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Item 7. Management’s Discussion and Analysis

2023-10-27 compared with 2022-10-21 · 365 added, 386 removed, 279 unchanged (73% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8.

Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

For a similar detailed discussion comparing fiscal 2021 and 2020, refer to Item 7.

Financial Statements and Supplementary Data , of this Annual Report on Form 10-K, our Current Reports on Form 8-K and our other filings with the Securities and Exchange Commission.

For a similar detailed discussion comparing fiscal 2022 and 2021, refer to Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report on Form 10-K for the year ended August 31, 2022.

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Our actual results could differ materially from those discussed below.

Factors that could cause such differences include, but are not limited to, those identified below and those discussed in Item 1A.

Factors that could cause such differences include, but are not limited to, those identified below and those discussed in Part I, Item 1A.

Risk Factors of this Annual Report on Form 10-K.

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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 over 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.

and its wholly-owned subsidiaries (collectively, "we," "our," "us," the "Company" or "FactSet") is a global financial digital platform and enterprise solutions provider with open and flexible products that drive the investment community to see more, think bigger and do its best work.

Our platform delivers expansive data, sophisticated analytics and flexible technology used by global financial professionals to power their critical investment workflows.

As of August 31, 2023, we had nearly 8,000 clients comprised of almost 190,000 investment professionals, including asset managers, bankers, wealth managers, asset owners, partners, hedge funds, corporate users and private equity & venture capital professionals.

Our revenues are primarily derived from subscriptions to our multi-asset class data and solutions powered by our content refinery.

Our products and services include workstations, portfolio analytics and enterprise solutions.

We drive our business based on our detailed understanding of our clients’ workflows, which helps us to solve their most complex challenges.

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 APIs.

Our on- and off-platform solutions span the investment life cycle of investment research, portfolio construction and analysis, trade execution, performance measurement, risk management and reporting.

We provide open and flexible technology offerings, including a configurable desktop and mobile platform, comprehensive data feeds, cloud-based digital solutions and 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.

Our platform and solutions are supported by our dedicated client service teams.

We operate our business through three segments:

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of this Annual Report on Form 10-K for further discussion.

For each of our segments, we execute our strategy through our three workflow solutions:

Research & Advisory;

Analytics & Trading;

Business Strategy

As the needs of our clients evolve, they seek personalized and connected data, tools for multi-asset class investing and reduced costs.

Clients are also seeking cloud-based solutions, open and flexible systems and increased efficiencies to support their digital transformations.

Our strategy is to build the leading open content and analytics platform to deliver differentiated advantages for our clients’ success.

To execute this strategy, we plan on:

• Growing our digital platform :

We are scaling up our content refinery to offer a comprehensive and connected inventory of industry, proprietary and third-party data for the financial community.

This data includes granular data for key industry verticals, private companies, wealth management, real-time data, and environmental, social and governance data ("ESG").

We are driving personalized workflow solutions for financial professionals, including asset managers, bankers, wealth managers, asset owners, channel partners, hedge funds, corporate users and private equity and venture capital professionals.

We offer an open ecosystem with solutions and content that is accessible and flexible through a myriad of delivery methods.

Our goal is to deliver cloud-based data and analytics to our clients, enabling them to more efficiently manage their workflows.

• Delivering execution excellence :

We are building an agile organization that accelerates product creation and content collection.

We offer new products designed for delivery via the cloud, making them highly efficient for our clients.

We will continue to employ technology to accelerate the pace of content collection and drive expertise in complex data sets such as private companies, ESG and deep sector.

Additionally, we are improving our price realization through consistent packaging and internal governance.

• Driving a growth mindset :

To drive sustainable growth, we are recruiting, training and empowering a diverse and operationally efficient workforce.

As a performance-based culture, we are investing in talent that can create leading technological solutions and efficiently execute our strategy.

We use partnerships and acquisitions to accelerate our growth in strategic areas.

Our strategy centers on relentless focus on our clients and their FactSet experience.

We aim to be a trusted partner and service provider, offering personalized digital products powered by cognitive computing to research ideas and uncover relevant insights.

Additionally, we continually evaluate business opportunities such as partnerships and acquisitions to increase our capabilities and competitive differentiation.

We are focused on growing our global business through three segments:

the Americas, EMEA and Asia Pacific.

We believe this geographical strategic alignment helps us better manage our resources, target our solutions and interact with our clients.

We further execute on our growth strategy by offering data, products and analytical applications within our three workflow solutions:

For each of our segments, we execute our strategy through three workflow solutions:

Research & Advisory;

Analytics & Trading;

Fiscal 2022 Year in Review

Revenues for the fiscal year 2022 was $1.8 billion, an increase of 15.9% from the prior year.

Revenues increased across our operating segments, primarily in the Americas, followed by EMEA and Asia Pacific, supported by increased revenues from each of our workflow solutions, mainly in CTS, followed by Research & Advisory and Analytics and Trading and our annual price increase.

Organic revenues contributed to 9.8% of the growth during fiscal 2022, compared with the prior year period.

CGS operates as part of CTS.

Refer to Part I, Item 1.

Business - Business Strategy , of this Annual Report on Form 10-K for further discussion on our business strategy.

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Fiscal 2023 in Review

Revenues for fiscal 2023 were $2.1 billion, an increase of 13.1% from the prior year.

Revenues increased in all our segments, primarily in the Americas, and, to a lesser extent, EMEA and Asia Pacific.

This increase in revenues was supported by higher sales in each of our workflow solutions, primarily in CTS (driven by inorganic revenues from CGS), followed by Analytics & Trading and Research & Advisory.

Organic revenues contributed to 8.2% of our growth during fiscal 2023, compared with the prior year.

Refer to Part II, Item 7.

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As of August 31, 2023, organic annual subscription value ("Organic ASV") plus Professional Services totaled $2.2 billion, an increase of 7.1% over the prior year.

Organic ASV increased across all our segments, with the majority of the increase related to the Americas, followed by EMEA and Asia Pacific, supported by increases in our workflow solutions, mainly Research & Advisory and Analytics & Trading, followed by CTS.

Organic ASV increased in all our segments, with the majority of the increase related to the Americas and, to a lesser extent, EMEA and Asia Pacific.

This increase was driven by additional sales in our workflow solutions, primarily in Analytics & Trading, followed by CTS and Research & Advisory.

Refer to Part II, Item 7.

Management's Discussion and Analysis of

Financial Condition and Results of Operations, Annual Subscription Value of this Annual Report on Form 10-K for the definitions of Organic ASV and Organic ASV plus Professional Services.

Operating income for the fiscal year 2022 increased 0.3%, compared with the prior year period.

Operating margin decreased in fiscal 2022 to 25.8%, compared with 29.8% for fiscal 2021.

Operating margin decreased primarily due to impairment charges related to vacating certain leased office space and higher amortization of intangible assets, primarily from the CGS acquisition, partially offset by growth in revenues and lower employee compensation expense, when expressed as a percentage of revenue.

Diluted earnings per share ("EPS") decreased 1.1% compared with the prior year.

Management's Discussion and Analysis of Financial Condition and Results of Operations, Annual Subscription Value, of this Annual Report on Form 10-K for the definitions of Organic ASV and Organic ASV plus Professional Services.

Operating income for fiscal 2023 was $629.2 million, an increase of 32.3% compared with the prior year.

Operating margin increased in fiscal 2023 to 30.2%, compared with 25.8% for fiscal 2022.

Operating margin increased primarily due to growth in revenues and, when expressed as a percentage of revenues, a decrease in asset impairment charges, employee compensation costs, professional fees, data costs and occupancy costs, partially offset by higher royalty fees and amortization of intangible assets.

Net income for fiscal 2023 was $468.2 million, an increase of 18.0% from the prior year.

Diluted earnings per common share ("Diluted EPS") increased 17.5% compared with the prior year.

This increase in net income and Diluted EPS was primarily due to higher operating income, partially offset by an increase in the provision for income taxes and an increase in interest expense as a result of higher outstanding debt compared to the prior year.

Our clients and users reached new highs of 7,921 and 189,972, respectively, in fiscal 2023.

We returned $315.3 million to stockholders in the form of share repurchases and dividends paid during fiscal 2023.

As of August 31, 2022, our employee count was 11,203, up 2.9% in the past 12 months, due primarily to an increase in net new employees of 4.5% in Asia Pacific and 2.1% in EMEA, partially offset by a decrease of 1.6% in the Americas.

We garnered multiple awards in 2022, with honors spanning multiple workflows, including research, risk, performance, trading and wealth management.

We were recognized by over thirty industry awards and rankings reports, including winning four categories in WatersTechnology’s 2022 Inside Market Data & Inside Reference Data awards, Snowflake Marketplace Partner of the Year and Waters Rankings 2022 Best Data Analytic Provider.

As of August 31, 2023, our employee count was 12,237, up 9.2% compared to the prior year, due to an increase in net new employees of 12.4% in Asia Pacific, 3.6% in the Americas and 1.9% in EMEA.

We garnered multiple awards in fiscal 2023, with honors noted for research, risk, performance, trading and wealth management.

FactSet was honored by more than thirty industry awards and rankings reports, including winning “Trading Tech’s Best Cloud-Based Market Data Delivery Solution.”

CUSIP Global Services Acquisition

On December 24, 2021, we entered into a definitive agreement to acquire CGS, previously operated by S&P Global Inc.

on behalf of the American Bankers Association ("ABA"), for $1.932 billion in cash, inclusive of working capital adjustments.

The acquisition was completed on March 1, 2022.

CGS 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.

We believe that the CGS acquisition will significantly expand our critical role in the global capital markets.

On March 1, 2022, we completed our acquisition of CGS for a cash price of $1.932 billion, inclusive of working capital adjustments.

We acquired CGS to expand our critical role in the global capital markets.

Revenues from CGS are recognized based on geographic business activities in accordance with how our operating segments are currently aligned.

CGS functions as part of CTS.

During fiscal 2023, CGS functioned as part of the CTS workflow solution.

The purchase price for the CGS acquisition was financed from the net proceeds of the issuance of the Senior Notes and borrowings under the 2022 Credit Facilities.

Refer to Note 6, Acquisitions and Note 12, Debt for more information on these defined terms as well as our acquisition of CGS, the Senior Notes and the 2022 Credit Facilities.

COVID-19 Update

A novel strain of coronavirus, now known as COVID-19 ("COVID-19"), was first reported in December 2019, with the World Health Organization characterizing COVID-19 as a pandemic on March 11, 2020.

