigned to Acquired databases considers the historical period of data collection and the limited changes to the data on an annual basis. The results of CGS's operations have been included in our Consolidated Financial Statements, within the Americas, EMEA, and Asia Pacific segments, beginning with the closing of the acquisition on March 1, 2022. CGS functions as part of CTS. Pro forma information has not been presented because the effect of the CGS acquisition is not material to our Consolidated Financial Statements. Cobalt Software, Inc. On October 12, 2021, we acquired all of the outstanding shares of Cobalt for a purchase price of $ 50.0 million, net of cash acquired, and inclusive of working capital adjustments. Cobalt is a leading portfolio monitoring solutions provider for the private capital industry. This acquisition advances our strategy to scale our data and workflow solutions through targeted investments as part of our multi-year investment plan and expands our private markets offering. The Cobalt 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 Cobalt acquisition during the fourth quarter of fiscal 2022 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 $ 540 Amortizable intangible assets Software technology 7,750 5 years Straight-line Client relationships 4,800 11 years Straight-line Goodwill 41,338 Other assets 34 Current liabilities ( 4,437 ) Other liabilities ( 7 ) Total purchase price $ 50,018 Goodwill totaling $ 41.3 million represents the excess of the Cobalt purchase price over the fair value of net assets acquired and is included i n the Americas and EMEA segments. Goodwill generated from the Cobalt acquisition is not deductible for income tax purposes. The useful life assigned to the Client relationships intangible asset considers the historical client retention as a basis for expected future retention. The useful life assigned to Software technology considers our historical experience and anticipated technological changes. The results of Cobalt's operations have been included in our Consolidated Financial Statements, within the Americas and EMEA segments, beginning with its acquisition on October 12, 2021. Pro forma information has not been presented because the effect of the Cobalt acquisition is not material to our Consolidated Financial Statements. Truvalue Labs, Inc. On November 2, 2020, we acquired all of the outstanding shares of TVL for a purchase price of $ 41.9 million, net of cash acquired. 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. 68 Table of Contents 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 Trade names 2,800 15 years Straight-line Client relationships 900 12 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. 7. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Property, equipment and leasehold improvements consist of the following: (in thousands) August 31, 2022 2021 Leasehold improvements $ 184,425 $ 197,719 Computers and related equipment 104,514 136,213 Furniture and fixtures 58,143 58,212 Subtotal $ 347,082 $ 392,144 Less accumulated depreciation and amortization ( 266,239 ) ( 260,767 ) Property, equipment and leasehold improvements, net $ 80,843 $ 131,377 Depreciation expense was $ 24.3 million, $ 30.4 million and $ 32.2 million for fiscal years 2022, 2021 and 2020, respectively. During fiscal 2022, we incurred an impairment charge of $ 30.7 million for property, equipment and leasehold improvements related to vacating certain leased office space. Refer to Note 4, Fair Value Measures , for more information on the property, equipment and leasehold improvements assets impairment methodology. 69 Table of Contents 8. GOODWILL Changes in the carrying amount of goodwill by segment for fiscal years ended August 31, 2022 and 2021 are as follows: (in thousands) Americas EMEA Asia Pacific Total 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 Acquisitions 256,324 428 — 256,752 Foreign currency translations — ( 44,491 ) ( 618 ) ( 45,109 ) Balance at August 31, 2022 $ 686,412 $ 277,087 $ 2,349 $ 965,848 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, we write down our goodwill 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 2022 utilizing a qualitative analysis, consistent with the timing and methodology of previous years. We concluded it was more likely than not that the fair value of each of our segments was not less than its respective carrying value and no impairment charge was required. 9. INTANGIBLE ASSETS 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, 2022 August 31, 2021 (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 ABA business process 36 $ 1,583,000 $ 21,986 $ 1,561,014 $ — $ — $ — Client relationships 8 to 26 263,163 55,405 207,758 101,077 49,139 51,938 Software technology 5 to 9 122,363 96,567 25,796 121,556 87,207 34,349 Developed technology 3 to 5 80,956 33,676 47,280 57,666 21,278 36,388 Acquired databases 15 46,000 $ 1,533 44,467 — — — Data content 5 to 20 32,305 24,973 7,332 36,681 26,835 9,846 Trade names 15 6,693 4,431 2,262 6,900 4,435 2,465 Total $ 2,134,480 $ 238,571 $ 1,895,909 $ 323,880 $ 188,894 $ 134,986 The weighted average useful life of our intangible assets at August 31, 2022 was 32.8 years. As described in Note 6, Acquisitions , we acquired several intangible assets as part of the CGS acquisition. The weighted average useful life of our intangible assets excluding those acquired from CGS at August 31, 2022 was 9.6 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 not identified a material impairment, nor a material change to the estimated remaining useful lives of our intangible assets during fiscal years 2022 and 2021. The intangible assets have no assigned residual values. Amortization expense recorded for intangible assets was $ 62.4 million, $ 31.5 million, and $ 25.4 million during fiscal years 2022, 2021, and 2020, respectively. 70 Table of Contents As of August 31, 2022, estimated intangible asset amortization expense for each of the next five years and thereafter are as follows: Fiscal Year (in thousands) Estimated Amortization Expense 2023 $ 89,450 2024 80,238 2025 73,818 2026 65,685 2027 62,409 Thereafter 1,524,309 Total $ 1,895,909 10. 