What changed in this filing

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Item 1A. Risk Factors

2023-10-27 compared with 2022-10-21 · 68 added, 104 removed, 264 unchanged (39% of the section changed)

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We rely on, and continuously invest in, a complex system of internal processes and controls, along with policies, procedures and training, designed to protect data that we receive in the ordinary course of business, including information from client portfolios and strategies.

However, these measures do not guarantee security, and improper access to or release of confidential information may still occur through, for example, employee error or malfeasance, system error, other inadvertent release, failure to properly purge and protect data, or cyberattack.

Additionally, the maintenance and enhancement of our systems may not be completely effective in preventing loss, unauthorized access or misappropriation.

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Breaches of security measures could expose us, our clients or the individuals affected to a risk of loss or misuse of this information, potentially resulting in litigation and liability for us, as well as the loss of existing or potential clients and suppliers.

Many jurisdictions in which we operate have laws and regulations relating to data privacy and protection of personal information, including, for example, the European Union General Data Protection Regulation, which became effective May 25, 2018, the laws of multiple U.S.

states such as California's Consumer Privacy Act, which became effective January 1, 2020, and China's Personal Information Protection Law, which became effective November 1, 2021.

Many jurisdictions in which we operate have laws and regulations relating to data privacy and protection of personal information, including, for example, the European Union's General Data Protection Regulation, an increasing number of U.S.

state laws, such as California's Consumer Privacy Act and Connecticut's Personal Data Privacy and Online Monitoring Act, China's Personal Information Protection Law, and India's Digital Personal Data Protection Act.

These laws contain requirements regarding the handling of personal and sensitive data, including our use, protection and the ability of persons whose data is stored to correct or delete such data about themselves.

The law in this area continues to develop and the changing nature of privacy laws could impact our processing of personal and sensitive information related to our content, operations, employees, clients, and suppliers, and may expose us to claims of violations.

Successful prohibited data access and other cyber-attacks and the failure of cyber-security systems and procedures

The law in this area continues to develop and the changing nature of these laws could impact our processing and cross-border transfer of personal and sensitive information related to our content, operations, employees, clients, suppliers and others, and may expose us to claims of violations.

Successful access to prohibited data and other cyber-attacks and the failure of cyber-security systems and procedures

In providing our digital-enabled services to clients, we rely on information technology infrastructure that is managed internally along with placing reliance on third-party service providers for critical functions.

We and these third-party service providers are subject to the risks of system failures and security breaches, including cyber-attacks (including those sponsored by nation-states, terrorist organizations, or global corporations seeking to illicitly obtain technology or other intellectual property), such as phishing scams, hacking, viruses, denials of service attacks, tampering, intrusions, physical break-ins, ransomware and malware as well as employee errors or malfeasance.

We and these third-party service providers are subject to the risks of system failures and security breaches, including cyber-attacks (such as those sponsored by nation-states, terrorist organizations, or global corporations seeking to illicitly obtain technology or other intellectual property and those accomplished by phishing scams, hacking, viruses, denials of service attacks, tampering, intrusions, physical break-ins, ransomware and malware), as well as employee errors or malfeasance.

In some cases, these risks might be heightened when employees are working remotely.

Our and our vendors' use of mobile and cloud technologies may increase our risk for such threats.

Our protective

systems and procedures and those of third parties to which we are connected, such as cloud computing providers, may not be effective against these threats.

Our protective systems and procedures and those of third parties to which we are connected, such as cloud computing providers, may not be effective against these threats.

Our information technology systems must be constantly updated and patched to protect against known vulnerabilities and to optimize performance.

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In addition, to access our network, products and services, customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own security risk.

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We could suffer significant damage to our brand and reputation:

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While significant effort is placed on addressing information technology security issues with respect to the acquired companies, we may inherit such risks when these acquisitions are integrated into our infrastructure.

While we maintain insurance coverage that is intended to address certain aspects of cybersecurity and data protection risks, such coverage may not include, or may not be sufficient to cover, all or the majority of the costs, losses or types of claims.

A prolonged or recurring outage at our data centers and other business continuity disruptions at facilities could result in reduced service and the loss of clients

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Additionally, our systems and networks may become strained due to aging or end-of-life technology that we have not yet updated or replaced.