In r esponse to the COVID-19 pandemic, we implemented a business continuity plan with a dedicated incident management team to respond quickly and provide ongoing guidance so that we could continue offering our clients uninterrupted products, services and support while also protecting our employees.

We believe these actions have been successful and that the pandemic, and our responses, have not significantly affected our financial results during fiscal 2022 .

At the outset of the pandemic, we required the vast majority of our employees at our offices across the globe (including our corporate headquarters) to work remotely and implemented global travel restrictions for our employees.

Since that time, we have re-opened our offices globally with a focus on safety, while acting consistently with applicable local regulations.

As of August 31, 2022, there have been minimal interruptions in our ability to provide our products, services and support to our clients.

Working remotely has had relatively little impact on the productivity of our employees, including our ability to gather content.

Based on our success working in a remote environment during the COVID-19 pandemic, we have implemented a new work standard under which employees in many of our locations, where permitted by local laws and regulations, and where the role permits, have the opportunity to choose between different work arrangements.

These include working in a hybrid arrangement, where an employee can split time between working from the office and working from a pre-approved remote location, or a fully remote arrangement, where an employee can work entirely from a pre-approved remote location.

Our revenues, earnings and ASV are relatively stable and predictable as a result of our subscription-based business model.

To date, the COVID-19 pandemic has not had a material negative impact on our revenues, earnings or ASV.

As we continue to work in remote and hybrid environments, reductions in discretionary spending, particularly travel and entertainment, have more than offset any related increased expenses.

Given our transition to our new work standard, we anticipate that many of these

expense reductions will continue going forward, including incurring less travel and entertainment spending than we did pre-pandemic.

We also reassessed our real estate footprint in light of these new work arrangements and have exited office space that we believe will no longer be necessary.

For the year ended as of August 31, 2022, we recognized $62.2 million in impairment charges related to vacating certain leased office space to resize our real estate footprint for the hybrid work environment.

While we will continue to evaluate our real estate needs, we expect that this initiative is largely complete, and we do not currently anticipate additional similar ly-sized real estate impairment charges as part of the reduction of our real estate footprint.

Refer to Part I, Item 1.

Business, Human Capital Management, How We Work and Item 1A.

Risk Factors, Operational Risks of this Annual Report on Form 10-K for further discussion of the potential impact of the COVID-19 pandemic on our business.

Ukraine/Russia Conflict

As the ongoing military conflict between Russia and Ukraine continues, we are closely monitoring the current and potential impact on our business, our people and our clients.

We have taken all necessary steps to ensure compliance with all applicable regulatory restrictions on international trade and financial transactions.

We have discontinued all commercial operations and delivery of products and services to clients inside Russia;

have terminated all contracts with vendors in Russia;

and have suspended all new business, trials and prospecting activities in Russia.

Total revenues associated with clients in Russia were not material to our consolidated financial results, and termination of Russian vendors has not had a material impact on our business or client relationships.

We have no offices in Russia or Ukraine, and none of our employees or contractors has been directly impacted by the crisis.

We are monitoring the regional and global ramifications of the events in the area, are in close contact with our office in Latvia, and are reviewing our business continuity plans to ensure that we are prepared in the event this office is impacted.

Our cybersecurity teams are ready to respond in the event of any attempted systems compromise.

Refer to Note 6, Acquisitions and 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 more information on these defined terms as well as our acquisition of CGS, the Senior Notes and the 2022 Credit Facilities, respectively.

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Annual Subscription Value ("ASV")

We believe ASV reflects our ability to grow recurring revenues and generate positive cash flow and is the key indicator of the successful execution of our business strategy.

We believe ASV reflects our ability to grow recurring revenues and generate positive cash flow and serves as a key indicator of the successful execution of our business strategy.

– "ASV" at any point in time represents our forward-looking revenues for the next 12 months from all subscription services currently being supplied to clients, excluding revenues from Professional Services.

– "Organic ASV" at any point in time equals our ASV excluding ASV from acquisitions and dispositions completed within the last 12 months and the effects of foreign currency movements on the current year period.

– "Organic ASV" at any point in time equals our ASV excluding ASV from acquisitions and dispositions completed within the last 12 months and the effects of foreign currency movements.

– "Professional Services" are revenues derived from project-based consulting and implementation, annualized over the past 12 months.

– "Organic ASV plus Professional Services" at any point in time equals the sum of Organic ASV and Professional Services.

Prior year ASV now reflects additional CGS revenues not previously included.

Organic ASV plus Professional Services

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With proper notice provided as contractually required, our clients can add to, delete portions of, or terminate service, subject to certain limitations.

(in millions) As of August 31, 2022

(dollar amounts in millions)

As of August 31, 2023

As reported ASV plus Professional Services (1)

Currency impact (2)

Acquisition ASV (3)

Organic ASV plus Professional Services $ 2,175.1

Organic ASV plus Professional Services growth rate 9.3 %

Organic ASV plus Professional Services annual growth rate

(1) Includes $22.7 million in Professional Services as of August 31, 2023.

(2) The impact from foreign currency movements.

(3) Acquired ASV from acquisitions completed within the last 12 months.

As of August 31, 2023, Organic ASV plus Professional Services was $2.2 billion, an increase of 7.1% compared with August 31, 2022.

The increase in year-over-year Organic ASV was largely attributable to increased sales to existing clients, followed by new client sales and existing client price increases, partially offset by existing client cancellations.

Organic ASV increased across all our geographic segments with the majority of the increase related to the Americas, followed by EMEA and Asia Pacific.

This increase was driven by additional sales in our workflow solutions, primarily in Research & Advisory and Analytics & Trading, followed by CTS.

The increase in Organic ASV was primarily driven by higher sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations.

Organic ASV increased in all our segments, with the majority of the increase related to the Americas, followed by EMEA and Asia Pacific.

This increase was driven by additional sales in our workflow solutions, primarily in Analytics & Trading, followed by CTS and Research & Advisory.

Sales increased in Analytics & Trading mainly from our performance & reporting products, portfolio analytics solutions and portfolio & benchmark services.

CTS sales increased mainly from CGS and, to a lesser extent, data management solutions, company data and real time data.

Sales increased in Research & Advisory mainly due to higher demand for our workstations.

Sales increased in Analytics & Trading mainly from our performance and reporting products, portfolio analytics solutions and portfolio and benchmark services.

CTS sales increased primarily due to purchases of company financial data, such as fundamentals, estimates and ownership, along with data management solutions to empower data connectivity.

As of August 31, 2023, ASV from the Americas represented 64% of total ASV and was $1,376.9 million, an increase from $1,286.7 million as of August 31, 2022.

Americas Organic ASV increased to $1,135.3 million as of August 31, 2022, a 9.3% increase compared with August 31, 2021.

As of August 31, 2022, ASV from EMEA equaled 26% of total ASV and was $515.3 million, an increase from $450.0 million as of August 31, 2021.

EMEA Organic ASV increased to $486.0 million as of August 31, 2022, an 8.4% increase compared with August 31, 2021.

As of August 31, 2022, ASV from Asia Pacific comprised 10% of total ASV and was $200.4 million, an increase from $174.7 million as of August 31, 2021.

Asia Pacific Organic ASV increased to $191.7 million as of August 31, 2022, a 12.0% increase compared with August 31, 2021.

The increased Organic ASV in the Americas was primarily driven by increased sales of Research & Advisory and Analytics & Trading.

The EMEA organic ASV increase was mainly driven by higher sales of Research & Advisory, Analytics & Trading and CTS.

The Asia Pacific organic ASV increase was primarily due to increased sales of Analytics & Trading and Research & Advisory.

Americas Organic ASV was $1,376.9 million as of August 31, 2023, a 7.0% increase from the prior year.

The Organic ASV increase in the Americas was primarily driven by increased sales from Analytics & Trading, followed by CTS and Research & Advisory.

As of August 31, 2023, ASV from EMEA represented 26% of total ASV and was $559.6 million, an increase from $516.1 million as of August 31, 2022.

EMEA Organic ASV was $558.8 million as of August 31, 2023, a 7.7% increase from the prior year.

The EMEA Organic ASV increase was mainly driven by higher sales from Analytics & Trading and CTS.

As of August 31, 2023, ASV from Asia Pacific represented 10% of total ASV and was $215.4 million, an increase from $200.5 million as of August 31, 2022.

Asia Pacific Organic ASV was $216.7 million as of August 31, 2023, an 8.1% increase from the prior year.

The Asia Pacific Organic ASV increase was primarily due to higher sales from Research & Advisory and Analytics & Trading.

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Buy-side and Sell-side Organic ASV Growth

The buy-side and sell-side Organic ASV growth rates at August 31, 2022, compared with August 31, 2021, were 8.5% and 13.8%, respectively.

Buy-side clients account for approximately 83% of our organic ASV, consistent with the prior year period, and primarily include asset managers, wealth managers, asset owners, channel partners, hedge funds and corporate firms.

The remainder of our Organic ASV is derived from sell-side firms and primarily include broker-dealers, banking and advisory, private equity and venture capital firms.

The buy-side and sell-side Organic ASV annual growth rates as of August 31, 2023 were 6.9% and 9.3%, respectively.

Buy-side clients account for approximately 82% of our Organic ASV, compared to 83% in the prior year, and primarily include asset managers, wealth managers, asset owners, partners, hedge funds and corporate firms.

The remainder of our Organic ASV is derived from sell-side firms and primarily include broker-dealers, banking & advisory and private equity & venture capital firms.

Client and User Additions

The table below presents our total clients and users:

As of and for the

Year Ended August 31,

As of August 31,

2023 2022 Change

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(1) The client count includes clients with ASV of $10,000 and above.

Our total client count was 7,538 as of August 31, 2022, a net increase of 16.8%, or 1,085 clients in the last 12 months, mainly due to an increase in corporate clients, wealth management clients, and private equity and venture capital firms.

We believe this increase is primarily due to our continued focus on our on- and off-platform workflow-focused solutions, connected content and client-focused services.

As of August 31, 2022, there were 179,982 professionals using FactSet, representing a net increase of 11.8%, or 19,050 users, in the last 12 months, primarily driven by an increase in wealth advisory professionals from our wealth management clients, as well as an increase in sell-side users from our banking clients.

The increase in users was mainly due to new wealth management clients, improvement in our client retention and increased new hiring at our banking clients.

Annual ASV retention was greater than 95% of ASV for the period ended August 31, 2022 and August 31, 2021.

When expressed as a percentage of clients, annual retention was approximately 92% for the period ended August 31, 2022, an improvement from approximately 91% for the period ended August 31, 2021.