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 and Components for Income Taxes The provision for income taxes is as follows: (in thousands) Years ended August 31, 2022 2021 2020 U.S. operations $ 281,971 $ 311,767 $ 280,283 Non-U.S. operations 161,623 155,850 146,851 Income before income taxes $ 443,594 $ 467,617 $ 427,134 U.S. operations $ 18,107 $ 40,595 $ 31,926 Non-U.S. operations 28,570 27,432 22,270 Total provision for income taxes $ 46,677 $ 68,027 $ 54,196 Effective tax rate 10.5 % 14.5 % 12.7 % The components of the provision for income taxes consist of the following: (in thousands) Years ended August 31, 2022 2021 2020 Current U.S. federal $ 12,766 $ 26,734 $ 9,332 U.S. state and local 10,936 13,894 8,034 Non-U.S. 31,690 32,001 26,204 Total current taxes $ 55,392 $ 72,629 $ 43,570 Deferred U.S. federal $ ( 4,722 ) $ 1,031 $ 13,332 U.S. state and local ( 874 ) ( 1,064 ) 2,665 Non-U.S. ( 3,119 ) ( 4,569 ) ( 5,371 ) Total deferred taxes $ ( 8,715 ) $ ( 4,602 ) $ 10,626 Total provision for income taxes $ 46,677 $ 68,027 $ 54,196 71 Table of Contents The fiscal 2022 provision for income taxes decreased 31.4 % to $ 46.7 million, compared with $ 68.0 million in fiscal 2021. This decrease was primarily driven by lower pretax income and $ 11.7 million in higher tax benefits from the exercise of stock options for fiscal 2022, compared with the prior year period. Our effective tax rate is based on recurring factors and non-recurring events, including the taxation of foreign income. 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. Our effective tax rate is lower than the applicable U.S. corporate income tax rate for fiscal 2022 driven mainly by research and development ("R&D") tax credits, a foreign derived intangible income ("FDII") deduction and a tax benefit from the exercise of stock options. The following table presents a reconciliation between the U.S. corporate income tax rate and our effective tax rate: Years ended August 31, (expressed as a percentage of income before income taxes) 2022 2021 2020 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 1.8 2.1 3.1 Foreign income at other than U.S. rates ( 1.2 ) ( 1.0 ) ( 1.4 ) Foreign derived intangible income ("FDII") deduction ( 2.2 ) ( 1.9 ) ( 1.8 ) Income tax benefits from R&D tax credits ( 4.1 ) ( 3.9 ) ( 3.8 ) Stock-based payments ( 3.4 ) ( 2.2 ) ( 3.7 ) Other, net ( 1.4 ) 0.4 ( 0.7 ) Effective tax rate 10.5 % 14.5 % 12.7 % We are permanently reinvested in all foreign unremitted earnings, except in jurisdictions where earnings can be repatriated substantially free of tax. It is not practicable to determine the amount of unremitted earnings that are permanently reinvested and the taxes that would be payable if these amounts were repatriated to the U.S. 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, 2022 2021 Deferred tax assets: Lease Liabilities $ 45,842 $ 55,416 Stock-based compensation 30,382 22,847 Unrealized tax loss on investment 4,216 4,135 Other 19,943 11,199 Total deferred tax assets $ 100,383 $ 93,597 At August 31, 2022, we had pre-tax federal and state net operating loss carryforwards ("NOLs") of approximately $ 34.8 million and $ 13.8 million, respectively. The carryforwards may be used to offset future taxable income. The federal NOLs have an indefinite carryforward and the state NOLs have various expiration dates, beginning August 31, 2025. Utilization of the NOLs may be subject to an annual limitation due to the ownership limitations provided by the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions. Any annual limitation may result in the expiration of net operating losses before utilization. 72 Table of Contents The significant components of deferred tax liabilities recorded within the Consolidated Balance Sheets were as follows: (in thousands) At August 31, 2022 2021 Deferred tax liabilities: Depreciation on property, equipment and leasehold improvements $ 19,855 $ 17,133 Purchased intangible assets, including acquired technology 57,098 44,773 Lease right-of-use assets 27,540 43,904 Other 1,537 289 Total deferred tax liabilities $ 106,030 $ 106,099 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, recorded in Provision for income taxes in the Consolidated Statements of Income and Taxes Payable (non-current) within the Consolidated Balance Sheets. The following table summarizes the changes in the balance of gross unrecognized tax benefits: (in thousands) Unrecognized income tax benefits as of 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 as of August 31, 2020 (1) $ 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 as of August 31, 2021 (1) $ 14,870 Additions based on tax positions related to the current year 7,959 Release for tax positions of prior years ( 2,658 ) Unrecognized income tax benefits as of August 31, 2022 (1) $ 20,171 (1) The unrecognized income tax benefits include accrued interest of $ 1.4 million, $ 1.3 million and $ 0.9 million as of August 31, 2022, 2021 and 2020, respectively. 73 Table of Contents In the normal course of business, our tax filings are subject to audit by federal, state and foreign tax authorities. At August 31, 2022, 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 2019 through 2021 State (various) 2019 through 2021 Europe United Kingdom 2019 through 2021 France 2019 through 2021 Germany 2018 through 2021 11. LEASES Our lease portfolio is primarily related to our office space, under various operating lease agreements. 