Our computer operations, as well as our other business centers, and those of our suppliers and clients, are vulnerable to interruption by fire, natural disaster, power loss, telecommunications failures, terrorist attacks, acts of war, civil unrest, internet failures, computer viruses, security breaches, and other events beyond our reasonable control.

Our computer operations, as well as our other business centers, and those of our suppliers and clients, may be vulnerable to interruption by fire, natural disaster, extreme weather or climate conditions, power loss, telecommunications failures, terrorist attacks, acts of war or civil unrest, internet failures, computer viruses or security breaches, employee or systems errors, and other events beyond our reasonable control.

In addition, in the remote work environments, the daily activities and productivity of our workforce is now more closely tied to key vendors, such as video conferencing services, consistently delivering their services without material disruption.

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We also currently use multiple providers of cloud services;

however, one supplier provided the majority of our cloud computing support for the twelve months ended August 31, 2022.

however, one supplier provided the majority of our cloud computing support for fiscal 2023.

While we believe this provider to be reliable, we have limited control over its performance, and a disruption or loss of service from this provider could impair our system's operation and our ability to operate for a period of time.

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To remain competitive, we must adapt and migrate to new technologies, applications and processes.

Use of more advanced technologies and infrastructure is critical to the development of our products

and services, the scaling of our business for future growth, and the accurate maintenance of our data and operations.

Use of more advanced technologies and infrastructure is critical to the development of our products and services, the scaling of our business for future growth, and the accurate maintenance of our data and operations.

The implementation of new technologies and infrastructure, such as migration to new cloud-based systems, is complex and can involve substantial expenditures as well as risks inherent in the conversion to any new system, including potential loss of information and disruption to operations.

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We also may incur increased operating expenses to recover data, repair or remediate systems, equipment or facilities, and to protect ourselves from such disruptions.

As we increase our reliance on third-party systems, our exposure to damages from services disruptions may increase, and we may incur additional costs to remedy damages caused by these disruptions.

As we increase our reliance on third-party

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systems, our exposure to damages from services disruptions may increase, and we may incur additional costs to remedy damages caused by these disruptions.

Use of open source software could introduce security vulnerabilities, impose unanticipated restrictions on our ability to commercialize our products and services, and subject us to increased costs

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Any remedial actions could divert resources away from our development efforts, be time intensive and have a significant cost.

Our use of artificial intelligence technologies may not be successful and may present business, compliance, and reputational risks

We use, and will expand our use of, machine learning and artificial intelligence ("AI") technologies in some of our products and processes.

If we fail to keep pace with rapidly evolving AI technological developments, our competitive position and business results may be negatively impacted.

Our use of AI technologies will require resources to develop, test and maintain such products, which could be costly.

Third parties may be able to use AI to create technology that could reduce demand for our products.

In addition, the introduction of AI technologies, particularly generative AI, into new or existing offerings may result in new or expanded risks and liabilities, due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, data privacy or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.

For example, use of AI technologies could lead to unintended consequences, such as accuracy issues, cybersecurity risks, unintended biases, and discriminatory outputs, could impact our ability to protect our data, intellectual property, and client information, or could expose us to intellectual property claims by third parties.

Strategy & Market Demand Risks

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A continued shift to passive investing, resulting in an increased outflow to passively managed index funds, could reduce demand for the services of active investment managers and consequently, the demand of our clients for our services.

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A decline in equity and/or fixed income returns may impact the buying power of investment management clients

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Uncertainty or downturns in the global economy and consolidation in the financial services industry may cause us to lose clients and users

Many of our clients are investment banks, asset managers, wealth advisors, and other financial services entities.

Many of our clients are asset and wealth managers, investment and commercial bankers, hedge funds, private equity and venture capital professionals, and other financial services entities.

Uncertainty or downturns in the global economy or a lack of confidence in the global financial system could negatively impact our clients, which could cause a corresponding negative impact on our business results.

Mergers, consolidation or contraction of our clients in the financial services industry also could directly impact the number of clients and prospective clients and users of our products and services.

Mergers, consolidation or contraction of our clients in the financial services industry also could directly impact the number of clients, prospective clients and users of our products and services.