Our total client count was 7,921 as of August 31, 2023, a net increase of 5.1%, or 383 clients compared to the prior year, mainly due to an increase in corporate clients, wealth management clients and partners.

We believe this increase is primarily due to our on- and off- platform workflow solutions, connected content and client-focused services.

As of August 31, 2023, there were 189,972 professionals using FactSet, representing a net increase of 5.6%, or 9,990 users, compared to the prior year, primarily driven by an increase from our wealth management firms and sell-side users from our banking clients.

Annual ASV retention was greater than 95% for the year ended August 31, 2023 and August 31, 2022.

When expressed as a percentage of clients, annual retention was approximately 91% for the year ended August 31, 2023, compared with approximately 92% for the year ended August 31, 2022.

Employee Headcount

As of August 31, 2023, our employee headcount was 12,237, an increase of 9.2% compared with 11,203 employees as of August 31, 2022.

This growth in headcount was due to an increase in net new employees of 4.5% in Asia Pacific and 2.1% in EMEA, partially offset by a decrease of 1.6% in the Americas.

At August 31, 2022, 7,401 employees were located in Asia Pacific, 2,400 in the Americas and 1,402 in EMEA.

This headcount increase was primarily due to our continued investment in our COEs by expanding our talent pool primarily in India and the Philippines.

Our COEs accounted for approximately 67% of our employees.

Our net headcount growth by segment as of August 31, 2023 compared with August 31, 2022 was 12.4% in Asia Pacific, 3.6% in the Americas and 1.9% in EMEA.

As of August 31, 2023, the number of employees located in Asia Pacific was 8,322, in the Americas was 2,487 and in EMEA was 1,428.

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Results of Operations

For an understanding of the significant factors that influenced our performance during fiscal 2022 and 2021, the following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8.

For an understanding of the significant factors that influenced our performance during fiscal 2023 and 2022, the following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes included in Part II, Item 8.

of this Annual Report on Form 10-K.

The following table summarizes the results of operations for the periods described:

The following table summarizes our results of operations:

Years ended August 31,

(in thousands, except share and per share data) 2022 2021 $ Change % Change

(dollar amounts in thousands, except per share data)

2023 2022 $ Change % Change

Revenues $ 2,085,508 $ 1,843,892 $ 241,616 13.1 %

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Selling, general and administrative 457,130 433,032 24,098 5.6 %

Asset impairments 64,272 — 64,272 N/M

Asset impairments 25,946 64,272 (38,326) (59.6) %

Operating income $ 629,207 $ 475,482 $ 153,725 32.3 %

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Diluted weighted average common shares 38,898 38,736

Diluted earnings per common share $ 10.25 $ 10.36 $ (0.11) (1.1) %

Revenues in fiscal 2022 was $1.8 billion, an increase of 15.9% compared to the prior year.

This increase in revenues was largely attributed to increased sales to existing clients, new client sales and existing client price increases, partially offset by existing client cancellations.

Revenues increased across all our segments, primarily from the Americas, followed by EMEA and Asia Pacific, driven by increased revenues in all our workflow solutions, mainly in CTS, followed by Research & Advisory and Analytics & Trading, compared with the prior year.

Organic revenues increased to $1.7 billion for the fiscal year ended 2022, a 9.8% increase over the prior year period.

Refer to Item 7.

$ 12.04 $ 10.25 $ 1.79 17.5 %

Revenues in fiscal 2023 were $2.1 billion, an increase of 13.1% compared to the prior year.

This increase was primarily driven by higher sales to existing clients and, to a lesser extent, price increases to existing clients and sales to new clients, partially offset by existing client cancellations.

Revenues increased in all our segments, primarily from the Americas, followed by EMEA and Asia Pacific.

The increased revenues were supported by higher sales in all three of our workflow solutions, primarily in CTS (driven by inorganic revenues from CGS), and, to a lesser extent, by Analytics & Trading and Research & Advisory.

Organic revenues increased to $1,995.0 million for fiscal 2023, an 8.2% increase over the prior year.

Refer to Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Financial Measures, of this Annual Report on Form 10-K for further discussion on organic revenues.

The growth in revenues of 15.9% was reflective of organic revenues growth of 9.8% and a 6.6% increase primarily due to the impact of acquisition-related revenues, partially offset by a 0.5% decrease from foreign currency exchange rate fluctuations.

The 13.1% growth in revenues was reflective of organic revenues growth of 8.2% and a 5.2% increase primarily related to acquisition-related revenues, partially offset by a 0.3% decrease from foreign currency exchange rate fluctuations.

Revenues by Segment

The following table summarizes our revenues by segment for the periods described:

The following table summarizes our revenues by segment:

Years ended August 31,

(in thousands) 2022 2021 $ Change % Change

(dollar amounts in thousands)

2023 2022 $ Change % Change

Americas $ 1,335,484 $ 1,173,946 $ 161,538 13.8 %

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Consolidated Revenues $ 2,085,508 $ 1,843,892 $ 241,616 13.1 %

Americas revenues increased 16.5% to $1,173.9 million in fiscal 2022, compared with $1,008.0 million from the same period a year ago.

The increased revenues were mainly due to increased sales in all of our workflow solutions, primarily in CTS, followed by Research & Advisory and Analytics & Trading.

The revenues growth of 16.5% was due to organic revenues growth of 8.6% and a 7.9% increase due to the impact of acquisition-related revenues.

EMEA revenues increased 13.2% to $484.3 million in fiscal 2022, compared with $427.7 million from the same period in the prior year.

This revenues growth was mainly due to increased sales in all of our workflow solutions, primarily in CTS, followed by Research & Advisory and Analytics & Trading.

The EMEA revenues growth of 13.2% was driven by organic revenues growth of 10.0% and a 4.2% increase due to the impact of acquisition-related revenues, partially offset by a 1.0% decrease from foreign currency exchange rate fluctuations.

Asia Pacific revenues increased 19.2% to $185.7 million in fiscal 2022, compared with $155.7 million from the same period in the prior year.

This revenues growth was mainly due to increased sales in all of our workflow solutions, primarily in CTS, followed by Research & Advisory and Analytics & Trading.

The Asia Pacific revenues growth of 19.2% was due mainly to organic revenues growth of 17.2% and a 4.3% increase in acquisition-related revenues, partially offset by a 2.3% decrease from foreign currency exchange rate fluctuations.

Americas revenues increased 13.8% to $1,335.5 million in fiscal 2023, compared with $1,173.9 million in fiscal 2022.

This increase was mainly due to higher sales in all our workflow solutions, primarily in CTS (driven by inorganic revenue from CGS).

The 13.8% growth in revenues was reflective of a 7.7% increase in organic revenue and a 6.1% increase primarily due to the impact of acquisition-related revenues.

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EMEA revenues increased 11.5% to $539.8 million in fiscal 2023, compared with $484.3 million in fiscal 2022.

This increase was mainly due to higher sales in all our workflow solutions, primarily in CTS (driven by inorganic revenues from CGS).

The 11.5% growth in revenues was reflective of an 8.0% increase in organic revenue and a 3.9% increase primarily due to the impact of acquisition-related revenues, partially offset by a 0.4% decrease due to effects of foreign currency exchange rate fluctuations.

Asia Pacific revenues increased 13.2% to $210.2 million in fiscal 2023, compared with $185.7 million in fiscal 2022.

This increase was mainly due to higher sales in all our workflow solutions, primarily in CTS (driven by inorganic revenues from CGS), followed by Research & Advisory and Analytics & Trading.

The 13.2% growth in revenues was reflective of an 11.8% increase in organic revenue and a 3.3% increase primarily due to the impact of acquisition-related revenues, partially offset by a 1.9% decrease due to effects of foreign currency exchange rate fluctuations.

Revenues by Workflow Solution

The growth in revenues of 15.9% for fiscal 2022, compared with the same period a year ago, was due to growth in revenues across our segments supported by increased revenues from our workflow solutions, primarily from CTS, followed by Research & Advisory and Analytics & Trading.

The increase in CTS revenues was driven mainly by CUSIP related data licensing and issuance revenues and sales of company financial data, such as fundamentals, estimates and ownership.

The increase in Research & Advisory revenues was driven mainly by higher demand for our workstations.

The increase in revenues from Analytics & Trading was primarily due to increased demand for our performance and reporting products and portfolio analytics solutions.

The growth in revenues of 13.1% for fiscal 2023, compared with fiscal 2022, was due to higher revenues from each of our segments supported by increased revenues from our workflow solutions, primarily from CTS and, to a lesser extent, Analytics & Trading and Research & Advisory.

The increased CTS revenues were driven mainly by CGS related data licensing and issuance revenues.

The increased revenues from Analytics & Trading were primarily due to higher demand for our performance & reporting products, portfolio analytics solutions and portfolio & benchmark services.

The increased Research & Advisory revenues was driven mainly by higher demand for our workstations.

Operating Expenses

Principal Operating Costs and Expenses

Cost of services is mainly comprised of employee compensation costs and also includes costs primarily related to data costs, computer-related expenses, amortization of identifiable intangible assets, royalty fees, client-related communication costs and computer depreciation.

Selling, general and administrative (" SG&A") consist primarily of employee compensation costs and also includes expenses related to occupancy costs, professional fees, depreciation of furniture and fixtures, amortization of leasehold improvements, travel and entertainment expenses, marketing costs, non-compensatory employee expenses, internal communication costs and bad debt expense.

Principal Operating Expenses

Cost of services is mainly comprised of employee compensation costs and also includes expenses related to data costs, computer-related expenses, amortization of identifiable intangible assets, royalty fees, client-related communication costs and computer depreciation.

Selling, general and administrative (" SG&A") consists primarily of employee compensation costs and also includes expenses related to occupancy costs, professional fees, depreciation of furniture and fixtures, amortization of leasehold improvements, travel and entertainment expenses, marketing costs, other employee-related expenses, internal communication costs and bad debt expense.

Employee compensation costs are a major component of both our Cost of services and SG&A.

These expenses primarily include costs related to salaries, incentive compensation and sales commissions, stock-based compensation, benefits, employment taxes, and any applicable restructuring costs.

We assign employee compensation costs between costs of services and SG&A based on the roles and activities associated with each employee.

We assign employee compensation costs between Cost of services and SG&A based on the roles and activities associated with each employee.

We categorize employees within the content collection, consulting, product development, software and systems engineering groups as Cost of services personnel.