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 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 due to prepayments, lease incentives received and initial direct costs incurred. We account for the lease and non-lease components as a 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, 2022 , we recognized $ 159.5 million of Lease right-of-use assets, net and $ 237.8 million of combined Current lease liabilities and Long-term lease liabilities in the Consolidated Balance Sheet. Such leases have a remaining lease term ranging from less than one year to just over 13 years and did not include any renewal or termination options that were not yet reasonably certain to be exercised. The following table reconciles our future undiscounted cash flows related to our operating leases and the reconciliation to the combined Current lease liabilities and Long-term lease liabilities in the Consolidated Balance Sheets as of August 31, 2022: (in thousands) Minimum Lease Payments Fiscal Years Ended August 31, 2023 $ 38,696 2024 35,316 2025 33,245 2026 32,540 2027 31,716 Thereafter 114,016 Total $ 285,529 Less: Imputed Interest 47,722 Present Value $ 237,807 The components of lease cost related to the operating leases were as follows: Years ended August 31, (in millions) 2022 2021 Operating lease cost 1 $ 38.8 $ 42.8 Variable lease cost 2 $ 11.5 $ 14.6 1. Operating lease costs include 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 74 Table of Contents elected by us. 2. Variable lease costs were not included in the measurement of lease liabilities. These costs primarily include variable non-lease costs and leases that qualified for the short-term lease exception. Our variable non-lease costs include 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, 2022 2021 Weighted average remaining lease term (in years) 8.6 9.4 Weighted average discount rate (IBR) 4.4 % 4.3 % The following table summarizes supplemental cash flow information related to our operating leases: Years ended August 31, (in millions) 2022 2021 Cash paid for amounts included in the measurement of lease liabilities $ 43.0 $ 42.1 Lease ROU assets obtained in exchange for lease liabilities 1, 3 $ 9.3 $ 6.4 Reductions to ROU assets resulting from reductions to lease liabilities 2, 3 $ ( 17.5 ) $ ( 0.7 ) 1. Primarily includes new lease arrangements entered into during the period and contract modifications that extend our lease terms and/or provide additional rights. 2. Primarily includes modifications to our lease agreements based on contractual options or negotiations that allow for early termination that result in a reduction to our future minimum lease payments. 3. We reclassified prior year comparative figures from Lease ROU assets obtained in exchange for lease liabilities to Reductions to ROU assets resulting from reductions to lease liabilities to conform to the current year's presentation. During fiscal 2022, we incurred an impairment charge of $ 31.5 million related to our lease ROU assets associated with vacating certain leased office space. Refer to Note 4, Fair Value Measures , for more information on the lease ROU assets impairment methodology. 75 Table of Contents 12. DEBT We elected not to carry our Long-term debt at fair value. The carrying value of our debt is net of related unamortized discount and debt issuance costs. Our total debt obligations as of August 31, 2022 and August 31, 2021 consisted of the following: (in thousands) Issuance Date Contractual Maturity Date August 31, 2022 August 31, 2021 2019 Credit Agreement 2019 Revolving Credit Facility (terminated on March 1, 2022) 3/29/2019 3/29/2024 $ — $ 575,000 2022 Credit Agreement 2022 Term Facility 3/1/2022 3/1/2025 750,000 — 2022 Revolving Facility 3/1/2022 3/1/2027 250,000 — Senior Notes 2027 Notes 3/1/2022 3/1/2027 500,000 — 2032 Notes 3/1/2022 3/1/2032 500,000 — Total unamortized discounts and debt issuance costs ( 17,576 ) ( 465 ) Total Long-term debt $ 1,982,424 $ 574,535 As of August 31, 2022, annual maturities on our total debt obligations, based on contract maturity, were as follows: (in thousands) Maturities Fiscal Years Ended August 31, 2023 $ — 2024 — 2025 750,000 2026 — 2027 750,000 Thereafter 500,000 Total $ 2,000,000 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"), which provided a $ 750.0 million revolving credit facility (the "2019 Revolving Credit Facility"). We borrowed $ 575.0 million of the available $ 750.0 million provided by the 2019 Revolving Credit Facility. We were required to pay a commitment fee using a pricing grid based on the daily amount by which the available balance in the 2019 Revolving Credit Facility exceeded the borrowed amount. All outstanding loan amounts were reported as Long-term debt within the Consolidated Balance Sheets. Borrowings under the 2019 Revolving Credit Facility bore interest on the outstanding principal amount at a rate equal to the daily LIBOR plus a spread using a debt leverage pricing grid. Interest on the amounts outstanding under the 2019 Revolving Credit Facility was 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 were amortized into Interest expense, net in the Consolidated Statements of Income ratably over the term of the 2019 Credit Agreement. 76 Table of Contents The 2019 Credit Agreement contained covenants and requirements restricting certain of our activities, which were usual and customary for this type of loan. In addition, the 2019 Credit Agreement required 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 through the termination date of the 2019 Credit Agreement. On March 1, 2022, we terminated the 2019 Credit Agreement and amortized the remaining related $ 0.4 million of capitalized debt issuance costs into Interest expense, net in the Consolidated Statements of Income. 