If our clients merge with or are acquired by other entities that are not our clients, or that use fewer of our products and services, they may discontinue or reduce their use of our products and services.

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Defects, errors, or delays in our products that are significant, or are perceived to be significant, could result in rejection or delay in market acceptance, damage to our reputation, loss of revenues, lower rate of license renewals or upgrades, diversion of development resources, product liability claims or regulatory actions, or increases in service and support costs.

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We have provisions in our client contracts to limit our exposure to potential liability claims brought by clients based on the use of our products or services or our delay or failure to provide services.

Contracts with customers also increasingly include service level requirements and audit rights to review our security.

Many of our customers in the financial services sector are

also subject to regulations and requirements to adopt risk management processes commensurate with the level of risk and complexity of their third-party relationships, and provide rigorous oversight of relationships that involve certain "critical activities," some of which may be deemed to be provided by us.

Many of our customers in the financial services sector are also subject to regulations and requirements to adopt risk management processes commensurate with the level of risk and complexity of their third-party relationships, and provide rigorous oversight of relationships that involve certain "critical activities," some of which may be deemed to be provided by us.

Any failure on our part to comply with the specific provisions in customer contracts could result in the imposition of various penalties, which may include termination of contracts, service credits, suspension of payments, contractual penalties, adverse monetary judgments, and, in the case of government contracts, suspension from future government contracting.

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difficulties in staffing and managing personnel that are located outside the U.S.;

different regulatory, legal and compliance requirements, including in the areas of privacy and data protection, anti-bribery and anti-corruption, trade sanctions and currency controls, marketing and sales and other barriers to conducting business;

different regulatory, legal and compliance requirements, including in the areas of privacy and data protection, anti-bribery and anti-corruption, trade sanctions and restraints and currency controls, marketing and sales and other barriers to conducting business;

social and cultural differences, such as language;

diverse or less stable political, operating and economic environments and market fluctuations;

civil disturbances or other catastrophic events that reduce business activity, including the risk that the current conflict between Ukraine and Russia expands in a way that impacts our business and operations;

civil disturbances or other catastrophic events that reduce business activity, including the risk that the current conflicts between Ukraine and Russia and in the Middle East expand in a way that impacts our business and operations;

limited recognition of our brand and intellectual property protection;

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If we are not able to adapt efficiently or manage the business effectively in markets outside the U.S., our business prospects and operating results could be materially and adversely affected.

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Failure to enter into, renew or comply with contracts supplying new and existing data sets or products on competitive terms

We collect and aggregate third-party content from data suppliers, news sources, exchanges, brokers and contributors into our own dedicated online service, which clients access to perform their analyses.

We collect and aggregate third-party content from data suppliers, news sources, exchanges, brokers and contributors into our own dedicated managed databases, which clients access to perform their analyses.

We combine the data from these sources into our own dedicated databases.

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These databases are important to our operations as they provide clients with key information.

We have entered into third-party content agreements of varying

lengths, which in some cases can be terminated on one year’s notice at predefined dates, and in other cases on shorter notice.

We have entered into third-party content agreements of varying lengths, which in some cases can be terminated on one year’s notice at predefined dates, and in other cases on shorter notice.

Some of our content provider agreements are with competitors, who may attempt to make renewals difficult or expensive.

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Certain data sets that we rely on have a limited number of suppliers, although we make every effort to assure that, where reasonable, alternative sources are available.

We are not dependent on any one 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 twelve months ended August 31, 2022.

Our failure to be able to maintain these relationships, or the failure of our suppliers to deliver accurate data or in a timely manner, or the occurrence of a dispute with a vendor over use of their content, could increase our costs and reduce the type of content and products available to our clients, which could harm our reputation in the marketplace and adversely affect our business.

We are not dependent on any one third-party data supplier to meet the needs of our clients, with only two data suppliers each representing more than 10% of our total data costs for fiscal 2023 .

Our failure to be able to maintain our supplier relationships, or the failure of our suppliers to deliver accurate data or in a timely manner, or the occurrence of a dispute with a vendor over use of their content, could increase our costs and reduce the type of content and products available to our clients, which could harm our reputation in the marketplace and adversely affect our business.

Increased accessibility to free or relatively inexpensive information sources may reduce demand for our products

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All of these personnel possess business and technical capabilities that are difficult to replace.

