Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, including our Principal Executive Officer and Principal Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the annual period covered by this report, and our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of the end of the annual period covered by this report due to a material weakness in internal control over financial reporting.
Our management has identified certain control deficiencies related to the design and operation of our information technology (“IT”) general controls (“ITGCs”) that support our revenues, accounts receivable, and deferred revenues processes which, in the aggregate, rise to a material weakness in internal control over financial reporting. The deficiencies related to program change management and user access in connection with segregation of duties and restriction to appropriate users. As a result, the automated controls and IT dependent manual business process controls that rely upon information from the affected financial applications were also deemed not effective. Management has also concluded the material weakness existed in the prior year. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
After giving full consideration to the material weakness, and the additional analyses and other procedures we performed to ensure that our Consolidated Financial Statements included in this Annual Report on Form 10-K were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), our management has concluded that our Consolidated Financial Statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with GAAP.
Remediation Efforts
Management is committed to remediating the material weakness in a timely manner. Our remediation process includes, but is not limited to: (i) increasing timely reviews of IT system changes made; (ii) rationalizing access privileges for developer system users; (iii) implementing or modifying controls related to program change management and certain computer operations; and (iv) training of relevant personnel on the design and operation of any new or modified ITGCs.
These steps are subject to ongoing management review, as well as oversight by the Audit Committee of our Board of Directors. Additional or modified measures may also be required to remediate the material weakness. We will not be able to conclude that we have completely remediated the material weakness until the applicable controls are fully implemented and have operated for a sufficient period of time and management has concluded, through formal testing, that the remediated controls are operating effectively. We expect to complete these remediation measures as early as practicable in fiscal 2025. We will continue to monitor the design and effectiveness of these and other processes, procedures, and controls and make any further changes management deems appropriate.
No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls will be met, and no evaluation of controls can provide absolute assurance that all control deficiencies or material weaknesses have been or will be detected. There is no assurance that our remediation efforts will be fully effective. If these remediation efforts do not prove effective and control deficiencies and material weaknesses persist or occur in the future, the accuracy and timing of our financial reporting may be adversely affected.
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Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of fiscal 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
See Part II, Item 8. Management’s Report on Internal Control Over Financial Reporting of this Annual Report on Form 10-K, which is incorporated herein by reference.
Report of Independent Registered Public Accounting Firm
See Part II, Item 8. Report of Independent Registered Public Accounting Firm of this Annual Report on Form 10-K, which is incorporated herein by reference.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the quarter ended August 31, 2024, none of our directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934, as amended), adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408(a) and (c) of Regulation S-K).
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Part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required to be furnished by this Item 10 is incorporated herein by reference to our Notice of Annual Meeting of Stockholders and Proxy Statement to be filed within 120 days of August 31, 2024 (the "Proxy Statement").
Pursuant to General Instruction G(3) of Form 10-K, the information required by this item relating to our executive officers is included in Part I, Item 1. Business - Executive Officers of the Registrant of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required to be furnished by this Item 11 is incorporated herein by reference to our Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required to be furnished by this Item 12 is incorporated herein by reference to our Proxy Statement.
Equity Compensation Plan Information
The following table summarizes, as of August 31, 2024, the number of outstanding equity awards granted to employees and non-employee directors, as well as the number of equity awards remaining available for future issuance, under our equity compensation plans:
Plan category
Number of securities
to be issued upon exercise
of outstanding options, warrants and rights
(a) Weighted-average
exercise price of
outstanding options, warrants and rights
(b) Number of securities remaining
available for future issuances under
equity compensation plans (excluding
securities reflected in column (a))
(c) (3)
Equity compensation plans approved by security holders 2,084,552 (1)
$ 319.07 (2)
3,981,788 (4)
Equity compensation plans not approved by security holders — — —
Total 2,084,552 (1)
$ 319.07 (2)
3,981,788 (4)
(1) Includes 1,822,913 shares issuable upon exercise of outstanding options, 168,969 shares issuable upon vesting of outstanding RSUs and 92,670 shares issuable upon the conversion of outstanding PSUs.
(2) Weighted average exercise price of outstanding options only.
(3) In accordance with the LTIP and Director Plan, each Restricted Stock Award granted or canceled/forfeited is equivalent to 2.5 shares deducted from or added back to, respectively, the aggregate number of stock-based awards available for grant.
(4) Includes 3,742,978 shares available for future issuance under the LTIP, 212,571 shares available for future issuance under the Director Plan, and 26,239 shares available for purchase under the ESPP.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required to be furnished by this Item 13 is incorporated herein by reference to our Proxy Statement.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required to be furnished by this Item 14 is incorporated herein by reference to our Proxy Statement.
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Part IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this Annual Report on Form 10-K:
1. Financial Statements
The information required by this item is included in Item 8. Financial Statements and Supplementary Data , of this Annual Report on Form 10-K which is incorporated herein.
2. Financial Statements Schedule
FactSet Research Systems Inc.
Schedule II – Valuation and Qualifying Accounts
(in thousands)
Description
Balance at Beginning of Year Charged to Expense Write-offs,
Net of Recoveries Balance at
End of Year
Accounts Receivable Allowance:
2024 $ 7,769 $ 7,420 $ ( 608 ) $ 14,581
2023 $ 2,776 $ 6,668 $ ( 1,675 ) $ 7,769
2022 $ 6,431 $ 1,324 $ ( 4,979 ) $ 2,776
Additional financial statement schedules are omitted since they are either not required, not applicable, or the information is otherwise included in the financial statements or notes thereto.