Employees included in our sales department and those that serve in various other support departments, including marketing, business development, finance, legal, human resources and administrative services, are classified as SG&A.

Employees included in our sales department and those that serve in various other support departments, including marketing, finance, legal, human resources and administrative services, are classified as SG&A.

Asset impairments consist primarily of expenses recognized when the carrying amount of an asset exceeds its fair value.

The following table summarizes the components of our total operating expenses and operating margin for the periods described:

(in thousands) Years ended August 31,

The following table summarizes the components of our total operating expenses and operating margin:

(dollar amounts in thousands) Years ended August 31,

2023 2022 $ Change % Change

1 unchanged sentence

SG&A 457,130 433,032 24,098 5.6 %

Asset impairments 64,272 — $ 64,272 N/M

Asset impairments 25,946 64,272 $ (38,326) (59.6) %

Total operating expenses $ 1,456,301 $ 1,368,410 $ 87,891 6.4 %

1 unchanged sentence

Operating margin 30.2 % 25.8 % 17.0 %

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Cost of S ervices

Cost of services increased 10.8% to $871.1 million in fiscal 2022 compared with $786.4 million in the same period a year ago, primarily due to an increase in amortization of intangible assets, computer-related expenses, royalty fees, data costs and employee compensation expense.

Cost of services, when expressed as a percentage of revenues, was 47.2% during fiscal 2022, a decrease of 220 basis points over the prior year period.

This decrease was primarily due to lower employee compensation costs, computer depreciation and data costs, partially offset by higher amortization of intangible assets, royalty fees and computer-related expenses.

• Employee compensation costs decreased 430 basis points primarily due to a reduction in salaries related to a shift from high to low cost locations, an increase in stock-based compensation expense and an increase in year-over-year variable compensation, partially offset by a net increase in employee headcount of 120 employees

• Computer depreciation expense decreased by 40 basis points as certain network equipment was fully depreciated during fiscal 2022, with less replacement equipment needed due to our migration to cloud-based hosting services.

• Data costs decreased by 30 basis points due to revenue growth outpacing the cost of content.

• Amortization of intangible assets increased 140 basis points mainly due to increased amortization related to acquired intangible assets, primarily from the CGS acquisition, and increased amortization from capitalized internal-use software.

Cost of services increased 11.7% to $973.2 million in fiscal 2023, compared with $871.1 million in fiscal 2022, primarily due to an increase in employee compensation costs, amortization of intangible assets, computer-related expenses and royalty fees related to our CGS acquisition.

Cost of services, when expressed as a percentage of revenues, was 46.7% for fiscal 2023, a decrease of 60 basis points compared with fiscal 2022.

This decrease was primarily due to lower employee compensation costs and data costs, partially offset by higher royalty fees, amortization of intangible assets and computer-related expenses.

When expressed as a percentage of revenues:

• Employee compensation costs decreased 180 basis points primarily due to growth of our revenues outpacing the increase in employee compensation costs.

This decrease was also driven by higher capitalization of compensation costs related to the development of internal-use software, partially offset by higher annual base salaries and restructuring costs to drive organization realignment.

The increase in annual base salaries was primarily driven by annual merit increases and a net headcount increase in Cost of services of 959 employees, primarily located in our COEs.

• Data costs decreased 80 basis points mainly due to the release of certain accruals in the first quarter of fiscal 2023 related to the successful resolution of exchange audits that were recorded during the prior year and revenue growth outpacing the increased cost of content.

• Royalty fees increased Cost of services 80 basis points due to contracts acquired in connection with the acquisition of CGS.

• Computer-related expenses increased 60 basis points due to increased spend from our migration to cloud-based hosting services and licensed software arrangements.

Due to the timing of the CGS acquisition, fiscal 2023 included a full year of royalty fees, compared with a partial year during fiscal 2022.

• Amortization of intangible assets increased 80 basis points, mainly due to acquired intangible assets, primarily from the CGS acquisition.

Due to the timing of the CGS acquisition, fiscal 2023 included a full year of CGS intangible amortization, compared with a partial year during fiscal 2022.

• Computer-related expenses increased 50 basis points, primarily due to higher spend related to licensed software arrangements and our cloud-based hosting services.

Selling, General and Administrative

SG&A expenses increased 30.8% to $433.0 million during fiscal 2022, compared with $331.0 million from the same period a year ago, primarily due to higher employee compensation expense and professional fees.

SG&A expenses, expressed as a percentage of revenues, were 23.5% in fiscal 2022, an increase of 270 basis points over the prior year period.

This increase was primarily due to higher professional fees and employee compensation expense.

• Professional fees increased 80 basis points, primarily driven by costs incurred in connection with the acquisition of CGS.

• Employee compensation expense increased 70 basis points, primarily due to increased variable compensation, a net increase in SG&A employee headcount of 191, increased stock-based compensation expense and higher annual base salaries.

• Occupancy costs decreased 60 basis points mainly driven by vacating leased office space resulting in the recognition of asset impairment charges of our lease right-of-use ("ROU") asset during fiscal 2022.

This impairment accelerated the recognition of lease expense, thereby reducing occupancy costs recorded over the remaining lease terms.

SG&A expenses increased 5.6% to $457.1 million during fiscal 2023, compared with $433.0 million in fiscal 2022, primarily due to higher employee compensation costs and, to a lesser extent, an increase in travel and entertainment expenses, partially offset by a decrease in professional fees and occupancy costs.

SG&A expenses, when expressed as a percentage of revenues, were 21.9% for fiscal 2023, a decrease of 160 basis points over fiscal 2022.

This decrease was primarily due to lower professional fees and occupancy costs, partially offset by an increase in travel and entertainment expenses.

When expressed as a percentage of revenues:

• Professional fees decreased 100 basis points primarily due to CGS acquisition costs incurred during the prior year.

• Occupancy costs decreased by 60 basis points mainly driven by impairment charges recognized during fiscal 2022 related to vacating leased office space, which reduces occupancy costs recorded over their respective remaining lease terms.

• Travel and entertainment expenses increased by 30 basis points as we resumed essential business travel and incurred other employee-related expenses associated with return to office activities during the current year.

Asset Impairments

Asset impairments incurred during fiscal 2022 were $64.3 million, or 3.5% when expressed as a percentage of revenues.

This asset impairment charge included $62.2 million related to our lease ROU assets and property, equipment and leasehold improvements associated with vacating certain leased office space to resize our real estate footprint for the hybrid work environment.

We fully impaired our lease ROU assets for locations we vacated, with no intention to sublease.

For locations we intend to sublease, we recognized an impairment when the estimated fair value of the lease ROU asset was less than its carrying value.

Substantially all the property, equipment and leasehold improvements associated with the vacated lease office space was fully impaired as there are no expected future cash flows for these items.

Asset impairments were $25.9 million and $64.3 million during fiscal 2023 and 2022, respectively.

The asset impairments were mainly driven by an $18.0 million and $62.2 million charge during fiscal 2023 and 2022, respectively, related to our lease right-of-use ("ROU") assets and property, equipment and leasehold improvements ("PPE") associated with vacating certain leased office space to resize our real estate footprint for the hybrid work environment.

As there were no expected future cash flows associated with lease ROU assets for locations we will not sublease nor PPE associated with the related vacated leased office space, we determined these assets had no remaining fair value and were fully impaired.

For locations we intended to sublease, we recognized an impairment when the estimated fair value of the lease ROU asset was less than its carrying value.

The remaining asset impairments for fiscal 2023 and 2022 were $7.9 million related to Developed technology and Trade names and $2.1 million related to Developed technology, respectively.

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Operating Income and Operating Margin

Operating income increased 32.3% to $629.2 million in fiscal 2023, compared with $475.5 million in the prior year.

This increase was primarily due to growth in revenues of 15.9%, largely offset by higher operating expenses due mainly to impairment charges related to vacating certain leased office space and higher employee compensation expense, amortization of intangible assets, computer-related expenses, professional fees and data costs.

Foreign currency exchange rate fluctuations, net of hedge activity, decreased operating income by $3.1 million.

Operating margin decreased in fiscal 2022 to 25.8%, compared with 29.8% for fiscal 2021.

Operating margin decreased primarily due to impairment charges related to vacating certain leased office space and higher amortization of intangible assets, royalty fees, professional fees and computer-related expenses, when expressed as a percentage of revenues, partially offset by growth in revenues and lower employee compensation expense, occupancy costs, computer depreciation and data costs, when expressed as a percentage of revenues.

This increase was primarily due to a 13.1% growth in revenues, and, to a lesser extent, a decrease in asset impairment charges and professional fees, partially offset by higher employee compensation costs, amortization of intangible assets, computer-related expenses and royalty fees.

Foreign currency exchange rate fluctuations, net of hedge activity, increased operating income by $25.7 million during fiscal 2023, compared with a decrease of $3.1 million in fiscal 2022.

Operating margin increased in fiscal 2023 to 30.2%, compared with 25.8% in the prior year.

This increase was primarily due to growth in revenues and, when expressed as a percentage of revenues, a decrease in asset impairment charges, employee compensation costs, professional fees, data costs and occupancy costs, partially offset by higher royalty fees and amortization of intangible assets.

Operating Income by Segment

Our internal financial reporting structure is based on three segments:

the Americas;

and Asia Pacific.

Refer to Note 18, Segment Information , for further discussion regarding our segments.

The following table summarizes our operating income by segment for the periods described:

We operate our business through three segments:

the Americas, EMEA and Asia Pacific.

Refer to Note 18, Segment Information in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for further discussion regarding our segments.

The following table summarizes our operating income by segment:

Years ended August 31,

(in thousands) 2022 2021 $ Change % Change

(dollar amounts in thousands) 2023 2022 $ Change % Change

Americas $ 239,438 $ 159,140 $ 80,298 50.5 %

2 unchanged sentences

Total Operating Income $ 629,207 $ 475,482 $ 153,725 32.3 %

Americas operating income decreased 27.1% to $159.1 million during fiscal 2022, compared with $218.2 million from the prior year.

This decrease is primarily due to asset impairments, higher employee compensation expense, amortization of intangible assets, computer-related expenses, professional fees, and royalty fees, partially offset by growth in revenues of 16.5%.

• Asset impairments include $62.2 million related to our lease ROU assets and property, equipment and leasehold improvements associated with vacating certain leased office space to resize our real estate footprint for the hybrid work environment.

• Employee compensation expense increased primarily due to increased variable compensation, higher stock compensation expense and an increase in annual base salary, partially offset by a decrease in net employee headcount of 39.