If we are unsuccessful in our recruiting efforts, or if we are unable to retain key employees, our ability to develop and deliver successful products and services may be adversely affected and could have a material, adverse effect on our business.

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

If we are unsuccessful in our recruiting efforts, or if we are unable to retain key employees, our ability to develop and deliver successful products and services may be negatively affected and could have a material, adverse effect on our business.

Pandemics and other global public health epidemics may adversely impact our business, our future results of operations and our overall financial performance

Our business could be materially and adversely affected by the risk, or the public perception of risk, related to a pandemic or widespread health crisis, such as the COVID-19 pandemic.

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Such results could have a material adverse effect on our operations, business, financial condition, results of operations, or cash flows.

To date, the COVID-19 pandemic has not had a material negative impact on our financial condition, results of operations, or cash flows.

However, due to the ongoing uncertainty related to the duration, magnitude and impact of the pandemic, it may still have a substantial negative impact on our employees' or vendors' productivity, which could result in our operations, including our ability to gather content, suffering, and in turn our results of operations, cash flows, and overall financial performance being impacted negatively.

Furthermore, if our employees incur substantial medical expenses due to COVID-19, our expenses may increase due to our self-funded employee medical insurance model.

Our management is focused on mitigating the effects of COVID-19 on our business, which has required and will continue to require a substantial investment of their time and may delay their other efforts.

The continued impact of COVID-19 may also increase the severity or likelihood of the other risks described in this Item, any of which could have a material effect on us.

Given the dynamic nature of these circumstances, the extent to which our business, financial condition, results of operations, or cash flows are affected by COVID-19 will depend in part on future developments which cannot be accurately predicted and are uncertain.

The impact of the COVID-19 pandemic depends upon various uncertainties, including the geographic spread of the virus, the severity of the virus, the duration of the outbreak, and actions that may be taken by governmental authorities to contain the virus.

If we are not able to respond to and manage the impact of such events effectively, our business and financial condition could be negatively impacted.

Refer to Item

Management’s Discussion and Analysis of Financial Condition and Results of Operations - COVID-19 Update for additional information.

Legal & Regulatory Risks

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and in the other countries in which we operate.

These laws, rules, and regulations, and their interpretations, may change in the future or conflict, and compliance with these changes may increase our costs or cause us to make changes in or otherwise limit our business practices.

In addition, the global nature and scope of our business operations make it more difficult to monitor areas that may be subject to regulatory and compliance risk.

These laws, rules, and regulations, and their interpretations, may conflict or change in the future, and compliance with these changes may increase our costs or cause us to make changes in or otherwise limit our business practices.

In addition, the global nature and scope of our business operations make it more difficult to monitor areas that may be subject to regulatory and

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compliance risk.

If we fail to comply with any applicable law, rule, or regulation, we could be subject to claims and fines and suffer reputational damage.

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Additionally, if our clients are subjected to investigations or legal proceedings they may be adversely impacted, possibly leading to their liquidation, bankruptcy, receivership, reduction in assets under management, or diminished operations, which would adversely affect our revenues.

Recent regulatory changes that we believe might materially impact us and our clients include:

In the European Union ("EU"), the Markets in Financial Instruments Directive (recast) ("MiFID II") became effective in January 2018.

In the United Kingdom ("UK"), laws and regulations implementing MiFID II were modified to transpose aspects of EU law and address deficiencies that would have otherwise been created as a result of the UK's withdrawal from the EU.

We believe that compliance with MiFID II requirements is time-consuming and costly for investment managers who are subject to it and may cause clients to adapt their pricing models and business practices significantly.

These increased costs may impact our clients’ spending and may cause some investment managers to lose business or withdraw from the market, which may adversely affect demand for our services.

However, MiFID II may also present us with new business opportunities for new service offerings.

In May 2022, the UK government announced the new Financial Services and Markets Bill ("FSM Bill"), which would reform financial service regulation in the UK and represent a divergence from the existing UK MiFID regime.

There is no set timescale as to when passage of the FSM Bill would occur.

This regulatory reform may impact some of our UK-regulated clients and may require them to devote more resources towards realigning their compliance measures, and in some cases ensuring compliance with both the UK and EU regimes.