3. Exhibits
The information required by this Item is set forth below.
Incorporated by Reference
Exhibit
Number Exhibit
Description Form File No. Exhibit No. Filing Date Filed
Herewith
3.1
FactSet Research Systems Inc. Second Amended and Restated Articles of Incorporation
8-K 001-11869 3.1 1/10/2023
3.2
FactSet Research Systems Inc. Amended and Restated By-Laws
8-K 001-11869 3.2 9/19/2024
4.0
Form of Common Stock
S-1/A 333-04238 4.1 6/26/1996
4.1
Indenture, dated as of March 1, 2022, between FactSet Research Systems Inc. and U.S. Bank Trust Company, National Association, as trustee
8-K 001-11869 4.1 3/1/2022
4.2
Supplemental Indenture, dated as of March 1, 2022, between FactSet Research Systems Inc. and U.S. Bank Trust Company, National Association, as trustee
8-K 001-11869 4.2 3/1/2022
4.3
Form of 2.900% Global Note due 2027 (included in Exhibit A-1 to Exhibit 4.2 above)
8-K 001-11869 4.3 3/1/2022
4.4
Form of 3.450% Global Note due 2032 (included in Exhibit A-2 to Exhibit 4.2 above)
8-K 001-11869 4.4 3/1/2022
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10.1
FactSet Research Systems Inc. 2004 Employee Stock Option and Award Plan (1)
DEF-14A 001-11869 Exhibit A 11/10/2004
10.2
FactSet Research Systems Inc. 2004 Stock Option and Award Plan, as Amended and Restated (1)
DEFR-14A 001-11869 Appendix A 12/6/2010
10.3
FactSet Research Systems Inc. Stock Option and Award Plan as Amended and Restated (1)
8-K 001-11869 10.1 12/21/2017
10.4
FactSet Research Systems Inc. 2008 Non-Employee Directors’ Stock Option Plan (1)
DEF-14A 001-11869 Appendix A 10/30/2008
10.5
FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated (1)
8-K 001-11869 10.2 12/21/2017
10.6
Lease, dated February 14, 2018, between FactSet Research Systems Inc. and 45 Glover Partners, LLC (2)
10-Q 001-11869 10.1 4/9/2018
10.7
FactSet Research Systems Inc. Executive Severance Plan (1)
8-K 001-11869 10.1 7/3/2024
10.8
Form of FactSet Research Inc. Equity Award Agreement (1)
8-K 001-11869 10.2 3/5/2020
10.9
Credit Agreement dated as of March 1, 2022, among FactSet Research Systems Inc., the Borrowing Subsidiaries party thereto, the Lenders party thereto, and PNC Bank, National Association, as the Administrative Agent
8-K 001-11869 4.5 3/1/2022
10.10
Separation Agreement and General Release of Claims dated April 26, 2022 between FactSet Research Systems Inc. and Gene Fernandez
10-Q 001-11869 10.1 7/1/2022
1 0.11
S eparation Agreement and General Release of Claims by and between FactSet Research Systems Inc. and Linda Huber, dated July 22, 2024
8-K
001-11869
10.1 7/23/2024
1 9
F actSet Research Systems Inc. Securities and Insider Trading Policy
X
21
Subsidiaries of FactSet Research Systems Inc.
X
23
Consent of Ernst & Young LLP
X
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
X
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31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
X
32.1
Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2
Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
97
FactSet Research Systems Inc. Incentive Compensation Recoupment Policy
10-K
001-11869 97 10/27/2023
101.INS XBRL Instance Document X
101.SCH XBRL Taxonomy Extension Schema X
101.CAL XBRL Taxonomy Extension Calculation Linkbase X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB XBRL Taxonomy Extension Label Linkbase X
101.PRE XBRL Taxonomy Extension Presentation Linkbase X
104 Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 X
(1) Indicates a management contract or compensatory plan or arrangement.
(2) Confidential treatment has been granted for portions of this exhibit.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
FACTSET RESEARCH SYSTEMS INC.
(Registrant)
Date: October 29, 2024 /s/ F. PHILIP SNOW
F. Philip Snow
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ F. PHILIP SNOW Chief Executive Officer and Director October 29, 2024
F. Philip Snow (Principal Executive Officer)
/s/ HELEN L. SHAN Executive Vice President, Chief Financial Officer October 29, 2024
Helen L. Shan
(Principal Financial Officer)
/s/ GREGORY T. MOSKOFF Managing Director, Controller and Chief Accounting Officer October 29, 2024
Gregory T. Moskoff (Principal Accounting Officer)
/s/ ROBIN A. ABRAMS Director October 29, 2024
Robin A. Abrams
/s/ SIEW KAI CHOY Director October 29, 2024
Siew Kai Choy
/s/ MALCOLM FRANK Director October 29, 2024
Malcolm Frank
/s/ LAURIE G. HYLTON Director October 29, 2024
Laurie G. Hylton
/s/ JAMES J. MCGONIGLE Director October 29, 2024
James J. McGonigle
/s/ LEE SHAVEL Director October 29, 2024
Lee Shavel
/s/ LAURIE SIEGEL Director October 29, 2024
Laurie Siegel
/s/ MARIA TERESA TEJADA Director October 29, 2024
Maria Teresa Tejada
/s/ ELISHA WIESEL
Director October 29, 2024
Elisha Wiesel
101