• Amortization of intangible assets primarily increased due to amortization related to acquired intangible assets primarily from the CGS acquisition and increased amortization from capitalized internal-use software.

• Computer-related expenses increased primarily due to increased spend from our migration to cloud-based hosting services and licensed software arrangements.

• Professional fees increased primarily due to costs incurred in connection with the acquisition of CGS.

Americas operating income increased 50.5% to $239.4 million during fiscal 2023, compared with $159.1 million from the prior year.

This increase was primarily due to a 13.8% growth in revenues and, to a lesser extent, a decrease in asset impairment charges and professional fees, partially offset by higher employee compensation costs, amortization of intangible assets, computer-related expenses and royalty fees.

• Asset impairment charges decreased primarily due to lower lease ROU asset and PPE impairment charges associated with vacating certain leased office space during fiscal 2023, compared with fiscal 2022.

• Professional fees decreased primarily due to costs incurred during the prior year related to the acquisition of CGS.

• Employee compensation costs increased primarily due to an increase in annual base salaries and, to a lesser extent, higher stock-based compensation expense, payroll taxes and restructuring costs, partially offset by a decrease in variable compensation.

The increase in annual base salaries was primarily driven by annual merit increases and a net headcount increase of 87 employees.

• Amortization of intangible assets increased mainly due to acquired intangible assets, primarily from the CGS acquisition.

Due to the timing of the CGS acquisition, fiscal 2023 included a full year of CGS intangible asset amortization, compared with a partial year during fiscal 2022.

• Computer-related expenses increased primarily due to higher spend related to licensed software arrangements and our cloud-based hosting services.

• Royalty fees increased due to contracts acquired in connection with the acquisition of CGS.

Due to the timing of the CGS acquisition, fiscal 2023 included a full year of royalty fees, compared with a partial year during fiscal 2022.

EMEA operating income increased 23.8% to $243.0 million during fiscal 2023, compared with $196.2 million from the prior year.

This increase was primarily due to growth in revenues of 13.2%, a decrease in amortization of intangible assets and a decrease in bad debt expense, partially offset by asset impairments.

Amortization of intangible assets decreased as certain acquired intangible assets were fully amortized during fiscal 2022.

The asset impairments related to vacating certain leased office space to resize our real estate footprint for the hybrid work environment and impacted both our lease ROU assets and property, equipment and leasehold improvements balances.

This increase was primarily due to an 11.5% growth in revenues and, to a lesser extent, a decrease in data costs and amortization of intangible assets.

These increases in operating income were partially offset by higher employee compensation costs and, to a lesser extent, asset impairment charges.

• Data costs decreased due to the release of certain accruals during the first quarter of fiscal 2023 which related to the successful resolution of exchange audits that were recorded during the prior year.

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• Amortization of intangible assets decreased as certain acquired intangible assets were fully amortized during the third quarter of fiscal 2022.

• Employee compensation costs increased primarily due to higher annual base salaries, restructuring costs and, to a lesser extent, higher variable compensation.

The increase in annual base salaries was primarily driven by annual merit increases and a net headcount increase of 26 employees.

• Asset impairment charges increased primarily due to higher lease ROU asset impairment charges associated with vacating certain leased office space during fiscal 2023, compared with fiscal 2022.

Asia Pacific operating income increased 22.2% to $146.8 million during fiscal 2023, compared with $120.1 million from the prior year.

The increase in Asia Pacific operating income was mainly due to growth in revenues of 19.2%, partially offset by an increase in employee compensation expense.

Employee compensation expense increased mainly due to higher annual base salaries due to a net increase in employee headcount of 321 and increased variable compensation.

The increase was mainly due to a 13.2% growth in revenues, partially offset by an increase in employee compensation costs and, to a lesser extent, travel expenses.

Employee compensation costs increased mainly due to an increase in annual base salaries driven by annual merit increases and a net headcount increase of 921 employees primarily in our COEs.

Travel expenses increased due to other employee-related expenses associated with return to office activities in the current year.

Years ended August 31,

(in thousands) 2022 2021 $ Change % Change

(dollar amounts in thousands) 2023 2022 $ Change % Change

Income before income taxes $ 583,954 $ 443,594 $ 140,360 31.6 %

1 unchanged sentence

Effective tax rate 19.8 % 10.5 % 88.4 %

We are subject to taxation in the United States and various foreign jurisdictions in which we conduct our business.

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 will vary based on, among other things, changes in levels of foreign income, as well as other non-recurring events.

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 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.

Net Income and Diluted Earnings per Share

corporate income tax rate for fiscal 2023 driven mainly by research and development ("R&D") tax credits, a tax benefit from the exercise of stock options and a foreign derived intangible income ("FDII") deduction, partially offset by a one-time out-of-period adjustment related to a review and analysis of certain tax positions, as well as our net state taxes.

Our effective tax rate for fiscal 2023 was 19.8% compared to 10.5% in fiscal 2022.

The increase was primarily driven by an out-of-period adjustment related to a review and analysis of certain tax positions, resulting in a one-time net charge of $22.1 million.

The adjustment related to the accounting of tax balance sheet accounts.

All local, federal and foreign taxes payable have been paid in a timely manner, subject to normal audits of open years.

The increase was also driven by a lower impact from tax attributes on the effective tax rate as a result of an increase in income before income taxes, higher net state taxes, an increase in the UK's enacted tax rates and a reduction in the exercise of stock options.

Net Income and Diluted EPS

Years ended August 31,

(in thousands, except for per share data) 2022 2021 $ Change % Change

(dollar amounts in thousands, except per share data) 2023 2022 $ Change % Change

Net income $ 468,173 $ 396,917 $ 71,256 18.0 %

Diluted weighted average common shares 38,898 38,736 162 0.4 %

Diluted earnings per common share $ 10.25 $ 10.36 $ (0.11) (1.1) %

Net income decreased 0.7% to $396.9 million and diluted EPS decreased 1.1% to $10.25 for fiscal 2022, compared with fiscal 2021.

Net income and diluted EPS decreased primarily due to an increase in operating expenses and interest expense related to our debt refinancing, partially offset by higher revenues and a reduction in the provision for income taxes, compared with the prior year period.

Diluted EPS also decreased due to a 0.2 million increase in our diluted weighted average shares outstanding.

$ 12.04 $ 10.25 $ 1.79 17.5 %

Net income increased 18.0% and Diluted EPS increased 17.5% for fiscal 2023, compared with fiscal 2022.

The increase in net income and Diluted EPS was primarily due to higher operating income, partially offset by an increase in the provision for income taxes and an increase in interest expense as a result of higher outstanding debt compared to the prior year.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), we use non-GAAP financial measures including organic revenues, adjusted operating income, adjusted operating margin, adjusted net income, EBITDA, adjusted EBITDA and adjusted Diluted EPS.

The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are show in the tables below.

The reconciliations from our

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financial measures calculated and presented in accordance with GAAP to these non-GAAP financial measures are shown in the tables below.

These non-GAAP financial measures should not be considered in isolation from, as a substitute for, or superior to, financial measures reported in accordance with GAAP.

Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in

accordance with GAAP.

Other companies may calculate similarly titled non-GAAP financial measures differently that we do, limiting the usefulness of those measures for comparative purposes.

Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of our business as determined in accordance with GAAP.

Other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

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

Adjusted measures may also facilitate comparisons to our historical performance.

Organic revenues exclude revenue related to acquisitions and dispositions completed in the last 12 months, the amortization of deferred revenues' fair value adjustments from purchase accounting related to acquisitions prior to fiscal 2022, and the impacts of foreign currency movements on the current year period.

Acquisitions during fiscal 2022 were accounted for in accordance with our adoption of ASU No.

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.

Adjusted revenues exclude the impact of the fair value of deferred revenues acquired in a business combination.

Organic revenues further excludes both acquisition-related revenues recognized in the current year in which the comparable prior year period predated the acquisition(s) and foreign currency movements in all years presented.

The table below provides an unaudited reconciliation of revenues to adjusted revenues and organic revenues:

Twelve Months Ended

(In thousands) 2022 2021 $ Change % Change

Years ended August 31,

(dollar amounts in thousands) 2023 2022 $ Change % Change

Revenues $ 2,085,508 $ 1,843,892 $ 241,616 13.1 %

Deferred revenues fair value adjustment (1)

25 539 (514) (95.4) %

Adjusted revenues 2,085,508 1,843,917 241,591 13.1 %

4 unchanged sentences

Organic revenues $ 1,994,953 $ 1,843,917 $ 151,036 8.2 %

(1) The amortization effect of the purchase accounting adjustment related to the fair value of acquired deferred revenues.

Acquisitions during fiscal 2022 were accounted for in accordance with our adoption of ASU No.

as such, the deferred revenues did not include a fair value adjustment.

(2) Revenues from acquisitions completed within the last 12 months.

(3) The impact from foreign currency movements over the past 12 months.

(1) Reflects the amortization effect of any purchase accounting adjustments related to the fair value of acquired deferred revenues for acquisitions prior to fiscal 2022.

Acquisitions thereafter do not include this adjustment in accordance with ASU No.

2021-08, Business Combinations:

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) .

(2) Removes acquisition-related revenues recognized during fiscal 2023 in which the comparable prior year period predated the acquisition(s).

(3) The impact from foreign currency movements during the fiscal year.

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

Twelve Months Ended

(In thousands, except per share data) 2022

Adjusted operating income and margin, adjusted net income, and adjusted Diluted EPS exclude the impact of the fair value of deferred revenues acquired in a business combination, intangible asset amortization and non-recurring items.

EBITDA excludes interest expense, provision for income taxes and depreciation and amortization, while Adjusted EBITDA further excludes non-recurring non-cash expenses.