2022 Credit Agreement On March 1, 2022, we entered into a credit agreement (the "2022 Credit Agreement") which provides for a senior unsecured term loan credit facility in an aggregate principal amount of $ 1.0 billion (the “2022 Term Facility”) and a senior unsecured revolving credit facility in an aggregate principal amount of $ 500.0 million (the “2022 Revolving Facility” and, together with the 2022 Term Facility, the “2022 Credit Facilities”). The 2022 Term Facility matures on March 1, 2025, and the 2022 Revolving Facility matures on March 1, 2027. The 2022 Revolving Facility allows for the availability of up to $ 100.0 million in the form of letters of credit and up to $ 50.0 million in the form of swingline loans. We may seek additional commitments under the 2022 Revolving Facility from lenders or other financial institutions up to an aggregate principal amount of $ 750.0 million. On March 1, 2022, we borrowed $ 1.0 billion under the 2022 Term Facility and $ 250.0 million of the available $ 500.0 million under the 2022 Revolving Facility. We are required to pay a commitment fee on the daily unused amount of the 2022 Revolving Facility using a pricing grid which remained at 0.125 % through August 31, 2022. The commitment fee can fluctuate between 0.10 % and 0.25 % per annum based upon our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio. We used these borrowings, along with the net proceeds from the issuance of the Senior Notes (as defined below) and cash on hand, to finance the consideration for the CGS acquisition, to repay borrowings under the 2019 Credit Agreement and to pay related transaction fees, costs and expenses. During the third quarter of 2022, we incurred approximately $ 9.5 million in debt issuance costs related to the 2022 Credit Facilities. Debt issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of the related debt liability. Debt issuance costs are amortized to Interest expense, net in the Consolidated Statements of Income over the contractual term of the debt on a straight-line basis, which approximates the effective interest method. Loans under the 2022 Term Facility are subject to scheduled amortization payments on the last day of each fiscal quarter, commencing with August 31, 2022 and ending on the last such day to occur prior to the maturity date. Each amortization payment is equal to 1.25 % of the original principal amount of the 2022 Term Facility. Any remaining outstanding principal will be repaid in full on March 1, 2025, the maturity date of the 2022 Term Facility. The 2022 Credit Facilities are not otherwise subject to any mandatory prepayments. We may voluntarily prepay loans under the 2022 Credit Facilities at any time without premium or penalty. Prepayme nts of the 2022 Term Facility shall be applied to reduce the subsequent scheduled amortization payments in direct order of maturity. During fiscal 2022, we repaid $ 250.0 million under the 2022 Term Facility, inclusive of voluntary prepayments of $ 237.5 million. The 2022 Credit Agreement provides that loans denominated in U.S. dollars, at our option, will bear interest at either (i) the one-month Term SOFR (with a 0.1 % credit spread adjustment and subject to a " zero " floor), (ii) the Daily Simple SOFR (with a 0.1 % credit spread adjustment and subject to a " zero " floor) or (iii) an alternate base rate. Under the 2022 Credit Agreement, loans denominated in Pounds Sterling will bear interest at the Daily Simple Sterling Overnight Index Average ("SONIA") (subject to a " zero " floor) and loans denominated in Euros will bear interest at the Euro Interbank Offered Rate ("EURIBOR") (subject to a " zero " floor), in each case, plus an applicable interest rate margin. The interest rate margin will fluctuate based upon our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio. For fiscal 2022, the outstanding borrowings under the 2022 Credit Facilities bore interest at rates equal to the applicable one-month Term SOFR rate plus a 1.1 % spread (comprised of a 1.0 % interest rate margin based on a debt leverage pricing grid plus 0.1 % credit spread adjustment). The spread remained consistent through August 31, 2022. Interest on the 2022 Credit Facilities is currently payable on the last business day of each month, in arrears. The 2022 Credit Agreement contains usual and customary event of default provisions for facilities of this type, which are subject to usual and customary grace periods and materiality thresholds. If an event of default occurs under the 2022 Credit Agreement, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings immediately due and payable. 77 Table of Contents The 2022 Credit Agreement contains usual and customary affirmative and negative covenants for facilities of this type, including limitations on indebtedness of non-guarantor subsidiaries, liens, sale and leaseback transactions, mergers and certain other fundamental changes and change in nature of business. The 2022 Credit Agreement contains a financial covenant requiring maintenance of a total leverage ratio, permitting netting up to $ 350.0 million of unrestricted cash and cash equivalents, no greater than (a) 4.00 to 1.00 as of the last day of each fiscal quarter beginning with the fiscal quarter ending on May 31, 2022, (b) 3.75 to 1.00 as of the last day of each fiscal quarter beginning with the fiscal quarter ending on August 31, 2023 and (c) 3.50 to 1.00 as of the last day of each fiscal quarter beginning with the fiscal quarter ending on August 31, 2024, but if we consummate a material acquisition where the aggregate consideration payable is $ 200.0 million or more, we may, on no more than two occasions, increase the maximum total leverage ratio then applicable under the financial covenant by 0.50 to 1.00 with respect to the fiscal quarter in which such material acquisition is consummated and the subsequent four consecutive fiscal quarters. We were in compliance with all the covenants and requirements of the 2022 Credit Agreement during fiscal 2022. The 2022 Credit Agreement provides that, in the event that we no longer have a senior unsecured non-credit enhanced long-term debt rating or a corporate rating from at least two of the rating agencies where such rating is Baa3, BBB- or BBB-, respectively, or higher, (i) our wholly-owned domestic subsidiaries will be required to guarantee the 2022 Credit Facilities, subject to customary exceptions, (ii) we will be subject to limitations on additional indebtedness, investments, dispositions, restricted payments and burdensome agreements, and (iii) we will be required to maintain an interest coverage ratio of no less than 3.00 to 1.00 for any period of four consecutive fiscal quarters. We were in compliance with the required interest coverage ratio during fiscal 2022. Senior Notes On March 1, 2022 we completed a public offering of $ 500.0 million aggregate