We continue to monitor and work with our clients to navigate through the impact of UK regulatory change and of MiFID II on the investment process and trade lifecycle.

On January 31, 2020, the UK formally left the EU.

On January 1, 2021, the UK left the EU Single Market and Customs Union, as well as all EU policies and international agreements.

resulting in two separate markets in the EU and the UK.

On December 24, 2020, the EU reached a trade agreement with the UK (the "Trade Agreement").

The Trade Agreement offers UK and EU companies preferential access to each other's markets, ensuring imported goods will be free of tariffs and quotas;

however, economic relations between the UK and EU will now be on more restricted terms than existed previously.

The Trade Agreement does not incorporate the full scope of the services sector, and businesses such as banking and finance face uncertainty.

In March 2021, the UK and EU had agreed on a framework for voluntary regulatory cooperation and dialogue on financial services issues between the two countries in a Memorandum of Understanding (the "MOU"), which is expected to be signed after formal steps are completed, although this has not yet occurred.

In June 2022, following an inquiry, the European Affairs Committee issued a report which concluded that while the outlook for financial services after Brexit seems relatively positive, the impact of Brexit on financial services would be dependent on political decisions made by the UK and the EU.

At this time, we cannot predict the impact that the Trade Agreement, the MOU or any future agreements on services, particularly financial services, will have on our business and our clients.

It is possible that new terms may adversely affect our operations and financial results.

We continue to evaluate our own risks and uncertainty related to Brexit, and partner with our clients to help them navigate the fluctuating international markets.

This uncertainty may have an impact on our clients’ expansion or spending plans, which may in turn negatively impact our revenue or growth.

The EU Commission has adopted adequacy decisions which will allow personal data to continue to move freely between the EU and the UK until June 27, 2025.

While these adequacy decisions have created some certainty for our clients, we will continue to monitor developments which may impact their future validity and extension.

Some recent legislative and regulatory changes that we believe might materially impact us and our clients include:

(a) in the European Union ("EU") and the United Kingdom ("UK"), the Markets in Financial Instruments Directive (recast) ("MiFID II"), which became effective in January 2018, may adversely affect demand for our services;

(b) in the UK, the uncertainty surrounding the UK and EU regulatory frameworks following the UK's departure from the EU in January 2020 ("Brexit"), including the Financial Services and Markets Bill, may negatively impact our revenues or growth;

and (c) evolving laws, rules and regulations in a variety of jurisdictions around such areas as climate, data privacy, cybersecurity, and data protection.

Adverse resolution of litigation or governmental investigations

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Legal Proceedings , of this Annual Report on Form 10-K.

Third parties may claim we infringe upon their intellectual property rights or may infringe upon our intellectual property rights

Third parties may claim we infringe upon their intellectual property rights or they may infringe upon our intellectual property rights

We may receive notice from others claiming that we have infringed upon their intellectual property rights.

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The global and diverse nature of our business means that there could be additional examinations by governmental tax au thorities and the resolution of ongoing and other probable audits which could impose a future risk to the results of our business.

In August 2019 and July 2021, we received Notices of Intent to Assess (the "Notices") additional sales/use taxes, interest and underpayment penalties from the Commonwealth of Massachusetts Department of Revenue relating to prior tax periods.

Based upon a review of the Notices, we believe the Commonwealth may assess sales/use tax, interest and underpayment penalties on previously recorded sales transactions.

We filed an appeal to the Notices and we intend to contest any such assessment, if assessed, and continue to cooperate with the Commonwealth’s inquiry.

Further, on August 10, 2021, we received a letter (the "Letter") from the Commonwealth relating to additional prior tax periods, requesting 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/use tax, interest and underpayment penalties on previously recorded sales transactions.

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.

In August 2019, July 2021 and December 2022, we received Notices of Intent to Assess (the "Notices") additional sales/use taxes, interest and underpayment penalties from the Commonwealth of Massachusetts Department of Revenue relating to prior tax periods.

We requested pre-assessment conferences with the Department of Revenue's Office of Appeals to appeal the Notices and in May 2023 we received a Letter of Determination from the Commonwealth upholding the Notices, along with a Notice of Assessment for all the periods covered by the Notices.