Years ended August 31,

(dollar amounts in thousands, except per share data) 2023

Operating income $ 629,207 $ 475,482 32.3 %

Deferred revenues fair value adjustment — 25

Real estate charges 62,205 716

Intangible asset amortization 71,503 49,122

Business acquisition costs 20,608 —

Asset impairments (1)

20,327 62,205

Restructuring / severance 19,879 9,975

Business acquisition / integration costs (2)

Contingent liability 6,239 3,610

6 unchanged sentences

Deferred revenues fair value adjustment — 22

Real estate charges 54,789 606

Intangible asset amortization 59,422 43,266

Business acquisition costs 18,151 —

Asset impairments (1)

16,893 54,789

Restructuring / severance 16,520 8,786

Business acquisition / integration costs (2)

Contingent liability 5,185 3,180

1 unchanged sentence

Income tax items (2,316) (7,799)

(7,799) (4,466)

Adjusted net income (5)

5 unchanged sentences

EBITDA $ 755,657 $ 565,974 33.5 %

Real estate charges 62,205 —

Non-recurring non-cash expenses 20,963 62,205

Adjusted EBITDA $ 776,620 $ 628,179 23.6 %

$ 628,179 $ 540,293 16.3 %

Diluted earnings per common share $ 10.25 $ 10.36 (1.1) %

Diluted EPS $ 12.04 $ 10.25 17.5 %

Deferred revenues fair value adjustment — 0.00

Real estate charges 1.41 0.02

Intangible asset amortization 1.53 1.11

Business acquisition costs 0.47 —

Asset impairments (1)

Restructuring / severance 0.43 0.23

Business acquisition / integration costs (2)

Contingent liability 0.13 0.08

1 unchanged sentence

Income tax items (0.06) (0.20)

(0.20) (0.12)

Adjusted diluted earnings per common share (3)

Adjusted Diluted EPS (5)

$ 14.65 $ 13.43 9.1 %

Weighted average common shares (Diluted) 38,898 38,736

(1) Adjusted operating margin is calculated as adjusted operating income divided by adjusted revenues as shown in the organic revenue table above.

(2) Adjusted EBITDA is calculated as the sum of EBITDA and non-recurring, non-cash charges.

(3) For purposes of calculating adjusted net income and adjusted diluted earnings per share, adjustments were taxed at the annual effective tax rates of 12.3% for fiscal 2022 and 17.8% for fiscal 2021.

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(1) We reclassified Real estate charges to Asset impairments in the Non-GAAP Financial Measures to conform to current year's presentation.

Asset impairments primarily related to impairment charges of lease ROU assets and PPE associated with vacating certain leased office space.

(2) Related to acquisition and integration costs of the CGS acquisition.

(3) Primarily related to professional fees associated with our multi-year investment plan.

(4) Adjusted operating margin is calculated as Adjusted operating income divided by Adjusted revenues as shown in the revenues reconciliation table above.

(5) For purposes of calculating Adjusted net income and Adjusted Diluted EPS, all adjustments for fiscal 2023 and 2022 were taxed at an adjusted tax rate of 16.9% and 11.9%, respectively.

Liquidity and Capital Resources

Our cash flows provided by operating activities, existing cash and cash equivalents, supplemented with our long-term debt borrowings, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our operations.

Generally, some or all of the remaining available cash flow has been used to among other things, service our existing and future debt obligations, satisfy our working capital requirements and fund our capital expenditures, investments, acquisitions, dividend payments and repurchases of our common stock.

Generally, some or all of our remaining available cash flows have been used to, among other things, service our existing and future debt obligations, satisfy our working capital requirements and fund various activities, including our capital expenditures, acquisitions, investments, dividend payments and repurchases of our common stock.

Based on past performance and current expectations, we believe our sources of liquidity, including the available capacity under our existing revolving credit facility and other financing alternatives, will provide us the necessary capital to fund these transactions and achieve our planned growth for the next 12 months and the foreseeable future.

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;

however, we do not believe our concentration of cash and cash equivalents presents a significant credit risk as the counterparties to the instruments consist of multiple high-quality, credit-worthy financial institutions.

Sources of Liquidity

Long-Term Debt

Long-Term Debt & Swap Agreements

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").

On March 1, 2022, we entered into a credit agreement (the "2022 Credit Agreement") and borrowed an aggregate principal amount of $1.0 billion under its senior unsecured term loan credit facility (the "2022 Term Facility") and $250.0 million of the available $500.0 million under its senior unsecured revolving credit facility (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.

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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 pay a commitment fee on the daily unused amount of the 2022 Revolving Facility using a pricing grid based on our senior unsecured non-credit enhanced long-term debt rating and our total leverage ratio.

The commitment fee remained consistent at 0.125% from the borrowing date through August 31, 2023.

During fiscal 2022, we incurred approximately $9.5 million in debt issuance costs related to the 2022 Credit Facilities.

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 (as defined below) 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.

Prepayments of the 2022 Term Facility shall be applied to reduce the subsequent scheduled amortization payments in direct order of maturity.

During fiscal 2023, we repaid $375.0 million under the 2022 Term Facility, inclusive of voluntary prepayments of $325.0 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 SONIA (subject to a "zero" floor) and loans denominated in Euros will bear interest at the EURIBOR (subject to a "zero" floor), in each case, plus an applicable interest rate margin.

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.

Since loan inception on March 1, 2022, we have repaid $625.0 million under the 2022 Term Facility, inclusive of voluntary prepayments of $562.5 million.

As of August 31, 2023, the outstanding borrowings under the 2022 Credit Facilities bore interest at a rate equal to the applicable one-month Term Secured Overnight Financing Rate ("SOFR") rate plus a 1.1% spread (comprised of a 1.0% interest rate margin based on a debt leverage pricing grid plus a 0.1% credit spread adjustment).

The spread remained consistent from the borrowing date through August 31, 2023.

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.

Refer to Note 12, Debt for further discussion of the 2022 Credit Agreement.

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The 2022 Credit Agreement contains usual and customary affirmative and negative covenants for facilities of this type, including a financial covenant requiring maintenance of a total leverage ratio of no greater than 3.75 to 1.00 as of August 31, 2023.

We were in compliance with all covenants and requirements of the 2022 Credit Agreement as of August 31, 2023.

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 further discussion of the 2022 Credit Agreement.

2022 Swap Agreement

On March 1, 2022, we entered into an interest rate swap agreement (the "2022 Swap Agreement") to hedge a portion of our outstanding floating SOFR rate debt with a fixed interest rate of 1.162%.

Effective December 30, 2022, we apportioned the then-outstanding notional amount of the 2022 Swap Agreement between two counterparties.

Refer to Note 5, Derivative Instruments in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K, for defined terms and more information on the 2022 Swap Agreement.

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”).

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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.

Interest on the Senior Notes is payable semiannually in arrears on March 1 and September 1 of each year, with the first payment made on September 1, 2022.

The Senior Notes were issued at an aggregate discount of $2.8 million and we incurred approximately $9.1 million in debt issuance costs.

We may redeem the Senior Notes, in whole or in part, at any time at specified redemption prices, plus any accrued and unpaid interest.

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.

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.

2022 Swap Agreement

On March 1, 2022, we 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 in the Notes to the Consolidated Financial Statements included in Item 8.

of this Annual Report on Form 10-K, for defined terms and more information on the 2022 Swap Agreement.

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 for 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.

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.

On March 29, 2019, we entered into a credit agreement with PNC Bank, National Association (the "2019 Credit Agreement") and borrowed $575.0 million of the available $750.0 million provided by the revolving credit facility thereunder (the "2019 Revolving Credit Facility").

Borrowings under the 2019 Revolving Credit Facility bore interest on the outstanding principal amount at a rate equal to the daily London Interbank Offer Rate ("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.

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.

As of March 1, 2022, we repaid in full and terminated the 2019 Credit Agreement.

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

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 more information on the termination.

Uses of Liquidity

Returning Value to Shareholders

We returned $144.6 million and $382.6 million to stockholders in the form of share repurchases and dividends paid during fiscal 2022 and 2021, respectively.

Returning Value to Stockholders

During fiscal 2023 and 2022, respectively, we returned $315.3 million and $144.6 million to our stockholders in the form of share repurchases and dividends.

During fiscal 2023 and 2022, we paid dividends of $138.6 million and $125.9 million, respectively.

Our dividends per share increased 8.5% during fiscal 2022 compared to fiscal 2021, which marked the 23rd consecutive year we have increased dividends, highlighting our continued commitment to returning value to stockholders.

Future cash dividends will depend on our earnings, capital requirements, financial condition and other factors considered relevant by us and is subject to final determination by our Board of Directors.

During fiscal 2023, our dividends increased 10%, which marked the 24th consecutive year we have increased dividends, highlighting our continued

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commitment to returning value to our stockholders.

Future cash dividends 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.

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.

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.

We may repurchase shares of our common stock under our share repurchase program from time-to-time in the open market and via privately negotiated transactions, subject to market conditions.

We suspended our share repurchase program beginning in the second quarter of fiscal 2022, 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.

We suspended our share repurchase program to prioritize the repayment of debt under the 2022 Credit Facilities.

We resumed our share repurchase program in the third quarter of fiscal 2023.

For fiscal 2023 and 2022, we repurchased 430,350 shares for $176.7 million and 46,200 shares for $18.6 million, respectively.

There is no defined number of shares to be repurchased over a specified timeframe through the life of our share repurchase program.

As of August 31, 2023, we had $4.5 million authorized under our share repurchase program for future share repurchases, which was not available for use after August 31, 2023.

On June 20, 2023, our Board of Directors authorized up to $300 million for share repurchases on or after September 1, 2023.

Capital Expenditures

For the year ended August 31, 2022, capital expenditures decreased by 16.6% to $51.2 million, compared with $61.3 million during the same period a year ago.

Capital expenditures decreased primarily due to costs incurred for the build-out of our office space in the Philippines during the year ended August 31, 2021, partially offset by higher expenditures related to peripherals for our office space in India during the year ended August 31, 2022.

During fiscal 2022 and 2021, we completed acquisitions of several businesses, with the most significant cash flows related to the acquisitions of CGS, Cobalt Software, Inc.

For the year ended August 31, 2023, capital expenditures increased by 18.8% to $60.8 million, compared with $51.2 million in fiscal 2022.

This increase was primarily due to higher expenditures related to the development of capitalized internal-use software and investments in network-related equipment mainly at our data centers.

We completed acquisitions of several businesses during fiscal 2021 through fiscal 2023, with the most significant cash flows related to the acquisitions of CGS, Cobalt Software, Inc.

("Cobalt") and Truvalue Labs, Inc.

CUSIP Global Services

On March 1, 2022, we completed the acquisition of CGS, previously operated by S&P Global Inc.

on behalf of the ABA, for a cash purchase price of $1.932 billion, inclusive of working capital adjustments.

On March 1, 2022, we completed the acquisition of CGS for a cash purchase price of $1.932 billion, inclusive of working capital adjustments.

CGS 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.

We believe that the CGS acquisition will significantly expand our critical role in the global capital markets.

CGS, operating on behalf of the ABA, is the exclusive issuer of CUSIP and CINS identifiers globally and also acts as the official numbering agency for ISIN identifiers in the United States and as a substitute number agency for more than 30 other countries.

We acquired CGS to expand our critical role in the global capital markets.