principal amount of 2.900 % Senior Notes due March 1, 2027 (the “2027 Notes”) and $ 500.0 million aggregate principal amount of 3.450 % Senior Notes due March 1, 2032 (the “2032 Notes” and, together with the 2027 Notes, the “Senior Notes”). The Senior Notes were issued pursuant to an indenture, dated as of March 1, 2022, by and between us and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), as supplemented by the supplemental indenture, dated as of March 1, 2022, between us and the Trustee (the "Supplemental Indenture"). The Senior Notes were issued at an aggregate discount of $ 2.8 million, and during the third quarter of 2022 we incurred approximately $ 9.1 million in debt issuance costs related to the Senior Notes. Debt discounts and debt issuance costs are presented in the Consolidated Balance Sheets as a net direct deduction from the carrying amount of the related debt liability. The debt discounts and debt issuance costs are amortized to Interest expense, net in the Consolidated Statements of Income over the contractual term of the debt, leveraging the effective interest method. The 2027 Notes and the 2032 Notes will mature on March 1, 2027 and March 1, 2032, respectively. Interest on the Senior Notes is payable semiannually in arrears on March 1 and September 1 of each year, beginning September 1, 2022. The Senior Notes are unsecured unsubordinated obligations, and will be effectively subordinated to any of our existing and future secured obligations, to the extent of the value of the assets securing such obligations. We may redeem the Senior Notes, in whole or in part, at any time at specified redemption prices, plus any accrued and unpaid interest. Upon the occurrence of a change of control triggering event (as defined in the Supplemental Indenture), we must offer to repurchase the Senior Notes at 101 % of their principal amount, plus any accrued and unpaid interest. Swap Agreements On March 5, 2020, we entered into the 2020 Swap Agreement to hedge a portion of our then outstanding floating LIBOR rate debt with a fixed interest rate of 0.7995 %. On March 1, 2022, we terminated the 2020 Swap Agreement and concurrently entered into the 2022 Swap Agreement to hedge a portion of our outstanding floating SOFR rate debt with a fixed interest rate of 1.162 %. Refer to Note 5, Derivative Instruments for further discussion of the 2020 Swap Agreement and 2022 Swap Agreement. Interest Expense On March 1, 2022, the 2019 Revolving Credit Facility and 2020 Swap Agreement were both terminated and concurrently replaced with the 2022 Credit Facilities, Senior Notes and 2022 Swap Agreement. For the twelve months ended August 31, 2022 and August 31, 2021, we recorded interest expense on our outstanding debt, including the related amortization of debt issuance costs and debt discounts, net of the effects of the interest rate swap agreement, of $ 35.2 million and $ 8.1 million, respectively in Interest expense, net in the Consolidated Statements of Income. 78 Table of Contents Including the related amortization of debt issuance costs and debt discounts, net of the effects of the related interest rate swap agreement, the year-to-date weighted average interest rate on amounts outstanding under our outstanding debt was 2.02 % and 1.38 % as of August 31, 2022 and August 31, 2021, respectively. Refer to Note 5, Derivative Instruments for further discussion of the 2020 Swap Agreement and 2022 Swap Agreement. 13. 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). We accrue non-income-tax liabilities for contingencies when we believe that a loss is probable, and the amount can be reasonably estimated. Judgment is required to determine both probability and the estimated amount of loss. If the reasonable estimate of a probable loss is a range, we record the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. We review accruals on a quarterly basis and adjust, as necessary, to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other current information. Contingent gains are recognized only when realized. Uncertain income tax positions are accounted for in accordance with applicable accounting guidance, refer to Note 10, Income Taxes for further details. Purchase Commitments with Suppliers and Vendors Purchase obligations represent our legally-binding agreements to purchase fixed or minimum quantities at determinable prices. As of August 31, 2022 and 2021, we had total purchase obligations with suppliers of $ 373.9 million and $ 191.9 million, respectively. Our total purchase obligations at the end of both fiscal years primarily related to hosting services and data content. Hosting services support our technology investments related to our migration to cloud-based hosting services, the majority of which rely on third-party hosting providers. Data content is an integral component of the value we provide to our clients. Additional commitments relate primarily to third-party software providers. We also have contractual obligations related to our lease liabilities and outstanding debt. Refer to Note 11, Leases and Note 12, Debt for information regarding lease commitments and outstanding debt obligations, respectively. Capital Commitments As of August 31, 2022 and 2021, we had outstanding capital commitments related to an investment of $ 1.1 million and $ 2.3 million, respectively. 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, 2022 we had approximately $ 0.5 million, compared to $ 2.8 million as of August 31, 2021, of standby letters of credit outstanding. No liabilities related to these arrangements are reflected in the Company's Consolidated Balance Sheets. Contingencies Income Taxes 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 are engaged in various legal proceedings, claims and litigation that have arisen in the ordinary course of business. 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, 2022, 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. 79 Table of Contents 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. As of August 31, 2022 , we have concluded that a payment to the Commonwealth is probable. We recorded an accrual which is not material to our consolidated financial statements. While we believe that the assumptions and estimates used to determine the accrual are reasonable, future developments could result in adjustments being made to this accrual. If we are presented with a formal assessment for any of these matters, we believe that we will ultimately prevail; 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 to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification obligations is immaterial. 14. STOCKHOLDERS’ EQUITY Shares of common stock outstanding were as follows: (in thousands) Years ended August 31, 2022 2021 2020 Balance, beginning of year at September 1, 2021, 2020 and 2019, respectively 37,615 38,030 38,118 Common stock issued for employee stock plans 490 395 663 Repurchase of common stock from employees (1) ( 14 ) ( 13 ) ( 12 ) Repurchase of common stock under the share repurchase program ( 46 ) ( 797 ) ( 739 ) Balance, end of year at August 31, 2022, 2021, and 2020 respectively 38,045 37,615 38,030 (1) For fiscal years 2022, 2021 and 2020 , we repurchased 14,489 , 12,932 and 11,945 shares, or $ 6.2 million, $ 4.3 million and $ 3.5 million, of common stock, respectively, primarily to satisfy tax withholding obligations due upon the vesting of stock-based awards. Share Repurchase Program As of August 31, 2022, a total of $ 181.3 million remained authorized for future share repurchases under our share repurchase program. There is no defined number of shares to be repurchased over a specified timeframe through the life of the program. 80 Table of Contents We may repurchase shares of our common stock under the program from time-to-time in the open market and privately negotiated transactions, subject to market conditions. For the year ended August 31, 2022, we repurchased 46,200 shares for $ 18.6 million compared with 797,385 shares for $ 264.7 million for the year ended August 31, 2021. Beginning in the second quarter of fiscal 2022, we suspended our share repurchase program until at least the second half of fiscal 2023, with the exception of potential minor repurchases to offset dilution from grants of equity awards or repurchases to satisfy withholding tax obligations due upon the vesting of stock-based awards. The suspension of our share repurchase program allows us to prioritize the repayment of debt under the 2022 Credit Facilities. Refer to Note 12, Debt for more information on the 2022 Credit Facilities. 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, 2022, 39,499 shares of previously granted restricted stock vested and were included in common stock outstanding as of August 31, 2022 (recorded net of 14,489 shares repurchased from employees at a cost of $ 6.2 million to cover their cost of taxes upon vesting of the restricted stock). 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). Dividends Our Board of Directors declared dividends for the full years ended August 31, 2022 and August 31, 2021 as follows: Year Ended Dividends per Share of Common Stock Record Date Total amount (in thousands) Payment Date Fiscal 2022 First Quarter $ 0.82 November 30, 2021 $ 30,973 December 16, 2021 Second Quarter $ 0.82 February 28, 2022 31,065 March 17, 2022 Third Quarter $ 0.89 May 31, 2022 33,795 June 16, 2022 Fourth Quarter $ 0.89 August 31, 2022 33,860 September 15, 2022 Total Dividends $ 129,693 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 Total Dividends $ 120,224 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 April 28, 2022, our Board of Directors approved a 8.5 % increase in the regular quarterly dividend from $ 0.82 to $ 0.89 per share. Accumulated Other Comprehensive Loss The components of AOCL are as follows: (in thousands) August 31, 2022 August 31, 2021 Accumulated unrealized losses on cash flow hedges, net of tax $ 3,149 $ ( 2,095 ) Accumulated foreign currency translation adjustments ( 111,532 ) ( 36,867 ) Total AOCL $ ( 108,383 ) $ ( 38,962 ) 81 Table of Contents 15. 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 cumulative weighted average common shares that are outstanding or are issuable upon the exercise of outstanding stock-based compensation awards during the period. Performance-based awards stock-based compensation awards that are out-of-the-money are omitted from the calculation of diluted EPS until the reporting period in which the performance criteria has been met. A reconciliation of the weighted average shares outstanding used in the basic and diluted earnings per share ("EPS") computation is as follows. Twelve Months Ended August 31, (in thousands, except per share data) 2022 2021 2020 Numerator Net income used for calculating basic and diluted income per share $ 396,917 $ 399,590 $ 372,938 Denominator Weighted average common shares used in the calculation of basic income per share 37,864 37,856 37,936 Common stock equivalents associated with stock-based compensation plan 872 714 710 Shares used in the calculation of diluted income per share 38,736 38,570 38,646 Basic income per share $ 10.48 $ 10.56 $ 9.83 Diluted income per share $ 10.25 $ 10.36 $ 9.65 Dilutive potential common shares consist of stock options and unvested performance-based awards. As of August 31, 2022 and August 31, 2021, there were 329,189 and 1,750 stock options excluded from the calculation of diluted EPS, respectively, as they were out-of-the-money and 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, 2022 and August 31, 2021, there were 60,725 and 68,990 performance-based awards excluded from the calculation of diluted EPS, respectively. 16. STOCK-BASED COMPENSATION We measure compensation expense for all stock-based awards made to our employees and board of directors ("non-employees") using the Black-Scholes model or the lattice-binomial option-pricing model ("binomial model") to estimate the grant-date fair value. We utilize the Black-Scholes model for new non-employee director stock option grants, non-employee restricted stock units ("RSUs") and common stock acquired under our employee stock purchase plan ("ESPP"), and the binomial model for new employee stock option grants, employee RSUs and employee performance share units ("PSUs"). Both models involve certain estimates and assumptions such as: • Risk-free interest rate - based on the U.S. Treasury yield curve in effect at the time of grant with maturities equal to the expected terms of the stock-based awards granted. • Expected life - the weighted average period the stock-based awards are expected to remain outstanding. • Expected volatility - based on a blend of historical volatility of the stock-based award's useful life and the weighted average implied volatility for call option contracts traded in the 90 days preceding the stock-based award's valuation date. • Dividend yield - the expectation of dividend payouts based on our history. Additionally, the binomial model incorporates market conditions, vesting restrictions and exercise patterns. 82 Table of Contents For stock-based awards with service conditions, we use the straight-line method to recognize compensation expense over the requisite service period. For stock-based awards that also include performance conditions, the graded vesting method is used to determine compensation expense over the requisite service period if achievement of the performance condition is determined to be probable, which is reviewed on a quarterly basis. Compensation expense for all stock-based awards is recorded net of estimated forfeitures which are based on historical forfeiture rates and revised if actual forfeitures differ from those estimates. For RSUs and PSUs, the grant date fair value 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. We recognized total stock-based compensation expense of $ 56.0 million, $ 45.1 million and $ 36.6 million in fiscal 2022, 2021 and 2020, respectively. As of August 31, 2022, $ 109.3 million of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a weighted average period of 3.0 years. There was no stock-based compensation capitalized as of August 31, 2022 and 2021, respectively. Stock Option Awards A summary of stock option activity is as follows: Number Outstanding (thousands) Weighted Average Exercise Price Per Share Weighted Average Grant Date Fair Value Aggregate Intrinsic Value (millions) (1) Weighted Average Remaining Contractual Life (years) Outstanding as of August 31, 2019 2,524 $ 168.50 Granted – employees 424 $ 256.43 $ 60.33 Granted – non-employee directors 16 $ 271.51 $ 54.74 Exercised (2) ( 588 ) $ 145.54 Forfeited ( 122 ) $ 218.36 Outstanding as of August 31, 2020 2,254 $ 189.32 Granted – employees 418 $ 317.17 $ 78.31 Granted – non-employee directors 12 $ 318.20 $ 82.01 Exercised (2) ( 322 ) $ 166.36 Forfeited ( 85 ) $ 237.23 Outstanding as of August 31, 2021 2,277 $ 214.89 Granted – employees 348 $ 433.09 $ 103.49 Granted – non-employee directors 6 $ 428.71 $ 109.11 Exercised (2) ( 414 ) $ 178.57 Forfeited ( 128 ) $ 301.05 Outstanding as of August 31, 2022 2,089 (3) $ 253.85 $ 194.4 6.2 Options vested and exercisable as of August 31, 2022 1,035 $ 189.12 $ 252.8 4.7 Options expected to vest as of August 31, 2022 974 $ 314.18 $ 116.4 7.6 (1) The aggregate intrinsic value represents the difference between our closing stock price as of August 31, 2022 of $ 433.34 and the exercise price, multiplied by the number of options exercisable as of that date. (2) The total pre-tax intrinsic value of stock options exercised during fiscal 2022, 2021 and 2020 was $ 104.1 million, $ 54.3 million and $ 85.0 millio n, respectively . (3) As of August 31, 2022, a total of 2,089,231 shares underlying the stock option awards were unvested and outstanding, which results in unamortized stock-based compensation of $ 60.1 million to be recognized as stock-based compensation expense over the remaining vesting period of 3.2 years. 83 Table of Contents Employee Stock Option Awards During the twelve months ended August 31, 2022, the majority of the 348,458 employee stock options granted under the FactSet Research Systems Inc. Stock Option and Award Plan as Amended and Restated (the "LTIP") were related to the annual employee grant on November 1, 2021. The November 1, 2021 grant vests ratably over five years on the anniversary date of the grant with the majority of the remaining employee stock options granted during fiscal 2022 vesting ratably over four years . All employee stock options granted during fiscal 2022 expire ten years from the date the options were granted. The following table includes the weighted average inputs to the binomial model to estimate the grant-date fair value of the employee stock options granted. 2022 2021 2020 Term structure of risk-free interest rate 0.07 % — 2.99 % 0.04 % — 1.67 % 0.10 % — 1.79 % Expected life (years) 6.9 7.1 7.2 Term structure of volatility 24 % — 25 % 26 % — 27 % 25 % — 25 % Dividend yield 0.86 % 0.12 % 1.09 % Non-Employee Directors' Stock Option Awards On January 18, 2022, we granted 6,329 stock options under t he FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan as Amended and Restated (the “Director Plan”) which provides for the grant of stock-based awards, including stock options, to non-employee directors of FactSet. The expiration date of the Director Plan is December 19, 2027. The January 18, 2022 grant vests 100 % after three years on the anniversary date of the grant and expires seven years from the date the options were granted. Restricted Stock Awards A summary of Restricted 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, 2019 124 $ 205.47 Granted - employee Restricted Stock Awards (1) (2) 74 $ 252.17 Vested - employee RSUs ( 33 ) $ 197.37 Forfeit ed (1) ( 19 ) $ 198.53 Balance at August 31, 2020 146 $ 231.55 Granted - employee Restricted Stock Awards (1) (2) 99 $ 312.86 Vested - employee Restricted Stock Awards ( 35 ) $ 208.67 Forfei ted (1) ( 13 ) $ 267.23 Balance at August 31, 2021 197 $ 274.10 Granted - employee Restricted Stock Awards (1) (2) 103 $ 418.16 Granted – non-employee dire ctors RSUs (1) 2 $ 425.29 Vested - Restricted Stock Awards ( 40 ) $ 242.87 Forfeited (1) ( 29 ) $ 323.16 Balance at August 31, 2022 233 (3) $ 338.87 (1) Each Restricted Stock Award granted or canceled/forfeited is equivalent to 2.5 shares under the LTIP. (2) During the fiscal year ended August 31, 2022 we granted 71,978 RSUs and 30,704 PSUs. 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. (3) As of August 31, 2022, a total of 233,408 shares underlying the restricted stock awards were unvested and outstanding, which results in unamortized stock-based compensation of $ 49.2 million to be recognized as stock-based compensation expense over the remaining vesting period of 2.8 years. 84 Table of Contents Employee Restricted Stock Awards Our LTIP provides for the grant of stock-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. During the twelve months ended August 31, 2022, we granted 102,682 R estricted Stock Awards of which 71,978 were RSUs and 30,704 were PSUs. The majority of the Restricted Stock Awards granted are related to the annual employee grant on November 1, 2021. From this grant, the RSUs vest ratably over five years on the anniversary of the grant date with the majority of the r emaining RSUs granted during fiscal 2022 vesting ratably over three years on the anniversary of the grant date. All PSUs granted in fiscal 2022, including those under the November 1, 2021 grant, cliff vest on the third anniversary of the grant date, subject to the achievement of certain performance metrics. Non-Employee Directors' Restricted Stock Units The Director Plan provides for the grant of stock-based awards, including RSUs, to non-employee directors of FactSet. On January 18, 2022, we granted 1,629 RSUs to our non-employee directors that vest 100 % on the first anniversary of the grant date. There were no non-employee director RSU grants in fiscal 2021 and 2020. 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. Shares purchased through the ESPP cannot be sold or otherwise transferred for 18 months after purchase. 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 2022, employees purchased 36,244 shares at a weighted average price of $ 332.30 compared with 38,848 shares at a weighted average price of $ 273.59 in fiscal 2021 and 42,606 shares at a weighted average price of $ 234.41 in fiscal 2020. Stock-based compensation expense recorded during fiscal 2022, 2021 and 2020 relating to the ESPP was $ 2.3 million, $ 2.0 million and $ 2.1 million, respectively. At August 31, 2022, the ESPP had 102,712 shares reserved for future issuance. The weighted average estimated fair value of the ESPP shares during fiscal years 2022, 2021 and 2020, was $ 66.35 , $ 54.00 and $ 50.69 per share. 85 Table of Contents Stock-based Awards Available for Grant A summary of stock-based awards available for grant is as follows: (in thousands) Stock-based Awards Available for Grant under the Employee Stock Option Plan Stock-based Awards Available for Grant under the Non-Employee Stock Option Plan Balance at August 31, 2019 6,067 264 Granted - stock option awards ( 424 ) ( 16 ) Granted - RSUs (1) ( 93 ) — Granted - PSUs (1) ( 91 ) — Forfeited - stock-based awards (2) 167 2 Balance at August 31, 2020 5,626 250 Granted - stock option awards ( 418 ) ( 12 ) Granted - RSUs (1) ( 157 ) — Granted - PSUs (1) ( 91 ) — Forfeited - stock-based awards (2) 120 — Balance at August 31, 2021 5,080 238 Granted - stock option awards ( 348 ) ( 6 ) Granted - RSUs (1) ( 180 ) ( 4 ) Granted - PSUs (1) ( 77 ) — Forfeited - stock-based awards (2) 194 4 Balance at August 31, 2022 4,669 232 (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 stock-based awards balance. 17. 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 $ 12.0 million, $ 11.6 million, and $ 11.3 million in matching contributions to employee 401(k) accounts during fiscal 2022, 2021 and 2020, respectively. 18. 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. Our Chief Executive Officer functions as our CODM. Our operating segments are consistent with our reportable segments and 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. 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 revenues reflect sales to our clients based on their respective geographic locations. 86 Table of Contents 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 revenues. The following tables reflect the results of operations of our segments: (in thousands) Year Ended August 31, 2022 Americas EMEA Asia Pacific Total Revenue $ 1,173,946 $ 484,279 $ 185,667 $ 1,843,892 Operating income (1)(2) $ 159,140 $ 196,231 $ 120,111 $ 475,482 Depreciation and amortization (2) $ 64,916 $ 11,794 $ 9,973 $ 86,683 Stock-based compensation $ 45,319 $ 8,271 $ 2,413 $ 56,003 Capital expenditures $ 44,114 $ 1,427 $ 5,615 $ 51,156 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 (1) Includes impairment charges of $ 64.3 million, of which $ 62.2 million ($ 57.7 million in the Americas, $ 4.2 million in EMEA and $ 0.3 million in Asia Pacific) related to lease ROU assets and property, equipment and leasehold improvements impairment charges associated with va cating certain leased office space. (2) The Americas includes CGS intangible asset amortization of $ 26.8 million during fiscal 2022. Segment Total Assets The following table reflects the total assets for our segments: As of August 31, (in thousands) 2022 2021 Segment Assets Americas $ 3,191,313 $ 1,144,693 EMEA 580,450 842,652 Asia Pacific 242,542 237,595 Total assets $ 4,014,305 $ 2,224,940 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, 2022 2021 2020 Revenues United States $ 1,106,602 $ 952,423 $ 898,609 United Kingdom 215,369 190,044 179,966 Other European Countries 268,910 237,656 226,532 All Other Countries 253,011 211,322 189,004 Total revenue $ 1,843,892 $ 1,591,445 $ 1,494,111 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, 2022 2021 Long-lived Assets United States $ 111,301 $ 179,864 Philippines 63,879 80,320 India 29,440 36,902 United Kingdom 12,637 30,976 All Other Countries 23,044 42,379 Total long-lived assets $ 240,301 $ 370,441 88 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.