On June 22, 2023 , we filed an Application for Abatement wi th the Commonwealth disputing all amounts assessed, which was subsequently denied.

We are filing petitions with the Appellate Tax Board to appeal all amounts assessed by the Commonwealth and believe that we will ultimately prevail;

however, if we do not prevail the amount of these assessments could have a material impact on our consolidated financial position, results of operations and cash flows.

As of August 31, 2023, we have concluded that some payment to the Commonwealth is probable.

We have 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.

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Changes in tax laws or the terms of tax treaties in a jurisdiction where we are subject to tax could have an impact on our taxes payable.

In addition, as a global taxpayer, we face challenges due to increasing complexities in accounting for taxes in a variety of jurisdictions, which could impact our tax obligations and effective tax rate.

Financial Market Risks

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in several currencies.

Our primary currency exposures include the British Pound Sterling, Euro, Indian Rupee and Philippine Peso.

Our primary currency exposures include the Indian Rupee, Euro, British Pound Sterling and Philippine Peso.

To the extent our international activities increase in the future, our exposure to fluctuations in currency exchange rates may increase as well.

To manage this exposure, we utilize derivative instruments (such as foreign currency forward contracts).

To manage this exposure, we utilize derivative instruments, namely foreign currency forward contracts.

By their nature, all derivative instruments involve elements of market and credit risk.

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Our primary objective in holding derivatives is to reduce the volatility of earnings with changes in foreign currency.

Although we believe

that our foreign exchange hedging policies are reasonable and prudent under the circumstances, our attempt to hedge against these risks may not be successful, which could cause an adverse impact on both our results of operations and cash flows.

Although we believe that our foreign exchange hedging policies are reasonable and prudent under the circumstances, our attempt to hedge against these risks may not be successful, which could cause an adverse impact on both our results of operations and cash flows.

Business performance may not be sufficient to meet financial guidance or publicly disclosed long-term targets

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Our costs and the demand for our products may be impacted by domestic and international factors that are beyond our control.

Negative conditions in the general economy in either the United States or abroad, including conditions resulting from financial and credit market fluctuations, changes in economic policy, inflation rate fluctuations and trade uncertainty, including changes in tariffs, sanctions, international treaties and other trade restrictions, could result in an increase in our costs and/or a reduction in demand for our products, which could have an adverse effect on our results of operations and financial condition.

Risks Relating to the CGS Transaction

We may fail to realize the anticipated benefits of the CGS Transaction

The success of our acquisition of the CGS business (the "CGS Business") will depend on, among other things, our ability to incorporate the CGS Business into our business in a manner that enhances our value proposition to clients and facilitates other growth opportunities.

We must successfully include the CGS Business within our business in a manner that permits these growth opportunities to be realized.

In addition, we must achieve the growth opportunities without adversely affecting current revenues and investments in other future growth.

If we are not able to successfully achieve these objectives, the anticipated benefits of the acquisition of CGS (the "CGS Transaction") may not be realized fully, if at all, or may take longer to realize than expected.

Additionally, management may face challenges in incorporating certain elements and functions of the CGS Business with the FactSet business, and this process may result in additional and unforeseen expenses.

The CGS Transaction may also disrupt the CGS Business’s and FactSet’s ongoing business or cause inconsistencies in standards, controls, procedures and policies that adversely affect our relationships with third-party partners, employees, suppliers, customers and others with whom the CGS Business and FactSet have business or other dealings or limit our ability to achieve the anticipated benefits of the CGS Transaction.

It is possible that our experience in operating the CGS Business will require us to adjust our expectations regarding the impact of the CGS Transaction on our operating results.

If we are not able to successfully add the CGS Business to the existing FactSet business in an efficient, effective and timely manner, anticipated benefits, including the opportunities for growth we expect from the CGS Transaction, may not be realized fully, if at all, or may take longer to realize than expected, and our cash flow and financial condition may be negatively affected.

We have incurred and may incur additional significant transaction costs in connection with the CGS Transaction

We have incurred a number of non-recurring costs associated with the CGS Transaction.

These costs and expenses include financial advisory, legal, accounting, consulting and other advisory fees and expenses, filing fees and other related charges.

There is also a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the CGS Transaction.