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.

Cobalt is a leading portfolio monitoring platform for the private capital industry.

We acquired Cobalt to scale our data and workflow solutions through targeted investments as part of our multi-year investment plan and to expand our private markets offering.

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 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.

Refer to Note 6, Acquisitions , in the Notes to the Consolidated Financial Statements included in Item 8.

TVL is a leading provider of sustainability information.

We acquired TVL to further enhance our commitment to providing industry leading access to sustainability data across our platforms.

Refer to Note 6, Acquisitions , in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for further discussion of the CGS, Cobalt and TVL acquisitions.

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As of August 31, 2023 and 2022, we had total purchase obligations with suppliers of $362.2 million and $373.9 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.

Our total purchase obligations as of August 31, 2023 and 2022 primarily related to hosting services, acquisition of

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data and, to a lesser extent, third-party software providers.

Hosting services support our hybrid cloud strategy, the majority of which rely on third-party hosting providers.

Data is an integral component of the value we provide to our clients, and our commitments to third-party software providers mainly include internal-use software licenses.

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.

Refer to Note 11, Leases and 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 information regarding lease commitments and outstanding debt obligations, respectively.

Summary of Cash Flows

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

As of August 31, 2023, Cash and cash equivalents were $425.4 million, compared with $503.3 million as of August 31, 2022.

Our cash and cash equivalents are held in numerous locations throughout the world, with $165.4 million in the Americas, $148.4 million in EMEA (predominantly in the UK) and the remaining $111.6 million in Asia Pacific (predominantly in India and the Philippines) as of August 31, 2023.

As of August 31, 2023 , we had approximately $204.0 million of undistributed foreign earnings.

We permanently reinvest all foreign undistributed earnings, except in jurisdictions where earnings can be repatriated substantially free of tax.

It is not practicable to determine the deferred tax liability that would be payable if these earnings were repatriated to the U.S.

The table below provides selected cash flow information:

Years ended August 31,

(in thousands) 2022 2021 $ Change % Change

(dollar amounts in thousands) 2023 2022 $ Change % Change

Net cash provided by operating activities $ 645,573 $ 538,277 $ 107,296 19.9 %

Net cash used in investing activities (2,033,675) (135,992) (1,897,683) 1,395.4 %

Net cash provided by (used in) investing activities (95,393) (2,033,675) 1,938,282 (95.3) %

Net cash provided by (used in) financing activities (632,024) 1,339,234 (1,971,258) (147.2) %

Effect of exchange rate changes on cash and cash equivalents (22,428) (263) (22,165) NM

Net (decrease) increase in cash and cash equivalents $ (178,592) $ 96,260 $ (274,852) (285.5) %

Cash and cash equivalents aggregated to $503.3 million as of August 31, 2022, compared with $681.9 million as of August 31, 2021.

Our cash and cash equivalents decreased $178.6 million during the twelve months ended August 31, 2022.

This decrease was primarily due to cash outflows of $1,981.6 million for the acquisition of businesses, $825.0 million of debt repayments related to the termination of the 2019 Credit Agreement and partial repayment of the 2022 Term Facility, $125.9 million in dividend payments, $51.2 million of capital expenditures and $18.6 million in share repurchases.

These cash outflows were partially offset by inflows of $2,238.4 million from the issuance of new debt related to our 2022 Credit Facilities and Senior Notes, $538.3 million from net cash provided by operating activities and $86.0 million in proceeds from the exercise of employee stock options.

Our cash and cash equivalents are held in numerous locations throughout the world, with $221.1 million in the Americas, $199.6 million in EMEA (predominantly in the UK) and the remaining $82.6 million in Asia Pacific (predominantly in the Philippines and India) as of August 31, 2022.

We are permanently reinvested in all foreign unremitted earnings, except in jurisdictions where earnings can be repatriated substantially free of tax.

For fiscal 2022, net cash provided by operating activities was $538.3 million, compared with $555.2 million for fiscal 2021, a decrease of $16.9 million.

This decrease was primarily driven by the timing of tax payments in certain jurisdictions and higher accounts receivable due to increased sales and an increase in days sales outstanding.

For fiscal 2022, net cash used in in investing activities was $2,033.7 million, compared with $136.0 million for fiscal 2021, an increase of $1,897.7 million.

This increase was primarily driven by higher spend on acquisitions of $1,923.6 million mainly related to the cash purchase of CGS for $1,931.5 million, inclusive of working capital adjustments, and the cash purchase of Cobalt for $50.0 million, net of cash acquired and inclusive of working capital adjustments, during the twelve months ended August 31, 2022, compared with the cash purchase of TVL for $41.9 million, net of cash acquired, in the prior year period.

The increase in net cash used in investing was partially offset by a decrease in net purchases of investments (net of proceeds) of $15.7 million and a decrease in capital expenditures of $10.2 million compared with the prior year period.

For fiscal 2022, net cash inflow from financing activities was $1,339.2 million, compared with a net cash outflow of $322.7 million for fiscal 2021, an increase of $1,661.9 million.

This cash inflow was mainly driven by $2,238.4 million in proceeds received from the 2022 Credit Facilities and Senior Notes, a $246.1 million reduction in repurchases of common stock, and a $21.9 million increase in proceeds from employee stock plans, partially offset by the repayment of $825.0 million of debt related to the termination of the 2019 Credit Agreement and partial repayment of the 2022 Term Facility.

Effect of exchange rate changes on cash and cash equivalents 4,015 (22,428) 26,443 (117.9) %

Net increase (decrease) in cash and cash equivalents $ (77,829) $ (178,592) $ 100,763 (56.4) %

For fiscal 2023, net cash provided by operating activities was $645.6 million, which included net income of $468.2 million, non-cash charges of $194.6 million and a net cash outflow of $17.2 million to support working capital requirements.

The non-cash charges were primarily driven by $105.4 million of depreciation and amortization, $62.0 million of stock-based compensation expense and $32.3 million from amortization of lease ROU assets, partially offset by $31.1 million in deferred income taxes.

The net cash outflow in working capital was primarily due to an increase in accounts receivable driven by sales and the timing of client payments and cash outflows for lease payments, partially offset by an increase in net taxes payable due to an out-of-period adjustment related to an ongoing review and analysis of certain tax positions and timing of tax payments in certain jurisdictions.

For fiscal 2022, net cash provided by operating activities was $538.3 million, which included net income of $396.9 million, non-cash charges of $241.3 million and net cash outflow of $99.9 million to support working capital requirements.

The non-cash charges were primarily driven by $86.7 million of depreciation and amortization, $64.3 million in asset impairment charges, $56.0 million of stock-based compensation expense and $43.0 million from amortization of lease ROU assets.

The net cash outflow in working capital was primarily driven by cash outflows for lease payments and an increase in accounts receivable driven by sales and the timing of client payments.

For fiscal 2023, net cash used in investing activities was $95.4 million, mainly driven by capital expenditures of $60.8 million, primarily due to capitalization of compensation costs related to development of capitalized internal-use software and, to a lesser extent, investments in network-related equipment mainly at our data centers and laptops.

Cash used in investing activities was also driven by the acquisition of a business for $23.6 million.

For fiscal 2022, net cash used in investing activities was $2,033.7 million, mainly driven by the cash purchase of CGS for $1.932 billion, inclusive of working capital adjustments, and the cash purchase of Cobalt for $50.0 million, net of cash acquired and inclusive of working capital adjustments.

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For fiscal 2023, net cash used in financing activities was $632.0 million, consisting mainly of $375.0 million related to the partial repayment of the 2022 Term Facility, $176.7 million of share repurchases and $138.6 million of dividend payments, partially offset by $72.0 million in proceeds from employee stock plans.

For fiscal 2022, net cash provided by financing activities was $1,339.2 million, consisting mainly of $2,238.4 million proceeds received from the 2022 Credit Facilities and Senior Notes and $86.0 million of proceeds from employee stock plans, partially offset by $825.0 million related to the full repayment and termination of the 2019 Credit Agreement and, to a lesser extent, the partial repayment of the 2022 Term Loan Facility, $125.9 million of dividend payments and $18.6 million of share repurchases.

Free Cash Flow

We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities less purchases of property, equipment, leasehold improvements and capitalized internal use software.

We believe free cash flow is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures, can be used for strategic opportunities, including returning value to shareholders, investing in our business, making strategic acquisitions, and strengthening the balance sheet.

We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities, less purchases of PPE and capitalized internal use software.

We believe free cash flow is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures, can be used for strategic opportunities, including returning value to stockholders, investing in our business, making strategic acquisitions, and strengthening the balance sheet.

Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.

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Years ended August 31,

(in thousands) 2022 2021 Change

(dollar amounts in thousands) 2023 2022 Change

Net cash provided by operating activities $ 645,573 $ 538,277 $ 107,296

Capital expenditures (1)

purchases of property, equipment, leasehold improvements and capitalized internal-use software

(60,786) (51,156) (9,630)

Free cash flow $ 584,787 $ 487,121 $ 97,666

(1) Capital expenditures are included in net cash used in investing activities during each fiscal period reported and include property, equipment, leasehold improvements and capitalized internal-use software.

During fiscal 2022, we generated free cash flow of $487.1 million, compared with $493.9 million in fiscal 2021.

This decrease of $6.8 million was primarily due to a $16.9 million decrease in operating cash flows, partially offset by a $10.2 million decrease in capital expenditures.

The operating cash flows decrease was primarily driven by the timing of tax payments in certain jurisdictions and an increase in days sales outstanding.

Capital expenditures decreased primarily due to costs incurred for the build-out of our office space in the Philippines during fiscal 2021, partially offset by higher peripherals for our office space primarily in India during fiscal 2022.

During fiscal 2023, we generated free cash flow of $584.8 million, an increase of $97.7 million compared with fiscal 2022.

This change reflects a $107.3 million increase in cash provided by operating activities, mainly due to lower working capital requirements and higher net income, partially offset by an increase in purchases of PPE and capitalized internal-use software, primarily driven by higher capitalized costs related to internal-use software and investments in network-related equipment at our data centers.

Off-Balance Sheet Arrangements

At August 31, 2022 and 2021, we had no off-balance sheet financing or other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing other debt arrangements, or other contractually limited purposes.

As of August 31, 2023 and August 31, 2022, we had no off-balance sheet financing other than letters of credit incurred in the ordinary course of business.

Refer to Note 12, Debt and Note 13, Commitments and Contingencies in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for more information on our letters of credit.

As of August 31, 2023 and August 31, 2022, we also had no other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing other debt arrangements, or other contractually limited purposes.

Foreign Currency Exposure

As we operate globally, we are exposed to the risk that our financial condition, results of operations and cash flows could be impacted by changes in foreign currency exchange rates.

To mitigate this foreign currency exposure, we entered into a series of forward contracts to hedge a portion of our foreign currency exposures related to the British Pound Sterling, Euro, Indian Rupee, and Philippine Peso ranging from 25% to 75% over their respective hedged periods as of August 31, 2022.

During fiscal 2022, foreign currency exchange rate fluctuations, net of hedge activity, decreased operating income by $3.1 million, compared with a $5.4 million decrease to operating income in the prior year.

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.

A loss on foreign currency forward contracts of $7.9 million was recorded into operating income during fiscal 2022, compared with a gain of $5.0 million in fiscal 2021.

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.

As of August 31, 2023, we maintained a series of foreign currency forward contracts to hedge a portion of our primary currency exposures of the Indian Rupee, Euro, British Pound Sterling and Philippine Peso.

To mitigate our currency exposure, we entered into these contracts to hedge between 25% to 75% of our

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projected primary currency operating expenses over their respective hedge periods which range from the first quarter of fiscal 2024 through the fourth quarter of fiscal 2024.

The following table summarizes the gross notional value of our foreign currency forward contracts to purchase the respective local currency with U.S.

August 31, 2023 August 31, 2022

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We base our estimates on historical experience and other assumptions that we believe to be reasonable at the time the Consolidated Financial Statements are prepared and, as such, they may ultimately differ materially from actual results.

We describe our significant accounting policies in Note 2, Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Item 8.

We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K.

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The tax laws also require us to allocate our taxable income to many jurisdictions based on subjective allocation methodologies and information collection processes.

Our effective tax rates differ from the statutory rate primarily due to the impact of state taxes, foreign operations, research and development ("R&D") and other tax credits, tax audit settlements, the tax benefit from stock option exercises and the foreign derived intangible income ("FDII") tax deduction.

Our provision for income taxes is subject to volatility and could be adversely impacted by numerous factors such as changes in tax laws, regulations, or accounting principles, including accounting for uncertain tax positions or interpretations of them.

Significant judgment is required to determine recognition and measurement.

Further, as a result of certain ongoing employment and capital investment actions and commitments, our income in certain countries is subject to reduced tax rates and in some cases is wholly exempt from tax.

Our failure to meet these commitments could adversely affect our provision for income taxes.

Our effective tax rate differs from the statutory rate primarily due to the impact of state taxes, foreign operations, research and development ("R&D") and other tax credits, tax audit settlements, the tax benefit from stock option exercises and the foreign derived intangible income ("FDII") tax deduction.

Our provision for income taxes is subject to volatility and could be adversely impacted by numerous factors such as changes in earnings or tax laws, regulations, or accounting principles, including accounting for uncertain tax positions or interpretations of them.

Significant judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and unrecognized tax benefits.

Further, as a result of certain ongoing employment and capital investment actions and commitments, our income in certain countries is subject to reduced tax rates.

Our failure to meet these employment and capital investment actions and commitments could adversely affect our provision for income taxes.

In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities.

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There can be no assurance that the outcomes from these continuous examinations will not have an adverse impact on our operating results and financial condition.

To account for unrecognized tax benefits, we first determine whether it is more likely than not (defined as a likelihood of more than 50%) that a tax position will be sustained based on its technical merits as of the reporting date.

A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.

The determination of liabilities related to unrecognized tax benefits, including associated interest and penalties, requires significant estimates.

There can be no assurance that we will accurately predict the outcomes of these audits, however, we have no reason to believe that such audits will result in the payment of additional taxes and/or penalties that would have a material adverse effect on our results of operations or financial position, beyond current estimates.

Significant judgement is required in determining our uncertain tax positions.

We follow a two-step approach in recognizing and measuring uncertain tax positions.

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not (defined as a likelihood of more than 50%) that a tax position will be sustained based on its technical merits as of the reporting date.

The second step, for those positions that meet the recognition criteria, is to measure and recognize the largest amount of benefit that is greater than 50% likely of being realized upon effective settlement with a taxing authority.

As the determination of liabilities related to uncertain tax positions and associated interest and penalties requires significant estimates and assumptions, there can be no assurance that we will accurately predict

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the outcomes of these audits.

For this reason and due to ongoing audits by multiple tax authorities, we regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions.

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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 accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws.

This interest is classified as income tax expense in the financial statements.

Refer to Note 10, Income Taxes in the Notes to the Consolidated Financial Statements included in Item 8.

The Provision for income taxes on our Consolidated Statements of Income includes the impact of changes to reserves and any related interest.

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.

Refer to Note 10, Income Taxes in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for further information.

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 to estimate the grant-date fair value.

Both models involve certain estimates and subjective assumptions regarding our stock price volatility, the expected life of the award, the term selected for the risk-free rate, and the exp ected dividend yield.

We measure compensation expense for all stock-based awards using a lattice-binomial option-pricing model ("binomial model") or the Black-Scholes model to estimate the grant-date fair value.

The binomial model also incorporates market conditions, vesting restrictions and exercise patterns.

Our performance-based equity awards require management to make assumptions regarding the probability of achieving the relevant performance condition, which is reviewed on a quarterly basis.

The number of performance-based awards that vest will be predicated on achieving performance levels during the measurement period subsequent to the date of grant.

Our performance share units ("PSUs") require management to make assumptions regarding the probability of achieving specified performance levels established at the time of grant, which are reviewed on a quarterly basis.

The ultimate number of common shares that may be earned from a PSU is determined pursuant to a payout range based on the achievement of specified performance levels.

We estimate expected forfeitures of equity awards at the date of grant and recognize compensation expense only for those awards expected to vest.

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As a result, if we revise our assumptions and estimates, our stock-based compensation expense could differ from amounts recorded.

Refer to Note 16 , Stock-Based Compensation in the Notes to the Consolidated Financial Statements included in Item 8.

Refer to Note 16, Stock-Based Compensation in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for further information.

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We test our goodwill for impairment annually during the fourth quarter of each fiscal year and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of any one of our reporting units below its respective carrying amount.

We may elect to perform a qualitative analysis for the reporting units to determine whether it is more likely (a likelihood of more than 50%) than not the fair value of the reporting unit is less than its carrying value.

We may elect to perform a qualitative analysis for the reporting units to determine whether it is more likely than not (a likelihood of more than 50%) that 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.

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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.

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 the total amount of goodwill allocated to that reporting unit.

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 acquisitions or capitalization of costs related to on-premises internal-use software.

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.

The quantitative goodwill impairment analysis is used to identify potential impairment by comparing the carrying amount of a reporting unit with its fair value.

To perform this analysis, we apply the income approach which utilizes discounted cash flows, along with other relevant market information.

Significant judgment is involved in determining the assumptions used in estimating future cash flows.

These assumptions include, but are not limited to, the following estimates:

expected sales, working capital needs to support each reporting unit, capital expenditures and related depreciation and amortization, operating expenses, expected tax rates and the weighted average cost of capital for each reporting unit.

Our 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 the present value of expected cash flows used in determining fair value of a reporting unit.

If the carrying value of the reporting unit exceeds the fair value, then the goodwill is considered impaired and written down to the reporting unit’s fair value.

The impairment loss for the reporting unit cannot exceed the carrying amount of the goodwill allocated to that reporting unit.

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Intangible Assets

We amortize our identifiable 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 life.

Intangible assets are tested for impairment qualitatively on a quarterly basis.

An impairment is recognized if the carrying amount is not recoverable and exceeds the fair value of the asset.

Recoverability is determined by comparing the carrying amount of the intangible asset to the estimated undiscounted future cash flows expected to be generated by the asset.

Determining the useful life of intangible assets requires judgement and an understanding of our planned use of the asset, among other factors.

Intangible assets are tested for impairment qualitatively on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset group is not recoverable.

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.

Significant judgment is involved in determining the assumptions used in estimating future cash flows.

If it is determined that the intangible asset is not recoverable, the impairment loss would be calculated based on the excess of the carrying amount of the intangible asset over its fair value.

Refer to Note 8, Goodwill and Note 9, Intangible Assets in the Notes to the Consolidated Financial Statements included in Item 8.

Refer to Note 8, Goodwill and Note 9, Intangible Assets in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for further details.

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Long-lived Assets

We perform a qualitative review on a quarterly basis of our long-lived assets, comprised of property, equipment and leasehold improvements.

In evaluating long-lived assets for recoverability, we use our best estimate of future cash flows (undiscounted and excluding interest charges).

If the estimated future cash flows are less than the carrying value of the asset, an impairment loss is recognized to the extent that such asset's carrying value exceeds its fair value, based on the most appropriate valuation technique, including discounted cash flows.

In determining indicators for impairment, we take various factors into account, including, but not limited to, a significant decline in our expected future cash flows, changes in expected useful life, unanticipated competition, slower growth rates, ongoing maintenance and improvements of the assets, or changes in the usage or operating performance.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred and in calculating the inputs to the impairment calculation such as estimates related to future cash flows and asset fair values, forecasting asset useful lives and selecting the discount rate that reflects the risk inherent in future cash flows.

We review our PPE to determine if any indicators of impairment are present on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

If indicators of impairment are present, the asset group is 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.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred and in calculating the inputs to the impairment calculation.

Indicators we consider include, but are not limited to, a significant decline in our expected future cash flows, a change in an expected useful life, unanticipated competition, slower growth rates, ongoing maintenance and improvements of the assets, or changes in the usage or operating performance.

Inputs to an impairment calculation include estimates related to future cash flows and asset fair values, forecasting asset useful lives and selecting the discount rate that reflects the risk inherent in future cash flows.

If actual results are not consistent with our estimates and assumptions included in our impairment assessment, we may be exposed to losses that could be material.

Refer to Note 7, Property, Equipment and Leasehold Improvements in the Notes to the Consolidated Financial Statements included in Item 8.

Refer to Note 7, Property, Equipment and Leasehold Improvements in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for further information.

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If actual results differ from our assessments, our financial position, results of operations, or cash flows would be affected.

Refer to Note 13, Commitments and Contingencies in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K, for more information on contingent matters.

New Accounting Pronouncements

Refer to Note 2, Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Item 8.

Refer to Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8.

of this Annual Report on Form 10-K for a full description of recent accounting pronouncements, including the expected dates of adoption.

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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 7. Management’s Discussion and Analysis