While we have assumed that a certain level of expenses would be incurred in connection with the CGS Transaction and related transactions, there are many factors beyond our control that could affect the total amount or the timing of the integration and implementation expenses.

There may also be additional unanticipated significant costs in connection with the CGS Transaction that we may not recoup.

These costs and expenses could reduce the benefits and additional income we expect to achieve from the CGS Transaction.

Although we expect that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at all.

Negative conditions in the general economy in either the United States or abroad, including conditions resulting from financial and credit market fluctuations, changes in economic policy, inflation rate fluctuations and trade uncertainty, including changes in tariffs, sanctions, international treaties and other trade restrictions, or other geopolitical events, such as the ongoing military conflicts between Russia and Ukraine and in the Middle East, could result in an increase in our costs and/or a reduction in demand for our products, which could have an adverse effect on our results of operations and financial condition.

Risks Relating to Our Debt

Our indebtedness may impair our financial condition and prevent us from fulfilling our obligations under the Senior Notes and our other debt instruments

As of August 31, 2022 giving effect to the issuance of the Senior Notes and the incurrence of borrowings under the 2022 Credit Facilities and the repayment of the 2019 Revolving Credit Facility, our total outstanding principal amount of debt was $2.0

billion, none of which is secured.

As of August 31, 2023, our total outstanding principal amount of debt was $1.6 billion, none of which is secured.

This includes our obligations under the Senior Notes and the 2022 Credit Facilities.

Under the 2022 Revolving Facility, we have $250.0 million of unused commitments and an option to increase the size of the facility by an additional $750.0 million.

Refer to Note 12, Debt for definitions of these terms and more information on the Senior Notes, 2022 Credit Facilities and 2019 Revolving Credit Facility.

Refer to Note 12, Debt in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for definitions of these terms and more information on the Senior Notes, 2022 Credit Facilities and 2019 Revolving Credit Facility.

Our indebtedness could have important consequences to investors, including:

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limiting our ability to borrow additional amounts to fund working capital, capital expenditures, acquisitions, debt service requirements, execution of our growth strategy and other purposes;

requiring us to dedicate a substantial portion of our cash flow from operations to pay interest on our debt and scheduled amortization on the 2022 Term Facility, which would reduce availability of our cash flow to fund working capital, capital expenditures, acquisitions, execution of our strategy and other general corporate purposes;

requiring us to dedicate a substantial portion of our cash flows from operations to pay interest on our debt and scheduled amortization on the 2022 Term Facility, which would reduce availability of our cash flow to fund working capital, capital expenditures, acquisitions, execution of our strategy and other general corporate purposes;

making us more vulnerable to adverse changes in general economic, industry and government regulations and in our business by limiting our flexibility in planning for, and making it more difficult for us to react quickly to, changing conditions;

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placing us at a competitive disadvantage compared with those of our competitors that have less debt;

exposing us to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which could result in higher interest expense in the event of increases in market interest rates.

In addition, we may not be able to generate sufficient cash flow from our operations to repay our indebtedness when it becomes due and to meet our other cash needs.

In addition, we may not be able to generate sufficient cash flows from our operations to repay our indebtedness when it becomes due and to meet our other cash needs.

If we are not able to pay our debts as they become due, we will be required to pursue one or more alternative strategies, such as selling assets, refinancing or restructuring our indebtedness or selling additional debt or equity securities.

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Events beyond our control, including changes in general economic and business conditions, may affect our ability to meet those financial ratios and financial condition tests.

We cannot assure you that we will meet those tests or that the lenders will waive any failure to meet those tests.

There can be no assurance that we will meet those tests or that the lenders will waive any failure to meet those tests.

A breach of any of these covenants or any other restrictive covenants contained in the definitive documentation governing our indebtedness would result in a default or an event of default.

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The 2022 Credit Agreement provides that (i) loans denominated in U.S.

dollars, at our option, will bear interest at either the one-month Term Secured Overnight Financing Rate ("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

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.

4 unchanged sentences

An increase in the applicable rates would increase our interest payment obligations under the 2022 Credit Facilities and could have a negative effect on our cash flow and financial condition.

UNRESOLVED STAFF COMMENTS

Ta ble of C onte nts

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors