10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to ______

Commission File Number: 1-11869

FACTSET RESEARCH SYSTEMS INC.

(Exact name of registrant as specified in its charter)

 

Delaware	13-3362547
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

601 Merritt 7, Norwalk, Connecticut	06851
(Address of principal executive office)	(Zip Code)

Registrant’s telephone number, including area code: (203) 810-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒   Accelerated filer ☐   Non-accelerated filer ☐   Smaller reporting company ☐   Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, $.01 par value, as of March 29, 2019 was 38,239,923.

FactSet Research Systems Inc.

Form 10-Q

For the Quarter Ended February 28, 2019

Index

		Page
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income for the three and six months ended February 28, 2019 and 2018	3
	Consolidated Statements of Comprehensive Income for the three and six months ended February 28, 2019 and 2018	4
	Consolidated Balance Sheets at February 28, 2019 and August 31, 2018	5
	Consolidated Statements of Cash Flows for the six months ended February 28, 2019 and 2018	6
	Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended February 28, 2019	7
	Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended February 28, 2018	8
	Notes to the Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	47
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
	Signatures	50

For additional information about FactSet Research Systems Inc. and access to its Annual Reports to Stockholders and Securities and Exchange Commission filings, free of charge, please visit FactSet’s website (https://investor.factset.com). Any information on or linked from the website is not incorporated by reference into this Quarterly Report on Form 10-Q.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF INCOME – Unaudited

	Three Months Ended February 28,						Six Months Ended February 28,
(In thousands, except per share data)	2019			2018			2019			2018
Revenues	$	354,895		$	335,231		$	706,535		$	664,372
Operating expenses
Cost of services		165,108			163,232			331,884			324,756
Selling, general and administrative		81,099			76,514			165,424			155,033
Total operating expenses		246,207			239,746			497,308			479,789
Operating income		108,688			95,485			209,227			184,583
Other (expense) income
Interest (expense), net of interest income		(4,339	)		(3,272	)		(8,935	)		(6,191	)
Income before income taxes		104,349			92,213			200,292			178,392
Provision for income taxes		19,647			39,076			31,294			54,876
Net income	$	84,702		$	53,137		$	168,998		$	123,516
Basic earnings per common share	$	2.23		$	1.36		$	4.44		$	3.16
Diluted earnings per common share	$	2.19		$	1.33		$	4.37		$	3.11
Basic weighted average common shares		38,055			38,991			38,081			39,038
Diluted weighted average common shares		38,619			39,846			38,714			39,763

The accompanying notes are an integral part of these consolidated financial statements.

3

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – Unaudited

	Three Months Ended February 28,					Six Months Ended February 28,
(In thousands)	2019		2018			2019			2018
Net income	$	84,702	$	53,137		$	168,998		$	123,516
Other comprehensive income (loss), net of tax
Net unrealized gain (loss) on cash flow hedges*		527		(1,268	)		1,565			(1,744	)
Foreign currency translation adjustments		5,026		9,400			(4,478	)		17,866
Other comprehensive income (loss)		5,553		8,132			(2,913	)		16,122
Comprehensive income	$	90,255	$	61,269		$	166,085		$	139,638

* For the three and six months ended February 28, 2019, the unrealized gain on cash flow hedges was net of a tax expense of $179 and $767, respectively. For the three and six months ended February 28, 2018, the unrealized loss on cash flow hedges was net of a tax benefit of $902 and $1,190, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

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FactSet Research Systems Inc.

CONSOLIDATED BALANCE SHEETS – Unaudited

(In thousands, except share data)	February 28, 2019			August 31, 2018
ASSETS
Cash and cash equivalents	$	218,335		$	208,623
Investments		27,069			29,259
Accounts receivable, net of reserves of $5,376 at February 28, 2019 and $3,490 at August 31, 2018		176,356			156,639
Prepaid taxes		25,730			6,274
Prepaid expenses and other current assets		40,475			30,121
Total current assets		487,965			430,916
Property, equipment and leasehold improvements, net		104,829			100,545
Goodwill		700,029			701,833
Intangible assets, net		136,409			148,935
Deferred taxes		6,737			9,716
Other assets		29,025			27,502
TOTAL ASSETS	$	1,464,994		$	1,419,447
LIABILITIES
Accounts payable and accrued expenses	$	66,846		$	72,059
Accrued compensation		40,140			66,479
Deferred fees		59,178			49,700
Taxes payable		8,233			8,453
Dividends payable		24,385			24,443
Total current liabilities		198,782			221,134
Long-term debt		574,848			574,775
Deferred taxes		20,220			21,190
Deferred fees		8,475			7,833
Taxes payable		26,728			29,626
Deferred rent and other non-current liabilities		36,420			38,989
TOTAL LIABILITIES	$	865,473		$	893,547
Commitments and contingencies (see Note 17)
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued	$	—		$	—
Common stock, $.01 par value, 150,000,000 shares authorized, 39,690,225 and 39,264,849 shares issued, 38,100,165 and 38,192,586 shares outstanding at February 28, 2019 and August 31, 2018, respectively		397			393
Additional paid-in capital		732,538			667,531
Treasury stock, at cost: 1,590,060 and 1,072,263 shares at February 28, 2019 and August 31, 2018, respectively		(324,167	)		(213,428	)
Retained earnings		244,388			122,843
Accumulated other comprehensive loss		(53,635	)		(51,439	)
TOTAL STOCKHOLDERS’ EQUITY	$	599,521		$	525,900
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,464,994		$	1,419,447

The accompanying notes are an integral part of these consolidated financial statements.

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FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS – Unaudited

	Six Months Ended February 28,
(in thousands)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	168,998		$	123,516
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		29,052			28,372
Stock-based compensation expense		16,140			15,420
Deferred income taxes		1,088			2,934
Loss on sale of assets		196			25
Changes in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of reserves		(19,676	)		(16,307	)
Accounts payable and accrued expenses		(5,423	)		147
Accrued compensation		(26,266	)		(23,595	)
Deferred fees		9,729			18,098
Taxes payable, net of prepaid taxes		(17,385	)		17,166
Prepaid expenses and other assets		(10,327	)		(11,915	)
Deferred rent and other non-current liabilities		(646	)		(186	)
Other working capital accounts, net		74			14
Net cash provided by operating activities		145,554			153,689
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments		(7,927	)		(9,487	)
Proceeds from maturity of investments		10,041			9,872
Purchases of property, equipment and leasehold improvements, net of proceeds from dispositions		(21,482	)		(12,375	)
Net cash used in investing activities		(19,368	)		(11,990	)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments		(48,442	)		(43,406	)
Repurchases of common stock		(110,739	)		(113,906	)
Other financing activities		—			442
Proceeds from employee stock plans		43,362			48,784
Net cash used by financing activities		(115,819	)		(108,086	)
Effect of exchange rate changes on cash and cash equivalents		(655	)		5,284
Net increase in cash and cash equivalents		9,712			38,897
Cash and cash equivalents at beginning of period		208,623			194,731
Cash and cash equivalents at end of period	$	218,335		$	233,628

The accompanying notes are an integral part of these consolidated financial statements.

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FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY- Unaudited

For the three months ended February 28, 2019

(in thousands,	Common Stock				Additional Paid-in		Treasury Stock					Retained			Accumulated Other Comprehensive			Total Stockholders’
except per share data)	Shares		Par Value		Capital		Shares		Amount			Earnings			Loss			Equity
Balance as of November 30, 2018		39,447,491	$	394	$	694,078		1,366,613	$	(278,146	)	$	184,071		$	(59,188	)	$	541,209
Net income													84,702						84,702
Other comprehensive (loss) income																5,553			5,553
Common stock issued for employee stock plans		219,815		3		30,755													30,758
Vesting of restricted stock		22,919						8,502		(1,878	)								(1,878	)
Repurchases of common stock								214,945		(44,143	)								(44,143	)
Stock-based compensation expense						7,705													7,705
Dividends declared													(24,385	)					(24,385	)
Balance as of February 28, 2019		39,690,225	$	397	$	732,538		1,590,060	$	(324,167	)	$	244,388		$	(53,635	)	$	599,521

For the six months ended February 28, 2019

(in thousands,	Common Stock				Additional Paid-in		Treasury Stock					Retained			Accumulated Other Comprehensive			Total Stockholders’
except per share data)	Shares		Par Value		Capital		Shares		Amount			Earnings			Loss			Equity
Balance as of August 31, 2018		39,264,849	$	393	$	667,531		1,072,263	$	(213,428	)	$	122,843		$	(51,439	)	$	525,900
Net income													168,998						168,998
Other comprehensive (loss) income																(2,913	)		(2,913	)
Common stock issued for employee stock plans		349,846		4		48,867													48,871
Vesting of restricted stock		75,530						27,852		(6,155	)								(6,155	)
Repurchases of common stock								489,945		(104,584	)								(104,584	)
Stock-based compensation expense						16,140													16,140
Dividends declared													(48,756	)					(48,756	)
Cumulative effect of adoption of accounting standards*													1,303			717			2,020
Balance as of February 28, 2019		39,690,225	$	397	$	732,538		1,590,060	$	(324,167	)	$	244,388		$	(53,635	)	$	599,521

* Includes the cumulative effect of adoption of accounting standards primarily due to both the adoption of the new revenue recognition standard (ASC 606) resulting in a cumulative increase to retained earnings related to certain fulfillment costs and the accounting standard update related to the U.S. Tax Cuts and Jobs Act (“TCJA”) providing for the reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects. See Notes 3 and 4 for additional information.

The accompanying notes are an integral part of these consolidated financial statements.

7

FactSet Research Systems Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY- Unaudited

For the three months ended February 28, 2018

(in thousands,	Common Stock						Additional Paid-in			Treasury Stock Shares Amount						Retained			Accumulated Other Comprehensive			Total Stockholders’
except per share data)	Shares			Par Value			Capital			Shares			Amount			Earnings			Loss			Equity
Balance as of November 30, 2017		52,101,426		$	521		$	775,509			12,991,346		$	(1,638,384	)	$	1,507,301		$	(26,730	)	$	618,217
Net income																	53,137						53,137
Other comprehensive (loss) income																				8,132			8,132
Common stock issued for employee stock plans		234,855			2			28,664															28,666
Vesting of restricted stock		3,561									1,343			(263	)								(263	)
Repurchases of common stock											420,000			(81,938	)								(81,938	)
Stock-based compensation expense								7,938															7,938
Dividends declared																	(21,799	)					(21,799	)
Retirement of Treasury Shares		(13,292,689	)		(133	)		(186,717	)		(13,292,689	)		1,697,206			(1,510,356	)
Balance as of February 28, 2018		39,047,153		$	390		$	625,394			120,000		$	(23,379	)	$	28,283		$	(18,598	)	$	612,090

For the six months ended February 28, 2018

(in thousands,	Common Stock						Additional Paid-in			Treasury Stock						Retained			Accumulated Other Comprehensive			Total Stockholders’
except per share data)	Shares			Par Value			Capital			Shares			Amount			Earnings			Loss			Equity
Balance as of August 31, 2017		51,845,132		$	518		$	741,748			12,822,100		$	(1,606,678	)	$	1,458,823		$	(34,720	)	$	559,691
Net income																	123,516						123,516
Other comprehensive (loss) income																				16,122			16,122
Common stock issued for employee stock plans		479,871			5			54,943															54,948
Vesting of restricted stock		14,839									5,563			(1,015	)								(1,015	)
Repurchases of common stock											585,026			(112,892	)								(112,892	)
Stock-based compensation expense								15,420															15,420
Dividends declared																	(43,700	)					(43,700	)
Retirement of Treasury Shares		(13,292,689	)		(133	)		(186,717	)		(13,292,689	)		1,697,206			(1,510,355	)
Balance as of February 28, 2018		39,047,153		$	390		$	625,394			120,000		$	(23,379	)	$	28,283		$	(18,598	)	$	612,090

The accompanying notes are an integral part of these consolidated financial statements.

8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FactSet Research Systems Inc.

February 28, 2019

(Unaudited)

1. ORGANIZATION AND NATURE OF BUSINESS

FactSet Research Systems Inc. (the “Company” or “FactSet”) is a global provider of integrated financial information, analytical applications and industry-leading service for the global investment community. These professionals include portfolio managers, investment research professionals, investment bankers, risk and performance analysts, and wealth advisors. From streaming real-time data to historical information, including quotes, estimates, news and commentary, FactSet offers proprietary and third-party content through desktop, web, mobile, and off-platform solutions. The Company’s broad application suite offers tools and resources including company and industry analyses, full screening tools, portfolio analysis, risk profiles, alpha-testing, portfolio optimization and research management solutions. With recent acquisitions, FactSet has continued to expand its solutions across the investment lifecycle from idea generation to performance and client reporting. The Company delivers insight and information to investment professionals through key workflow solutions including Research, Analytics, Wealth, and Content and Technology Solutions (“CTS”). The Company’s revenue is primarily derived from subscriptions to products and services such as workstations, analytics, enterprise data, research management, and trade execution.

2. BASIS OF PRESENTATION

FactSet conducts business globally and is managed on a geographic basis. The accompanying unaudited consolidated financial statements and notes of FactSet and its wholly owned subsidiaries included in this Quarterly Report on Form 10-Q are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany activity and balances have been eliminated from the consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments, transactions or events discretely impacting the interim periods considered necessary to present fairly the Company’s financial position, results of operations, equity and cash flows. The information in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2018, filed with the Securities and Exchange Commission (“SEC”) on October 30, 2018.

The Company has evaluated subsequent events through the date that the financial statements were issued.

3. RECENT ACCOUNTING PRONOUNCEMENTS

As of February 28, 2019, The Company implemented all applicable new accounting standards and updates issued by the Financial Accounting Standards Board (“FASB”) that were in effect. There were no new standards or updates adopted during the first six months of fiscal 2019 that had a material impact on the consolidated financial statements.

New Accounting Standards or Updates Recently Adopted

Revenue Recognition

In May 2014 and July 2015, the FASB issued accounting standard updates which clarified principles for recognizing revenue arising from contracts with clients and superseded most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. The new guidance also requires increased disclosures including the nature, amount, timing, and uncertainty of revenue and cash flows related to contracts with clients.

The standard allows two methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective method”). FactSet adopted the new standard using the modified retrospective method as of the beginning of its first quarter of fiscal 2019.

FactSet’s implementation efforts include the evaluation of contract revenue under the new guidance. Additionally, an assessment of the qualitative and quantitative impacts of pricing changes during the contractual term and fulfillment costs was made.

9

The Company derives most of its revenues by providing client access to its hosted proprietary data and analytics platform, which can include various combinations of products and services available over the contractual term. The Company determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. FactSet recorded an opening cumulative increase to retained earnings of $2.5 million, or $2.0 million net of tax, during the first quarter of fiscal 2019, related to certain fulfillment costs, which include up-front costs to allow for the delivery of services and products that are expected to be recovered. Under the new standard, such up-front costs are recognized as an asset and amortized consistent with the associated revenue for providing the services. The adoption of the new standards did not materially change the Company’s accounting policy for revenue recognition and did not have a material impact on the Company’s consolidated financial statements. Refer to Note 4 Revenue Recognition for further details.

Recognition and Measurement of Financial Assets and Financial Liabilities

During the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in January 2016, which amended the recognition, measurement, presentation, and disclosure of certain financial instruments. Under the amended guidance, investments in equity securities, excluding equity method investments, will be measured at fair value with changes in fair value to be recognized in net income. This guidance was applied on a modified retrospective approach through a cumulative effect adjustment to retained earnings as permitted by the standard and did not have a material impact on the Company’s consolidated financial statements.

Cash Flow Simplification

During the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in August 2016, which simplified how certain transactions are classified in the statement of cash flows. This included revised guidance on the cash flow classification of debt prepayments and debt extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investments. The guidance is intended to reduce diversity in practice across all industries. The adoption of this standard had no impact on the Company’s consolidated financial statements.

Income Taxes on Intra-Entity Transfers of Assets

During the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in October 2016, which removed the prohibition against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The guidance was issued in order to reduce diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. The adoption of this standard had no impact on the Company’s consolidated financial statements.

Share-Based Payments

During the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in May 2017, which amended the scope of modification accounting for share-based payment arrangements. The guidance focused on changes to the terms or conditions of share-based payment awards that would require the application of modification accounting and specifies that an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The adoption of this standard had no impact on the Company’s consolidated financial statements.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

During the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in February 2018, which allowed companies to reclassify certain stranded income tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the "TCJA") from accumulated other comprehensive income to retained earnings. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Implementation Costs in a Cloud Computing Arrangement

During the first quarter of fiscal 2019, FactSet adopted the accounting standard update issued by the FASB in August 2018, which related to a client’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the requirements for capitalizing implementation costs in a cloud computing service contract with the guidance for capitalizing implementation costs to develop or obtain internal-use software. Capitalized implementation costs will be amortized over the term of the arrangement. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021, however the Company elected to early adopt this standard on a prospective basis during the first quarter of fiscal 2019. There was no impact to the Company’s consolidated financial statements as a result of the adoption of this standard, as FactSet is currently accounting for costs incurred in a cloud computing arrangement in accordance with the guidance provided in this standard.

Recent Accounting Standards or Updates Not Yet Effective

Leases

In February 2016, the FASB issued an accounting standard update related to accounting for leases. The guidance introduces a lessee model that requires most leases to be reported on the balance sheet. The accounting standard update aligns many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. The guidance also eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification. This accounting standard update will be effective for FactSet beginning in the first quarter of fiscal 2020, with early adoption in fiscal 2019 permitted. The Company is currently evaluating the impact of this accounting standard update, including the transition method, but expects the adoption to have a material impact to its balance sheet. However, it does not expect the adoption to have a material impact on the statements of income, comprehensive income or cash flows. Refer to Note 17 Commitments and Contingencies for information regarding the Company’s undiscounted future lease commitments.

10

Goodwill Impairment Test

In January 2017, the FASB issued an accounting standard update which removes the requirement for companies to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021, with early adoption permitted for any impairment tests performed after January 1, 2017 and is not expected to have a material impact on the consolidated financial statements.

Hedge Accounting Simplification

In August 2017, the FASB issued an accounting standard update to reduce the complexity of and simplify the application of hedge accounting. The guidance refines and expands hedge accounting for both financial and nonfinancial risk components, eliminates the need to separately measure and report hedge ineffectiveness, and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance will be effective for the Company beginning in the first quarter of fiscal 2020, with early adoption permitted. The Company is currently evaluating the impact of this accounting standard update but it is not expected to have a material impact on the consolidated financial statements.

No other new accounting pronouncements issued or effective as of February 28, 2019 have had or are expected to have an impact on the Company’s consolidated financial statements.

4. REVENUE RECOGNITION

In May 2014 and July 2015, the FASB issued accounting standard updates which clarified principles for recognizing revenue arising from contracts with customers (ASC 606) and superseded most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue standard is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance applies a five-step model for revenue measurement and recognition and also requires increased disclosures including the nature, amount, timing, and uncertainty of revenue and cash flows related to contracts with clients.

The Company adopted the standard at the beginning of the first quarter of fiscal 2019, using the modified retrospective method of adoption and applied the guidance to those contracts that were not completed as of August 31, 2018. Under the modified retrospective method of adoption, the cumulative effect of applying the new standard is recorded at the date of initial application, with no restatement of the comparative prior periods presented. The Company assessed its revenue contracts with clients under the new standards and determined that the adoption did not materially change the timing or amount of revenue recognized.

The Company derives most of its revenues by providing client access to its hosted proprietary data and analytics platform which can include various combinations of products and services available over the contractual term. The hosted platform is a subscription-based service that consists primarily of providing access to products and services including workstations, analytics, enterprise data, research management, and trade execution. The Company determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. The Company determined that the nature of the promise to the client is to provide daily access to one overall data and analytics platform. This platform provides integrated financial information, analytical applications and industry-leading service for the investment community. Based on the nature of the services and products offered by FactSet, the Company applies an input time-based measure of progress as the client is simultaneously receiving and consuming the benefits of the platform. The Company records revenue for its contracts using the over-time revenue recognition model as a client is invoiced or performance in satisfied, which is comparable with how revenue is recognized today. FactSet does not consider payment terms a performance obligation for customers with contractual terms that are one year or less and has elected the practical expedient.

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In FactSet’s assessment of contracts with clients, the Company did identify a small portion of contracts with certain fulfillment costs, which include up-front costs to allow for the delivery of services and products that are expected to be recovered. In connection with the adoption of the new standard, these fulfillment costs are recognized as an asset and amortized consistent with the associated revenue for providing the services, which prior to adoption were expensed. As a result, during the first quarter of fiscal 2019, FactSet recorded an opening cumulative increase to Retained earnings of $2.5 million, or $2.0 million net of tax, with an offsetting increase related to the current asset portion in Prepaid expenses and other current assets and the non-current asset portion in Other assets based on the term of the license period. Prospectively, fulfillment costs will continue to be recognized in the same accounts used for the adoption impact, which include the Prepaid expenses and other current assets account for the current portion and Other assets for the non-current portion, based on the term of the license period. The differences between the Company’s reported operating results for the three months and six months ended February 28, 2019, which reflect the application of the new standard on the Company’s contracts, and the results that would have been reported as if the accounting was performed pursuant to the accounting standards previously in effect, were not material. There are no significant judgements that would impact the timing of revenue recognition. The majority of client contracts have a duration of one year or less, or the amount FactSet is entitled to receive corresponds directly with the value of performance obligations completed to date, and therefore, the Company does not disclose the value of the remaining unsatisfied performance obligations.

Disaggregated Revenue

The Company disaggregates revenue from contracts with clients by demographic region which include U.S., Europe and Asia Pacific. FactSet believes these geographic regions are reflective of how the Company manages the business and the demographic markets in which it serves. The geographic regions best depict the nature, amount, timing and uncertainty of revenues and cash flows related to contracts with clients. Refer to Note 8 Segment Information for further information on revenues by geographic region.

The following table presents this disaggregation of revenue by geography:

	Three months ended February 28,				Six months ended February 28,
(in thousands)	2019		2018		2019		2018
U.S.	$	223,315	$	208,900	$	445,518	$	417,668
Europe		98,933		96,206		196,698		187,933
Asia Pacific		32,647		30,125		64,319		58,771
Total Revenue	$	354,895	$	335,231	$	706,535	$	664,372

5. FAIR VALUE MEASURES

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income and cost approaches is permissible. The Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. 

Fair Value Hierarchy

The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels. The Company has categorized its cash equivalents, investments and derivatives within the fair value hierarchy as follows:

Level 1 – applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. These Level 1 assets and liabilities include the Company’s corporate money market funds that are classified as cash equivalents.

Level 2 – applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. The Company’s mutual funds, certificates of deposit, and derivative instruments are classified as Level 2.

Level 3 – applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. There were no Level 3 assets or liabilities held by the Company as of February 28, 2019 or August 31, 2018.

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(a) Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables shows by level within the fair value hierarchy the Company’s assets and liabilities that are measured at fair value on a recurring basis at February 28, 2019 and August 31, 2018. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

	Fair Value Measurements at February 28, 2019
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds (1)	$	38,000	$	—	$	—	$	38,000
Mutual funds (2)		—		18,541		—		18,541
Certificates of deposit (3)		—		8,528		—		8,528
Derivative instruments (4)		—		680		—		680
Total assets measured at fair value	$	38,000	$	27,749	$	—	$	65,749
Liabilities
Derivative instruments (4)	$	—	$	2,293	$	—	$	2,293
Total liabilities measured at fair value	$	—	$	2,293	$	—	$	2,293

	Fair Value Measurements at August 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds (1)	$	75	$	—	$	—	$	75
Mutual funds (2)		—		18,668		—		18,668
Certificates of deposit (3)		—		10,591		—		10,591
Derivative instruments (4)		—		90		—		90
Total assets measured at fair value	$	75	$	29,349	$	—	$	29,424
Liabilities
Derivative instruments (4)	$	—	$	4,036	$	—	$	4,036
Total liabilities measured at fair value	$	—	$	4,036	$	—	$	4,036

⁽¹⁾ The Company’s corporate money market funds are readily convertible into cash and the net asset value of each fund on the last day of the quarter is used to determine its fair value. As such, the Company’s corporate money market funds are classified as Level 1 and included in Cash and cash equivalents within the consolidated balance sheets.

⁽²⁾ The Company’s mutual funds have a fair value based on the fair value of the underlying investments held by the mutual funds, allocated to each share of the mutual fund using a net asset value approach. The fair value of the underlying investments is based on observable inputs. As such, the Company’s mutual funds are classified as Level 2 and are included as Investments (short-term) on the consolidated balance sheets.

⁽³⁾ The Company’s certificates of deposit held for investment are valued at amortized cost, which approximates fair value and, therefore, are classified as Level 2. These certificates of deposit are not debt securities and have original maturities greater than three months, but less than one year and, as such, are classified as Investments (short-term) within the consolidated balance sheets.

⁽⁴⁾ The Company utilizes the income approach to measure fair value for its derivative instruments (foreign exchange forward contracts). The income approach uses pricing models that rely on market observable inputs such as spot, forward and interest rates, as well as credit default swap spreads and therefore are classified as Level 2.

(b) Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Certain assets, including Goodwill and Intangible assets, and liabilities, are measured at fair value on a non-recurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances such as when they are deemed to be other-than-temporarily impaired. The fair values of these non-financial assets and liabilities are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparable information, and discounted cash flow projections. An impairment charge is recorded when the cost exceeds its fair value, based upon the results of such valuations. During the six months ended February 28, 2019, no fair value adjustments or material fair value measurements were required for the Company’s non-financial assets or liabilities.

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(c) Assets and Liabilities Measured at Fair Value for Disclosure Purposes Only

As of February 28, 2019, and August 31, 2018, the fair value of the Company’s Long-term debt was $575.0 million, which approximated its carrying amount given the application of a floating interest rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid. The fair value of the Company’s long-term debt was determined based on quoted market prices for debt with a similar maturity, and thus categorized as Level 2 in the fair value hierarchy.

6. DERIVATIVE INSTRUMENTS

Cash Flow Hedges

FactSet conducts business outside the U.S. in several currencies including the Euro, British Pound Sterling, Indian Rupee, and Philippine Peso. As such, it is exposed to movements in foreign currency exchange rates compared to the U.S. dollar. The Company utilizes derivative instruments (foreign currency forward contracts) to manage the exposures related to the effects of foreign exchange rate fluctuations and reduce the volatility of earnings and cash flows associated with changes in foreign currency. The Company does not enter into foreign currency forward contracts for trading or speculative purposes. See Note 17, Commitments and Contingencies – Concentrations of Credit Risk, for further discussion on counterparty credit risk.

In designing a specific hedging approach, FactSet considered several factors, including offsetting exposures, the significance of exposures, the forecasting of risk and the potential effectiveness of the hedge. The gains and losses on foreign currency forward contracts offset the variability in operating expenses associated with currency movements. The changes in fair value for these foreign currency forward contracts are initially reported as a component of accumulated other comprehensive loss (“AOCL”) and subsequently reclassified into operating expenses when the hedged exposure affects earnings. There was no discontinuance of cash flow hedges during the first six months of fiscal 2019 and 2018, and as such, no corresponding gains or losses related to changes in the value of the Company’s contracts were reclassified into earnings prior to settlement.

As of February 28, 2019, FactSet maintained the following foreign currency forward contracts to hedge its exposures:

● Philippine Peso – foreign currency forward contracts to hedge approximately 75% of its Philippine Peso exposure through the fourth quarter of fiscal 2020.

● Indian Rupee – foreign currency forward contracts to hedge approximately 75% of its Indian Rupee exposure through the third quarter of fiscal 2019, 50% of its exposure from the fourth quarter of fiscal 2019 through the end of the second quarter of fiscal 2020, and 25% of its exposure from the third quarter of fiscal 2020 through the end of the fourth quarter of fiscal 2020.

● Euro – foreign currency forward contracts to hedge approximately 78% of its Euro exposure through the third quarter of fiscal 2019.

● British Pound Sterling – foreign currency forward contracts to hedge approximately 50% of its British Pound Sterling exposure through the third quarter of fiscal 2019.

The following is a summary of all hedging positions and corresponding fair values:

	Gross Notional Value				Fair Value (Liability) Asset
Currency Hedged (in thousands, in U.S. dollars)	February 28, 2019		August 31, 2018		February 28, 2019			August 31, 2018
Philippine Peso	$	39,000	$	52,000	$	680		$	(1,230	)
Indian Rupee		35,580		50,780		(1,506	)		(1,490	)
Euro		29,977		26,312		(622	)		(503	)
British Pound Sterling		6,682		18,995		(165	)		(723	)
Total	$	111,239	$	148,087	$	(1,613	)	$	(3,946	)

As of February 28, 2019, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos with U.S. dollars was PHP 2.1 billion. The gross notional value of foreign currency forward contracts to purchase Indian Rupees with U.S. dollars was Rs. 2.5 billion. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros was € 25.7 million. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with British Pound Sterling was £ 4.9 million.

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Fair Value of Derivative Instruments 

The following table provides a summary of the fair value amounts of derivative instruments:

Designation of Derivatives (in thousands)	Balance Sheet Location	February 28, 2019		August 31, 2018
Derivatives designated as hedging instruments	Assets: Foreign Currency Forward Contracts
	Prepaid expenses and other current assets	$	533	$	90
	Other Assets	$	147	$	—
	Liabilities: Foreign Currency Forward Contracts
	Accounts payable and accrued expenses	$	2,044	$	1,731
	Deferred rent and other non-current liabilities	$	249	$	2,305

All derivatives were designated as hedging instruments as of February 28, 2019 and August 31, 2018.

Derivatives in Cash Flow Hedging Relationships

The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the three months ended February 28, 2019 and 2018, respectively:

(in thousands)	Gain (Loss) Recognized in AOCL on Derivatives (Effective Portion)					Location of (Loss) Gain Reclassified from AOCL into Income	(Loss) Gain Reclassified from AOCL into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	2019		2018			(Effective Portion)	2019			2018
Foreign currency forward contracts	$	321	$	(1,346	)	SG&A	$	(385	)	$	824

The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the six months ended February 28, 2019 and 2018, respectively:

(in thousands)	Gain (Loss) Recognized in AOCL on Derivatives (Effective Portion)					Location of (Loss) Gain Reclassified from AOCL into Income	(Loss) Gain Reclassified from AOCL into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	2019		2018			(Effective Portion)	2019			2018
Foreign currency forward contracts	$	2,264	$	(1,345	)	SG&A	$	(784	)	$	1,589

No amount of ineffectiveness was recorded in the consolidated statements of income for these designated cash flow hedges and all components of each derivative’s gain or loss was included in the assessment of hedge effectiveness. As of February 28, 2019, the Company estimates that $1.5 million of net derivative losses related to its cash flow hedges included in AOCL will be reclassified into earnings within the next 12 months.

Offsetting of Derivative Instruments

FactSet’s master netting and other similar arrangements with its respective counterparties allow for net settlement under certain conditions. As of February 28, 2019, and August 31, 2018, there were no material amounts recorded net on the consolidated balance sheets.

7. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Other comprehensive income for the three months ended February 28, 2019 and 2018 are as follows:

	February 28, 2019				February 28, 2018
(in thousands)	Pre-tax		Net of tax		Pre-tax			Net of tax
Foreign currency translation adjustments	$	5,026	$	5,026	$	9,400		$	9,400
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		706		527		(2,170	)		(1,268	)
Other comprehensive income	$	5,732	$	5,553	$	7,230		$	8,132

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The components of Other comprehensive (loss) income for the six months ended February 28, 2019 and 2018 are as follows:

	February 28, 2019						February 28, 2018
(in thousands)	Pre-tax			Net of tax			Pre-tax			Net of tax
Foreign currency translation adjustments	$	(4,478	)	$	(4,478	)	$	17,866		$	17,866
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		2,332			1,565			(2,934	)		(1,744	)
Other comprehensive (loss) income	$	(2,146	)	$	(2,913	)	$	14,932		$	16,122

The components of AOCL are as follows:

(in thousands)	February 28, 2019			August 31, 2018
Accumulated unrealized (gains) losses on cash flow hedges, net of tax	$	(1,204	)	$	(3,486	)
Accumulated foreign currency translation adjustments		(52,431	)		(47,953	)
Total accumulated other comprehensive loss	$	(53,635	)	$	(51,439	)

8. SEGMENT INFORMATION

Operating segments are defined as (i) components of an enterprise that engage in business activities from which they may earn revenue and incur expense, (ii) with operating results that are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and (iii) for which discrete financial information is available. Executive management, along with the CEO, constitute FactSet’s chief operating decision making group (“CODMG”). Executive management consists of certain executives who directly report to the CEO, consisting of the Chief Financial Officer, Chief Technology and Product Officer, Global Head of Sales and Client Solutions, General Counsel, Chief Human Resources Officer and Head of Analytics & Trading. The CODMG reviews financial information at the operating segment level and is responsible for making decisions about resources allocated amongst the operating segments based on actual results.

The Company’s operating segments are aligned with how the Company, including its CODMG, manages the business and the demographic markets in which it serves. The Company’s internal financial reporting structure is based on three segments: the U.S., Europe and Asia Pacific. The Company believes this alignment helps to better manage the business and view the markets it serves, which are centered on providing integrated global financial and economic information. Sales, consulting, data collection, product development and software engineering are the primary functional groups within the U.S., Europe and Asia Pacific segments. These functional groups provide global financial and economic information to investment managers, investment banks and other financial services professionals.

The U.S. segment serves investment professionals including financial institutions throughout the Americas. The Europe and Asia Pacific segments serve investment professionals located throughout Europe and Asia Pacific, respectively. Segment revenue reflects direct sales to clients based on their respective geographic locations. Each segment records compensation expense, including stock-based compensation, amortization of intangible assets, depreciation of furniture and fixtures, amortization of leasehold improvements, communication costs, professional fees, rent expense, travel, office and other direct expenses.

Expenditures associated with the Company’s data centers, third-party data costs and corporate headquarters charges are recorded by the U.S. segment and are not allocated to the other segments. The content collection centers, located in India, the Philippines, and Latvia, benefit all the Company’s operating segments and thus the expenses incurred at these locations are allocated to each segment based on a percentage of revenue. Of the total $700.0 million of goodwill reported by the Company at February 28, 2019, 55% was recorded in the U.S. segment, 44% in the Europe segment and the remaining 1% in the Asia Pacific segment.

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The following reflects the results of operations of the segments, consistent with the Company’s management structure. These results are used, in part, by management, both in evaluating the performance of, and in allocating resources to, each of the segments.

(in thousands) For the three months ended February 28, 2019	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	223,315	$	98,933	$	32,647	$	354,895
Segment operating income	$	45,696	$	43,248	$	19,744	$	108,688
Total assets	$	792,573	$	556,526	$	115,895	$	1,464,994
Capital expenditures	$	7,254	$	434	$	4,269	$	11,957

For the three months ended February 28, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	208,900	$	96,206	$	30,125	$	335,231
Segment operating income	$	38,527	$	36,993	$	19,965	$	95,485
Total assets	$	733,045	$	634,472	$	104,975	$	1,472,492
Capital expenditures	$	3,729	$	755	$	1,979	$	6,463

(in thousands) For the six months ended February 28, 2019	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	445,518	$	196,698	$	64,319	$	706,535
Segment operating income	$	89,537	$	82,337	$	37,353	$	209,227
Capital expenditures	$	11,358	$	1,697	$	8,427	$	21,482

For the six months ended February 28, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	417,668	$	187,933	$	58,771	$	664,372
Segment operating income	$	79,298	$	69,963	$	35,322	$	184,583
Capital expenditures	$	7,274	$	2,279	$	2,822	$	12,375

9. GOODWILL

Changes in the carrying amount of goodwill by segment for the six months ended February 28, 2019 are as follows:

(in thousands)	U.S.		Europe			Asia Pacific			Total
Balance at August 31, 2018	$	386,195	$	312,694		$	2,944		$	701,833
Foreign currency translations		—		(1,793	)		(11	)		(1,804	)
Balance at February 28, 2019	$	386,195	$	310,901		$	2,933		$	700,029

Goodwill is not amortized as it is estimated to have an indefinite life. At least annually, the Company is required to test goodwill at the reporting unit level for potential impairment, and, if impaired, write down to fair value based on the present value of discounted cash flows. The Company’s reporting units evaluated for potential impairment were the U.S., Europe and Asia Pacific, which reflect the level of internal reporting the Company uses to manage its business and operations. The three reporting units are consistent with the operating segments reported as there is no discrete financial information available for the subsidiaries within each operating segment. The Company performed its annual goodwill impairment test during the fourth quarter of fiscal 2018, consistent with the timing of previous years, at which time it was determined that there was no impairment, with the fair value of each of the Company’s reporting units significantly exceeding carrying value.

10. INTANGIBLE ASSETS

FactSet’s identifiable intangible assets consist of acquired content databases, client relationships, software technology, non-compete agreements and trade names resulting from previous acquisitions, which have been fully integrated into the Company’s operations. The weighted average useful life of FactSet’s acquired identifiable intangible assets at February 28, 2019 was 12.3 years. The Company amortizes intangible assets over their estimated useful lives, which are evaluated quarterly to determine whether events and circumstances warrant a revision to the remaining period of amortization. There have been no changes to the estimate of the remaining useful lives during the first six months of fiscal 2019. If indicators of impairment are present, amortizable intangible assets are tested for impairment comparing the carrying value to undiscounted cash flows and, if impaired, written down to fair value based on discounted cash flows. No impairment of intangible assets has been identified during any of the periods presented. The intangible assets have no assigned residual values.

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The gross carrying amounts and accumulated amortization totals related to the Company’s identifiable intangible assets are as follows:

At February 28, 2019 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	34,135	$	21,835	$	12,300
Client relationships		98,148		32,801		65,347
Software technology		106,231		50,837		55,394
Non-compete agreements		4,860		2,815		2,045
Trade names		4,068		2,745		1,323
Total	$	247,442	$	111,033	$	136,409

At August 31, 2018 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	33,992	$	20,990	$	13,002
Client relationships		98,882		29,387		69,495
Software technology		106,505		44,231		62,274
Non-compete agreements		4,840		2,381		2,459
Trade names		4,070		2,365		1,705
Total	$	248,289	$	99,354	$	148,935

Amortization expense recorded for intangible assets was $5.8 million and $6.2 million for the three months ended February 28, 2019 and 2018, respectively. Amortization expense recorded for intangible assets was $11.7 million and $12.4 million for the six months ended February 28, 2019 and 2018, respectively. As of February 28, 2019, estimated intangible asset amortization expense for each of the next five years and thereafter is as follows

Fiscal Year (in thousands)	Estimated Amortization Expense
2019 (remaining six months)	$	11,927
2020		23,216
2021		21,252
2022		18,666
2023		13,844
Thereafter		47,504
Total	$	136,409

11. COMMON STOCK AND EARNINGS PER SHARE

On February 15, 2019, FactSet’s Board of Directors approved a regular quarterly dividend of $0.64 per share. The cash dividend of $24.4 million was paid on March 19, 2019 to common stockholders of record at the close of business on February 28, 2019.

Shares of common stock outstanding were as follows:

	Six Months ended February 28,
(in thousands)	2019			2018
Balance, beginning of year (September 1)		38,192			39,023
Common stock issued for employee stock plans		426			495
Repurchase of common stock from employees(1)		(28	)		(6	)
Repurchase of common stock under the share repurchase program		(490	)		(585	)
Balance at February 28, 2019 and 2018, respectively		38,100			38,927

⁽¹⁾  For the six months ended February 28, 2019 and 2018, the Company repurchased 27,852 and 5,563 shares, or $6.1 million and $1.0 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock.

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A reconciliation of the weighted average shares outstanding used in the basic and diluted earnings per share (“EPS”) computations is as follows:

(in thousands, except per share data)	Net Income (Numerator)		Weighted Average Common Shares (Denominator)		Per Share Amount
For the three months ended February 28, 2019
Basic EPS
Income available to common stockholders	$	84,702		38,055	$	2.23
Diluted EPS
Dilutive effect of stock options and restricted stock				564
Income available to common stockholders plus assumed conversions	$	84,702		38,619	$	2.19
For the three months ended February 28, 2018
Basic EPS
Income available to common stockholders	$	53,137		38,991	$	1.36
Diluted EPS
Dilutive effect of stock options and restricted stock				855
Income available to common stockholders plus assumed conversions	$	53,137		39,846	$	1.33
For the six months ended February 28, 2019
Basic EPS
Income available to common stockholders	$	168,998		38,081	$	4.44
Diluted EPS
Dilutive effect of stock options and restricted stock				633
Income available to common stockholders plus assumed conversions	$	168,998		38,714	$	4.37
For the six months ended February 28, 2018
Basic EPS
Income available to common stockholders	$	123,516		39,038	$	3.16
Diluted EPS
Dilutive effect of stock options and restricted stock				725
Income available to common stockholders plus assumed conversions	$	123,516		39,763	$	3.11

Dilutive potential common shares consist of stock options and unvested restricted stock awards. There were 447,709 stock options excluded from the calculation of diluted EPS for the three and six months ended February 28, 2019, because their inclusion would have been anti-dilutive. There were no stock options or unvested restricted stock awards excluded from the calculation of diluted EPS for the three and six months ended February 28, 2018.

Performance-based stock options are omitted from the calculation of diluted EPS until the performance criteria is probable of being achieved. For the three and six months ended February 28, 2019, the number of performance-based stock option grants excluded from the calculation of diluted EPS was 206,417. For the three and six months ended February 28, 2018, the number of performance-based stock option grants excluded from the calculation of diluted EPS was 309,800.

12. STOCKHOLDERS’ EQUITY

Preferred Stock

At February 28, 2019 and August 31, 2018, there were 10,000,000 shares of preferred stock ($0.01 par value per share) authorized, of which no shares were issued and outstanding. FactSet’s Board of Directors may from time to time authorize the issuance of one or more series of preferred stock and, in connection with the creation of such series, determine the characteristics of each such series including, without limitation, the preference and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of the series.

Common Stock

At February 28, 2019 and August 31, 2018, there were 150,000,000 shares of common stock ($.01 par value per share) authorized, of which 39,690,225 and 39,264,849 shares were issued, respectively. The authorized shares of common stock are issuable for any proper corporate purpose, including future stock splits, stock dividends, acquisitions, raising equity capital or to adopt additional employee benefit plans.

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Treasury Stock

On January 31, 2018, FactSet retired 13,292,689 shares of treasury stock. These retired shares are now included in the Company’s pool of authorized but unissued shares. The retired treasury stock was initially recorded using the cost method and had a carrying value of $1.7 billion at January 31, 2018. The Company’s accounting policy upon the formal retirement of treasury stock is to deduct its par value from common stock ($0.1 million), reduce additional paid-in capital (“APIC”) by the average amount recorded in APIC when stock was originally issued ($186.7 million) and any remaining excess of cost as a reduction to retained earnings ($1.5 billion). As of February 28, 2019, and August 31, 2018, there were 1,590,060 and 1,072,263 shares of treasury stock (at cost) outstanding, respectively.

Share Repurchase Program

Repurchases will be made from time to time in the open market and privately negotiated transactions, subject to market conditions. For the three months ended February 28, 2019 and 2018, the Company repurchased 214,945 shares for $44.1 million and 420,000 shares for $81.9 million, respectively. For the six months ended February 28, 2019 and 2018, the Company repurchased 489,945 shares for $104.6 million and 584,920 shares for $112.9 million, respectively. As of February 28, 2019, $137.2 million remains authorized for future share repurchases. No minimum number of shares to be repurchased has been fixed. There is no timeframe to complete the repurchase program and it is expected that share repurchases will be paid using existing and future cash generated by operations.

Restricted Stock 

Restricted stock awards entitle the holder to shares of common stock as the awards vest over time. During the first six months of fiscal 2019, previously granted restricted stock awards of 75,530 shares vested and were included in common stock outstanding as of February 28, 2019 (recorded net of 27,852 shares repurchased from employees at a cost of $6.1 million to cover their cost of taxes upon vesting of the restricted stock). During the same comparable period a year ago, 14,839 shares of previously granted restricted stock awards vested and were included in common stock outstanding as of February 28, 2018 (recorded net of 5,563 shares repurchased from employees at a cost of $1.0 million to cover their cost of taxes upon vesting of the restricted stock).

Dividends

The Company’s Board of Directors declared the following dividends for the first six months of fiscal 2019 and 2018 respectively:

Year Ended	Dividends per Share of Common Stock		Record Date	Total $ Amount (in thousands)		Payment Date
Fiscal 2019
First Quarter	$	0.64	November 30, 2018	$	24,372	December 18, 2018
Second Quarter	$	0.64	February 28, 2019	$	24,385	March 19, 2019
Fiscal 2018
First Quarter	$	0.56	November 30, 2017	$	21,901	December 19, 2017
Second Quarter	$	0.56	February 28, 2018	$	21,799	March 20, 2018

All the above cash dividends were paid from existing cash resources. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Company and is subject to final determination by the Company’s Board of Directors.

13. EMPLOYEE STOCK OPTION AND RETIREMENT PLANS

Stock Option Awards

The FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (the “Long Term Incentive Plan” or “LTIP”) provides for the grant of share-based awards, including stock options and restricted stock awards to employees of FactSet. The expiration date of the Long Term Incentive Plan is December 19, 2027. Stock options granted under the LTIP expire not more than ten years from the date of grant and the majority vest ratably over a period of five years. Options become vested and exercisable provided the employee continues employment with the Company through the applicable vesting date and remain exercisable until expiration or cancellation. Options are not transferable or assignable other than by will or the laws of descent and distribution. During the grantee’s lifetime, the options may be exercised only by the grantee.

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Stock Option Activity

During the first six months of fiscal 2019, FactSet granted 460,713 stock options with a weighted average exercise price of $221.74 to existing employees of the Company.

A summary of stock option activity for the six months ended February 28, 2019 is as follows:

(in thousands, except per share data)	Number of Stock Options Outstanding			Weighted Average Exercise Price Per Share
Balance at August 31, 2018		3,143		$	153.05
Granted – non-performance-based		455			221.93
Exercised		(117	)		132.81
Forfeited		(24	)		169.47
Balance at November 30, 2018		3,457		$	162.68
Granted – non-performance-based		6			207.84
Granted – non-employee Directors’ grant		21			207.88
Exercised		(207	)		136.30
Forfeited		(61	)		152.19
Balance at February 28, 2019		3,216		$	164.42

The total number of in-the-money options exercisable as of February 28, 2019 was 1.2 million with a weighted average exercise price of $138.41. The aggregate intrinsic value of in-the-money stock options exercisable at February 28, 2019 and August 31, 2018 was $116.5 million and $105.3 million, respectively. The aggregate intrinsic value represents the difference between the Company’s closing stock price as of February 28, 2019 of $235.17, and the exercise price, multiplied by the number of options exercisable as of that date.

The total pre-tax intrinsic value of stock options exercised during the three months ended February 28, 2019 and 2018 was $15.5 million and $17.2 million, respectively. The total pre-tax intrinsic value of stock options exercised during the six months ended February 28, 2019 and 2018 was $26.3 million and $35.2 million, respectively.

Performance-based Equity Awards

Performance-based equity awards, whether in the form of stock options or restricted stock, require management to make assumptions regarding the likelihood of achieving Company performance targets. The number of performance-based awards that vest will be predicated on the Company achieving performance levels during the measurement period subsequent to the date of grant. Dependent on the financial performance levels attained by FactSet, a percentage of the performance-based awards will vest to the grantees. However, there is no current guarantee that such awards will vest in whole or in part.

The following summarizes the material performance-based award outstanding as of February 28, 2019.

June 2017 Performance-based Option Grant Review

In connection with the acquisition of BISAM, FactSet granted 206,417 performance-based stock options in June 2017. These performance-based options will vest 40% on the second anniversary date of the grant and 20% on each subsequent anniversary date if certain BISAM revenue and operating income targets are achieved by March 31, 2019. The option holders must also remain employed by FactSet for the options to be eligible to vest. As of February 28, 2019, FactSet does not believe these growth targets are probable of being achieved, and as such, no stock-based compensation expense is expected to be recognized in connection with these performance-based options. A change in the actual financial performance levels achieved by BISAM in future fiscal years could result in the following changes to the current estimate of the vesting percentage and related expense:

Vesting Percentage (in thousands)	Cumulative Catch-up Adjustment*		Remaining Expense to be Recognized
0% (current expectation)	$	—	$	—
80%	$	2,369	$	4,738
90%	$	2,665	$	5,331
100%	$	2,961	$	5,923

* Amounts represent the cumulative catch-up adjustment to be recorded if there were a change in the vesting percentage as of February 28, 2019. 

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Restricted Stock Awards

The Company’s Option Plan permits the issuance of restricted stock awards in the form of either restricted shares or restricted stock units. Restricted stock awards are subject to continued employment over a specified period.

Restricted Stock Awards Activity

During the first six months of fiscal 2019, FactSet granted 41,153 restricted stock awards to employees of the Company at a weighted average grant date fair value of $212.66. These restricted stock awards vest over a weighted average period of 5.0 years from grant date.

As of February 28, 2019, a total of 106,558 restricted stock awards were unvested and outstanding, which results in unamortized stock-based compensation of $16.1 million to be recognized as stock-based compensation expense over the remaining weighted average vesting period of 3.6 years.

A summary of restricted stock award activity is as follows:

(in thousands, except per award data)	Number Outstanding			Weighted Average Grant Date Fair Value Per Award
Balance at August 31, 2018		143			$	139.34
Granted		41			$	212.66
Forfeited		(1	)		$	200.18
Vested		(52	)(1)		$	113.44
Balance at November 30, 2018		131			$	172.48
Granted		—			$	—
Forfeited		(1	)		$	184.64
Vested		(23	)(2)		$	136.58
Balance at February 28, 2019		107			$	187.62

⁽¹⁾ The majority of the vested restricted stock awards related to the final vesting of awards granted on November 1, 2013, which cliff vested 60% after three years on November 1, 2016 and 40% after five years on November 1, 2018.

⁽²⁾ The majority of the vested restricted stock awards related to the final vesting of awards granted on February 9, 2015, which vested 100% on the four year anniversary date of the grant.

As of February 28, 2019, and August 31, 2018, the aggregate fair value of unvested restricted stock was $25.1 million and $32.8 million, respectively. Aggregate fair value of unvested restricted stock represents the Company’s closing stock prices of $235.17 and $229.39 on February 28, 2019 and August 31, 2018, respectively, multiplied by the number of unvested restricted stock as of that date.

The total pre-tax fair value of restricted stock that vested during the three months ended February 28, 2019 and 2018 was $5.1 million and $0.7 million, respectively. The total pre-tax fair value of restricted stock that vested during the six months ended February 28, 2019 and 2018 was $16.7 million and $2.7 million, respectively.

Share-based Awards Available for Grant

A summary of share-based awards available for grant is as follows:

(in thousands)	Share-based Awards Available for Grant under the Employee Stock Option Plan			Share-based Awards Available for Grant under the Non-Employee Stock Option Plan
Balance at August 31, 2018		6,298			282
Granted – non-performance-based options		(455	)		—
Restricted stock awards granted(1)		(103	)		—
Share-based awards canceled/forfeited(2)		25			—
Balance at November 30, 2018		5,765			282
Granted – non-performance-based options		(6	)		(21	)
Share-based awards canceled/forfeited(2)		65			3
Balance at February 28, 2019		5,824			264

⁽¹⁾ Each restricted stock award granted is equivalent to 2.5 shares granted under the Company’s Option Plan.

⁽²⁾ Under the Company’s Option Plan, for each restricted stock award canceled/forfeited, an equivalent of 2.5 shares is added back to the available share-based awards balance.

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Employee Stock Purchase Plan

Shares of FactSet common stock may be purchased by eligible employees under the Amended and Restated FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (the “ESPP”) in three-month intervals. The purchase price is equal to 85% of the lesser of the fair market value of the Company’s common stock on the first day or the last day of each three-month offering period. Employee purchases may not exceed 10% of their gross compensation and a $25,000 contribution limit during an offering period.

During the three months ended February 28, 2019, employees purchased 12,624 shares at a price of $199.36 compared to 14,805 shares at a price of $171.23 for the three months ended February 28, 2018. During the six months ended February 28, 2019, employees purchased 25,719 shares at a price of $198.33 as compared to 34,394 shares at a price of $150.25 for the six months ended February 28, 2018. At February 28, 2019, the ESPP had 243,223 shares reserved for future issuance.

Employee Benefit Plans

FactSet sponsors benefit plans for the majority of its domestic and foreign employees. The Company contributed $2.6 million in employer matching contributions for its U.S. defined contribution plan for both the three months ended February 28, 2019 and 2018. During the six months ended February 28, 2019 and 2018, the Company contributed $5.2 million and $5.5 million in employer matching contributions for its U.S. defined contribution plan, respectively. Contributions to foreign benefit plans were not material to FactSet on either an individual or aggregate basis for any of the periods presented.

14. STOCK-BASED COMPENSATION

During the three months ended February 28, 2019 and 2018, the Company recognized total stock-based compensation expense of $7.7 million and $7.9 million, respectively. During the six months ended February 28, 2019 and 2018, the Company recognized total stock-based compensation expense of $16.1 million and $15.4 million, respectively. As of February 28, 2019, $87.2 million of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of 3.3 years. There was no stock-based compensation capitalized for the three and six months ended February 28, 2019 or August 31, 2018, respectively.

Employee Stock Option Fair Value Determinations

The Company utilizes the lattice-binomial option-pricing model (“binomial model”) to estimate the fair value of new employee stock option grants. The Company’s determination of fair value of stock option awards on the date of grant using the binomial model is affected by the Company’s stock price as well as assumptions regarding several variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors.

Q1 2019	454,598 non-performance-based employee stock options were granted at a weighted average exercise price of $221.93 and a weighted average estimated fair value of $56.77 per share.
Q2 2019	6,115 non-performance-based employee stock options were granted at a weighted average exercise price of $207.84 and a weighted average estimated fair value of $53.18 per share.
Q1 2018	553,942 non-performance-based employee stock options were granted at a weighted average exercise price of $189.98 and a weighted average estimated fair value of $48.27 per share.
Q2 2018	15,363 non-performance-based employee stock options were granted at a weighted average exercise price of $192.11 and a weighted average estimated fair value of $48.82 per share.

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The weighted average estimated fair value of employee stock options granted was determined using the binomial model with the following weighted average assumptions:

Three months ended February 28,	2019					2018
Term structure of risk-free interest rate		2.48%	-	3.14	%		1.28%	-	2.41	%
Expected life (years)				7.1					7.4
Term structure of volatility		18%	-	25	%		19%	-	29	%
Dividend yield				1.15	%				1.32	%
Weighted average estimated fair value	$	53.18				$	48.82
Weighted average exercise price	$	207.84				$	192.11
Fair value as a percentage of exercise price				25.6	%				25.4	%

Six months ended February 28,	2019					2018
Term structure of risk-free interest rate		1.28%	-	3.14	%		1.28%	-	2.41	%
Expected life (years)				7.1					7.4
Term structure of volatility		18%	-	29	%		19%	-	29	%
Dividend yield				1.16	%				1.32	%
Weighted average estimated fair value	$	56.72				$	48.29
Weighted average exercise price	$	221.74				$	190.04
Fair value as a percentage of exercise price				25.6	%				25.4	%

The risk-free interest rate assumption for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on a combination of historical volatility of the Company’s stock and implied volatilities of publicly traded options to buy FactSet common stock with contractual terms closest to the expected life of options granted to employees. The approach to utilize a mix of historical and implied volatility was based upon the availability of actively traded options on the Company’s stock and the Company’s assessment that a combination of implied volatility and historical volatility is best representative of future stock price trends. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is a derived output of the binomial model. The binomial model estimates employee exercise behavior based on the option’s remaining vested life and the extent to which the option is in-the-money. The binomial model estimates the probability of exercise as a function of these two variables based on the entire history of exercises and cancellations of all past option grants made by the Company.

Non-Employee Director Stock Option Fair Value Determinations

The Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated (the “Director Plan”), provides for the grant of share-based awards, including stock options, to non-employee directors of FactSet. As of February 28, 2019, shares available for future grant under the Director Plan was 263,956. The expiration date of the Director Plan is December 19, 2027.

The Company utilizes the Black-Scholes model to estimate the fair value of new non-employee Director stock option grants. The Company’s determination of fair value of share-based payment awards on the date of grant is affected by the Company’s stock price, as well as, assumptions regarding several variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors.

Fiscal 2019

On January 15, 2019, FactSet granted 20,576 stock options to the Company’s non-employee Directors. These options have a weighted average estimated fair value of $42.77 per share, using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate	2.51	%
Expected life (years)	5.4
Expected volatility	20.5	%
Dividend yield	1.17	%

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Fiscal 2018

On January 12, 2018, FactSet granted 18,963 stock options to the Company’s non-employee Directors. These options have a weighted average estimated fair value of $38.76 per share, using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate	2.34	%
Expected life (years)	5.4
Expected volatility	19.7	%
Dividend yield	1.16	%

Restricted Stock Fair Value Determinations

Restricted stock granted to employees entitles the holder to shares of common stock as the award vests over time, but not to dividends declared on the underlying shares, while the restricted stock is unvested. The grant date fair value of restricted stock awards is measured by reducing the grant date price of FactSet’s share by the present value of the dividends expected to be paid on the underlying stock during the requisite service period, discounted at the appropriate risk-free interest rate. Restricted stock awards are amortized to expense over the vesting period. During the first six months of fiscal 2019, there were 41,153 restricted stock awards granted, with a weighted average grant date fair value of $212.66. During the first six months of fiscal 2018, FactSet granted 961 restricted stock awards at a weighted average grant date fair value of $182.17.

Employee Stock Purchase Plan Fair Value Determinations

During the three months ended February 28, 2019, employees purchased 12,624 shares at a weighted average price of $199.36 as compared to 14,805 shares at a weighted average price of $171.23 for the three months ended February 28, 2018. During the six months ended February 28, 2019, employees purchased 25,719 shares at a weighted average price of $198.33 as compared to 34,394 shares at a weighted average price of $150.25 for the six months ended February 28, 2018. Stock-based compensation expense relating to the ESPP was $0.5 million for both the three months ended February 28, 2019 and 2018. Stock-based compensation expense related to the ESPP for the six months ended February 28, 2019 and 2018 was $1.0 million and $1.1 million, respectively.

The weighted average estimated fair value for the shares repurchased under the ESPP was calculated using the Black-Scholes model with the following assumptions:

Three months ended February 28,	2019			2018
Risk-free interest rate		2.42	%		1.45	%
Expected life (months)		3			3
Expected volatility		12.47	%		13.9	%
Dividend yield		1.09	%		1.11	%
Weighted average estimated fair value	$	40.45		$	35.02

Six months ended February 28,	2019			2018
Risk-free interest rate		2.35	%		1.26	%
Expected life (months)		3			3
Expected volatility		10.68	%		10.52	%
Dividend yield		1.10	%		1.29	%
Weighted average estimated fair value	$	39.52		$	29.76

Accuracy of Fair Value Estimates

The Company is responsible for determining the assumptions used in estimating the fair value of its share-based payment awards. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price, as well as assumptions regarding several highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, interest rates, option forfeiture rates and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable.

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15. INCOME TAXES

Income tax expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes are recorded for the temporary differences between the financial statement and the tax bases of assets and liabilities using currently enacted tax rates.

Provision for Income Taxes

The provision for income taxes is as follows:

	Three months ended February 28,						Six months ended February 28,
(in thousands)	2019			2018			2019			2018
Income before income taxes	$	104,349		$	92,213		$	200,292		$	178,392
Provision for income taxes	$	19,647		$	39,076		$	31,294		$	54,876
Effective tax rate		18.8	%		42.4	%		15.6	%		30.8	%

FactSet’s effective tax rate is based on recurring factors and nonrecurring events, including the taxation of foreign income. The Company’s effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as discrete and other nonrecurring events that may not be predictable. The lower effective tax rate for both the three and six months ended February 28, 2019, compared to the same periods a year ago, is mainly due to the enactment of the Tax Cuts and Jobs Act (“TCJA”). The TCJA imposed a one-time transition tax expense, resulting in $23.2 million being recorded in the second quarter of fiscal 2018. This impact was revised during the first and second quarters of fiscal 2019, resulting in a benefit of $2.3 million and $1.1 million, respectively, which positively impacted the six months ended February 28, 2019. The TCJA also lowered the statutory U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. Due to the timing of FactSet’s year end, the lower tax rate was fully applicable for the three and six months ended February 28, 2019, while being phased in during the same periods a year ago. The reduction in the U.S. corporate income tax rate required a remeasurement of the Company’s net U.S. deferred tax position, which resulted in a non-recurring tax charge of $2.2 million in the second quarter of fiscal 2018. FactSet’s effective tax rate is lower than the applicable U.S. corporate income tax rate for the three and six months ended February 28, 2019 due to R&D tax benefits and tax benefits associated with share-based payments. The decrease in the income tax provision for three and six months ended February 28, 2019 was partially offset by a $2.4 million income tax expense from the settlement with a tax authority recognized during the second quarter of fiscal 2019.

FactSet has finalized the accounting for the tax effects of the TCJA with respect to the one-time transition tax. The tax effects of the TCJA may be affected by changes in interpretations at the federal and state levels, and any additional regulatory guidance that may be issued.

Deferred Tax Assets and Liabilities

The significant components of Deferred tax assets recorded within the consolidated balance sheets were as follows:

(in thousands)	February 28, 2019			August 31, 2018
Deferred tax assets:
Receivable reserve	$	571		$	599
Depreciation on property, equipment and leasehold improvements		3,110			1,032
Deferred rent		7,410			7,711
Stock-based compensation		13,333			14,827
Purchased intangible assets, including acquired technology		(25,269	)		(24,059	)
Other		7,582			9,606
Total deferred tax assets	$	6,737		$	9,716

The significant components of Deferred tax liabilities recorded within the consolidated balance sheets were as follows:

(in thousands)	February 28, 2019			August 31, 2018
Deferred tax liabilities:
Stock-based compensation	$	(1,077	)	$	(946	)
Purchased intangible assets, including acquired technology		20,368			22,429
Other		929			(293	)
Total deferred tax liabilities	$	20,220		$	21,190

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Unrecognized Tax Positions

Applicable accounting guidance prescribes a comprehensive model for the financial statement recognition, measurement, classification and disclosure of uncertain tax positions that a company has taken or expects to take on a tax return. A company can recognize the financial effect of an income tax position only if it is more likely than not (greater than 50%) that the tax position will prevail upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit or expense can be recognized in the consolidated financial statements. The tax benefits recognized are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Additionally, companies are required to accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws.

As of February 28, 2019, the Company had gross unrecognized tax benefits totaling $11.0 million recorded as non-current Taxes payable within the consolidated balance sheet. This amount includes $1.3 million of accrued interest. When applicable, the Company adjusts the previously recorded tax expense to reflect examination results when the position is ultimately settled. The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that certain federal, foreign, and state tax matters may be concluded in the next 12 months. However, FactSet has 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 the Company’s results of operations or financial position, beyond current estimates. Any changes in accounting estimates resulting from new developments with respect to uncertain tax positions will be recorded as appropriate. The Company does not currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next 12 months.

The following table summarizes the changes in the balance of gross unrecognized tax benefits during the first six months of fiscal 2019:

(in thousands)
Unrecognized income tax benefits at August 31, 2018	$	9,223
Additions based on tax positions related to the current year		1,493
Additions for tax positions of prior years		270
Unrecognized income tax benefits at February 28, 2019	$	10,986

In the normal course of business, the Company’s tax filings are subject to audit by federal, state and foreign tax authorities. At February 28, 2019, the Company remained subject to examination in the following major tax jurisdictions for the tax years as indicated below:

Major Tax Jurisdictions	Open Tax Years
U.S.
Federal	2015	through	2018
State (various)	2015	through	2018
Europe
United Kingdom	2015	through	2018
France	2016	through	2018
Germany	2017	through	2018

16. DEBT

FactSet’s debt obligations consisted of the following:

(in thousands)	February 28, 2019		August 31, 2018
2017 Revolving Credit Facility (maturity date of March 17, 2020)	$	575,000	$	575,000

On March 17, 2017, the Company entered into a credit agreement (the “2017 Credit Agreement”) between FactSet, as the borrower, and PNC Bank, National Association (“PNC”), as the administrative agent and lender. As of February 28, 2019, the 2017 Credit Agreement provides for a $575.0 million revolving credit facility (the “2017 Revolving Credit Facility”). FactSet may request borrowings under the 2017 Revolving Credit Facility until its maturity date of March 17, 2020. The 2017 Credit Agreement also allows FactSet, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount of up to $225.0 million, provided that any such request for additional borrowings must be in a minimum amount of $25.0 million. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at 1.00%. Interest on the loan outstanding is payable quarterly in arrears and on the maturity date. There are no prepayment penalties if the Company elects to prepay the outstanding loan amounts prior to the scheduled maturity date. The principal balance is payable in full on the maturity date.

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On March 29, 2019, the Company entered into a credit agreement (the “2019 Credit Agreement”) between FactSet, as the borrower, and PNC, as the administrative agent and lender. The 2019 Credit Agreement provides for a $750.0 million revolving credit facility (the “2019 Revolving Credit Facility”). In conjunction with FactSet’s entrance into the 2019 Credit Agreement, FactSet repaid its outstanding debt under the 2017 Credit Agreement on March 29, 2019. The total principal amount of the loan outstanding at the time of repayment was $575.0 million. See Note 18, Subsequent Events, for further discussion of the 2019 Credit Agreement.

All outstanding loan amounts are reported as Long-term debt within the consolidated balance sheet at February 28, 2019. For the three months ended February 28, 2019 and 2018, the Company recorded interest expense of $5.1 million and $3.6 million on its outstanding debt amounts, respectively. For the six months ended February 28, 2019 and 2018, the Company recorded interest expense of $9.9 million and $7.0 million on its outstanding debt amounts, respectively. The principal balance is payable in full on the maturity date. As of February 28, 2019, no commitment fee was owed by FactSet since it borrowed the full amount under the 2017 Credit Agreement.

The 2017 Credit Agreement contained covenants restricting certain FactSet activities, which are usual and customary for this type of loan. In addition, the 2017 Credit Agreement required that FactSet maintain a consolidated leverage ratio, as measured by total funded debt/EBITDA below a specified level as of the end of each fiscal quarter. The Company was in compliance with all the covenants of the 2017 Credit Agreement as of February 28, 2019.

17. COMMITMENTS AND CONTINGENCIES

Commitments represent obligations, such as those for future purchases of goods or services that are not yet recorded on the balance sheet as liabilities. FactSet records liabilities for commitments when incurred (i.e., when the goods or services are received).

Lease Commitments

As of February 28, 2019, the Company continues to lease approximately 202,000 square feet of existing office space for its headquarters at 601 Merritt 7, Norwalk, Connecticut. On February 14, 2018, the Company entered a new lease to relocate its corporate headquarters to 45 Glover Avenue in Norwalk, Connecticut. The new location will comprise approximately 173,000 square feet of office space. The Company took possession of the newly leased property on January 1, 2019, for fit-out purposes. The Company will continue to occupy its existing headquarters space until the new headquarters property is ready for occupancy, currently estimated to be in the second quarter of fiscal 2020.

Including new lease agreements executed during the six months ended February 28, 2019, the Company’s worldwide leased office space increased to approximately 2,015,000 square feet of office space under various non-cancelable operating leases which expire on various dates through 2035. Total minimum rental payments associated with the leases are recorded as rent expense (a component of Selling, General & Administrative “SG&A” expense) on a straight-line basis over the periods of the respective non-cancelable lease terms. Future minimum commitments for the Company’s operating leases in place as of February 28, 2019, including the fully executed lease for its new headquarters in Norwalk, Connecticut are as follows:

(in thousands) Years ended August 31,	Minimum Lease Payments
2019 (remaining six months)	$	21,353
2020		40,747
2021		38,723
2022		36,118
2023		34,001
Thereafter		252,132
Total	$	423,074

For the three months ended February 28, 2019 and 2018, rent expense (including operating costs) for all operating leases amounted to $14.2 million and $13.5 million, respectively. For the six months ended February 28, 2019 and 2018, rent expense (including operating costs) for all operating leases amounted to $27.6 million and $26.5 million, respectively. As of February 28, 2019, deferred rent reported within the consolidated balance sheet totaled $36.9 million compared to $39.4 million as of August 31, 2018, of which $33.1 million and $33.6 million were reported as a non-current liability within the line item Deferred Rent and Other Non-Current Liabilities as of February 28, 2019 and August 31, 2018, respectively.

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Approximately $3.3 million of standby letters of credit have been issued during the ordinary course of business in connection with the Company’s current leased office space as of February 28, 2019. These standby letters of credit contain covenants that, among other things, require the Company to maintain minimum levels of consolidated net worth and certain leverage and fixed charge ratios. As of February 28, 2019, FactSet was in compliance with all covenants contained in the standby letters of credit.

Purchase Commitments with Suppliers

Purchase obligations represent payments due in future periods in respect of commitments to the Company’s various data vendors as well as commitments to purchase goods and services such as telecommunication and computer maintenance services. These purchase commitments are agreements that are enforceable and legally binding on FactSet, and they specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. As of August 31, 2018, the Company had total purchase commitments with suppliers of $79.0 million. There were no material changes in the Company’s purchase commitments during the first six months of fiscal 2019.

Contingencies

Income Taxes

Uncertain income tax positions are accounted for in accordance with applicable accounting guidance (see Note 15). FactSet is currently under audit by tax authorities and has reserved for potential adjustments to its provision for income taxes that may result from examinations by, or any negotiated settlements with, these tax authorities. The Company believes that the final outcome of these examinations or settlements will not have a material effect on its results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of tax benefits in the period FactSet determines the liabilities are no longer necessary. If the Company’s estimates of the federal, state, and foreign income tax liabilities are less than the ultimate assessment, a further charge to expense would result.

Legal Matters

FactSet accrues non-income-tax liabilities for contingencies when management believes that a loss is probable, and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. The Company is engaged in various legal proceedings, claims and litigation that have arisen in the ordinary course of business, including employment matters, commercial and intellectual property litigation. The outcome of all the matters against the Company is subject to future resolution, including the uncertainties of litigation. Based on information available at February 28, 2019, FactSet’s management believes that the ultimate outcome of these unresolved matters against the Company, individually or in the aggregate, will not have a material adverse effect on the Company's consolidated financial position, its results of operations or its cash flows.

Sales Tax Matters

In the third quarter of fiscal 2018, FactSet received a letter from the Massachusetts Department of Revenue relating to prior tax periods. The letter requested additional sales information to determine if a Notice of Intention to Assess should be issued to FactSet. Based upon a preliminary review of the Massachusetts request, the Company believes the state might assess sales tax, and underpayment penalties and interest, on previously recorded sales transactions. Due to the uncertainty surrounding the assessment process, the Company is unable to reasonably estimate the ultimate outcome of this matter and, as such, has not recorded a liability as of February 28, 2019. While FactSet believes that it will ultimately prevail if the Company is presented with a formal assessment and is required to pay it, the amount could have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

Indemnifications

As permitted or required under Delaware law and to the maximum extent allowable under that law, FactSet has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at FactSet’s request in such capacity. These indemnification obligations are valid as long as the director or officer acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The maximum potential amount of future payments FactSet could be required to make under these indemnification obligations is unlimited; however, FactSet has a director and officer insurance policy that it believes mitigates FactSet’s exposure and may enable FactSet to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification obligations is immaterial.

Concentrations of Credit Risk

Cash equivalents

Cash and cash equivalents are maintained primarily with five financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand and are maintained with financial institutions, with reputable credit, and therefore bear minimal credit risk. The Company seeks to mitigate its credit risks by spreading such risks across multiple counterparties and monitoring the risk profiles of these counterparties.

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Accounts Receivable 

Accounts receivable are unsecured and derived from revenue earned from clients located around the globe. The Company maintains reserves for potential write-offs and evaluates the adequacy of the reserves periodically. These losses have historically been within expectations. No single client represented 10% or more of FactSet’s total revenue in any period presented. At February 28, 2019, the Company’s largest individual client accounted for less than 3% of total annual subscriptions, and subscriptions from the ten largest clients did not surpass 15% of total annual subscriptions, consistent with August 31, 2018. As of February 28, 2019, the receivable reserve was $5.4 million compared to $3.5 million as of August 31, 2018.

Derivative Instruments

As a result of the use of derivative instruments, the Company is exposed to counterparty credit risk. The Company has incorporated counterparty credit risk into the fair value of its derivative assets and its own credit risk into the value of the Company’s derivative liabilities, when applicable. For derivative instruments, the Company calculates credit risk from observable data related to credit default swaps (“CDS”) as quoted by publicly available information. Counterparty risk is represented by CDS spreads related to the senior secured debt of the respective bank with whom the Company has executed these derivative transactions. To mitigate counterparty credit risk, the Company enters into contracts with large financial institutions and regularly reviews its credit exposure balances as well as the creditworthiness of the counterparties. For the Company’s liabilities, as CDS spread information is not available for FactSet, the Company’s credit risk is determined based on using a simple average of CDS spreads for peer companies. The Company does not expect any losses as a result of default of its counterparties.

Concentrations of Other Risk

Data Content Providers

Certain data sets that FactSet relies on have a limited number of suppliers, although the Company makes every effort to assure that, where reasonable, alternative sources are available. FactSet is not dependent on any one third-party data supplier in order to meet the needs of its clients. FactSet combines the data from these commercial databases into its own dedicated single online service, which the client accesses to perform their analysis. No single vendor or data supplier represented more than 10% of FactSet's total data expenses for the six months ended February 28, 2019 and 2018, respectively.

18. SUBSEQUENT EVENT

2019 Credit Agreement

On March 29, 2019, the Company entered into the 2019 Credit Agreement between FactSet, as the borrower, and PNC, as the administrative agent and lender. The 2019 Credit Agreement provides for a $750.0 million revolving credit facility. FactSet may request borrowings under the 2019 Revolving Credit Facility until its maturity date of March 29, 2024. The 2019 Credit Agreement also allows FactSet, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount of up to $500.0 million, provided that any such request for additional borrowings must be in a minimum amount of $25.0 million. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at 0.875%. Interest on the loan outstanding is payable quarterly in arrears and on the maturity date. In conjunction with FactSet’s entrance into the 2019 Credit Agreement, FactSet borrowed $575.0 million of the available $750.0 million provided by the 2019 Revolving Credit Facility, in the form of a LIBOR rate loan. FactSet will pay a commitment fee on the undrawn amount. On March 29, 2019 the borrowings from the 2019 Credit Agreement were used to retire all outstanding debt under the 2017 Credit Agreement.

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ITEM 2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

• Executive Overview

• Key Metrics

• Results of Operations

• Liquidity

• Capital Resources

• Foreign Currency

• Off-Balance Sheet Arrangements

• Share Repurchase Program

• Contractual Obligations

• Dividends

• Significant Accounting Policies and Critical Accounting Estimates

• New Accounting Pronouncements

• Market Trends

• Forward-Looking Factors 

• Business Developments

The MD&A should be read in conjunction with our 2018 Form 10-K, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission, and the consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.

Executive Overview

We are a global provider of integrated financial information, analytical applications and industry-leading service for the global investment community. These professionals include portfolio managers, investment research professionals, investment bankers, risk and performance analysts, and wealth advisors. From streaming real-time data to historical information, including quotes, estimates, news and commentary, we offer proprietary and third-party content through desktop, web, mobile and off-platform solutions. Our broad application suite offers tools and resources including company and industry analyses, full screening tools, portfolio analysis, risk profiles, alpha-testing, portfolio optimization and research management solutions. With recent acquisitions, we have continued to expand our solutions across the investment lifecycle from idea generation to performance and client reporting. We deliver insight and information to investment professionals through our key workflows of Research, Analytics, Wealth, and Content and Technology Solutions (“CTS”). Our revenue is primarily derived from subscriptions to products and services such as workstations, analytics, enterprise data, research management, and trade execution.

Business Strategy

As a premier financial solutions provider for the global financial community, we provide workflow solutions and leading analytical applications across the investment lifecycle to create an open and scalable platform. We bring the front, middle and back office together to drive productivity and performance throughout the portfolio lifecycle. Our strategy is focused on growing our business in each of our three segments which include the U.S., Europe, and Asia Pacific. We believe this geographical strategic alignment helps us better manage our resources and concentrate on markets that demand our products. To execute on our business strategy of broad-based growth across each geographical segment, we continue to look at ways to create value for our clients by offering data, products and analytical applications within our key workflow solutions of Research, Analytics, Wealth, and Content and Technology Solutions.

Fiscal 2019 Second Quarter in Review

As of February 28, 2019, organic annual subscription value (“organic ASV”) plus professional services totaled $1.44 billion, an increase of 6.0% over the prior year comparable period. Revenue in the second quarter of fiscal 2019 was $354.9 million, an increase of 5.9% from the prior year comparable period. Revenue growth can be attributed primarily to our Analytics, Content and Technology Solutions (“CTS”) and Wealth workflows due to increased demand for our analytics, data and technology offerings.

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Operating income grew 13.8% and diluted earnings per share (“EPS”) increased 64.7% compared to the prior year period. This increase in operating income was primarily driven by revenue growth of 5.9%, a foreign currency benefit from a stronger U.S. dollar reducing the operating expense impact, and a reduction in marketing expenses, partially offset by an increase in computer-related expenses and employee compensation. In addition to the drivers increasing operating income, diluted EPS also benefited from the enactment of the U.S. Tax Cuts and Jobs Act (“TCJA”) through a decrease in our effective tax rate, a one-time TCJA transition tax expense recorded in the second quarter of fiscal 2018, without a comparative impact during the second quarter of fiscal 2019, and a decrease in diluted shares outstanding mainly due to share repurchases.

As of February 28, 2019, employee count was 9,529, up 1.8% in the past 12 months, due primarily to an increase in net new employees of 4.3% in the Asia Pacific region, partially offset by a net decrease of 3.6% in the U.S. region. Of our total employees, 2,373 were located in the U.S., 1,252 in Europe and 5,904 in Asia Pacific.

Key Metrics

The following is a review of our key metrics:

	As of and for the Three months ended February 28,
(in millions, except client and user counts and per share data)	2019		2018		Change
Revenue	$	354.9	$	335.2		5.9	%
Operating income	$	108.7	$	95.5		13.8	%
Net income	$	84.7	$	53.1		59.4	%
Diluted EPS	$	2.19	$	1.33		64.7	%
Clients(1)		5,405		4,895		10.4	%
Users		122,063		88,646		37.7	%

⁽¹⁾  In the first quarter of fiscal 2019, we changed our client count definition to include clients from the April 2017 acquisition of FactSet Digital Solutions Group (“FDSG”). The prior year client count was not restated to reflect this change.

The table below provides an unaudited reconciliation of ASV to organic ASV and Organic ASV + professional services:

	As of February 28,
(in millions, except client and user counts)	2019			2018			Change
As reported ASV	$	1,420.7		$	1,348.8
Currency impact to ASV		(1.2	)		(8.7	)
Organic ASV(1)	$	1,419.5		$	1,340.1			5.9	%
Professional services fees		21.9			19.0
Organic ASV + Professional services	$	1,441.4		$	1,359.1			6.0	%

⁽¹⁾  Organic ASV excludes ASV from acquisitions and dispositions completed within the last 12 months, the effects of foreign currency, and professional services.

Annual Subscription Value Growth

ASV at any given point in time represents the forward-looking revenue for the next 12 months from all subscription services currently being supplied to clients and excludes professional service fees billed in the last 12 months, which are not subscription-based. With proper notice provided to us, our clients can add to, delete portions of, or terminate service at any time, subject to certain contractual limitations. As of February 28, 2019, our organic ASV totaled $1.42 billion, up 5.9% over the prior year comparable period. Organic ASV plus professional services increased to $1.44 billion as of February 28, 2019, up $82.3 million from the prior year, with a growth rate of 6.0%. As of February 28, 2019, ASV from the U.S. segment was $890.5 million, an increase of 5.8% from a year ago, and ASV from international operations was $530.2 million, an increase of 4.6% over the prior year. International ASV represents 37.3% of total ASV as of February 28, 2019, down from 37.6% in the prior year.

The increase in organic ASV across our geographic segments was driven by increased sales from our workflow solutions, mainly in Analytics and CTS, and from our annual price increase for the majority of our U.S. segment clients. The growth in the Analytics workflow is due to leveraging our existing client relationships to cross-sell our core portfolio analytics product. ASV growth in the CTS workflow is driven by sales of our core data feeds such as FactSet Fundamentals. The Wealth and Research workflows also had growth, driven by increased sales of our workstations, proprietary content sets, and our Research Management Solutions (“RMS”) across both buy and sell-side clients.

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ASV increased in the U.S. segment primarily from our Analytics and CTS workflows, due to the increasing demand for our integrated analytics and data products, combined with our annual price increase. The price increase was $10.2 million, an increase comparable with the second quarter of fiscal 2018. The ASV increase from our international operations was due to the growth in the CTS and Research workflows in Asia Pacific, partially offset by cancellations in both Europe and Asia Pacific.

Buy-side and sell-side ASV growth rates for the second quarter of fiscal 2019 were 5.3% and 9.2%, respectively. Buy-side clients account for 83.9% of ASV, while the remainder is derived from sell-side firms that perform mergers and acquisitions advisory work, capital markets services and equity research.

Client and User Additions

Our total client count was 5,405 as of February 28, 2019, representing a net increase of 510 or 10.4% in the last 12 months. In the first quarter of fiscal 2019, we changed our client count definition to include clients from the April 2017 acquisition of FDSG. The prior year client count was not restated to reflect this change. Client count grew by 108 in the last three months primarily driven by an increase in corporate and wealth management clients. As part of our long-term growth strategy, we continue to focus on expanding and cultivating relationships with our existing client base through sales of workstations, applications, services and content.

As of February 28, 2019, there were 122,063 professionals using FactSet, representing a net increase of 33,417 or 37.7% in the last 12 months primarily driven by Wealth workstation sales. Our user count increased 6,854 in the past three months primarily driven by an increase in banking and wealth management users.

Annual client retention as of February 28, 2019 was greater than 95% of ASV and 91% when expressed as a percentage of clients. The cancellation rate for the second quarter of fiscal 2019 is consistent with the rate for the prior year comparable period. Our high retention rate reflects the strength of our business strategy as the majority of our clients maintain their subscriptions to the FactSet platform year over year. As of February 28, 2019, our largest individual client accounted for less than 3% of total subscriptions, and annual subscriptions from our ten largest clients did not surpass 15% of total client subscriptions.

Returning Value to Stockholders

On February 15, 2019, our Board of Directors approved a regular quarterly dividend of $0.64 per share. The cash dividend of $24.4 million was paid on March 19, 2019 to common stockholders of record at the close of business on February 28, 2019. We repurchased 214,945 shares for $44.1 million during the second quarter of fiscal 2019 under our existing share repurchase program. Over the last 12 months, we have returned $395.2 million to stockholders in the form of share repurchases and cash dividends, funded by cash generated from operations. As of February 28, 2019, $137.2 million remains authorized for future share repurchases.

Capital Expenditures

Capital expenditures in the second quarter of fiscal 2019 were $12.0 million, compared to $6.5 million a year ago. Capital expenditures of $7.4 million, or 62%, were primarily related to corporate infrastructure investments, additional server equipment for our data centers located in New Jersey and Virginia, as well as computers and peripherals for new office space primarily in India. The remainder of our capital expenditures was primarily for the build out of office space, with $1.9 million related to the Philippines and $1.4 million related to the new corporate headquarters in Norwalk, Connecticut.

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Results of Operations

For an understanding of the significant factors that influenced our performance for the three and six months ended February 28, 2019 and 2018, the following discussion should be read in conjunction with the consolidated financial statements and related notes presented in this Quarterly Report on Form 10-Q.

	Three months ended February 28,							Six months ended February 28,
(in thousands, except per share data)	2019		2018		Change			2019		2018		Change
Revenue	$	354,895	$	335,231		5.9	%	$	706,535	$	664,372		6.3	%
Cost of services	$	165,108	$	163,232		1.1	%	$	331,884	$	324,756		2.2	%
Selling, general and administrative	$	81,099	$	76,514		6.0	%	$	165,424	$	155,033		6.7	%
Operating income	$	108,688	$	95,485		13.8	%	$	209,227	$	184,583		13.4	%
Net income	$	84,702	$	53,137		59.4	%	$	168,998	$	123,516		36.8	%
Diluted earnings per common share	$	2.19	$	1.33		64.7	%	$	4.37	$	3.11		40.5	%
Diluted weighted average common shares		38,619		39,846					38,714		39,763

Revenue

Three months ended February 28, 2019 compared to three months ended February 28, 2018

Revenue for the three months ended February 28, 2019 was $354.9 million, increasing 5.9% compared to the prior year. Our organic revenue growth rate for the three months ended February 28, 2019 was 5.7% compared to the same period a year ago. Organic revenue excludes the effects of acquisitions and dispositions completed in the last 12 months, foreign currency in all periods presented and deferred revenue fair value adjustments from purchase accounting. The increase in revenue was primarily driven by the Analytics, CTS, and Wealth workflows, combined with our annual price increase for the majority of our U.S. segment clients. Revenue growth in the Analytics workflow was primarily due to increased sales of the portfolio analytics product to existing clients. The growth in the CTS workflow was driven mainly by increased sales in core data feeds such as FactSet Fundamentals. The Wealth workflow also experienced revenue growth due to increased workstation sales. Cancellations for the second quarter of fiscal 2019 were consistent with the same period a year ago, and therefore did not materially impact the revenue growth comparative.

Six months ended February 28, 2019 compared to six months ended February 28, 2018

Revenue for the six months ended February 28, 2019 was $706.5 million, increasing 6.3% compared to the prior year. Our organic revenue growth rate for the six months ended February 28, 2019 was 6.1% compared to the same period a year ago. Organic revenue excludes the effects of acquisitions and dispositions completed in the last 12 months, foreign currency in all periods and deferred revenue fair value adjustments from purchase accounting. The increase in revenue was primarily driven by the Analytics, CTS and Wealth workflows, as well as, our annual price increase for the majority of our U.S. segment clients. Revenue growth in Analytics was due to an increase in sales of the portfolio analytics products to existing clients. Increased sales in the CTS workflow was driven by enterprise data feeds such as FactSet Fundamentals. Revenue growth in the Wealth workflow was due to higher sales of our workstation product. Although client retention remained high at over 95% of ASV for the six months ended February 28, 2019, revenue growth was partially offset by increased cancellations compared to the same period a year ago.

Revenue by Geographic Region

	Three months ended February 28,									Six months ended February 28,
(in thousands)	2019			2018			Change			2019			2018			Change
U.S.	$	223,315		$	208,900			6.9	%	$	445,518		$	417,668			6.7	%
% of revenue		62.9	%		62.3	%					63.1	%		62.9	%
Europe	$	98,933		$	96,206			2.8	%	$	196,698		$	187,933			4.7	%
Asia Pacific		32,647			30,125			8.4	%		64,319			58,771			9.4	%
International	$	131,580		$	126,331			4.2	%	$	261,017		$	246,704			5.8	%
% of revenue		37.1	%		37.7	%					36.9	%		37.1	%
Consolidated	$	354,895		$	335,231			5.9	%	$	706,535		$	664,372			6.3	%

Three months ended February 28, 2019 compared to three months ended February 28, 2018

Revenue from our U.S. segment increased 6.9% to $223.3 million during the three months ended February 28, 2019, compared to $208.9 million from the same period a year ago, primarily due to the Wealth, Analytics, and CTS workflows, and our annual price increase for the majority of our U.S. segment clients. Organic revenue in the U.S. increased 6.8% compared to the same period a year ago. Revenue from our U.S. operations accounted for 62.9% of our consolidated revenue during the second quarter of fiscal 2019, comparable to the prior year period of 62.3%.

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European revenue increased 2.8% to $98.9 million during the three months ended February 28, 2019, compared to $96.2 million from the same period a year ago. This increase was due to increased sales in the Analytics and CTS workflows, partially offset by limited cancellations in one region. Excluding the effects of acquisitions and dispositions completed in the last 12 months, foreign currency, and deferred revenue fair value adjustments from purchase accounting, European organic revenue increased 2.5% in the three months ended February 28, 2019 compared to the same period a year ago. Foreign currency exchange rate fluctuations decreased our European revenue growth rate by 30 basis points.

Asia Pacific revenue increased 8.4% to $32.6 million during the three months ended February 28, 2019 due to increased sales in the Research and CTS workflows. Asia Pacific organic revenue increased 8.3% for the three months ended February 28, 2019 compared to the same period a year ago.

Six months ended February 28, 2019 compared to six months ended February 28, 2018

Revenue from our U.S. segment increased 6.7% to $445.5 million during the six months ended February 28, 2019, compared to $417.7 million from the same period a year ago, primarily due to the Wealth, Analytics and CTS workflows, and our annual price increase for the majority of our U.S. segment clients, partially offset by improved client retention. Organic revenue in the U.S. increased 6.5% compared to the same period a year ago. Revenue from our U.S. operations accounted for 63.1% of our consolidated revenue for the first six months of fiscal 2019, compared to the prior year period of 62.9%.

European revenue increased 4.7% to $196.7 million during the six months ended February 28, 2019, compared to $187.9 million from the same period a year ago. This increase was driven by sales in the Analytics and CTS workflows, partially offset by limited cancellations in one region. European organic revenue increased 3.9% in the six months ended February 28, 2019 compared to the same period a year ago. Foreign currency exchange rate fluctuations decreased our European revenue growth rate by 20 basis points.

Asia Pacific revenue increased 9.4% to $64.3 million during the six months ended February 28, 2019 due to increased sales in the Analytics, CTS and Research workflows. Asia Pacific organic revenue increased 9.5% for the six months ended February 28, 2019 compared to the same period a year ago.

Operating Expenses

	Three months ended February 28,									Six months ended February 28,
(in thousands)	2019			2018			Change			2019			2018			Change
Cost of services	$	165,108		$	163,232			1.1	%	$	331,884		$	324,756			2.2	%
Selling, general and administrative		81,099			76,514			6.0	%		165,424			155,033			6.7	%
Total operating expenses	$	246,207		$	239,746			2.7	%	$	497,308		$	479,789			3.7	%
Operating Income	$	108,688		$	95,485			13.8	%	$	209,227		$	184,583			13.4	%
Operating Margin		30.6	%		28.5	%					29.6	%		27.8	%

Cost of Services

Three months ended February 28, 2019 compared to three months ended February 28, 2018

For the three months ended February 28, 2019, cost of services increased 1.1% to $165.1 million compared to $163.2 million in the same period a year ago, primarily due to an increase in computer-related expenses, partially offset by increased compensation costs. Cost of services, when expressed as a percentage of revenue, was 46.5% during the second quarter of fiscal 2019, a decrease of 220 basis points compared to the same period a year ago. This decrease was primarily due to revenue growth outpacing the growth of cost of services on a year over year basis, as well as a decrease in employee compensation and data costs, partially offset by higher computer-related expenses, when expressed as a percentage of revenue.

Employee compensation, when expressed as a percentage of revenue, decreased 230 basis points in the second quarter of fiscal 2019, compared to the same period a year ago. This decrease in employee compensation was primarily driven by a foreign currency benefit from a stronger U.S. dollar, and a shift in headcount distribution between our segments, partially offset by higher annual base salaries and employee benefit costs, including medical expenditures. Over the past 12 months, headcount grew by 168 net new employees, with net headcount growth of 4.3% in our centers of excellence in Asia Pacific, partially offset by a net headcount reduction of 3.6% in the U.S.

Data costs, when expressed as a percentage of revenue, decreased 30 basis points, due to a consistent spend in data costs year over year, compared to an increase in revenue growth. Computer-related expenses which includes depreciation, maintenance, software and other fees, increased 60 basis points, as a percentage of revenue, compared to the same period a year ago, primarily due to increased costs from cloud-based hosting and licensed software arrangements.

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Six months ended February 28, 2019 compared to six months ended February 28, 2018

For the six months ended February 28, 2019, cost of services increased 2.2% to $331.9 million, compared to $324.8 million for the same period a year ago. Cost of services, expressed as a percentage of revenues, were 47.0% during the first six months of fiscal 2019, a decrease of 190 basis points over the prior year period. This decrease was primarily due to lower employee compensation costs and contractor fees, partially offset by computer-related expenses.

Employee compensation, when expressed as a percentage of revenue, decreased 230 basis points for the six months ended February 28, 2019 compared to the prior year period. This decrease was primarily driven by a foreign currency benefit from a stronger U.S. dollar, a shift in headcount distribution across our segments, with an increase in net headcount in Asia Pacific and a reduction in net headcount in the U.S., partially offset by higher annual base salaries and employee benefit costs, including medical expenditures.

Contractor fees, when expressed as a percentage of revenue, decreased 30 basis points due primarily to a reduction in implementation projects and increased efficiencies. Computer-related expenses, as a percentage of revenue, increased 50 basis points primarily driven by increased costs from cloud-based hosting and licensed software arrangements.

Selling, General and Administrative

Three months ended February 28, 2019 compared to three months ended February 28, 2018

For the three months ended February 28, 2019, SG&A expenses increased 6.0% to $81.1 million, compared to $76.5 million in the same period a year ago primarily due to an increase in compensation expense, partially offset by a reduction in marketing expense. SG&A expenses, expressed as a percentage of revenue, were 22.9% during the second quarter of fiscal 2019, which was comparable with the prior year period. When expressed as a percentage of revenue, an increase in employee compensation expense and bad debt expense were partially offset by a reduction in marketing expenses compared with the same period a year ago.

Employee compensation, when expressed as a percentage of revenue, increased 30 basis points in the second quarter of fiscal 2019, compared with the same period a year ago. The increase was primarily driven by annual base salary increases and higher employee benefit costs, including medical expenditures. Marketing expenses decreased 40 basis points as a percentage of revenue, due to a realignment of our global marketing initiatives.

Six months ended February 28, 2019 compared to six months ended February 28, 2018

For the six months ended February 28, 2019, SG&A expenses increased 6.7% to $165.4 million, compared to $155.0 million in the same period a year ago, primarily due to an increase in compensation expense and bad debt expense, partially offset by a reduction in marketing expense. SG&A expenses, expressed as a percentage of revenue, were 23.4% during the first six months of fiscal 2019, which was comparable with the prior year period. When expressed as a percentage of revenue, marketing expenses decreased, partially offset by higher bad debt expense, compared with the same period a year ago.

Marketing expenses decreased 30 basis points as a percentage of revenue, compared to the same period a year ago, due to a realignment of our global marketing initiatives.

Operating Income and Operating Margin

Three months ended February 28, 2019 compared to three months ended February 28, 2018

Operating income increased 13.8% to $108.7 million for the three months ended February 28, 2019 compared to $95.5 million in the prior year period. Operating income increased due to revenue growth, favorable foreign exchange rates and a reduction in marketing expenses, partially offset by an increase in computer-related expenses and employee compensation. Operating margin increased to 30.6% during the second quarter of fiscal 2019 compared to 28.5% in the prior year period. The increase in operating margin on a year over year basis was primarily due to revenue growth outpacing the growth in operating expenses, a reduction in employee compensation, marketing expenses, and data costs, partially offset by higher computer-related expenses and bad debt expense, when expressed as a percentage of revenue.

Six months ended February 28, 2019 compared to six months ended February 28, 2018

Operating income increased 13.4% to $209.2 million for the six months ended February 28, 2019 compared to $184.6 million in the prior year period. Operating income increased due to revenue growth, favorable foreign exchange rates and a reduction in marketing expenses, partially offset by an increase in computer-related expenses, bad debt expense, and employee compensation. Operating margin increased to 29.6% during the first six months of fiscal 2019 compared to 27.8% in the prior year period. The increase in operating margin on a year over year basis was primarily due to revenue growth outpacing the growth in operating expenses, a reduction in compensation expense, marketing, and contractor fees, partially offset by higher computer-related expenses and bad debt expense, when expressed as a percentage of revenue.

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Operating Income by Segment

	Three months ended February 28,							Six months ended February 28,
(in thousands)	2019		2018		Change			2019		2018		Change
U.S.	$	45,696	$	38,527		18.6	%	$	89,537	$	79,298		12.9	%
Europe		43,248		36,993		16.9	%		82,337		69,963		17.7	%
Asia Pacific		19,744		19,965		(1.1	)%		37,353		35,322		5.7	%
Total Operating Income	$	108,688	$	95,485		13.8	%	$	209,227	$	184,583		13.4	%

Our operating segments are aligned with how we manage the business, the demographic markets we serve, and how the chief operating decision making group (“CODMG”) assesses performance. Our internal financial reporting structure is based on three reportable segments, the U.S., Europe and Asia Pacific, which we believe helps us better manage the business and view the markets we serve. Sales, consulting, data collection, product development and software engineering are the primary functional groups within each segment. Each segment records compensation expense, including stock-based compensation, amortization of intangible assets, depreciation of furniture and fixtures, amortization of leasehold improvements, communication costs, professional fees, rent expense, travel, office and other direct expenses. Expenditures associated with our data centers, third-party data costs and corporate headquarters charges are recorded by the U.S. segment and are not allocated to the other segments. The centers of excellence, located in India and the Philippines, primarily focus on content collection that benefit all our segments. The expenses incurred at these locations are allocated to each segment based on a percentage of revenue.

Three months ended February 28, 2019 compared to three months ended February 28, 2018

U.S. operating income increased 18.6% to $45.7 million during the three months ended February 28, 2019 compared to $38.5 million in the same period a year ago. The increase in U.S. operating income was primarily due to revenue growth of 6.9%, partially offset by an increase in compensation expense, computer-related expenses and bad debt expense. Employee compensation increased primarily due to annual base salary increases and higher employee benefit costs, including medical expenditures, partially offset by a net reduction in headcount of 3.6% over the past 12 months. Computer-related expenses, which includes depreciation, maintenance, software and other fees, increased year over year primarily due to increased costs from cloud-based hosting and licensed software arrangements.

European operating income increased 16.9% to $43.2 million during the three months ended February 28, 2019 compared to $37.0 million in the same period a year ago. The increase in European operating income was primarily due to revenue growth of 2.8% and a reduction in operating expenses driven mainly by a decrease in employee compensation expense, primarily due to a foreign currency benefit from a stronger U.S. dollar.

Asia Pacific operating income decreased 1.1% to $19.7 million during the three months ended February 28, 2019, compared to $20.0 million in the same period a year ago. The decrease in the Asia Pacific operating income was mainly due to an increase in employee compensation, partially offset by revenue growth of 8.4%. Employee compensation increased as a result of a 4.3% increase in our Asia Pacific workforce in the last 12 months, partially offset by a foreign currency benefit from a stronger U.S dollar.

Six months ended February 28, 2019 compared to six months ended February 28, 2018

U.S. operating income increased 12.9% to $89.5 million during the six months ended February 28, 2019, compared to $79.3 million in the same period a year ago. The increase in U.S. operating income was primarily due to revenue growth of 6.7%, partially offset by an increase in computer-related expenses, data costs, and increased bad debt expense. Computer-related expenses, which includes depreciation, maintenance, software and other fees, increased year over year primarily due to increased costs from cloud-based hosting and licensed software arrangements. Data costs increased due to increased spend in variable data costs to drive revenue growth.

European operating income increased 17.7% to $82.3 million during the six months ended February 28, 2019 compared to $70.0 million in the same period a year ago. The increase in European operating income was primarily due to revenue growth of 4.7% outpacing the growth of operating expenses, which were comparable on a year over year basis.

Asia Pacific operating income increased 5.7% to $37.4 million during the six months ended February 28, 2019, compared to $35.3 million in the same period a year ago. The increase in the Asia Pacific operating income was primarily due to revenue growth of 9.4%, partially offset by an increase in employee compensation and occupancy costs. Employee compensation increased due to net headcount growth of 4.3% over the past 12 months, with the increase primarily focused in the centers of excellence, partially offset by a foreign currency benefit from a stronger U.S. dollar. Occupancy costs increased due to the expansion of office space in India and the Philippines.

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Income Taxes, Net Income and Diluted Earnings per Share

	Three months ended February 28,							Six months ended February 28,
(in thousands, except for per share data)	2019		2018		Change			2019		2018		Change
Provision for income taxes	$	19,647	$	39,076		(49.7	)%	$	31,294	$	54,876		(43.0	)%
Net income	$	84,702	$	53,137		59.4	%	$	168,998	$	123,516		36.8	%
Diluted earnings per common share	$	2.19	$	1.33		64.7	%	$	4.37	$	3.11		40.5	%

Income Taxes

Three months ended February 28, 2019 compared to three months ended February 28, 2018

For the three months ended February 28, 2019, the provision for income taxes was $19.6 million, a decrease of 49.7% from the same period a year ago. The decrease was mainly due to the enactment of the Tax Cuts and Jobs Act (“TCJA”). The TCJA imposed a one-time transition tax expense, resulting in $23.2 million being recorded in the second quarter of fiscal 2018. This impact was revised during the second quarter of fiscal 2019, resulting in a benefit $1.1 million for the three months ended February 28, 2019. The TCJA also lowered the statutory U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. Due to the timing of our fiscal year end, the lower tax rate was fully applicable for the three months ended February 28, 2019, while phased in during the same periods a year ago. The reduction in the U.S. corporate income tax rate required a remeasurement of our net U.S. deferred tax position, which resulted in a non-recurring tax charge of $2.2 million in the second quarter of fiscal 2018. The decrease in the income tax provision was partially offset by a $2.4 million income tax expense from the settlement with a tax authority recognized during the second quarter of fiscal 2019.

Six months ended February 28, 2019 compared to six months ended February 28, 2018

For the six months ended February 28, 2019, the provision for income taxes was $31.3 million, a decrease of 43.0% from the same period a year ago. The decrease was mainly due to the enactment of the TCJA. The TCJA imposed a $23.2 million one-time transition tax expense which was recorded in the second quarter of fiscal 2018. This impact was revised during the first and second quarters of fiscal 2019, resulting in a benefit of $2.3 million and $1.1 million, respectively, which positively impacted the six months ended February 2019. The TCJA also lowered the statutory U.S corporate income tax rate, which applied to the first six months of fiscal 2019 compared to the lower tax rate being phased in for the prior year comparable period. The first six months of fiscal 2018 included a remeasurement of our net U.S. deferred tax position resulting in a non-recurring tax charge of $2.2 million due to the reduction in the statutory federal rate. The decrease in the income tax provision was partially offset by a $2.4 million income tax expense from the settlement with a tax authority recognized during the second quarter of fiscal 2019.

Net Income and Diluted Earnings per Share

Three months ended February 28, 2019 compared to three months ended February 28, 2018

Net income increased 59.4% to $84.7 million and diluted earnings per share (“EPS”) increased 64.7% to $2.19 for the three months ended February 28, 2019, compared to the same period a year ago. Net income and diluted EPS increased due to higher operating income and a reduction in the income tax provision primarily due to the TCJA reform. Diluted EPS also benefited from a 1.2 million share reduction in our diluted weighted average shares outstanding mainly due to share repurchases.

Six months ended February 28, 2019 compared to six months ended February 28, 2018

Net income increased 36.8% to $169.0 million and diluted EPS increased 40.5% to $4.37 for the six months ended February 28, 2019, compared to the six months ended February 28, 2018. Net income and diluted EPS increased due to higher operating income, a reduction in the income tax provision primarily due to the TCJA reform, partially offset by an increase in interest expense associated with our outstanding debt. Diluted EPS also benefited from a 1.0 million share reduction in our diluted weighted average shares outstanding mainly due to share repurchases.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures including organic revenue, adjusted operating margin, adjusted net income and adjusted diluted earnings per share. 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. 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.

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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.

The table below provides an unaudited reconciliation of revenues to organic revenues.

	Three Months Ended February 28,
(In thousands)	2019		2018		Change
Revenues	$	354,895	$	335,231		5.9	%
Deferred revenue fair value adjustment(1)		1,299		2,087
Currency impact(2)		310		—
Organic revenues	$	356,504	$	337,318		5.7	%

⁽¹⁾ Deferred revenue fair value adjustments from purchase accounting.

⁽²⁾ The impact from foreign currency movements over the past 12 months.

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 and adjusted diluted EPS.

	Three Months Ended February 28,
(In thousands, except per share data)		2019	(1)		2018	(2)	Change
Operating income	$	108,688		$	95,485			13.8	%
Intangible asset amortization		5,839			6,213
Deferred revenue fair value adjustment		1,299			2,087
Other items		2,417			2,239
Adjusted operating income	$	118,243		$	106,024			11.5	%
Adjusted operating margin		33.2	%		31.4	%
Net income	$	84,702		$	53,137			59.4	%
Intangible asset amortization(3)		4,742			4,924
Deferred revenue fair value adjustment(4)		1,055			1,654
Other items(5)		1,718			1,774
Income tax items		1,381			22,856
Adjusted net income	$	93,598		$	84,345			11.0	%
Diluted earnings per common share	$	2.19		$	1.33			64.7	%
Intangible asset amortization		0.12			0.12
Deferred revenue fair value adjustment		0.03			0.04
Other items		0.04			0.04
Income tax items		0.04			0.57
Adjusted diluted earnings per common share	$	2.42		$	2.12			14.2	%
Weighted average common shares (Diluted)		38,619			39,846

⁽¹⁾ Operating income, net income and diluted EPS in the second quarter of fiscal 2019 were adjusted to exclude (i) intangible asset amortization (ii) deferred revenue fair value adjustments from purchase accounting, and (iii) other items including severance, stock-based compensation expense, and occupancy costs. Net income and diluted EPS in the second quarter of fiscal 2019 were also primarily adjusted to exclude a settlement with a tax authority partially offset by income tax benefits primarily related to the TCJA.

⁽²⁾ Operating income, net income and diluted EPS in the second quarter of fiscal 2018 were adjusted to exclude (i) intangible asset amortization (ii) deferred revenue fair value adjustments from purchase accounting, and (iii) other items including severance, stock-based compensation expense acceleration and restructuring actions. Net income and diluted EPS in the second quarter of fiscal 2018 were also primarily adjusted to exclude the one-time deemed repatriation tax on foreign earnings as a result of the TCJA.

⁽³⁾ The intangible asset amortization was recorded net of a tax impact of $1.1 million in the second quarter of fiscal 2019 compared to $1.3 million for the second quarter of fiscal 2018.

⁽⁴⁾ The deferred revenue fair value adjustment was recorded net of a tax impact of $0.2 million in the second quarter of fiscal 2019 compared to $0.4 million for the second quarter of fiscal 2018.

⁽⁵⁾ The other items were recorded net of a tax impact of $0.5 million for both the second quarter of fiscal 2019 and 2018.

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Liquidity

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

	Six months ended February 28,
(in thousands)	2019			2018
Net cash provided by operating activities	$	145,554		$	153,689
Capital expenditures(1)		(21,482	)		(12,375	)
Free cash flow(2)	$	124,072		$	141,314
Net cash used in investing activities	$	(19,368	)	$	(11,990	)
Net cash used in financing activities	$	(115,819	)	$	(108,086	)
Cash and cash equivalents at end of period	$	218,335		$	233,628

⁽¹⁾ Included in net cash used in investing activities during each fiscal period reported.

⁽²⁾ Free cash flow is defined as cash provided by operating activities, which includes the cash cost for taxes and changes in working capital, less capital expenditures.

Cash and cash equivalents aggregated to $218.3 million, or 14.9% of our total assets as of February 28, 2019, compared to $208.6 million, or 14.7% of our total assets as of August 31, 2018. Our cash and cash equivalents increased $9.7 million during the first six months of fiscal 2019 due to cash inflows related to $145.6 million of net cash provided by operating activities, $43.4 million in proceeds from the exercise of employee stock options and $2.1 million net proceeds from equity investments. These cash inflows were partially offset by cash outflows primarily related to $110.7 million in share repurchases (which includes $104.6 million under the existing share repurchase program and $6.1 million share purchased from employees to cover their cost of taxes upon vesting of restricted stock), $48.4 million in dividend payments, and $21.5 million of capital expenditures.

Net cash used in investing activities was $19.4 million in the first six months of fiscal 2019, representing a $7.4 million increase from the same period a year ago. This increase was due primarily to higher capital expenditures of $9.1 million, offset by net proceeds from equity investments (net of purchases) of $1.7 million.

Net cash used in financing activities was $115.8 million in the first six months of fiscal 2019, representing a $7.7 million increase in cash used in financing activities from the same period a year ago. The increase in cash used in financing activities was primarily due to a decrease in proceeds from employee stock plans of $5.4 million, an increase in dividend payments of $5.0 million, partially offset by a decrease in share purchases of $3.2 million.

We expect that for at least the next 12 months, our operating expenses will continue to constitute a significant use of cash. As of February 28, 2019, our total Cash and cash equivalents worldwide was $218.3 million with $574.8 million in outstanding borrowings (net of $0.2 million of unamortized debt issuance costs). The total available cash and cash equivalents held in bank accounts located within the U.S. is $68.7 million, Europe (predominantly within the UK, France, and Germany) includes $110.3 and the remaining $39.3 million is held in the Asia Pacific segment. We believe our liquidity (including cash on hand, cash from operating activities and other cash flows that we expect to generate) within each geographic segment will be sufficient to meet our short-term and long-term operating requirements, as they occur, including working capital needs, capital expenditures, dividend payments, stock repurchases, growth objectives and other financing activities. In addition, we expect existing foreign cash, cash equivalents and cash flows from operations to continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities, such as capital expenditures, for at least the next 12 months, and thereafter, for the foreseeable future.

Free cash flow generated in the six months ended February 28, 2019 was $124.1 million, a decrease of 12.2% compared to a year ago. Free cash flow is the result of $169.0 million of net income, plus $46.5 million of non-cash items, less $69.9 million of working capital changes and $21.5 million in capital expenditures. The year over year decrease to free cash flow was primarily driven by an increase in capital expenditures and the timing of tax payments made during the second quarter of fiscal 2019, partially offset by an increase in net income.

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Capital Resources

Capital Expenditures

Capital expenditures were $12.0 million during the second quarter of fiscal 2019, compared to $6.5 million a year ago. Capital expenditures of $7.4 million, or 62%, were primarily related to corporate infrastructure investments, additional server equipment for our data centers located in New Jersey and Virginia, as well as computers and peripherals for new office space primarily in India. The remainder of our capital expenditures was primarily for the build out of office space, with $1.9 million related to the Philippines and $1.4 million related to the new corporate headquarters in Norwalk, Connecticut.

Capital expenditures were $21.5 million during the first six months of fiscal 2019, compared with $12.4 million in the same period a year ago. Approximately $13.8 million, or 64%, of capital expenditures were primarily related to corporate infrastructure investments, additional server equipment for our data centers located in New Jersey and Virginia, as well as computers and peripherals for new office space primarily in India. The remainder of our capital expenditures was primarily for the build out of office space, with $1.9 million related to the Philippines, $3.7 million related to India and $1.4 million related to the new corporate headquarters in Norwalk, Connecticut.

Capital Needs

Long-Term Debt

2017 Credit Agreement

On March 17, 2017, we entered into a credit agreement (the “2017 Credit Agreement”) between FactSet, as the borrower, and PNC Bank, National Association (“PNC”), as the administrative agent and lender. As of February 28, 2019, the 2017 Credit Agreement provides for an unsecured $575.0 million revolving credit facility (the “2017 Revolving Credit Facility”). We may request borrowings under the 2017 Revolving Credit Facility until its maturity date of March 17, 2020. The 2017 Credit Agreement also allows us, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount of up to $225.0 million, provided that any such request for additional borrowings must be in a minimum amount of $25.0 million. At our option, a borrowing may be in the form of a base rate loan or a LIBOR rate loan. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at 1.00%. Interest on the loan outstanding is payable quarterly in arrears and on the maturity date. There are no prepayment penalties if we elect to prepay the outstanding loan amounts prior to the scheduled maturity date. The principal balance is payable in full on the maturity date.

All outstanding loan amounts are reported as Long-term debt within the consolidated balance sheet, presented net of related loan origination fees at February 28, 2019. The loan origination fees are amortized into interest expense over the term of the loan using the effective interest method. During the three months ended February 28, 2019 and 2018, we recorded interest expense of $5.1 million and $3.6 million on our outstanding debt amounts, respectively. During the six months ended February 28, 2019 and 2018, we recorded interest expense of $9.9 million and $7.0 million on our outstanding debt amounts, respectively. As of February 28, 2019, no commitment fee was owed by us since we borrowed the full amount under the 2017 Credit Agreement.

The 2017 Credit Agreement contained covenants restricting certain FactSet activities, which are usual and customary for this type of loan.

In addition, the 2017 Credit Agreement required that we maintain a consolidated leverage ratio, as measured by total funded debt/EBITDA below a specified level as of the end of each fiscal quarter. We were in compliance with all the covenants of the 2017 Credit Agreement as of February 28, 2019 and August 31, 2018.

As of February 28, 2019, the fair value of our long-term debt was $575.0 million, which we believe approximated the carrying amount as the terms and interest rates approximate market rates given its floating interest rate basis.

2019 Credit Agreement

On March 29, 2019, we entered into a credit agreement (the “2019 Credit Agreement”) between FactSet, as the borrower, and PNC, as the administrative agent and lender. The 2019 Credit Agreement provides for a $750.0 million revolving credit facility (the “2019 Revolving Credit Facility”). We may request borrowings under the 2019 Revolving Credit Facility until its maturity date of March 29, 2024. The 2019 Credit Agreement also allows, subject to certain requirements, for additional borrowings with PNC for an aggregate amount of up to $500.0 million, provided that any such request for additional borrowings must be in a minimum amount of $25.0 million. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at 0.875%. Interest on the loan outstanding is payable quarterly in arrears and on the maturity date. In conjunction with our entrance into the 2019 Credit Agreement, we borrowed $575.0 million of the available $750.0 million provided by the 2019 Revolving Credit Facility, in the form of a LIBOR rate loan. We will pay a commitment fee on the undrawn amount. On March 29, 2019 the borrowings from the 2019 Credit Agreement were used to retire all outstanding debt under the 2017 Credit Agreement.

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Letters of Credit

From time to time, we are required to obtain letters of credit in the ordinary course of business. Approximately $3.3 million of standby letters of credit have been issued in connection with our leased office spaces as of February 28, 2019. These standby letters of credit contain covenants that, among other things, require us to maintain minimum levels of consolidated net worth and certain leverage and fixed charge ratios. As of February 28, 2019, and August 31, 2018, we were in compliance with all covenants contained in the standby letters of credit.

Foreign Currency

Foreign Currency Exposure

Certain wholly owned subsidiaries within the Europe and Asia Pacific segments operate under a functional currency different from the U.S. dollar. The financial statements of these foreign subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities and average exchange rates for revenue and expenses. Translation gains and losses that arise from translating assets, liabilities, revenue and expenses of foreign operations are recorded in accumulated other comprehensive (loss) income as a component of stockholders’ equity.

Over the next 12 months, our non-U.S. dollar denominated revenue expected to be recognized are estimated to be $90.5 million, while our non-U.S. dollar denominated expenses are estimated to be $324.6 million, which translates into a net foreign currency exposure of $234.1 million. Our foreign currency exchange exposure is related to our operating expense base in countries outside the U.S., where approximately 75% of our employees were located as of February 28, 2019. During the second quarter of fiscal 2019, foreign currency movements increased operating income by $4.0 million, compared to a $2.0 million decrease to operating income a year ago. During the first six months of fiscal 2019, foreign currency movements increased operating income by $5.6 million, compared to a decrease in operating income of $1.9 million in the same period a year ago.

Foreign Currency Hedges

As of February 28, 2019, we maintained the following foreign currency forward contracts to hedge its exposures:

● Philippine Peso – foreign currency forward contracts to hedge approximately 75% of its Philippine Peso exposure through the fourth quarter of fiscal 2020.

● Indian Rupee – foreign currency forward contracts to hedge approximately 75% of its Indian Rupee exposure through the third quarter of fiscal 2019, 50% of its exposure from the fourth quarter of fiscal 2019 through the end of the second quarter of fiscal 2020, and 25% of its exposure from the third quarter of fiscal 2020 through the end of the fourth quarter of fiscal 2020.

● Euro – foreign currency forward contracts to hedge approximately 78% of its Euro exposure through the third quarter of fiscal 2019.

● British Pound Sterling – foreign currency forward contracts to hedge approximately 50% of its British Pound Sterling exposure through the third quarter of fiscal 2019.

As of February 28, 2019, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos with U.S. dollars was PHP 2.1 billion. The gross notional value of foreign currency forward contracts to purchase Indian Rupees with U.S. dollars was Rs. 2.5 billion. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros was € 25.7 million. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with British Pound Sterling was £ 4.9 million.

There were no other outstanding foreign currency forward contracts as of February 28, 2019. A loss on derivatives of $0.4 million was recorded into operating income for the three months ended February 28, 2019, compared to a gain on derivatives of $0.8 million in the same period a year ago. For the six months ended February 28, 2019, a loss on derivatives of $0.8 million was recorded into operating income, compared to a gain on derivatives of $1.6 million in the prior year period.

Off-Balance Sheet Arrangements

At February 28, 2019 and August 31, 2018, 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.

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Share Repurchase Program

Repurchases will be made from time to time in the open market and privately negotiated transactions, subject to market conditions. In the second quarter of fiscal 2019, we repurchased 214,945 shares for $44.1 million under our existing share repurchase program compared to 420,000 shares for $81.9 million in the same period a year ago. During the first six months of fiscal 2019, we repurchased 489,945 shares for $104.6 million compared to 584,920 shares for $112.9 million in the prior year comparable period. Over the last 12 months, we have returned $395.2 million to stockholders in the form of share repurchases and dividends. As of February 28, 2019, $137.2 million is available for future share repurchases under the existing share repurchase program.

Contractual Obligations

Fluctuations in our operating results, the degree of success of our accounts receivable collection efforts, the timing of tax and other payments, as well as necessary capital expenditures to support growth of our operations will impact our liquidity and cash flows in future periods. The effect of our contractual obligations on our liquidity and capital resources in future periods should be considered in conjunction with the factors mentioned here. As of August 31, 2018, we had total purchase commitments of $79.0 million. There were no material changes in our purchase commitments during the first six months of fiscal 2019.

On February 14, 2018, we entered a new lease to relocate our corporate headquarters to 45 Glover Avenue in Norwalk, Connecticut. The new location will comprise approximately 173,000 square feet of office space. We took possession of the newly leased property on January 1, 2019, for fit-out purposes. We will continue to occupy our existing headquarters space until the new headquarters property is ready for occupancy, currently estimated to be in the second quarter of fiscal 2020.

Including new lease agreements executed during fiscal 2019, our worldwide leased office space increased to approximately 2,015,000 square feet as of February 28, 2019, up 265,000 square feet, or 15.1% from August 31, 2018. Future minimum commitments for our operating leases in place as of February 28, 2019 totaled $423.1 million, an increase of $15.3 million from $407.8 million as of August 31, 2018, due to additional office space in India.

As disclosed earlier in the Capital Resources section of this MD&A, through the second quarter of fiscal 2019 we had $575.0 million outstanding under the 2017 Credit Agreement. The maturity date on the outstanding loan amount was March 17, 2020. The amount borrowed bears interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at 1.00% and was reported as Long-term debt within our Consolidated Balance Sheet at February 28, 2019. Also disclosed in the Capital Resources sections of this MD&A is the 2019 Credit Agreement we entered into on March 29, 2019, in which we borrowed $575.0 million of the available $750.0 million under the 2019 Revolving Credit Facility, which were used to retire all outstanding debt under the 2017 Credit Agreement.

There were no other significant changes to our contractual obligations during the first six months of fiscal 2019.

Dividends

On February 15, 2019, our Board of Directors approved a regular quarterly dividend of $0.64 per share. The cash dividend of $24.4 million was paid on March 19, 2019, to common stockholders of record at the close of business on February 28, 2019. 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.

Significant Accounting Policies and Critical Accounting Estimates

We describe our significant accounting policies in Note 3, Summary of Significant Accounting Policies, of the notes to our consolidated financial statements included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended August 31, 2018.  The accounting policies used in preparing our consolidated financial statements for the first six months of fiscal 2019 are applied consistently with those described in our Annual Report on Form 10-K for the fiscal year ended August 31, 2018, with the exception of the accounting guidance adopted in the first quarter of fiscal 2019 related to revenue recognition.  Please see Note 4, Revenue Recognition, of this report for further details on the adoption of the new revenue recognition standard. 

We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended August 31, 2018. There were no significant changes in our accounting policies or critical accounting estimates during the first six months of fiscal 2019.

New Accounting Pronouncements

See Note 3, Recent Accounting Pronouncements, in the notes to the consolidated financial statements for a full description of recent accounting pronouncements, including the expected dates of adoption, which we include herein by reference.

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Market Trends

In the ordinary course of business, we are exposed to financial risks involving the volatility of equity markets as well as foreign currency and interest rate fluctuations.

Shift from Active to Passive Investment Management

Approximately 83.9% of our ASV is derived from our investment management clients. The prosperity of these clients is tied to equity assets under management. An equity market decline not only depresses assets under management but also could cause a significant increase in redemption requests to move money out of equities and into other asset classes. Moreover, a shift from active investment management to passive investment management can result in lower demand for our services. Our investment banking clients that provide M&A advisory work, capital markets services and equity research, account for approximately 16.1% of our ASV. A significant portion of this revenue relates to services deployed by large, bulge-bracket banks. Credit continues to impact many of the large banking clients due to the amount of leverage deployed in past operations. Our clients could also encounter similar issues. A lack of confidence in the global banking system could cause declines in M&A funded by debt. Additional uncertainty, consolidation and business failures in the global investment banking sector could adversely affect our financial results and future growth. Regardless, the size of banks in general is shrinking as they deleverage their balance sheets and adjust their expense bases to future revenue opportunities. Our revenue may decline if banks, including those involved in merger activity, significantly reduce headcount in the areas of corporate M&A, capital markets and equity research to compensate for the challenges faced by other departments.

Brexit

Volatility is expected to continue in the short term as the UK negotiates its exit from the European Union. The inability of UK politicians to agree on the terms of the departure from the European Union has had an adverse impact on the British economy, stagnating growth. The UK Parliament is reluctant to leave the European Union without a transitional deal, so it is expected that negotiations of the terms of the exit will be ongoing. We continue to monitor Brexit closely. Any impact from Brexit on us will depend, in part, on the longer-term outcome of tariff, trade, regulatory and other negotiations. Although it is unknown what the result of those negotiations will be, it is possible that new terms may adversely affect our operations and financial results. While we evaluate our own risks and uncertainty related to Brexit, we will continue to partner with our clients to help them navigate the fluctuating international markets.

MiFID II

In the European Union, the new version of the Markets in Financial Instruments Directive, also known as “MiFID II”, became effective in January 2018. The main purpose of this initiative was to ensure fairer, safe and more efficient markets and facilitate greater transparency for all participants. The Research workflow is one area where both buy-side and sell-side clients have seen and will continue to see significant change requirements as a result MiFID II inducement rules. The goal of the new legislative framework is to strengthen investor protection and improve the functioning of financial markets, making them more efficient, resilient and transparent. New reporting requirements and tests will increase the amount of information available and reduce the use of dark pools and OTC trading. MiFID II requirements have meant pricing models and business practices have had to adapt significantly. We will continue to evaluate our own risks and uncertainty related to MiFID II and partner with our clients to help them navigate these new rules. However, recently we have noticed a substantial interest in our Research workflow, which is part of the opportunity for us, but more importantly, allows our clients to leverage our technology solutions for MiFID II compliance.

Forward-Looking Factors

Forward-Looking Statements

In addition to current and historical information, this Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements based on management’s current expectations, estimates, forecast and projections about industries in which we operate and the beliefs and assumptions of management. All statements that address expectations, guidance, outlook or projections about the future, including statements about our strategy for growth, product development, revenue, future financial results, anticipated growth, market position, subscriptions, expected expenditures, trends in our business and financial results, are forward-looking statements. Forward-looking statements may be identified by words like “expects,” “believes”, “anticipates,” “plans,” “intends,” “estimates”, “projects,” “should,” “indicates,” “continues,” “may” and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this Quarterly Report on Form 10-Q or in any of our other filings with the Securities and Exchange Commission, could cause results to differ materially from those stated. These factors include, but are not limited to: the ability to integrate newly acquired companies, clients and businesses; strains on resources as a result of growth, the volatility and stability of global securities markets, including declines in equity or fixed income returns impacting the buying power of investment management clients; the ability to hire and retain qualified personnel; the maintenance of our leading technological position and reputation; failure to maintain or improve our competitive position in the marketplace; fraudulent, misappropriation or unauthorized data access, including cyber-security and privacy breaches; failures or disruptions of telecommunications, data centers, network systems, facilities, or the Internet; uncertainty, consolidation and business failures in the global investment banking industry; the continued shift from active to passive investing, the negotiation of contract terms with vendors, data suppliers and landlords; the retention of clients and the attraction of new ones; the absence of U.S. or foreign governmental regulation restricting international business; the unfavorable resolution of tax assessments and legal proceedings; and legislative and regulatory changes in the environments in which we and our clients operate. Forward-looking statements speak only as of the date they are made, and we assume no duty to and do not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

44

We intend that all forward-looking statements we make will be subject to safe harbor protection of the federal securities laws as found in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

These statements involve certain known and unknown risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those listed in this MD&A above and those listed in Part 1 Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2018. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this Quarterly Report to reflect actual results or future events or circumstances.

Business Outlook

The following forward-looking statements reflect our expectations as of March 26, 2019. Given the number of risk factors, uncertainties and assumptions discussed in Part 1 Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2018, actual results may differ materially. We do not intend to update our forward-looking statements until our next quarterly results announcement, other than in publicly available statements.

Fiscal 2019 Expectations:

We are confirming our guidance, provided in the first quarter of fiscal 2019, for the following metrics:

- Organic ASV plus professional services is expected to increase in the range of $75.0 million and $90.0 million over fiscal 2018.

- GAAP Revenues are expected to be in the range of $1.41 billion and $1.45 billion.

- GAAP operating margin is expected to be in the range of 29.0% and 30.0%.

- Adjusted operating margin is expected to be in the range of 31.5% and 32.5%.

We are updating our guidance, provided in the first quarter of fiscal 2019, for the following metrics:

- Our annual effective tax rate is now expected to be in the range of 17% and 18%, primarily as a result of the TCJA.

- GAAP diluted EPS is now expected to be in the range of $8.70 and $8.85. Adjusted diluted EPS is now expected to be in the range of $9.50 and $9.65. The midpoint of this guidance represents a 12% growth over the prior year.

Both GAAP operating margin and GAAP diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2019.

Business Developments

Planned Departure of Senior Vice President, Principal Accounting Officer and Appointment of Interim Senior Vice President, Principal Accounting Officer

On February 8, 2019, we announced that Matthew J. McNulty, the Company’s Senior Vice President, Principal Accounting Officer, resigned from the Company. Brian G. Daly was appointed as Interim Senior Vice President, Principal Accounting Officer, effective February 8, 2019.

45

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we are exposed to foreign currency exchange risk that could impact our financial position and results of operations.

Foreign Currency Exchange Risk

We conduct business outside the U.S. in several currencies including the Euro, British Pound Sterling, Indian Rupee and Philippine Peso. The financial statements of these foreign subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities and average rates for the period for revenue and expenses. Over the next 12 months, our non-U.S. dollar denominated revenues expected to be recognized are estimated to be $90.5 million while our non-U.S. dollar denominated expenses are estimated to be $324.6 million, which translates into a net foreign currency exposure of $234.1 million. To the extent that our international activities recorded in local currencies increase in the future, our exposure to fluctuations in currency exchange rates will correspondingly increase. To manage the exposures related to the effects of foreign exchange rate fluctuations, we utilize derivative instruments (foreign currency forward contracts). By their nature, all derivative instruments involve, to varying degrees, elements of market and credit risk. The market risk associated with these instruments resulting from currency exchange movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions are executed with a major financial institution. Further, our policy is to deal with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties. Our primary objective in holding derivatives is to reduce the volatility of earnings associated with changes in foreign currency.

Foreign Currency Hedges

As of February 28, 2019, we maintained the following foreign currency forward contracts to hedge our exposures:

● Philippine Peso – foreign currency forward contracts to hedge approximately 75% of our Philippine Peso exposure through the fourth quarter of fiscal 2020.

● Indian Rupee – foreign currency forward contracts to hedge approximately 75% of our Indian Rupee exposure through the third quarter of fiscal 2019, 50% of our exposure from the fourth quarter of fiscal 2019 through the end of the second quarter of fiscal 2020, and 25% of our exposure from the third quarter of fiscal 2020 through the end of the fourth quarter of fiscal 2020.

● Euro – foreign currency forward contracts to hedge approximately 78% of our Euro exposure through the third quarter of fiscal 2019.

● British Pound Sterling – foreign currency forward contracts to hedge approximately 50% of our British Pound Sterling exposure through the third quarter of fiscal 2019.

As of February 28, 2019, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos with U.S. dollars was PHP 2.1 billion. The gross notional value of foreign currency forward contracts to purchase Indian Rupees with U.S. dollars was Rs. 2.5 billion. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros was € 25.7 million. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with British Pound Sterling was £ 4.9 million.

A loss on derivatives of $0.4 million was recorded into operating income for the three months ended February 28, 2019, compared to a gain on derivatives of $0.8 million in the same period a year ago. For the six months ended February 28, 2019, a loss on derivatives of $0.8 million was recorded into operating income, compared to a gain on derivatives of $1.6 million in the prior year period. The gains and losses on foreign currency forward contracts mitigate the variability in operating expenses associated with currency movements. These transactions are designated and accounted for as cash flow hedges in accordance with applicable accounting guidance. The changes in fair value for these foreign currency forward contracts are initially reported as a component of accumulated other comprehensive loss and subsequently reclassified into operating expenses when the hedged exposure affects earnings. The related cash flow impacts of all our derivative activities are reflected as cash flows from operating activities.

A sensitivity analysis was performed based on the estimated fair value of all foreign currency forward contracts outstanding at February 28, 2019. If the U.S. dollar had been 10% weaker, the fair value of outstanding foreign currency forward contracts would have increased by $10.6 million, which would have had an immaterial impact on our consolidated balance sheet. Such a change in fair value of our financial instruments would be substantially offset by changes in our expense base. Had we not had any hedges in place as of February 28, 2019, a hypothetical 10% weaker U.S. dollar against all foreign currencies from the quoted foreign currency exchange rates at February 28, 2019, would have resulted in a decrease in operating income by $14.5 million over the next 12 months. A hypothetical 10% weaker U.S. dollar against all foreign currencies at February 28, 2019 would have increased the fair value of total assets by $63.7 million and equity by $57.2 million.

46

Volatility in the British Pound Sterling exchange rate is expected to continue in the short term as the UK negotiates its exit from the European Union. In the longer term, any impact from Brexit will depend on, in part, on the outcome of tariff, regulatory and other negotiations.

Interest Rate Risk

Cash and Cash Equivalents

The fair market value of our cash and cash equivalents and investments at February 28, 2019 was $245.4 million. Our Cash and cash equivalents consist of demand deposits and money market funds with original maturities of three months or less and are reported at fair value. Our investments consist of both mutual funds and certificates of deposit as both are part of our investment strategy. These mutual funds and certificates of deposit are included as Investments (short-term) on our consolidated balance sheet as the mutual funds can be liquidated at our discretion and the certificates of deposit have original maturities greater than three months, but less than one year. The mutual funds and certificates of deposit are held for investment and are not considered debt securities. It is anticipated that the fair market value of our cash and cash equivalents and investments will continue to be immaterially affected by fluctuations in interest rates. Preservation of principal is the primary goal of our cash and investment policy. Pursuant to our established investment guidelines, we try to achieve high levels of credit quality, liquidity and diversification. Our investment guidelines do not permit us to invest in puts, calls, strips, short sales, straddles, options, commodities, precious metals, futures or investments on margin. Because we have a restrictive investment policy, our financial exposure to fluctuations in interest rates is expected to remain low. We do not believe that the value or liquidity of our cash and cash equivalents and investments have been significantly impacted by current market events.

Debt

As of February 28, 2019, the fair value of our long-term debt was $575.0 million, which approximated its carrying amount and was determined based on quoted market prices for debt with a similar maturity. It is anticipated that the fair market value of our debt will continue to be immaterially affected by fluctuations in interest rates and we do not believe that the value of our debt has been significantly impacted by current market events. The debt bears interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at 1.00%. During the three months ended February 28, 2019 and 2018, we recorded interest expense of $5.1 million and $3.6 million, respectively, on our outstanding debt amounts. During the six months ended February 28, 2019 and 2018, we recorded interest expense of $9.9 million and $7.0 million, respectively, on our outstanding debt amounts. Assuming all terms of our outstanding long-term debt remained the same, a hypothetical 25 basis point change (up or down) in the one-month LIBOR rate would result in a $1.4 million change to our annual interest expense.

Technology Risk

Our clients rely on us for the delivery of time-sensitive, up-to-date data and applications. Our business is dependent on our ability to process substantial volumes of data and transactions rapidly and efficiently on our computer-based networks and systems. Our computer operations, as well as our other business centers, and those of our suppliers and clients are vulnerable to interruption by fire, natural disaster, power loss, telecommunications failures, terrorist attacks, acts of war, civil unrest, Internet failures, computer viruses and security breaches, and other events beyond our reasonable control. We maintain back-up facilities and certain other redundancies for each of our major data centers to minimize the risk that any such event will disrupt those operations. However, a loss of our services involving our significant facilities may materially disrupt our business and may induce our clients to seek alternative data suppliers. Any such, losses or damages we incur could have a material adverse effect on our business. Although we seek to minimize these risks through security measures, controls, back-up data centers and emergency planning, there can be no assurance that such efforts will be successful or effective.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the principal executive officer and principal financial officer, the Company has evaluated the effectiveness of its disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report. Based on that evaluation, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s 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 Company’s second quarter of fiscal 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

47

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth under Note 17, Commitments and Contingencies, contained in the notes to the consolidated financial statements of this Quarterly Report on Form 10-Q is incorporated by reference in answer to this Item.

ITEM 1A. RISK FACTORS

There were no material changes during the first six months of fiscal 2019 to the risk factors identified in the Company’s fiscal 2018 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Items 2(a) and (b) are not applicable as there have been no unregistered sales of equity securities.

(c) Issuer Purchases of Equity Securities (in thousands, except per share data)

The following table provides a month-to-month summary of the share repurchase activity during the three months ended February 28, 2019:

Period	Total number of shares purchased(1)		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs(2)		Maximum number of shares (or approximate dollar value) that may yet be purchased under the plans or programs (in US$)(2)
December 2018		65,131	$	198.44		65,000	$	168,415
January 2019		150,387	$	208.42		149,945	$	137,165
February 2019		7,929	$	221.13		—	$	137,165
Total		223,447				214,945

⁽¹⁾  Includes 214,945 shares purchased under the existing stock repurchase program, as well as 8,502 shares repurchased from employees to cover their cost of taxes upon vesting of restricted stock.

⁽²⁾  Repurchases may be made from time to time in the open market and privately negotiated transactions, subject to market conditions. No minimum number of shares to be repurchased has been fixed. There is no timeframe to complete the repurchase program and it is expected that share repurchases will be paid using existing and future cash generated by operations.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

48

ITEM 6. EXHIBITS

(a) 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
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
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
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

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FACTSET RESEARCH SYSTEMS INC.
	(Registrant)
Date: April 9, 2019	/s/ HELEN L. SHAN
	Helen L. Shan
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

/s/ BRIAN G. DALY

Brian G. Daly

Senior Vice President, Finance

(Principal Accounting Officer)

50

EXHIBIT INDEX
EXBHIT NUMBER	DESCRIPTION
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.
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.
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.
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
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

51

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, F. Philip Snow, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FactSet Research Systems Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have any significant role in the registrant’s internal control over financial reporting.

Date: April 9, 2019
	/s/ F. PHILIP SNOW
	F. Philip Snow
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Helen L. Shan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FactSet Research Systems Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have any significant role in the registrant’s internal control over financial reporting.

Date: April 9, 2019
	/s/ HELEN L. SHAN
	Helen L. Shan
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of FactSet Research Systems Inc. (the “Company”) on Form 10-Q for the quarter ended February 28, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, F. Philip Snow, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ F. PHILIP SNOW

F. Philip Snow

Chief Executive Officer

April 9, 2019

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of FactSet Research Systems Inc. (the “Company”) on Form 10-Q for the quarter ended February 28, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Helen L. Shan, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ HELEN L. SHAN      

Helen L. Shan

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

April 9, 2019

XML

Document And Entity Information - shares	6 Months Ended
	Feb. 28, 2019	Mar. 29, 2019
Document Information [Line Items]
Entity Registrant Name	FACTSET RESEARCH SYSTEMS INC
Entity Central Index Key	0001013237
Trading Symbol	fds
Current Fiscal Year End Date	--08-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)		38,239,923
Document Type	10-Q
Document Period End Date	Feb. 28, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Revenues	$ 354,895	$ 335,231	$ 706,535	$ 664,372
Operating expenses
Cost of services	165,108	163,232	331,884	324,756
Selling, general and administrative	81,099	76,514	165,424	155,033
Total operating expenses	246,207	239,746	497,308	479,789
Operating income	108,688	95,485	209,227	184,583
Other (expense) income
Interest (expense), net of interest income	(4,339)	(3,272)	(8,935)	(6,191)
Income before income taxes	104,349	92,213	200,292	178,392
Provision for income taxes	19,647	39,076	31,294	54,876
Net income	$ 84,702	$ 53,137	$ 168,998	$ 123,516
Basic earnings per common share (in dollars per share)	$ 2.23	$ 1.36	$ 4.44	$ 3.16
Diluted earnings per common share (in dollars per share)	$ 2.19	$ 1.33	$ 4.37	$ 3.11
Basic weighted average common shares (in shares)	38,055	38,991	38,081	39,038
Diluted weighted average common shares (in shares)	38,619	39,846	38,714	39,763

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Net income		$ 84,702	$ 53,137	$ 168,998	$ 123,516
Other comprehensive income (loss), net of tax
Net unrealized gain (loss) on cash flow hedges*	[1]	527	(1,268)	1,565	(1,744)
Foreign currency translation adjustments		5,026	9,400	(4,478)	17,866
Other comprehensive income (loss)		5,553	8,132	(2,913)	16,122
Comprehensive income		$ 90,255	$ 61,269	$ 166,085	$ 139,638

[1] For the three and six months ended February 28, 2019, the unrealized gain on cash flow hedges was net of a tax expense of $179 and $767, respectively. For the three and six months ended February 28, 2018, the unrealized loss on cash flow hedges was net of a tax benefit of $902 and $1,190, respectively.

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Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Tax expense on the net unrealized gain on cash flow hedges	$ 179	$ 902	$ 767	$ 1,190

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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Feb. 28, 2019	Aug. 31, 2018
ASSETS
Cash and cash equivalents	$ 218,335	$ 208,623
Investments	27,069	29,259
Accounts receivable, net of reserves of $5,376 at February 28, 2019 and $3,490 at August 31, 2018	176,356	156,639
Prepaid taxes	25,730	6,274
Prepaid expenses and other current assets	40,475	30,121
Total current assets	487,965	430,916
Property, equipment and leasehold improvements, net	104,829	100,545
Goodwill	700,029	701,833
Intangible assets, net	136,409	148,935
Deferred taxes	6,737	9,716
Other assets	29,025	27,502
TOTAL ASSETS	1,464,994	1,419,447
LIABILITIES
Accounts payable and accrued expenses	66,846	72,059
Accrued compensation	40,140	66,479
Deferred fees	59,178	49,700
Taxes payable	8,233	8,453
Dividends payable	24,385	24,443
Total current liabilities	198,782	221,134
Long-term debt	574,848	574,775
Deferred taxes	20,220	21,190
Deferred fees	8,475	7,833
Taxes payable	26,728	29,626
Deferred rent and other non-current liabilities	36,420	38,989
TOTAL LIABILITIES	865,473	893,547
Commitments and contingencies (see Note 17)
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
Common stock, $.01 par value, 150,000,000 shares authorized, 39,690,225 and 39,264,849 shares issued, 38,100,165 and 38,192,586 shares outstanding at February 28, 2019 and August 31, 2018, respectively	397	393
Additional paid-in capital	732,538	667,531
Treasury stock, at cost: 1,590,060 and 1,072,263 shares at February 28, 2019 and August 31, 2018, respectively	(324,167)	(213,428)
Retained earnings	244,388	122,843
Accumulated other comprehensive loss	(53,635)	(51,439)
TOTAL STOCKHOLDERS’ EQUITY	599,521	525,900
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,464,994	$ 1,419,447

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Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Feb. 28, 2019	Aug. 31, 2018
Accounts receivable, reserves	$ 5,376	$ 3,490
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	39,690,225	39,264,849
Common stock, shares outstanding (in shares)	38,100,165	38,192,586
Treasury stock, shares (in shares)	1,590,060	1,072,263

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 168,998	$ 123,516
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	29,052	28,372
Stock-based compensation expense	16,140	15,420
Deferred income taxes	1,088	2,934
Loss on sale of assets	196	25
Changes in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of reserves	(19,676)	(16,307)
Accounts payable and accrued expenses	(5,423)	147
Accrued compensation	(26,266)	(23,595)
Deferred fees	9,729	18,098
Taxes payable, net of prepaid taxes	(17,385)	17,166
Prepaid expenses and other assets	(10,327)	(11,915)
Deferred rent and other non-current liabilities	(646)	(186)
Other working capital accounts, net	74	14
Net cash provided by operating activities	145,554	153,689
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments	(7,927)	(9,487)
Proceeds from maturity of investments	10,041	9,872
Purchases of property, equipment and leasehold improvements, net of proceeds from dispositions	(21,482)	(12,375)
Net cash used in investing activities	(19,368)	(11,990)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments	(48,442)	(43,406)
Repurchases of common stock	(110,739)	(113,906)
Other financing activities		442
Proceeds from employee stock plans	43,362	48,784
Net cash used by financing activities	(115,819)	(108,086)
Effect of exchange rate changes on cash and cash equivalents	(655)	5,284
Net increase in cash and cash equivalents	9,712	38,897
Cash and cash equivalents at beginning of period	208,623	194,731
Cash and cash equivalents at end of period	$ 218,335	$ 233,628

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands		Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Aug. 31, 2017		51,845,132		12,822,100
Balance at Aug. 31, 2017		$ 518	$ 741,748	$ (1,606,678)	$ 1,458,823	$ (34,720)	$ 559,691
Net income					123,516		123,516
Other comprehensive (loss) income						16,122	16,122
Common stock issued for employee stock plans (in shares)		479,871
Common stock issued for employee stock plans		$ 5	54,943				54,948
Vesting of restricted stock (in shares)		14,839		5,563
Vesting of restricted stock				$ (1,015)			$ (1,015)
Repurchases of common stock (in shares)				585,026			584,920
Repurchases of common stock				$ (112,892)			$ (112,892)
Stock-based compensation expense			15,420				15,420
Dividends declared					(43,700)		(43,700)
Retirement of Treasury Shares (in shares)		(13,292,689)		(13,292,689)
Retirement of Treasury Shares		$ (133)	(186,717)	$ 1,697,206	(1,510,355)
Balance (in shares) at Feb. 28, 2018		39,047,153		120,000
Balance at Feb. 28, 2018		$ 390	625,394	$ (23,379)	28,283	(18,598)	612,090
Balance (in shares) at Nov. 30, 2017		52,101,426		12,991,346
Balance at Nov. 30, 2017		$ 521	775,509	$ (1,638,384)	1,507,301	(26,730)	618,217
Net income					53,137		53,137
Other comprehensive (loss) income						8,132	8,132
Common stock issued for employee stock plans (in shares)		234,855
Common stock issued for employee stock plans		$ 2	28,664				28,666
Vesting of restricted stock (in shares)		3,561		1,343
Vesting of restricted stock				$ (263)			$ (263)
Repurchases of common stock (in shares)				420,000			420,000
Repurchases of common stock				$ (81,938)			$ (81,938)
Stock-based compensation expense			7,938				7,938
Dividends declared					(21,799)		(21,799)
Retirement of Treasury Shares (in shares)		(13,292,689)		(13,292,689)
Retirement of Treasury Shares		$ (133)	(186,717)	$ 1,697,206	(1,510,356)
Balance (in shares) at Feb. 28, 2018		39,047,153		120,000
Balance at Feb. 28, 2018		$ 390	625,394	$ (23,379)	28,283	(18,598)	612,090
Balance (in shares) at Aug. 31, 2018		39,264,849		1,072,263
Balance at Aug. 31, 2018		$ 393	667,531	$ (213,428)	122,843	(51,439)	525,900
Net income					168,998		168,998
Other comprehensive (loss) income						(2,913)	(2,913)
Common stock issued for employee stock plans (in shares)		349,846
Common stock issued for employee stock plans		$ 4	48,867				48,871
Vesting of restricted stock (in shares)		75,530		27,852
Vesting of restricted stock				$ (6,155)			$ (6,155)
Repurchases of common stock (in shares)				489,945			489,945
Repurchases of common stock				$ (104,584)			$ (104,584)
Stock-based compensation expense			16,140				16,140
Dividends declared					(48,756)		(48,756)
Cumulative effect of adoption of accounting standards*	[1]				1,303	717	2,020
Balance (in shares) at Feb. 28, 2019		39,690,225		1,590,060
Balance at Feb. 28, 2019		$ 397	732,538	$ (324,167)	244,388	(53,635)	599,521
Balance (in shares) at Nov. 30, 2018		39,447,491		1,366,613
Balance at Nov. 30, 2018		$ 394	694,078	$ (278,146)	184,071	(59,188)	541,209
Net income					84,702		84,702
Other comprehensive (loss) income						5,553	5,553
Common stock issued for employee stock plans (in shares)		219,815
Common stock issued for employee stock plans		$ 3	30,755				30,758
Vesting of restricted stock (in shares)		22,919		8,502
Vesting of restricted stock				$ (1,878)			$ (1,878)
Repurchases of common stock (in shares)				214,945			214,945
Repurchases of common stock				$ (44,143)			$ (44,143)
Stock-based compensation expense			7,705				7,705
Dividends declared					(24,385)		(24,385)
Balance (in shares) at Feb. 28, 2019		39,690,225		1,590,060
Balance at Feb. 28, 2019		$ 397	$ 732,538	$ (324,167)	$ 244,388	$ (53,635)	$ 599,521

[1] Includes the cumulative effect of adoption of accounting standards primarily due to both the adoption of the new revenue recognition standard (ASC 606) resulting in a cumulative increase to retained earnings related to certain fulfillment costs and the accounting standard update related to the U.S. Tax Cuts and Jobs Act ("TCJA") providing for the reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects. See Notes 3 and 4 for additional information.

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Note 1 - Organization and Nature of Business

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Nature of Operations [Text Block]

1.

ORGANIZATION AND NATURE

OF BUSINESS

FactSet Research Systems Inc. (the “Company” or “FactSet”) is a global provider of integrated financial information, analytical applications and industry-leading service for the global investment community. These professionals include portfolio managers, investment research professionals, investment bankers, risk and performance analysts, and wealth advisors. From streaming real-time data to historical information, including quotes, estimates, news and commentary, FactSet offers proprietary and

third

-party content through desktop, web, mobile, and off-platform solutions. The Company’s broad application suite offers tools and resources including company and industry analyses, full screening tools, portfolio analysis, risk profiles, alpha-testing, portfolio optimization and research management solutions. With recent acquisitions, FactSet has continued to expand its solutions across the investment lifecycle from idea generation to performance and client reporting. The Company delivers insight and information to investment professionals through key workflow solutions including Research, Analytics, Wealth, and Content and Technology Solutions (“CTS”). The Company’s revenue is primarily derived from subscriptions to products and services such as workstations, analytics, enterprise data, research management, and trade execution.

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Note 2 - Basis of Presentation

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

FactSet conducts business globally and is managed on a geographic basis. The accompanying unaudited consolidated financial statements and notes of FactSet and its wholly owned subsidiaries included in this Quarterly Report on Form

10

-Q are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany activity and balances have been eliminated from the consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments, transactions or events discretely impacting the interim periods considered necessary to present fairly the Company’s financial position, results of operations, equity and cash flows. The information in this Quarterly Report on Form

10

-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

10

-K for the fiscal year ended

August 31, 2018,

filed with the Securities and Exchange Commission (“SEC”) on

October 30, 2018.

The Company has evaluated subsequent events through the date that the financial statements were issued.

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Note 3 - Recent Accounting Pronouncements

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

3

.

RECENT

ACCOUNTING PRONOUNCEMENTS

As of

February 28, 2019,

The Company implemented all applicable new accounting standards and updates issued by the Financial Accounting Standards Board (“FASB”) that were in effect. There were

no

new standards or updates adopted during the

first

six

months of fiscal

2019

that had a material impact on the consolidated financial statements.

New Accounting Standards or Updates Recently Adopted

Revenue Recognition

In

May 2014

and

July 2015,

the FASB issued accounting standard updates which clarified principles for recognizing revenue arising from contracts with clients and superseded most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. The new guidance also requires increased disclosures including the nature, amount, timing, and uncertainty of revenue and cash flows related to contracts with clients.

The standard allows

two

methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective method”). FactSet adopted the new standard using the modified retrospective method as of the beginning of its

first

quarter of fiscal

2019.

FactSet’s implementation efforts include the evaluation of contract revenue under the new guidance. Additionally, an assessment of the qualitative and quantitative impacts of pricing changes during the contractual term and fulfillment costs was made.

The Company derives most of its revenues by providing client access to its hosted proprietary data and analytics platform, which can include various combinations of products and services available over the contractual term. The Company determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. FactSet recorded an opening cumulative increase to retained earnings of

$2.5

million, or

$2.0

million net of tax, during the

first

quarter of fiscal

2019,

related to certain fulfillment costs, which include up-front costs to allow for the delivery of services and products that are expected to be recovered. Under the new standard, such up-front costs are recognized as an asset and amortized consistent with the associated revenue for providing the services. The adoption of the new standards did

not

materially change the Company’s accounting policy for revenue recognition and did

not

have a material impact on the Company’s consolidated financial statements. Refer to Note

4

Revenue Recognition for further details.

Recognition and Measurement of Financial Assets and Financial Liabilities

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

January 2016,

which amended the recognition, measurement, presentation, and disclosure of certain financial instruments. Under the amended guidance, investments in equity securities, excluding equity method investments, will be measured at fair value with changes in fair value to be recognized in net income. This guidance was applied on a modified retrospective approach through a cumulative effect adjustment to retained earnings as permitted by the standard and did

not

have a material impact on the Company’s consolidated financial statements.

Cash Flow Simplification

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

August 2016,

which simplified how certain transactions are classified in the statement of cash flows. This included revised guidance on the cash flow classification of debt prepayments and debt extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investments. The guidance is intended to reduce diversity in practice across all industries. The adoption of this standard had

no

impact on the Company’s consolidated financial statements.

Income Taxes on Intra-Entity Transfers of Assets

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

October 2016,

which removed the prohibition against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The guidance was issued in order to reduce diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. The adoption of this standard had

no

impact on the Company’s consolidated financial statements.

Share-Based Payments

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

May 2017,

which amended the scope of modification accounting for share-based payment arrangements. The guidance focused on changes to the terms or conditions of share-based payment awards that would require the application of modification accounting and specifies that an entity would

not

apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The adoption of this standard had

no

impact on the Company’s consolidated financial statements.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

February 2018,

which allowed companies to reclassify certain stranded income tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the "TCJA") from accumulated other comprehensive income to retained earnings. The adoption of this standard did

not

have a material impact on the Company’s consolidated financial statements.

Implementation Costs in a Cloud Computing Arrangement

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

August 2018,

which related to a client’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the requirements for capitalizing implementation costs in a cloud computing service contract with the guidance for capitalizing implementation costs to develop or obtain internal-use software. Capitalized implementation costs will be amortized over the term of the arrangement. This accounting standard update will be effective for the Company beginning in the

first

quarter of fiscal

2021,

however the Company elected to early adopt this standard on a prospective basis during the

first

quarter of fiscal

2019.

There was

no

impact to the Company’s consolidated financial statements as a result of the adoption of this standard, as FactSet is currently accounting for costs incurred in a cloud computing arrangement in accordance with the guidance provided in this standard.

Recent Accounting Standards or Updates

Not

Yet Effective

Leases

In

February 2016,

the FASB issued an accounting standard update related to accounting for leases. The guidance introduces a lessee model that requires most leases to be reported on the balance sheet. The accounting standard update aligns many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. The guidance also eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification. This accounting standard update will be effective for FactSet beginning in the

first

quarter of fiscal

2020,

with early adoption in fiscal

2019

permitted. The Company is currently evaluating the impact of this accounting standard update, including the transition method, but expects the adoption to have a material impact to its balance sheet. However, it does

not

expect the adoption to have a material impact on the statements of income, comprehensive income or cash flows. Refer to Note

17

Commitments and Contingencies for information regarding the Company’s undiscounted future lease commitments.

Goodwill Impairment Test

In

January 2017,

the FASB issued an accounting standard update which removes the requirement for companies to compare the implied fair value of goodwill with its carrying amount as part of step

2

of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill. This accounting standard update will be effective for the Company beginning in the

first

quarter of fiscal

2021,

with early adoption permitted for any impairment tests performed after

January 1, 2017

and is

not

expected to have a material impact on the consolidated financial statements.

Hedge Accounting Simplification

In

August 2017,

the FASB issued an accounting standard update to reduce the complexity of and simplify the application of hedge accounting. The guidance refines and expands hedge accounting for both financial and nonfinancial risk components, eliminates the need to separately measure and report hedge ineffectiveness, and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance will be effective for the Company beginning in the

first

quarter of fiscal

2020,

with early adoption permitted. The Company is currently evaluating the impact of this accounting standard update but it is

not

expected to have a material impact on the consolidated financial statements.

No

other new accounting pronouncements issued or effective as of

February 28, 2019

have had or are expected to have an impact on the Company’s consolidated financial statements.

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Note 4 - Revenue Recognition

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

4.

REVENUE RECOGNITION

In

May 2014

and

July 2015,

the FASB issued accounting standard updates which clarified principles for recognizing revenue arising from contracts with customers (ASC

606

) and superseded most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue standard is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance applies a

five

-step model for revenue measurement and recognition and also requires increased disclosures including the nature, amount, timing, and uncertainty of revenue and cash flows related to contracts with clients.

The Company adopted the standard at the beginning of the

first

quarter of fiscal

2019,

using the modified retrospective method of adoption and applied the guidance to those contracts that were

not

completed as of

August 31, 2018.

Under the modified retrospective method of adoption, the cumulative effect of applying the new standard is recorded at the date of initial application, with

no

restatement of the comparative prior periods presented. The Company assessed its revenue contracts with clients under the new standards and determined that the adoption did

not

materially change the timing or amount of revenue recognized.

The Company derives most of its revenues by providing client access to its hosted proprietary data and analytics platform which can include various combinations of products and services available over the contractual term. The hosted platform is a subscription-based service that consists primarily of providing access to products and services including workstations, analytics, enterprise data, research management, and trade execution. The Company determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. The Company determined that the nature of the promise to the client is to provide daily access to

one

overall data and analytics platform. This platform provides integrated financial information, analytical applications and industry-leading service for the investment community. Based on the nature of the services and products offered by FactSet, the Company applies an input time-based measure of progress as the client is simultaneously receiving and consuming the benefits of the platform. The Company records revenue for its contracts using the over-time revenue recognition model as a client is invoiced or performance in satisfied, which is comparable with how revenue is recognized today. FactSet does

not

consider payment terms a performance obligation for customers with contractual terms that are

one

year or less and has elected the practical expedient.

In FactSet’s assessment of contracts with clients, the Company did identify a small portion of contracts with certain fulfillment costs, which include up-front costs to allow for the delivery of services and products that are expected to be recovered. In connection with the adoption of the new standard, these fulfillment costs are recognized as an asset and amortized consistent with the associated revenue for providing the services, which prior to adoption were expensed. As a result, during the

first

quarter of fiscal

2019,

FactSet recorded an opening cumulative increase to Retained earnings of

$2.5

million, or

$2.0

million net of tax, with an offsetting increase related to the current asset portion in Prepaid expenses and other current assets and the non-current asset portion in Other assets based on the term of the license period. Prospectively, fulfillment costs will continue to be recognized in the same accounts used for the adoption impact, which include the Prepaid expenses and other current assets account for the current portion and Other assets for the non-current portion, based on the term of the license period. The differences between the Company’s reported operating results for the

three

months and

six

months ended

February 28, 2019,

which reflect the application of the new standard on the Company’s contracts, and the results that would have been reported as if the accounting was performed pursuant to the accounting standards previously in effect, were

not

material. There are

no

significant judgements that would impact the timing of revenue recognition. The majority of client contracts have a duration of

one

year or less, or the amount FactSet is entitled to receive corresponds directly with the value of performance obligations completed to date, and therefore, the Company does

not

disclose the value of the remaining unsatisfied performance obligations.

Disaggregated Revenue

The Company disaggregates revenue from contracts with clients by demographic region which include U.S., Europe and Asia Pacific. FactSet believes these geographic regions are reflective of how the Company manages the business and the demographic markets in which it serves. The geographic regions best depict the nature, amount, timing and uncertainty of revenues and cash flows related to contracts with clients. Refer to Note

8

Segment Information for further information on revenues by geographic region.

The following table presents this disaggregation of revenue by geography:

	Three months ended February 28,				Six months ended February 28,
(in thousands)	2019		2018		2019		2018
U.S.	$	223,315	$	208,900	$	445,518	$	417,668
Europe		98,933		96,206		196,698		187,933
Asia Pacific		32,647		30,125		64,319		58,771
Total Revenue	$	354,895	$	335,231	$	706,535	$	664,372

XML

Note 5 - Fair Value Measures

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block]

5.

FAIR

VALUE MEASURES

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income and cost approaches is permissible. The Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are

three

levels of inputs that

may

be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and

may

affect their placement within the fair value hierarchy levels. The Company has categorized its cash equivalents, investments and derivatives within the fair value hierarchy as follows:

Level

1

– applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. These Level

1

assets and liabilities include the Company’s corporate money market funds that are classified as cash equivalents.

Level

2

– applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. The Company’s mutual funds, certificates of deposit, and derivative instruments are classified as Level

2.

Level

3

– applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. There were

no

Level

3

assets or liabilities held by the Company as of

February 28, 2019

or

August 31, 2018.

(

a

) Assets and Liabilities Measured at

Fair Value on a Recurring Basis

The following tables shows by level within the fair value hierarchy the Company’s assets and liabilities that are measured at fair value on a recurring basis at

February 28, 2019

and

August 31, 2018.

The Company did

not

have any transfers between Level

1

and Level

2

fair value measurements during the periods presented.

	Fair Value Measurements at February 28, 2019
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds (1)	$	38,000	$	—	$	—	$	38,000
Mutual funds (2)		—		18,541		—		18,541
Certificates of deposit ( 3 )		—		8,528		—		8,528
Derivative instruments (4 )		—		680		—		680
Total assets measured at fair value	$	38,000	$	27,749	$	—	$	65,749
Liabilities
Derivative instruments (4)	$	—	$	2,293	$	—	$	2,293
Total liabilities measured at fair value	$	—	$	2,293	$	—	$	2,293

	Fair Value Measurements at August 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds (1)	$	75	$	—	$	—	$	75
Mutual funds (2)		—		18,668		—		18,668
Certificates of deposit (3)		—		10,591		—		10,591
Derivative instruments (4)		—		90		—		90
Total assets measured at fair value	$	75	$	29,349	$	—	$	29,424
Liabilities
Derivative instruments (4)	$	—	$	4,036	$	—	$	4,036
Total liabilities measured at fair value	$	—	$	4,036	$	—	$	4,036

( 1 ) The Company’s corporate money market funds are readily convertible into cash and the net asset value of each fund on the last day of the quarter is used to determine its fair value. As such, the Company’s corporate money market funds are classified as Level 1 and included in Cash and cash equivalents within the consolidated balance s heets.

( 2 ) The Company’s mutual funds have a fair value based on the fair value of the underlying investments held by the mutual funds , allocated to each share of the mutual fund using a net asset value approach. The fair value of the underlying investments is based on observable inputs. As such, the Company’s mutual funds are classified as Level 2 and are included as I nvestments (short-term) on the consolidated balance s heets.

( 3 ) The Company’s certificates of deposit held for investment are valued at amortized cost, which approximates fair value and, therefore, are classified as Level 2. These certificates of deposit are not debt securities and have original maturities greater than three months, but less than one year and, as such, are classified as Inves tments (short-term) within the consolidated balance s heets.

( 4 ) The Company utilizes the income approach to measure fair value for its derivative instruments ( foreign exchange forward contracts) . The income approach uses pricing models that rely on market observable inputs such as spot, forward and interest rates , as well as credit default swap spreads and therefore are classified as Level 2.

(b) Assets and Liabilities Measured at Fair Value on a Non-

R

ecurring Basis

Certain assets, including Goodwill and Intangible assets, and liabilities, are measured at fair value on a non-recurring basis; that is, the assets and liabilities are

not

measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances such as when they are deemed to be other-than-temporarily impaired. The fair values of these non-financial assets and liabilities are determined based on valuation techniques using the best information available, and

may

include quoted market prices, market comparable information, and discounted cash flow projections. An impairment charge is recorded when the cost exceeds its fair value, based upon the results of such valuations. During the

six

months ended

February 28, 2019,

no

fair value adjustments or material fair value measurements were required for the Company’s non-financial assets or liabilities.

(c) Assets and Liabilities Measured at Fair Value for Disclosure Purposes

O

nly

As of

February 28, 2019,

and

August 31, 2018,

the fair value of the Company’s Long-term debt was

$575.0

million, which approximated its carrying amount given the application of a floating interest rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid. The fair value of the Company’s long-term debt was determined based on quoted market prices for debt with a similar maturity, and thus categorized as Level

2

in the fair value hierarchy.

XML

Note 6 - Derivative Instruments

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

6

. DERIVATIVE INSTRUMENTS

Cash Flow Hedges

FactSet conducts business outside the U.S. in several currencies including the Euro, British Pound Sterling, Indian Rupee, and Philippine Peso. As such, it is exposed to movements in foreign currency exchange rates compared to the U.S. dollar. The Company utilizes derivative instruments (foreign currency forward contracts) to manage the exposures related to the effects of foreign exchange rate fluctuations and reduce the volatility of earnings and cash flows associated with changes in foreign currency. The Company does

not

enter into foreign currency forward contracts for trading or speculative purposes. See Note

17,

Commitments and Contingencies – Concentrations of Credit Risk, for further discussion on counterparty credit risk.

In designing a specific hedging approach, FactSet considered several factors, including offsetting exposures, the significance of exposures, the forecasting of risk and the potential effectiveness of the hedge. The gains and losses on foreign currency forward contracts offset the variability in operating expenses associated with currency movements. The changes in fair value for these foreign currency forward contracts are initially reported as a component of accumulated other comprehensive loss (“AOCL”) and subsequently reclassified into operating expenses when the hedged exposure affects earnings. There was

no

discontinuance of cash flow hedges during the

first

six

months of fiscal

2019

and

2018,

and as such,

no

corresponding gains or losses related to changes in the value of the Company’s contracts were reclassified into earnings prior to settlement.

As of

February 28, 2019,

FactSet maintained the following foreign currency forward contracts to hedge its exposures:

● Philippine Peso – foreign currency forward contracts to hedge approximately 75% of its Philippine Peso exposure through the fourth quarter of fiscal 2020.

● Indian Rupee – foreign currency forward contracts to hedge approximately 75% of its Indian Rupee exposure through the third quarter of fiscal 2019, 50% of its exposure from the fourth quarter of fiscal 2019 through the end of the second quarter of fiscal 2020, and 25% of its exposure from the third quarter of fiscal 2020 through the end of the fourth quarter of fiscal 2020.

● Euro – foreign currency forward contracts to hedge approximately 78% of its Euro exposure through the third quarter of fiscal 2019.

● British Pound Sterling – foreign currency forward contracts to hedge approximately 50% of its British Pound Sterling exposure through the third quarter of fiscal 2019.

The following is a summary of all hedging positions and corresponding fair values:

	Gross Notional Value				Fair Value (Liability) Asset
Currency Hedged (in thousands, in U.S. dollars)	February 28, 2019		August 31, 2018		February 28, 2019			August 31, 2018
Philippine Peso	$	39,000	$	52,000	$	680		$	(1,230	)
Indian Rupee		35,580		50,780		(1,506	)		(1,490	)
Euro		29,977		26,312		(622	)		(503	)
British Pound Sterling		6,682		18,995		(165	)		(723	)
Total	$	111,239	$	148,087	$	(1,613	)	$	(3,946	)

As of

February 28, 2019,

the gross notional value of foreign currency forward contracts to purchase Philippine Pesos with U.S. dollars was PHP

2.1

billion. The gross notional value of foreign currency forward contracts to purchase Indian Rupees with U.S. dollars was Rs.

2.5

billion. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with Euros was €

25.7

million. The gross notional value of foreign currency forward contracts to purchase U.S. dollars with British Pound Sterling was £

4.9

million.

Fair Value of Derivative Instruments

 

The following table provides a summary of the fair value amounts of derivative instruments:

Designation of Derivatives (in thousands)	Balance Sheet Location	February 28, 2019		August 31, 2018
Derivatives designated as hedging instruments	Assets : Foreign Currency Forward Contracts
	Prepaid expenses and other current assets	$	533	$	90
	Other Assets	$	147	$	—
	Liabilities : Foreign Currency Forward Contracts
	Accounts payable and accrued expenses	$	2,044	$	1,731
	Deferred rent and other non-current liabilities	$	249	$	2,305

All derivatives were designated as hedging instruments as of

February 28, 2019

and

August 31, 2018.

Derivatives in Cash Flow Hedging Relationships

The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the

three

months ended

February 28, 2019

and

2018,

respectively:

(in thousands)	Gain (Loss) Recognized in AOCL on Derivatives (Effective Portion)					Location of (Loss) Gain Reclassified from AOCL into Income	(Loss) Gain Reclassified from AOCL into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	2019		2018			(Effective Portion)	2019			2018
Foreign currency forward contracts	$	321	$	(1,346	)	SG&A	$	(385	)	$	824

The following table provides the pre-tax effect of derivative instruments in cash flow hedging relationships for the

six

months ended

February 28, 2019

and

2018,

respectively:

(in thousands)	Gain (Loss) Recognized in AOCL on Derivatives (Effective Portion)					Location of (Loss) Gain Reclassified from AOCL into Income	(Loss) Gain Reclassified from AOCL into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	2019		2018			(Effective Portion)	2019			2018
Foreign currency forward contracts	$	2,264	$	(1,345	)	SG&A	$	(784	)	$	1,589

No

amount of ineffectiveness was recorded in the consolidated statements of income for these designated cash flow hedges and all components of each derivative’s gain or loss was included in the assessment of hedge effectiveness. As of

February 28, 2019,

the Company estimates that

$1.5

million of net derivative losses related to its cash flow hedges included in AOCL will be reclassified into earnings within the next

12

months.

Offsetting of Derivative Instruments

FactSet’s master netting and other similar arrangements with its respective counterparties allow for net settlement under certain conditions. As of

February 28, 2019,

and

August 31, 2018,

there were

no

material amounts recorded net on the consolidated balance sheets.

XML

Note 7 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

7

. OTHER COMPREHENSIVE INCOME (

LOSS

)

AND ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Other comprehensive income for the

three

months ended

February 28, 2019

and

2018

are as follows:

	February 28, 2019				February 28, 2018
(in thousands)	Pre-tax		Net of tax		Pre-tax			Net of tax
Foreign currency translation adjustments	$	5,026	$	5,026	$	9,400		$	9,400
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		706		527		(2,170	)		(1,268	)
Other comprehensive income	$	5,732	$	5,553	$	7,230		$	8,132

The components of Other comprehensive (loss) income for the

six

months ended

February 28, 2019

and

2018

are as follows:

	February 28, 2019						February 28, 2018
(in thousands)	Pre-tax			Net of tax			Pre-tax			Net of tax
Foreign currency translation adjustments	$	(4,478	)	$	(4,478	)	$	17,866		$	17,866
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		2,332			1,565			(2,934	)		(1,744	)
Other comprehensive (loss) income	$	(2,146	)	$	(2,913	)	$	14,932		$	16,122

The components of AOCL are as follows:

(in thousands)	February 28, 2019			August 31, 2018
Accumulated unrealized (gains) losses on cash flow hedges, net of tax	$	(1,204	)	$	(3,486	)
Accumulated foreign currency translation adjustments		(52,431	)		(47,953	)
Total accumulated other comprehensive loss	$	(53,635	)	$	(51,439	)

XML

Note 8 - Segment Information

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

8

. SEGMENT

INFORMATION

Operating segments are defined as (i) components of an enterprise that engage in business activities from which they

may

earn revenue and incur expense, (ii) with operating results that are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and (iii) for which discrete financial information is available. Executive management, along with the CEO, constitute FactSet’s chief operating decision making group (“CODMG”). Executive management consists of certain executives who directly report to the CEO, consisting of the Chief Financial Officer, Chief Technology and Product Officer, Global Head of Sales and Client Solutions, General Counsel, Chief Human Resources Officer and Head of Analytics & Trading. The CODMG reviews financial information at the operating segment level and is responsible for making decisions about resources allocated amongst the operating segments based on actual results.

The Company’s operating segments are aligned with how the Company, including its CODMG, manages the business and the demographic markets in which it serves. The Company’s internal financial reporting structure is based on

three

segments: the U.S., Europe and Asia Pacific. The Company believes this alignment helps to better manage the business and view the markets it serves, which are centered on providing integrated global financial and economic information. Sales, consulting, data collection, product development and software engineering are the primary functional groups within the U.S., Europe and Asia Pacific segments. These functional groups provide global financial and economic information to investment managers, investment banks and other financial services professionals.

The U.S. segment serves investment professionals including financial institutions throughout the Americas. The Europe and Asia Pacific segments serve investment professionals located throughout Europe and Asia Pacific, respectively. Segment revenue reflects direct sales to clients based on their respective geographic locations. Each segment records compensation expense, including stock-based compensation, amortization of intangible assets, depreciation of furniture and fixtures, amortization of leasehold improvements, communication costs, professional fees, rent expense, travel, office and other direct expenses.

Expenditures associated with the Company’s data centers,

third

-party data costs and corporate headquarters charges are recorded by the U.S. segment and are

not

allocated to the other segments. The content collection centers, located in India, the Philippines, and Latvia, benefit all the Company’s operating segments and thus the expenses incurred at these locations are allocated to each segment based on a percentage of revenue. Of the total

$700.0

million of goodwill reported by the Company at

February 28, 2019,

55%

was recorded in the U.S. segment,

44%

in the Europe segment and the remaining

1%

in the Asia Pacific segment.

The following reflects the results of operations of the segments, consistent with the Company’s management structure. These results are used, in part, by management, both in evaluating the performance of, and in allocating resources to, each of the segments.

(in thousands) For the three months ended February 28, 2019	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	223,315	$	98,933	$	32,647	$	354,895
Segment operating income	$	45,696	$	43,248	$	19,744	$	108,688
Total assets	$	792,573	$	556,526	$	115,895	$	1,464,994
Capital expenditures	$	7,254	$	434	$	4,269	$	11,957

For the three months ended February 28, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	208,900	$	96,206	$	30,125	$	335,231
Segment operating income	$	38,527	$	36,993	$	19,965	$	95,485
Total assets	$	733,045	$	634,472	$	104,975	$	1,472,492
Capital expenditures	$	3,729	$	755	$	1,979	$	6,463

(in thousands) For the six months ended February 28, 2019	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	445,518	$	196,698	$	64,319	$	706,535
Segment operating income	$	89,537	$	82,337	$	37,353	$	209,227
Capital expenditures	$	11,358	$	1,697	$	8,427	$	21,482

For the six months ended February 28, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	417,668	$	187,933	$	58,771	$	664,372
Segment operating income	$	79,298	$	69,963	$	35,322	$	184,583
Capital expenditures	$	7,274	$	2,279	$	2,822	$	12,375

XML

Note 9 - Goodwill

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Goodwill Disclosure [Text Block]

9

. GOODWILL

Changes in the carrying amount of goodwill by segment for the

six

months ended

February 28, 2019

are as follows:

(i n thousands )	U.S.		Europe			Asia Pacific			Total
Balance at August 31, 2018	$	386,195	$	312,694		$	2,944		$	701,833
Foreign currency translations		—		(1,793	)		(11	)		(1,804	)
Balance at February 28, 2019	$	386,195	$	310,901		$	2,933		$	700,029

Goodwill is

not

amortized as it is estimated to have an indefinite life. At least annually, the Company is required to test goodwill at the reporting unit level for potential impairment, and, if impaired, write down to fair value based on the present value of discounted cash flows. The Company’s reporting units evaluated for potential impairment were the U.S., Europe and Asia Pacific, which reflect the level of internal reporting the Company uses to manage its business and operations. The

three

reporting units are consistent with the operating segments reported as there is

no

discrete financial information available for the subsidiaries within each operating segment. The Company performed its annual goodwill impairment test during the

fourth

quarter of fiscal

2018,

consistent with the timing of previous years, at which time it was determined that there was

no

impairment, with the fair value of each of the Company’s reporting units significantly exceeding carrying value.

XML

Note 10 - Intangible Assets

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

FactSet’s identifiable intangible assets consist of acquired content databases, client relationships, software technology, non-compete agreements and trade names resulting from previous acquisitions, which have been fully integrated into the Company’s operations. The weighted average useful life of FactSet’s acquired identifiable intangible assets at

February 28, 2019

was

12.3

years. The Company amortizes intangible assets over their estimated useful lives, which are evaluated quarterly to determine whether events and circumstances warrant a revision to the remaining period of amortization. There have been

no

changes to the estimate of the remaining useful lives during the

first

six

months of fiscal

2019.

If indicators of impairment are present, amortizable intangible assets are tested for impairment comparing the carrying value to undiscounted cash flows and, if impaired, written down to fair value based on discounted cash flows.

No

impairment of intangible assets has been identified during any of the periods presented. The intangible assets have

no

assigned residual values.

The gross carrying amounts and accumulated amortization totals related to the Company’s identifiable intangible assets are as follows:

At February 28, 2019 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	34,135	$	21,835	$	12,300
Client relationships		98,148		32,801		65,347
Software technology		106,231		50,837		55,394
Non-compete agreements		4,860		2,815		2,045
Trade names		4,068		2,745		1,323
Total	$	247,442	$	111,033	$	136,409

At August 31, 2018 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	33,992	$	20,990	$	13,002
Client relationships		98,882		29,387		69,495
Software technology		106,505		44,231		62,274
Non-compete agreements		4,840		2,381		2,459
Trade names		4,070		2,365		1,705
Total	$	248,289	$	99,354	$	148,935

Amortization expense recorded for intangible assets was

$5.8

million and

$6.2

million for the

three

months ended

February 28, 2019

and

2018,

respectively. Amortization expense recorded for intangible assets was

$11.7

million and

$12.4

million for the

six

months ended

February 28, 2019

and

2018,

respectively. As of

February 28, 2019,

estimated intangible asset amortization expense for each of the next

five

years and thereafter is as follows

Fiscal Year (in thousands)	Estimated Amortization Expense
2019 (remaining six months)	$	11,927
2020		23,216
2021		21,252
2022		18,666
2023		13,844
Thereafter		47,504
Total	$	136,409

XML

Note 11 - Common Stock and Earnings Per Share

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

1

1

. COMMON STOCK AND EARNINGS PER SHARE

On

February 15, 2019,

FactSet’s Board of Directors approved a regular quarterly dividend of

$0.64

per share. The cash dividend of

$24.4

million was paid on

March 19, 2019

to common stockholders of record at the close of business on

February 28, 2019.

Shares of common stock outstanding were as follows:

	Six Months ended February 28,
(i n thousands)	2019			2018
Balance, beginning of year (September 1)		38,192			39,023
Common stock issued for employee stock plans		426			495
Repurchase of common stock from employees (1)		(28	)		(6	)
Repurchase of common stock under the share repurchase program		(490	)		(585	)
Balance at February 28, 2019 and 2018, respectively		38,100			38,927

( 1 )   For the six months ended February 28 , 201 9 and 201 8 , the Company repurchased 27 , 852 and 5 , 563 shares, or $ 6 . 1 million and $ 1 . 0 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock.

A reconciliation of the weighted average shares outstanding used in the basic and diluted earnings per share (“EPS”) computations is as follows:

(in thousands, except per share data)	Net Income (Numerator)		Weighted Average Common Shares (Denominator)		Per Share Amount
For the three months ended February 28, 2019
Basic EPS
Income available to common stockholders	$	84,702		38,055	$	2.23
Diluted EPS
Dilutive effect of stock options and restricted stock				564
Income available to common stockholders plus assumed conversions	$	84,702		38,619	$	2.19
For the three months ended February 28, 2018
Basic EPS
Income available to common stockholders	$	53,137		38,991	$	1.36
Diluted EPS
Dilutive effect of stock options and restricted stock				855
Income available to common stockholders plus assumed conversions	$	53,137		39,846	$	1.33
For the six months ended February 28, 2019
Basic EPS
Income available to common stockholders	$	168,998		38,081	$	4.44
Diluted EPS
Dilutive effect of stock options and restricted stock				633
Income available to common stockholders plus assumed conversions	$	168,998		38,714	$	4.37
For the six months ended February 28, 2018
Basic EPS
Income available to common stockholders	$	123,516		39,038	$	3.16
Diluted EPS
Dilutive effect of stock options and restricted stock				725
Income available to common stockholders plus assumed conversions	$	123,516		39,763	$	3.11

Dilutive potential common shares consist of stock options and unvested restricted stock awards. There were

447,709

stock options excluded from the calculation of diluted EPS for the

three

and

six

months ended

February 28, 2019,

because their inclusion would have been anti-dilutive. There were

no

stock options or unvested restricted stock awards excluded from the calculation of diluted EPS for the

three

and

six

months ended

February 28, 2018.

Performance-based stock options are omitted from the calculation of diluted EPS until the performance criteria is probable of being achieved. For the

three

and

six

months ended

February 28, 2019,

the number of performance-based stock option grants excluded from the calculation of diluted EPS was

206,417

.

For the

three

and

six

months ended

February 28, 2018,

the number of performance-based stock option grants excluded from the calculation of diluted EPS was

309,800

.

XML

Note 12 - Stockholders' Equity

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

1

2

.

S

TOCK

HOLDERS’ E

QUITY

Preferred Stock

At

February 28, 2019

and

August 31, 2018,

there were

10,000,000

shares of preferred stock (

$

0.01

par value per share) authorized, of which

no

shares were issued and outstanding. FactSet’s Board of Directors

may

from time to time authorize the issuance of

one

or more series of preferred stock and, in connection with the creation of such series, determine the characteristics of each such series including, without limitation, the preference and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of the series.

Common Stock

At

February 28, 2019

and

August 31, 2018,

there were

150,000,000

shares of common stock (

$.01

par value per share) authorized, of which

39,690,225

and

39,264,849

shares were issued, respectively. The authorized shares of common stock are issuable for any proper corporate purpose, including future stock splits, stock dividends, acquisitions, raising equity capital or to adopt additional employee benefit plans.

Treasury Stock

On

January 31, 2018,

FactSet retired

13,292,689

shares of treasury stock. These retired shares are now included in the Company’s pool of authorized but unissued shares. The retired treasury stock was initially recorded using the cost method and had a carrying value of

$1.7

billion at

January 31, 2018.

The Company’s accounting policy upon the formal retirement of treasury stock is to deduct its par value from common stock (

$0.1

million), reduce additional paid-in capital (“APIC”) by the average amount recorded in APIC when stock was originally issued (

$186.7

million) and any remaining excess of cost as a reduction to retained earnings (

$1.5

billion). As of

February 28, 2019,

and

August 31, 2018,

there were

1,590,060

and

1,072,263

shares of treasury stock (at cost) outstanding, respectively.

Share Repurchase Program

Repurchases will be made from time to time in the open market and privately negotiated transactions, subject to market conditions. For the

three

months ended

February 28, 2019

and

2018,

the Company repurchased

214,945

shares for

$44.1

million and

420,000

shares for

$81.9

million, respectively. For the

six

months ended

February 28, 2019

and

2018,

the Company repurchased

489,945

shares for

$104.6

million and

584,920

shares for

$112.9

million, respectively. As of

February 28, 2019,

$137.2

million remains authorized for future share repurchases.

No

minimum number of shares to be repurchased has been fixed. There is

no

timeframe to complete the repurchase program and it is expected that share repurchases will be paid using existing and future cash generated by operations.

Restricted Stock

Restricted stock awards entitle the holder to shares of common stock as the awards vest over time. During the

first

six

months of fiscal

2019,

previously granted restricted stock awards of

75,530

shares vested and were included in common stock outstanding as of

February 28, 2019 (

recorded net of

27,852

shares repurchased from employees at a cost of

$6.1

million to cover their cost of taxes upon vesting of the restricted stock). During the same comparable period a year ago,

14,839

shares of previously granted restricted stock awards vested and were included in common stock outstanding as of

February 28, 2018 (

recorded net of

5,563

shares repurchased from employees at a cost of

$1.0

million to cover their cost of taxes upon vesting of the restricted stock).

Dividends

The Company’s Board of Directors declared the following dividends for the

first

six

months of fiscal

2019

and

2018

respectively:

Year Ended	Dividends per Share of Common Stock		Record Date	Total $ Amount (in thousands)		Payment Date
Fiscal 2019
First Quarter	$	0.64	November 30, 2018	$	24,372	December 18, 2018
Second Quarter	$	0.64	February 28, 2019	$	24,385	March 19, 2019
Fiscal 2018
First Quarter	$	0.56	November 30, 2017	$	21,901	December 19, 2017
Second Quarter	$	0.56	February 28, 2018	$	21,799	March 20, 2018

All the above cash dividends were paid from existing cash resources. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Company and is subject to final determination by the Company’s Board of Directors.

XML

Note 13 - Employee Stock Option and Retirement Plans

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

1

3

. EMPLOYEE STOCK OPTION AND RETIREMENT PLANS

Stock Option Awards

The FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (the “Long Term Incentive Plan” or “LTIP”) provides for the grant of share-based awards, including stock options and restricted stock awards to employees of FactSet. The expiration date of the Long Term Incentive Plan is

December 19, 2027.

Stock options granted under the LTIP expire

not

more than

ten

years from the date of grant and the majority vest ratably over a period of

five

years. Options become vested and exercisable provided the employee continues employment with the Company through the applicable vesting date and remain exercisable until expiration or cancellation. Options are

not

transferable or assignable other than by will or the laws of descent and distribution. During the grantee’s lifetime, the options

may

be exercised only by the grantee.

S

tock Option Activity

During the

first

six

months of fiscal

2019,

FactSet granted

460,713

stock options with a weighted average exercise price of

$221.74

to existing employees of the Company.

A summary of stock option activity for the

six

months ended

February 28, 2019

is as follows:

(in thousands, except per share data)	Number of Stock Options Outstanding			Weighted Average Exercise Price Per Share
Balance at August 31, 2018		3,143		$	153.05
Granted – non-performance-based		455			221.93
Exercised		(117	)		132.81
Forfeited		(24	)		169.47
Balance at November 30, 2018		3,457		$	162.68
Granted – non-performance-based		6			207.84
Granted – non-employee Directors’ grant		21			207.88
Exercised		(207	)		136.30
Forfeited		(61	)		152.19
Balance at February 28, 2019		3,216		$	164.42

The total number of in-the-money options exercisable as of

February 28, 2019

was

1.2

million with a weighted average exercise price of

$138.41.

The aggregate intrinsic value of in-the-money stock options exercisable at

February 28, 2019

and

August 31, 2018

was

$116.5

million and

$105.3

million, respectively. The aggregate intrinsic value represents the difference between the Company’s closing stock price as of

February 28, 2019

of

$235.17,

and the exercise price, multiplied by the number of options exercisable as of that date.

The total pre-tax intrinsic value of stock options exercised during the

three

months ended

February 28, 2019

and

2018

was 

$15.5

million and

$17.2

million, respectively. The total pre-tax intrinsic value of stock options exercised during the

six

months ended

February 28, 2019

and

2018

was

$26.3

million and

$35.2

million, respectively.

Performance-based

Equity Awards

Performance-based equity awards, whether in the form of stock options or restricted stock, require management to make assumptions regarding the likelihood of achieving Company performance targets. The number of performance-based awards that vest will be predicated on the Company achieving performance levels during the measurement period subsequent to the date of grant. Dependent on the financial performance levels attained by FactSet, a percentage of the performance-based awards will vest to the grantees. However, there is

no

current guarantee that such awards will vest in whole or in part.

The following summarizes the material performance-based award outstanding as of

February 28, 2019.

June 2017

Performance-based Option Grant Review

In connection with the acquisition of BISAM, FactSet granted

206,417

performance-based stock options in

June 2017.

These performance-based options will vest

40%

on the

second

anniversary date of the grant and

20%

on each subsequent anniversary date if certain BISAM revenue and operating income targets are achieved by

March 31, 2019.

The option holders must also remain employed by FactSet for the options to be eligible to vest. As of

February 28, 2019,

FactSet does

not

believe these growth targets are probable of being achieved, and as such,

no

stock-based compensation expense is expected to be recognized in connection with these performance-based options. A change in the actual financial performance levels achieved by BISAM in future fiscal years could result in the following changes to the current estimate of the vesting percentage and related expense:

Vesting Percentage (in thousands)	Cumulative Catch-up Adjustment*		Remaining Expense to be Recognized
0% (current expectation)	$	—	$	—
80%	$	2,369	$	4,738
90%	$	2,665	$	5,331
100%	$	2,961	$	5,923

* Amounts represent the cumulative catch-up adjustment to be recorded if there

were

a change in the vesting percentage as of

February 28

,

201

9

. 

Restricted Stock Awards

The Company’s Option Plan permits the issuance of restricted stock awards in the form of either restricted shares or restricted stock units. Restricted stock awards are subject to continued employment over a specified period.

Restricted Stock Awards Activity

During the

first

six

months of fiscal

2019,

FactSet granted

41,153

restricted stock awards to employees of the Company at a weighted average grant date fair value of

$212.66.

These restricted stock awards vest over a weighted average period of

5.0

years from grant date.

As of

February 28, 2019,

a total of

106,558

restricted stock awards were unvested and outstanding, which results in unamortized stock-based compensation of

$16.1

million to be recognized as stock-based compensation expense over the remaining weighted average vesting period of

3.6

years.

A summary of restricted stock award activity is as follows:

(in thousands, except per award data)	Number Outstanding			Weighted Average Grant Date Fair Value Per Award
Balance at August 31, 2018		143			$	139.34
Granted		41			$	212.66
Forfeited		(1	)		$	200.18
Vested		(52	) (1)		$	113.44
Balance at November 30, 2018		131			$	172.48
Granted		—			$	—
Forfeited		(1	)		$	184.64
Vested		(23	) (2)		$	136.58
Balance at February 28, 2019		107			$	187.62

( 1 ) The majority of the vested restricted stock awards relate d to the final vesting of awards grant ed on November 1, 2013 , which cliff vested 6 0% after three years o n November 1, 2016 and 4 0% after five years on November 1, 2018.

( 2 ) The majority of the vested restricted stock awards related to the final vesting of awards granted on February 9, 2015, which vested 100% on the four year anniversary date of the grant.

As of

February 28, 2019,

and

August 31, 2018,

the aggregate fair value of unvested restricted stock was

$25.1

million and

$32.8

million, respectively. Aggregate fair value of unvested restricted stock represents the Company’s closing stock prices of

$235.17

and

$229.39

on

February 28, 2019

and

August 31, 2018,

respectively, multiplied by the number of unvested restricted stock as of that date.

The total pre-tax fair value of restricted stock that vested during the

three

months ended

February 28, 2019

and

2018

was

$5.1

million and

$0.7

million, respectively. The total pre-tax fair value of restricted stock that vested during the

six

months ended

February 28, 2019

and

2018

was

$16.7

million and

$2.7

million, respectively.

Share-based Awards Available for Grant

A summary of share-based awards available for grant is as follows:

(in thousands)	Share-based Awards Available for Grant under the Employee Stock Option Plan			Share-based Awards Available for Grant under the Non-Employee Stock Option Plan
Balance at August 31, 2018		6,298			282
Granted – non-performance-based options		(455	)		—
Restricted stock awards granted (1)		(103	)		—
Share-based awards canceled/forfeited (2)		25			—
Balance at November 30, 2018		5,765			282
Granted – non-performance-based options		(6	)		(21	)
Share-based awards canceled/forfeited (2)		65			3
Balance at February 28, 2019		5,824			264

( 1 ) Each restricted stock award granted is equivalent to 2.5 shares granted under the Company’s Option Plan.

( 2 ) Under the Company’s Option Plan, for each restricted stock award canceled/forfeited, an equivalent of 2.5 shares is added back to the available share-based awards balance.

Employee Stock Purchase Plan

Shares of FactSet common stock

may

be purchased by eligible employees under the Amended and Restated FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (the “ESPP”) in

three

-month intervals. The purchase price is equal to

85%

of the lesser of the fair market value of the Company’s common stock on the

first

day or the last day of each

three

-month offering period. Employee purchases

may

not

exceed

10%

of their gross compensation and a

$25,000

contribution limit during an offering period.

During the

three

months ended

February 28, 2019,

employees purchased

12,624

shares at a price of

$199.36

compared to

14,805

shares at a price of

$171.23

for the

three

months ended

February 28, 2018.

During the

six

months ended

February 28, 2019,

employees purchased

25,719

shares at a price of

$198.33

as compared to

34,394

shares at a price of

$150.25

for the

six

months ended

February 28, 2018.

At

February 28, 2019,

the ESPP had

243,223

shares reserved for future issuance.

Employee Benefit Plans

FactSet sponsors benefit plans for the majority of its domestic and foreign employees. The Company contributed

$2.6

million in employer matching contributions for its U.S. defined contribution plan for both the

three

months ended

February 28, 2019

and

2018.

During the

six

months ended

February 28, 2019

and

2018,

the Company contributed

$5.2

million and

$5.5

million in employer matching contributions for its U.S. defined contribution plan, respectively. Contributions to foreign benefit plans were

not

material to FactSet on either an individual or aggregate basis for any of the periods presented.

XML

Note 14 - Stock-based Compensation

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

1

4

. STOCK-BASED COMPENSATION

During the

three

months ended

February 28, 2019

and

2018,

the Company recognized total stock-based compensation expense of

$7.7

million and

$7.9

million, respectively. During the

six

months ended

February 28, 2019

and

2018,

the Company recognized total stock-based compensation expense of

$16.1

million and

$15.4

million, respectively. As of

February 28, 2019,

$87.2

million of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of

3.3

years. There was

no

stock-based compensation capitalized for the

three

and

six

months ended

February 28, 2019

or

August 31, 2018,

respectively.

Employee Stock Option Fair Value Determinations

The Company utilizes the lattice-binomial option-pricing model (“binomial model”) to estimate the fair value of new employee stock option grants. The Company’s determination of fair value of stock option awards on the date of grant using the binomial model is affected by the Company’s stock price as well as assumptions regarding several variables. These variables include, but are

not

limited to, the Company’s expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors.

Q1 2019	454,598  non-performance-based employee stock options were granted at a weighted average exercise price of $221.93  and a weighted average estimated fair value of $56.77  per share.
Q2 2019	6,115 non-performance-based employee stock options were granted at a weighted average exercise price of $207.84 and a weighted average estimated fair value of $53.18 per share.
Q1 2018	553,942 non-performance-based employee stock options were granted at a weighted average exercise price of $189.98 and a weighted average estimated fair value of $48.27 per share.
Q2 2018	15,363 non-performance-based employee stock options were granted at a weighted average exercise price of $192.11 and a weighted average estimated fair value of $48.82 per share.

The weighted average estimated fair value of employee stock options granted was determined using the binomial model with the following weighted average assumptions:

Three months ended February 28,	2019					2018
Term structure of risk-free interest rate		2.48%	-	3.14	%		1.28%	-	2.41	%
Expected life (years)				7.1					7.4
Term structure of volatility		18%	-	25	%		19%	-	29	%
Dividend yield				1.15	%				1.32	%
Weighted average estimated fair value	$	53.18				$	48.82
Weighted average exercise price	$	207.84				$	192.11
Fair value as a percentage of exercise price				25.6	%				25.4	%

Six months ended February 28,	2019					2018
Term structure of risk-free interest rate		1.28%	-	3.14	%		1.28%	-	2.41	%
Expected life (years)				7.1					7.4
Term structure of volatility		18%	-	29	%		19%	-	29	%
Dividend yield				1.16	%				1.32	%
Weighted average estimated fair value	$	56.72				$	48.29
Weighted average exercise price	$	221.74				$	190.04
Fair value as a percentage of exercise price				25.6	%				25.4	%

The risk-free interest rate assumption for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on a combination of historical volatility of the Company’s stock and implied volatilities of publicly traded options to buy FactSet common stock with contractual terms closest to the expected life of options granted to employees. The approach to utilize a mix of historical and implied volatility was based upon the availability of actively traded options on the Company’s stock and the Company’s assessment that a combination of implied volatility and historical volatility is best representative of future stock price trends. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is a derived output of the binomial model. The binomial model estimates employee exercise behavior based on the option’s remaining vested life and the extent to which the option is in-the-money. The binomial model estimates the probability of exercise as a function of these

two

variables based on the entire history of exercises and cancellations of all past option grants made by the Company.

Non-Employee Director Stock Option Fair

Value Determinations

The Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated (the “Director Plan”), provides for the grant of share-based awards, including stock options, to non-employee directors of FactSet. As of

February 28, 2019,

shares available for future grant under the Director Plan was

263,956.

The expiration date of the Director Plan is

December 19, 2027.

The Company utilizes the Black-Scholes model to estimate the fair value of new non-employee Director stock option grants. The Company’s determination of fair value of share-based payment awards on the date of grant is affected by the Company’s stock price, as well as, assumptions regarding several variables. These variables include, but are

not

limited to, the Company’s expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors.

Fiscal

201

9

On

January 15, 2019,

FactSet granted

20,576

stock options to the Company’s non-employee Directors. These options have a weighted average estimated fair value of

$42.77

per share, using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate	2.51	%
Expected life (years)	5.4
Expected volatility	20.5	%
Dividend yield	1.17	%

Fiscal

2018

On

January 12, 2018,

FactSet granted

18,963

stock options to the Company’s non-employee Directors. These options have a weighted average estimated fair value of

$38.76

per share, using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate	2.34	%
Expected life (years)	5.4
Expected volatility	19.7	%
Dividend yield	1.16	%

Restricted Stock

Fair Value Determinations

Restricted stock granted to employees entitles the holder to shares of common stock as the award vests over time, but

not

to dividends declared on the underlying shares, while the restricted stock is unvested. The grant date fair value of restricted stock awards is measured by reducing the grant date price of FactSet’s share by the present value of the dividends expected to be paid on the underlying stock during the requisite service period, discounted at the appropriate risk-free interest rate. Restricted stock awards are amortized to expense over the vesting period. During the

first

six

months of fiscal

2019,

there were

41,153

restricted stock awards granted, with a weighted average grant date fair value of

$212.66.

During the

first

six

months of fiscal

2018,

FactSet granted

961

restricted stock awards at a weighted average grant date fair value of

$182.17.

Employee Stock Purchase Plan Fair Value Determinations

During the

three

months ended

February 28, 2019,

employees purchased

12,624

shares at a weighted average price of

$199.36

as compared to

14,805

shares at a weighted average price of

$171.23

for the

three

months ended

February 28, 2018.

During the

six

months ended

February 28, 2019,

employees purchased

25,719

shares at a weighted average price of

$198.33

as compared to

34,394

shares at a weighted average price of

$150.25

for the

six

months ended

February 28, 2018.

Stock-based compensation expense relating to the ESPP was

$0.5

million for both the

three

months ended

February 28, 2019

and

2018.

Stock-based compensation expense related to the ESPP for the

six

months ended

February 28, 2019

and

2018

was

$1.0

million and

$1.1

million, respectively.

The weighted average estimated fair value for the shares repurchased under the ESPP was calculated using the Black-Scholes model with the following assumptions:

Three months ended February 28,	2019			2018
Risk-free interest rate		2.42	%		1.45	%
Expected life (months)		3			3
Expected volatility		12.47	%		13.9	%
Dividend yield		1.09	%		1.11	%
Weighted average estimated fair value	$	40.45		$	35.02

Six months ended February 28,	2019			2018
Risk-free interest rate		2.35	%		1.26	%
Expected life (months)		3			3
Expected volatility		10.68	%		10.52	%
Dividend yield		1.10	%		1.29	%
Weighted average estimated fair value	$	39.52		$	29.76

Accuracy of Fair Value Estimates

The Company is responsible for determining the assumptions used in estimating the fair value of its share-based payment awards. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price, as well as assumptions regarding several highly complex and subjective variables. These variables include, but are

not

limited to, the Company’s expected stock price volatility over the term of the awards, interest rates, option forfeiture rates and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have

no

vesting or hedging restrictions and are fully transferable.

XML

Note 15 - Income Taxes

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

1

5

. INCOME TAXES

Income tax expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes are recorded for the temporary differences between the financial statement and the tax bases of assets and liabilities using currently enacted tax rates.

Provision for Income Taxes

The provision for income taxes is as follows:

	Three months ended February 28,						Six months ended February 28,
(in thousands)	2019			2018			2019			2018
Income before income taxes	$	104,349		$	92,213		$	200,292		$	178,392
Provision for income taxes	$	19,647		$	39,076		$	31,294		$	54,876
Effective tax rate		18.8	%		42.4	%		15.6	%		30.8	%

FactSet’s effective tax rate is based on recurring factors and nonrecurring events, including the taxation of foreign income. The Company’s effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as discrete and other nonrecurring events that

may

not

be predictable. The lower effective tax rate for both the

three

and

six

months ended

February 28, 2019,

compared to the same periods a year ago, is mainly due to the enactment of the Tax Cuts and Jobs Act (“TCJA”). The TCJA imposed a

one

-time transition tax expense, resulting in

$23.2

million being recorded in the

second

quarter of fiscal

2018.

This impact was revised during the

first

and

second

quarters of fiscal

2019,

resulting in a benefit of

$2.3

million and

$1.1

million, respectively, which positively impacted the

six

months ended

February 28, 2019.

The TCJA also lowered the statutory U.S. corporate income tax rate from

35%

to

21%,

effective

January 1, 2018.

Due to the timing of FactSet’s year end, the lower tax rate was fully applicable for the

three

and

six

months ended

February 28, 2019,

while being phased in during the same periods a year ago. The reduction in the U.S. corporate income tax rate required a remeasurement of the Company’s net U.S. deferred tax position, which resulted in a non-recurring tax charge of

$2.2

million in the

second

quarter of fiscal

2018.

FactSet’s effective tax rate is lower than the applicable U.S. corporate income tax rate for the

three

and

six

months ended

February 28, 2019

due to R&D tax benefits and tax benefits associated with share-based payments. The decrease in the income tax provision for

three

and

six

months ended

February 28, 2019

was partially offset by a

$2.4

million income tax expense from the settlement with a tax authority recognized during the

second

quarter of fiscal

2019.

FactSet has finalized the accounting for the tax effects of the TCJA with respect to the

one

-time transition tax. The tax effects of the TCJA

may

be affected by changes in interpretations at the federal and state levels, and any additional regulatory guidance that

may

be issued.

Deferred Tax Assets and Liabilities

The significant components of Deferred tax assets recorded within the consolidated balance sheets were as follows:

(in thousands)	February 28, 2019			August 31, 2018
Deferred tax assets:
Receivable reserve	$	571		$	599
Depreciation on property, equipment and leasehold improvements		3,110			1,032
Deferred rent		7,410			7,711
Stock-based compensation		13,333			14,827
Purchased intangible assets, including acquired technology		(25,269	)		(24,059	)
Other		7,582			9,606
Total deferred tax assets	$	6,737		$	9,716

The significant components of Deferred tax liabilities recorded within the consolidated balance sheets were as follows:

(in thousands)	February 28, 2019			August 31, 2018
Deferred tax liabilities:
Stock-based compensation	$	(1,077	)	$	(946	)
Purchased intangible assets, including acquired technology		20,368			22,429
Other		929			(293	)
Total deferred tax liabilities	$	20,220		$	21,190

Unrecognized Tax Positions

Applicable accounting guidance prescribes a comprehensive model for the financial statement recognition, measurement, classification and disclosure of uncertain tax positions that a company has taken or expects to take on a tax return. A company can recognize the financial effect of an income tax position only if it is more likely than

not

(greater than

50%

) that the tax position will prevail upon tax examination, based solely on the technical merits of the tax position. Otherwise,

no

benefit or expense can be recognized in the consolidated financial statements. The tax benefits recognized are measured based on the largest benefit that has a greater than

fifty

percent likelihood of being realized upon ultimate settlement. Additionally, companies are required to accrue interest on all tax exposures for which reserves have been established consistent with jurisdictional tax laws.

As of

February 28, 2019,

the Company had gross unrecognized tax benefits totaling

$11.0

million recorded as non-current Taxes payable within the consolidated balance sheet. This amount includes

$1.3

million of accrued interest. When applicable, the Company adjusts the previously recorded tax expense to reflect examination results when the position is ultimately settled. The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that certain federal, foreign, and state tax matters

may

be concluded in the next

12

months. However, FactSet has

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 the Company’s results of operations or financial position, beyond current estimates. Any changes in accounting estimates resulting from new developments with respect to uncertain tax positions will be recorded as appropriate. The Company does

not

currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next

12

months.

The following table summarizes the changes in the balance of gross unrecognized tax benefits during the

first

six

months of fiscal

2019:

(in thousands)
Unrecognized income tax benefits at August 31, 2018	$	9,223
Additions based on tax positions related to the current year		1,493
Additions for tax positions of prior years		270
Unrecognized income tax benefits at February 28, 2019	$	10,986

In the normal course of business, the Company’s tax filings are subject to audit by federal, state and foreign tax authorities. At

February 28, 2019,

the Company remained subject to examination in the following major tax jurisdictions for the tax years as indicated below:

Major Tax Jurisdictions	Open Tax Years
U.S.
Federal	2015	through	2018
State (various)	2015	through	2018
Europe
United Kingdom	2015	through	2018
France	2016	through	2018
Germany	2017	through	2018

XML

Note 16 - Debt

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Long-term Debt [Text Block]

1

6

.

DEBT

FactSet’s debt obligations consisted of the following:

(in thousands)	February 28, 2019		August 31, 2018
2017 Revolving Credit Facility (maturity date of March 17, 2020)	$	575,000	$	575,000

On

March 17, 2017,

the Company entered into a credit agreement (the

“2017

Credit Agreement”) between FactSet, as the borrower, and PNC Bank, National Association (“PNC”), as the administrative agent and lender. As of

February 28, 2019,

the

2017

Credit Agreement provides for a

$575.0

million revolving credit facility (the

“2017

Revolving Credit Facility”). FactSet

may

request borrowings under the

2017

Revolving Credit Facility until its maturity date of

March 17, 2020.

The

2017

Credit Agreement also allows FactSet, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount of up to

$225.0

million, provided that any such request for additional borrowings must be in a minimum amount of

$25.0

million. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at

1.00%.

Interest on the loan outstanding is payable quarterly in arrears and on the maturity date. There are

no

prepayment penalties if the Company elects to prepay the outstanding loan amounts prior to the scheduled maturity date. The principal balance is payable in full on the maturity date.

On

March 29, 2019,

the Company entered into a credit agreement (the

“2019

Credit Agreement”) between FactSet, as the borrower, and PNC, as the administrative agent and lender. The

2019

Credit Agreement provides for a

$750.0

million revolving credit facility (the

“2019

Revolving Credit Facility”). In conjunction with FactSet’s entrance into the

2019

Credit Agreement, FactSet repaid its outstanding debt under the

2017

Credit Agreement on

March 29, 2019.

The total principal amount of the loan outstanding at the time of repayment was

$575.0

million. See Note

18,

Subsequent Events, for further discussion of the

2019

Credit Agreement.

All outstanding loan amounts are reported as Long-term debt within the consolidated balance sheet at

February 28, 2019.

For the

three

months ended

February 28, 2019

and

2018,

the Company recorded interest expense of

$5.1

million and

$3.6

million on its outstanding debt amounts, respectively. For the

six

months ended

February 28, 2019

and

2018,

the Company recorded interest expense of

$9.9

million and

$7.0

million on its outstanding debt amounts, respectively. The principal balance is payable in full on the maturity date. As of

February 28, 2019,

no

commitment fee was owed by FactSet since it borrowed the full amount under the

2017

Credit Agreement.

The

2017

Credit Agreement contained covenants restricting certain FactSet activities, which are usual and customary for this type of loan. In addition, the

2017

Credit Agreement required that FactSet maintain a consolidated leverage ratio, as measured by total funded debt/EBITDA below a specified level as of the end of each fiscal quarter. The Company was in compliance with all the covenants of the

2017

Credit Agreement as of

February 28, 2019.

XML

Note 17 - Commitments and Contingencies

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

1

7

. COMMITMENTS AND CONTINGENCIES

Commitments represent obligations, such as those for future purchases of goods or services that are

not

yet recorded on the balance sheet as liabilities. FactSet records liabilities for commitments when incurred (

i.e.

, when the goods or services are received).

Lease Commitments

As of

February 28, 2019,

the Company continues to lease approximately

202,000

square feet of existing office space for its headquarters at

601

Merritt

7,

Norwalk, Connecticut. On

February 14, 2018,

the Company entered a new lease to relocate its corporate headquarters to

45

Glover Avenue in Norwalk, Connecticut. The new location will comprise approximately

173,000

square feet of office space. The Company took possession of the newly leased property on

January 1, 2019,

for fit-out purposes. The Company will continue to occupy its existing headquarters space until the new headquarters property is ready for occupancy, currently estimated to be in the

second

quarter of fiscal

2020.

Including new lease agreements executed during the

six

months ended

February 28, 2019,

the Company’s worldwide leased office space increased to approximately

2,015,000

square feet of office space under various non-cancelable operating leases which expire on various dates through

2035.

Total minimum rental payments associated with the leases are recorded as rent expense (a component of Selling, General & Administrative “SG&A” expense) on a straight-line basis over the periods of the respective non-cancelable lease terms. Future minimum commitments for the Company’s operating leases in place as of

February 28, 2019,

including the fully executed lease for its new headquarters in Norwalk, Connecticut are as follows:

(in thousands) Years ended August 31,	Minimum Lease Payments
2019 (remaining six months)	$	21,353
2020		40,747
2021		38,723
2022		36,118
2023		34,001
Thereafter		252,132
Total	$	423,074

For the

three

months ended

February 28, 2019

and

2018,

rent expense (including operating costs) for all operating leases amounted to

$14.2

million and

$13.5

million, respectively. For the

six

months ended

February 28, 2019

and

2018,

rent expense (including operating costs) for all operating leases amounted to

$27.6

million and

$26.5

million, respectively. As of

February 28, 2019,

deferred rent reported within the consolidated balance sheet totaled

$36.9

million compared to

$39.4

million as of

August 31, 2018,

of which

$33.1

million and

$33.6

million were reported as a non-current liability within the line item Deferred Rent and Other Non-Current Liabilities as of

February 28, 2019

and

August 31, 2018,

respectively.

Approximately

$3.3

million of standby letters of credit have been issued during the ordinary course of business in connection with the Company’s current leased office space as of

February 28, 2019.

These standby letters of credit contain covenants that, among other things, require the Company to maintain minimum levels of consolidated net worth and certain leverage and fixed charge ratios. As of

February 28, 2019,

FactSet was in compliance with all covenants contained in the standby letters of credit.

Purchase Commitments with Suppliers

Purchase obligations represent payments due in future periods in respect of commitments to the Company’s various data vendors as well as commitments to purchase goods and services such as telecommunication and computer maintenance services. These purchase commitments are agreements that are enforceable and legally binding on FactSet, and they specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. As of

August 31, 2018,

the Company had total purchase commitments with suppliers of

$79.0

million. There were

no

material changes in the Company’s purchase commitments during the

first

six

months of fiscal

2019.

Contingencies

Income Taxes

Uncertain income tax positions are accounted for in accordance with applicable accounting guidance (see Note

15

). FactSet is currently under audit by tax authorities and has reserved for potential adjustments to its provision for income taxes that

may

result from examinations by, or any negotiated settlements with, these tax authorities. The Company believes that the final outcome of these examinations or settlements will

not

have a material effect on its results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of tax benefits in the period FactSet determines the liabilities are

no

longer necessary. If the Company’s estimates of the federal, state, and foreign income tax liabilities are less than the ultimate assessment, a further charge to expense would result.

Legal Matters

FactSet accrues non-income-tax liabilities for contingencies when management believes that a loss is probable, and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. The Company is engaged in various legal proceedings, claims and litigation that have arisen in the ordinary course of business, including employment matters, commercial and intellectual property litigation. The outcome of all the matters against the Company is subject to future resolution, including the uncertainties of litigation. Based on information available at

February 28, 2019,

FactSet’s management believes that the ultimate outcome of these unresolved matters against the Company, individually or in the aggregate, will

not

have a material adverse effect on the Company's consolidated financial position, its results of operations or its cash flows.

Sales Tax Matters

In the

third

quarter of fiscal

2018,

FactSet received a letter from the Massachusetts Department of Revenue relating to prior tax periods. The letter requested additional sales information to determine if a Notice of Intention to Assess should be issued to FactSet. Based upon a preliminary review of the Massachusetts request, the Company believes the state might assess sales tax, and underpayment penalties and interest, on previously recorded sales transactions. Due to the uncertainty surrounding the assessment process, the Company is unable to reasonably estimate the ultimate outcome of this matter and, as such, has

not

recorded a liability as of

February 28, 2019.

While FactSet believes that it will ultimately prevail if the Company is presented with a formal assessment and is required to pay it, the amount could have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

Indemnifications

As permitted or required under Delaware law and to the maximum extent allowable under that law, FactSet has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at FactSet’s request in such capacity. These indemnification obligations are valid as long as the director or officer acted in good faith and in a manner the person reasonably believed to be in, or

not

opposed to, the best interests of the Company, and with respect to any criminal action or proceeding, had

no

reasonable cause to believe his or her conduct was unlawful. The maximum potential amount of future payments FactSet could be required to make under these indemnification obligations is unlimited; however, FactSet has a director and officer insurance policy that it believes mitigates FactSet’s exposure and

may

enable FactSet to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification obligations is immaterial.

Concentrations of Credit Risk

Cash equivalents

Cash and cash equivalents are maintained primarily with

five

financial institutions. Deposits held with banks

may

exceed the amount of insurance provided on such deposits. These deposits

may

be redeemed upon demand and are maintained with financial institutions, with reputable credit, and therefore bear minimal credit risk. The Company seeks to mitigate its credit risks by spreading such risks across multiple counterparties and monitoring the risk profiles of these counterparties.

Accounts Receivable

 

Accounts receivable are unsecured and derived from revenue earned from clients located around the globe. The Company maintains reserves for potential write-offs and evaluates the adequacy of the reserves periodically. These losses have historically been within expectations.

No

single client represented

10%

or more of FactSet’s total revenue in any period presented. At

February 28, 2019,

the Company’s largest individual client accounted for less than

3%

of total annual subscriptions, and subscriptions from the

ten

largest clients did

not

surpass

15%

of total annual subscriptions, consistent with

August 31, 2018.

As of

February 28, 2019,

the receivable reserve was

$5.4

million compared to

$3.5

million as of

August 31, 2018.

Derivative Instruments

As a result of the use of derivative instruments, the Company is exposed to counterparty credit risk. The Company has incorporated counterparty credit risk into the fair value of its derivative assets and its own credit risk into the value of the Company’s derivative liabilities, when applicable. For derivative instruments, the Company calculates credit risk from observable data related to credit default swaps (“CDS”) as quoted by publicly available information. Counterparty risk is represented by CDS spreads related to the senior secured debt of the respective bank with whom the Company has executed these derivative transactions. To mitigate counterparty credit risk, the Company enters into contracts with large financial institutions and regularly reviews its credit exposure balances as well as the creditworthiness of the counterparties. For the Company’s liabilities, as CDS spread information is

not

available for FactSet, the Company’s credit risk is determined based on using a simple average of CDS spreads for peer companies. The Company does

not

expect any losses as a result of default of its counterparties.

Concentrations of

Other

Risk

Data Content Providers

Certain data sets that FactSet relies on have a limited number of suppliers, although the Company makes every effort to assure that, where reasonable, alternative sources are available. FactSet is

not

dependent on any

one

third

-party data supplier in order to meet the needs of its clients. FactSet combines the data from these commercial databases into its own dedicated single online service, which the client accesses to perform their analysis.

No

single vendor or data supplier represented more than

10%

of FactSet's total data expenses for the

six

months ended

February 28, 2019

and

2018,

respectively.

XML

Note 18 - Subsequent Event

6 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

18

.

SUBSEQUENT EVENT

2019

Credit Agreement

On

March 29, 2019,

the Company entered into the

2019

Credit Agreement between FactSet, as the borrower, and PNC, as the administrative agent and lender. The

2019

Credit Agreement provides for a

$750.0

million revolving credit facility. FactSet

may

request borrowings under the

2019

Revolving Credit Facility until its maturity date of

March 29, 2024.

The

2019

Credit Agreement also allows FactSet, subject to certain requirements, to arrange for additional borrowings with PNC for an aggregate amount of up to

$500.0

million, provided that any such request for additional borrowings must be in a minimum amount of

$25.0

million. Borrowings under the loan bear interest on the outstanding principal amount at a rate equal to the daily LIBOR rate plus a spread using a debt leverage pricing grid currently at

0.875%.

Interest on the loan outstanding is payable quarterly in arrears and on the maturity date. In conjunction with FactSet’s entrance into the

2019

Credit Agreement, FactSet borrowed

$575.0

million of the available

$750.0

million provided by the

2019

Revolving Credit Facility, in the form of a LIBOR rate loan. FactSet will pay a commitment fee on the undrawn amount. On

March 29, 2019

the borrowings from the

2019

Credit Agreement were used to retire all outstanding debt under the

2017

Credit Agreement.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Feb. 28, 2019

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Standards or Updates Recently Adopted

Revenue Recognition

In

May 2014

and

July 2015,

the FASB issued accounting standard updates which clarified principles for recognizing revenue arising from contracts with clients and superseded most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. The new guidance also requires increased disclosures including the nature, amount, timing, and uncertainty of revenue and cash flows related to contracts with clients.

The standard allows

two

methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective method”). FactSet adopted the new standard using the modified retrospective method as of the beginning of its

first

quarter of fiscal

2019.

FactSet’s implementation efforts include the evaluation of contract revenue under the new guidance. Additionally, an assessment of the qualitative and quantitative impacts of pricing changes during the contractual term and fulfillment costs was made.

The Company derives most of its revenues by providing client access to its hosted proprietary data and analytics platform, which can include various combinations of products and services available over the contractual term. The Company determined that the subscription-based service represents a single performance obligation covering a series of distinct products and services that are substantially the same and that have the same pattern of transfer to the client. FactSet recorded an opening cumulative increase to retained earnings of

$2.5

million, or

$2.0

million net of tax, during the

first

quarter of fiscal

2019,

related to certain fulfillment costs, which include up-front costs to allow for the delivery of services and products that are expected to be recovered. Under the new standard, such up-front costs are recognized as an asset and amortized consistent with the associated revenue for providing the services. The adoption of the new standards did

not

materially change the Company’s accounting policy for revenue recognition and did

not

have a material impact on the Company’s consolidated financial statements. Refer to Note

4

Revenue Recognition for further details.

Recognition and Measurement of Financial Assets and Financial Liabilities

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

January 2016,

which amended the recognition, measurement, presentation, and disclosure of certain financial instruments. Under the amended guidance, investments in equity securities, excluding equity method investments, will be measured at fair value with changes in fair value to be recognized in net income. This guidance was applied on a modified retrospective approach through a cumulative effect adjustment to retained earnings as permitted by the standard and did

not

have a material impact on the Company’s consolidated financial statements.

Cash Flow Simplification

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

August 2016,

which simplified how certain transactions are classified in the statement of cash flows. This included revised guidance on the cash flow classification of debt prepayments and debt extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investments. The guidance is intended to reduce diversity in practice across all industries. The adoption of this standard had

no

impact on the Company’s consolidated financial statements.

Income Taxes on Intra-Entity Transfers of Assets

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

October 2016,

which removed the prohibition against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The guidance was issued in order to reduce diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. The adoption of this standard had

no

impact on the Company’s consolidated financial statements.

Share-Based Payments

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

May 2017,

which amended the scope of modification accounting for share-based payment arrangements. The guidance focused on changes to the terms or conditions of share-based payment awards that would require the application of modification accounting and specifies that an entity would

not

apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The adoption of this standard had

no

impact on the Company’s consolidated financial statements.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

February 2018,

which allowed companies to reclassify certain stranded income tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the "TCJA") from accumulated other comprehensive income to retained earnings. The adoption of this standard did

not

have a material impact on the Company’s consolidated financial statements.

Implementation Costs in a Cloud Computing Arrangement

During the

first

quarter of fiscal

2019,

FactSet adopted the accounting standard update issued by the FASB in

August 2018,

which related to a client’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance aligns the requirements for capitalizing implementation costs in a cloud computing service contract with the guidance for capitalizing implementation costs to develop or obtain internal-use software. Capitalized implementation costs will be amortized over the term of the arrangement. This accounting standard update will be effective for the Company beginning in the

first

quarter of fiscal

2021,

however the Company elected to early adopt this standard on a prospective basis during the

first

quarter of fiscal

2019.

There was

no

impact to the Company’s consolidated financial statements as a result of the adoption of this standard, as FactSet is currently accounting for costs incurred in a cloud computing arrangement in accordance with the guidance provided in this standard.

Recent Accounting Standards or Updates

Not

Yet Effective

Leases

In

February 2016,

the FASB issued an accounting standard update related to accounting for leases. The guidance introduces a lessee model that requires most leases to be reported on the balance sheet. The accounting standard update aligns many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. The guidance also eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification. This accounting standard update will be effective for FactSet beginning in the

first

quarter of fiscal

2020,

with early adoption in fiscal

2019

permitted. The Company is currently evaluating the impact of this accounting standard update, including the transition method, but expects the adoption to have a material impact to its balance sheet. However, it does

not

expect the adoption to have a material impact on the statements of income, comprehensive income or cash flows. Refer to Note

17

Commitments and Contingencies for information regarding the Company’s undiscounted future lease commitments.

Goodwill Impairment Test

In

January 2017,

the FASB issued an accounting standard update which removes the requirement for companies to compare the implied fair value of goodwill with its carrying amount as part of step

2

of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill. This accounting standard update will be effective for the Company beginning in the

first

quarter of fiscal

2021,

with early adoption permitted for any impairment tests performed after

January 1, 2017

and is

not

expected to have a material impact on the consolidated financial statements.

Hedge Accounting Simplification

In

August 2017,

the FASB issued an accounting standard update to reduce the complexity of and simplify the application of hedge accounting. The guidance refines and expands hedge accounting for both financial and nonfinancial risk components, eliminates the need to separately measure and report hedge ineffectiveness, and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance will be effective for the Company beginning in the

first

quarter of fiscal

2020,

with early adoption permitted. The Company is currently evaluating the impact of this accounting standard update but it is

not

expected to have a material impact on the consolidated financial statements.

No

other new accounting pronouncements issued or effective as of

February 28, 2019

have had or are expected to have an impact on the Company’s consolidated financial statements.

XML

Note 4 - Revenue Recognition (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three months ended February 28,				Six months ended February 28,
(in thousands)	2019		2018		2019		2018
U.S.	$	223,315	$	208,900	$	445,518	$	417,668
Europe		98,933		96,206		196,698		187,933
Asia Pacific		32,647		30,125		64,319		58,771
Total Revenue	$	354,895	$	335,231	$	706,535	$	664,372

XML

Note 5 - Fair Value Measures (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Fair Value Measurements at February 28, 2019
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds (1)	$	38,000	$	—	$	—	$	38,000
Mutual funds (2)		—		18,541		—		18,541
Certificates of deposit ( 3 )		—		8,528		—		8,528
Derivative instruments (4 )		—		680		—		680
Total assets measured at fair value	$	38,000	$	27,749	$	—	$	65,749
Liabilities
Derivative instruments (4)	$	—	$	2,293	$	—	$	2,293
Total liabilities measured at fair value	$	—	$	2,293	$	—	$	2,293

	Fair Value Measurements at August 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds (1)	$	75	$	—	$	—	$	75
Mutual funds (2)		—		18,668		—		18,668
Certificates of deposit (3)		—		10,591		—		10,591
Derivative instruments (4)		—		90		—		90
Total assets measured at fair value	$	75	$	29,349	$	—	$	29,424
Liabilities
Derivative instruments (4)	$	—	$	4,036	$	—	$	4,036
Total liabilities measured at fair value	$	—	$	4,036	$	—	$	4,036

XML

Note 6 - Derivative Instruments (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Foreign Exchange Contracts, Statement of Financial Position [Table Text Block]

	Gross Notional Value				Fair Value (Liability) Asset
Currency Hedged (in thousands, in U.S. dollars)	February 28, 2019		August 31, 2018		February 28, 2019			August 31, 2018
Philippine Peso	$	39,000	$	52,000	$	680		$	(1,230	)
Indian Rupee		35,580		50,780		(1,506	)		(1,490	)
Euro		29,977		26,312		(622	)		(503	)
British Pound Sterling		6,682		18,995		(165	)		(723	)
Total	$	111,239	$	148,087	$	(1,613	)	$	(3,946	)

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block]

Designation of Derivatives (in thousands)	Balance Sheet Location	February 28, 2019		August 31, 2018
Derivatives designated as hedging instruments	Assets : Foreign Currency Forward Contracts
	Prepaid expenses and other current assets	$	533	$	90
	Other Assets	$	147	$	—
	Liabilities : Foreign Currency Forward Contracts
	Accounts payable and accrued expenses	$	2,044	$	1,731
	Deferred rent and other non-current liabilities	$	249	$	2,305

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block]

(in thousands)	Gain (Loss) Recognized in AOCL on Derivatives (Effective Portion)					Location of (Loss) Gain Reclassified from AOCL into Income	(Loss) Gain Reclassified from AOCL into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	2019		2018			(Effective Portion)	2019			2018
Foreign currency forward contracts	$	321	$	(1,346	)	SG&A	$	(385	)	$	824

(in thousands)	Gain (Loss) Recognized in AOCL on Derivatives (Effective Portion)					Location of (Loss) Gain Reclassified from AOCL into Income	(Loss) Gain Reclassified from AOCL into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	2019		2018			(Effective Portion)	2019			2018
Foreign currency forward contracts	$	2,264	$	(1,345	)	SG&A	$	(784	)	$	1,589

XML

Note 7 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

	February 28, 2019				February 28, 2018
(in thousands)	Pre-tax		Net of tax		Pre-tax			Net of tax
Foreign currency translation adjustments	$	5,026	$	5,026	$	9,400		$	9,400
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		706		527		(2,170	)		(1,268	)
Other comprehensive income	$	5,732	$	5,553	$	7,230		$	8,132

	February 28, 2019						February 28, 2018
(in thousands)	Pre-tax			Net of tax			Pre-tax			Net of tax
Foreign currency translation adjustments	$	(4,478	)	$	(4,478	)	$	17,866		$	17,866
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		2,332			1,565			(2,934	)		(1,744	)
Other comprehensive (loss) income	$	(2,146	)	$	(2,913	)	$	14,932		$	16,122

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

(in thousands)	February 28, 2019			August 31, 2018
Accumulated unrealized (gains) losses on cash flow hedges, net of tax	$	(1,204	)	$	(3,486	)
Accumulated foreign currency translation adjustments		(52,431	)		(47,953	)
Total accumulated other comprehensive loss	$	(53,635	)	$	(51,439	)

XML

Note 8 - Segment Information (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

(in thousands) For the three months ended February 28, 2019	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	223,315	$	98,933	$	32,647	$	354,895
Segment operating income	$	45,696	$	43,248	$	19,744	$	108,688
Total assets	$	792,573	$	556,526	$	115,895	$	1,464,994
Capital expenditures	$	7,254	$	434	$	4,269	$	11,957

For the three months ended February 28, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	208,900	$	96,206	$	30,125	$	335,231
Segment operating income	$	38,527	$	36,993	$	19,965	$	95,485
Total assets	$	733,045	$	634,472	$	104,975	$	1,472,492
Capital expenditures	$	3,729	$	755	$	1,979	$	6,463

(in thousands) For the six months ended February 28, 2019	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	445,518	$	196,698	$	64,319	$	706,535
Segment operating income	$	89,537	$	82,337	$	37,353	$	209,227
Capital expenditures	$	11,358	$	1,697	$	8,427	$	21,482

For the six months ended February 28, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	417,668	$	187,933	$	58,771	$	664,372
Segment operating income	$	79,298	$	69,963	$	35,322	$	184,583
Capital expenditures	$	7,274	$	2,279	$	2,822	$	12,375

XML

Note 9 - Goodwill (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Goodwill [Table Text Block]

(i n thousands )	U.S.		Europe			Asia Pacific			Total
Balance at August 31, 2018	$	386,195	$	312,694		$	2,944		$	701,833
Foreign currency translations		—		(1,793	)		(11	)		(1,804	)
Balance at February 28, 2019	$	386,195	$	310,901		$	2,933		$	700,029

XML

Note 10 - Intangible Assets (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

At February 28, 2019 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	34,135	$	21,835	$	12,300
Client relationships		98,148		32,801		65,347
Software technology		106,231		50,837		55,394
Non-compete agreements		4,860		2,815		2,045
Trade names		4,068		2,745		1,323
Total	$	247,442	$	111,033	$	136,409

At August 31, 2018 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	33,992	$	20,990	$	13,002
Client relationships		98,882		29,387		69,495
Software technology		106,505		44,231		62,274
Non-compete agreements		4,840		2,381		2,459
Trade names		4,070		2,365		1,705
Total	$	248,289	$	99,354	$	148,935

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Fiscal Year (in thousands)	Estimated Amortization Expense
2019 (remaining six months)	$	11,927
2020		23,216
2021		21,252
2022		18,666
2023		13,844
Thereafter		47,504
Total	$	136,409

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Note 11 - Common Stock and Earnings Per Share (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Stock by Class [Table Text Block]

	Six Months ended February 28,
(i n thousands)	2019			2018
Balance, beginning of year (September 1)		38,192			39,023
Common stock issued for employee stock plans		426			495
Repurchase of common stock from employees (1)		(28	)		(6	)
Repurchase of common stock under the share repurchase program		(490	)		(585	)
Balance at February 28, 2019 and 2018, respectively		38,100			38,927

Schedule of Weighted Average Number of Shares [Table Text Block]

(in thousands, except per share data)	Net Income (Numerator)		Weighted Average Common Shares (Denominator)		Per Share Amount
For the three months ended February 28, 2019
Basic EPS
Income available to common stockholders	$	84,702		38,055	$	2.23
Diluted EPS
Dilutive effect of stock options and restricted stock				564
Income available to common stockholders plus assumed conversions	$	84,702		38,619	$	2.19
For the three months ended February 28, 2018
Basic EPS
Income available to common stockholders	$	53,137		38,991	$	1.36
Diluted EPS
Dilutive effect of stock options and restricted stock				855
Income available to common stockholders plus assumed conversions	$	53,137		39,846	$	1.33
For the six months ended February 28, 2019
Basic EPS
Income available to common stockholders	$	168,998		38,081	$	4.44
Diluted EPS
Dilutive effect of stock options and restricted stock				633
Income available to common stockholders plus assumed conversions	$	168,998		38,714	$	4.37
For the six months ended February 28, 2018
Basic EPS
Income available to common stockholders	$	123,516		39,038	$	3.16
Diluted EPS
Dilutive effect of stock options and restricted stock				725
Income available to common stockholders plus assumed conversions	$	123,516		39,763	$	3.11

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Note 12 - Stockholders' Equity (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Dividends Declared [Table Text Block]

Year Ended	Dividends per Share of Common Stock		Record Date	Total $ Amount (in thousands)		Payment Date
Fiscal 2019
First Quarter	$	0.64	November 30, 2018	$	24,372	December 18, 2018
Second Quarter	$	0.64	February 28, 2019	$	24,385	March 19, 2019
Fiscal 2018
First Quarter	$	0.56	November 30, 2017	$	21,901	December 19, 2017
Second Quarter	$	0.56	February 28, 2018	$	21,799	March 20, 2018

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Note 13 - Employee Stock Option and Retirement Plans (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Share-based Compensation, Stock Options and Stock Appreciation Rights Award Activity [Table Text Block]

(in thousands, except per share data)	Number of Stock Options Outstanding			Weighted Average Exercise Price Per Share
Balance at August 31, 2018		3,143		$	153.05
Granted – non-performance-based		455			221.93
Exercised		(117	)		132.81
Forfeited		(24	)		169.47
Balance at November 30, 2018		3,457		$	162.68
Granted – non-performance-based		6			207.84
Granted – non-employee Directors’ grant		21			207.88
Exercised		(207	)		136.30
Forfeited		(61	)		152.19
Balance at February 28, 2019		3,216		$	164.42

Schedule of Share-based Compensation Vesting Percentage and Related Expenses [Table Text Block]

Vesting Percentage (in thousands)	Cumulative Catch-up Adjustment*		Remaining Expense to be Recognized
0% (current expectation)	$	—	$	—
80%	$	2,369	$	4,738
90%	$	2,665	$	5,331
100%	$	2,961	$	5,923

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

(in thousands, except per award data)	Number Outstanding			Weighted Average Grant Date Fair Value Per Award
Balance at August 31, 2018		143			$	139.34
Granted		41			$	212.66
Forfeited		(1	)		$	200.18
Vested		(52	) (1)		$	113.44
Balance at November 30, 2018		131			$	172.48
Granted		—			$	—
Forfeited		(1	)		$	184.64
Vested		(23	) (2)		$	136.58
Balance at February 28, 2019		107			$	187.62

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

(in thousands)	Share-based Awards Available for Grant under the Employee Stock Option Plan			Share-based Awards Available for Grant under the Non-Employee Stock Option Plan
Balance at August 31, 2018		6,298			282
Granted – non-performance-based options		(455	)		—
Restricted stock awards granted (1)		(103	)		—
Share-based awards canceled/forfeited (2)		25			—
Balance at November 30, 2018		5,765			282
Granted – non-performance-based options		(6	)		(21	)
Share-based awards canceled/forfeited (2)		65			3
Balance at February 28, 2019		5,824			264

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Note 14 - Stock-based Compensation (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

Three months ended February 28,	2019					2018
Term structure of risk-free interest rate		2.48%	-	3.14	%		1.28%	-	2.41	%
Expected life (years)				7.1					7.4
Term structure of volatility		18%	-	25	%		19%	-	29	%
Dividend yield				1.15	%				1.32	%
Weighted average estimated fair value	$	53.18				$	48.82
Weighted average exercise price	$	207.84				$	192.11
Fair value as a percentage of exercise price				25.6	%				25.4	%

Six months ended February 28,	2019					2018
Term structure of risk-free interest rate		1.28%	-	3.14	%		1.28%	-	2.41	%
Expected life (years)				7.1					7.4
Term structure of volatility		18%	-	29	%		19%	-	29	%
Dividend yield				1.16	%				1.32	%
Weighted average estimated fair value	$	56.72				$	48.29
Weighted average exercise price	$	221.74				$	190.04
Fair value as a percentage of exercise price				25.6	%				25.4	%

The 2008 Employee Stock Purchase Plan [Member]

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

Three months ended February 28,	2019			2018
Risk-free interest rate		2.42	%		1.45	%
Expected life (months)		3			3
Expected volatility		12.47	%		13.9	%
Dividend yield		1.09	%		1.11	%
Weighted average estimated fair value	$	40.45		$	35.02

Six months ended February 28,	2019			2018
Risk-free interest rate		2.35	%		1.26	%
Expected life (months)		3			3
Expected volatility		10.68	%		10.52	%
Dividend yield		1.10	%		1.29	%
Weighted average estimated fair value	$	39.52		$	29.76

Non Employee Directors Stock Option Plan [Member]

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

Risk-free interest rate	2.51	%
Expected life (years)	5.4
Expected volatility	20.5	%
Dividend yield	1.17	%

Risk-free interest rate	2.34	%
Expected life (years)	5.4
Expected volatility	19.7	%
Dividend yield	1.16	%

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Note 15 - Income Taxes (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

	Three months ended February 28,						Six months ended February 28,
(in thousands)	2019			2018			2019			2018
Income before income taxes	$	104,349		$	92,213		$	200,292		$	178,392
Provision for income taxes	$	19,647		$	39,076		$	31,294		$	54,876
Effective tax rate		18.8	%		42.4	%		15.6	%		30.8	%

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

(in thousands)	February 28, 2019			August 31, 2018
Deferred tax assets:
Receivable reserve	$	571		$	599
Depreciation on property, equipment and leasehold improvements		3,110			1,032
Deferred rent		7,410			7,711
Stock-based compensation		13,333			14,827
Purchased intangible assets, including acquired technology		(25,269	)		(24,059	)
Other		7,582			9,606
Total deferred tax assets	$	6,737		$	9,716

(in thousands)	February 28, 2019			August 31, 2018
Deferred tax liabilities:
Stock-based compensation	$	(1,077	)	$	(946	)
Purchased intangible assets, including acquired technology		20,368			22,429
Other		929			(293	)
Total deferred tax liabilities	$	20,220		$	21,190

Summary of Income Tax Contingencies [Table Text Block]

(in thousands)
Unrecognized income tax benefits at August 31, 2018	$	9,223
Additions based on tax positions related to the current year		1,493
Additions for tax positions of prior years		270
Unrecognized income tax benefits at February 28, 2019	$	10,986

Summary of Income Tax Examinations [Table Text Block]

Major Tax Jurisdictions	Open Tax Years
U.S.
Federal	2015	through	2018
State (various)	2015	through	2018
Europe
United Kingdom	2015	through	2018
France	2016	through	2018
Germany	2017	through	2018

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Note 16 - Debt (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Debt [Table Text Block]

(in thousands)	February 28, 2019		August 31, 2018
2017 Revolving Credit Facility (maturity date of March 17, 2020)	$	575,000	$	575,000

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Note 17 - Commitments and Contingencies (Tables)

6 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

(in thousands) Years ended August 31,	Minimum Lease Payments
2019 (remaining six months)	$	21,353
2020		40,747
2021		38,723
2022		36,118
2023		34,001
Thereafter		252,132
Total	$	423,074

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Note 3 - Recent Accounting Pronouncements (Details Textual) - Accounting Standards Update 2014-09 [Member] $ in Millions	6 Months Ended
	Feb. 28, 2019 USD ($)
Cumulative Effect on Retained Earnings, before Tax	$ 2.5
Cumulative Effect on Retained Earnings, Net of Tax, Total	$ 2.0

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Note 4 - Revenue Recognition (Details Textual) - Accounting Standards Update 2014-09 [Member] $ in Millions	6 Months Ended
	Feb. 28, 2019 USD ($)
Cumulative Effect on Retained Earnings, before Tax	$ 2.5
Cumulative Effect on Retained Earnings, Net of Tax, Total	$ 2.0

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Note 4 - Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Revenues	$ 354,895	$ 335,231	$ 706,535	$ 664,372
UNITED STATES
Revenues	223,315	208,900	445,518	417,668
Europe [Member]
Revenues	98,933	96,206	196,698	187,933
Asia Pacific [Member]
Revenues	$ 32,647	$ 30,125	$ 64,319	$ 58,771

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Note 5 - Fair Value Measures (Details Textual) - USD ($) $ in Thousands	Feb. 28, 2019	Aug. 31, 2018	Aug. 31, 2017
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure	$ 0	$ 0
Financial Liabilities Fair Value Disclosure, Total	0	$ 0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Long-term Debt, Fair Value	$ 575,000		$ 575,000

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Note 5 - Fair Value Measures - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands		Feb. 28, 2019	Aug. 31, 2018
Fair Value, Measurements, Recurring [Member]
Derivative instruments	[1]	$ 680	$ 90
Total assets measured at fair value		65,749	29,424
Derivative instruments	[1]	2,293	4,036
Total liabilities measured at fair value		2,293	4,036
Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member]
Corporate money market funds	[2]	38,000	75
Fair Value, Measurements, Recurring [Member] | Mutual Funds [Member]
Mutual funds	[3]	18,541	18,668
Fair Value, Measurements, Recurring [Member] | Certificates of Deposit [Member]
Certificates of deposit	[4]	8,528	10,591
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Derivative instruments	[1]
Total assets measured at fair value		38,000	75
Derivative instruments	[1]
Total liabilities measured at fair value
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member]
Corporate money market funds	[2]	38,000	75
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Mutual Funds [Member]
Mutual funds	[3]
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of Deposit [Member]
Certificates of deposit	[4]
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Derivative instruments	[1]	680	90
Total assets measured at fair value		27,749	29,349
Derivative instruments	[1]	2,293	4,036
Total liabilities measured at fair value		2,293	4,036
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member]
Corporate money market funds	[2]
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Mutual Funds [Member]
Mutual funds	[3]	18,541	18,668
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of Deposit [Member]
Certificates of deposit	[4]	8,528	10,591
Fair Value, Inputs, Level 3 [Member]
Total assets measured at fair value		0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Derivative instruments	[1]
Total assets measured at fair value
Derivative instruments	[1]
Total liabilities measured at fair value
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member]
Corporate money market funds	[2]
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Mutual Funds [Member]
Mutual funds	[3]
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of Deposit [Member]
Certificates of deposit	[4]

[1] The Company utilizes the income approach to measure fair value for its derivative instruments (foreign exchange forward contracts). The income approach uses pricing models that rely on market observable inputs such as spot, forward and interest rates, as well as credit default swap spreads and therefore are classified as Level 2.

[2] The Company's corporate money market funds are readily convertible into cash and the net asset value of each fund on the last day of the quarter is used to determine its fair value. As such, the Company's corporate money market funds are classified as Level 1 and included in Cash and cash equivalents within the Consolidated Balance Sheets.

[3] The Company’s mutual funds have a fair value based on the fair value of the underlying investments held by the mutual funds, allocated to each share of the mutual fund using a net asset value approach. The fair value of the underlying investments is based on observable inputs. As such, the Company’s mutual funds are classified as Level 2 and are included as Investments (short-term) on the consolidated balance sheets.

[4] The Company’s certificates of deposit held for investment are valued at amortized cost, which approximates fair value and, therefore, are classified as Level 2. These certificates of deposit are not debt securities and have original maturities greater than three months, but less than one year and, as such, are classified as Investments (short-term) within the consolidated balance sheets.

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Note 6 - Derivative Instruments (Details Textual) $ in Thousands, € in Millions, £ in Millions, ₱ in Billions, ₨ in Billions	3 Months Ended				6 Months Ended		9 Months Ended
	Aug. 31, 2020	May 31, 2019	Nov. 30, 2018 USD ($)	Nov. 30, 2017 USD ($)	Aug. 31, 2020	Feb. 28, 2019 USD ($)	Feb. 29, 2020	Feb. 28, 2019 PHP (₱)	Feb. 28, 2019 USD ($)	Feb. 28, 2019 GBP (£)	Feb. 28, 2019 EUR (€)	Feb. 28, 2019 INR (₨)	Aug. 31, 2018 USD ($)
Gain (Loss) on Discontinuation of Foreign Currency Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring, Net			$ 0	$ 0
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative, Notional Amount								₱ 2.1	$ 111,239	£ 4.9	€ 25.7	₨ 2.5	$ 148,087
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred						$ 1,500
Philippines, Pesos | Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative, Notional Amount									39,000				52,000
Philippines, Pesos | Scenario, Forecast [Member]
Percent of Foreign Exchange Contracts Hedged	75.00%
India, Rupees | Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative, Notional Amount									35,580				50,780
India, Rupees | Scenario, Forecast [Member]
Percent of Foreign Exchange Contracts Hedged		75.00%			25.00%		50.00%
Euro Member Countries, Euro | Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative, Notional Amount									29,977				26,312
Euro Member Countries, Euro | Scenario, Forecast [Member]
Percent of Foreign Exchange Contracts Hedged		78.00%
United Kingdom, Pounds | Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative, Notional Amount									$ 6,682				$ 18,995
United Kingdom, Pounds | Scenario, Forecast [Member]
Percent of Foreign Exchange Contracts Hedged		50.00%

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Note 6 - Derivative Instruments - Hedging Positions and Corresponding Fair Values (Details) - Foreign Exchange Contract [Member] - Cash Flow Hedging [Member] - Designated as Hedging Instrument [Member] $ in Thousands, € in Millions, £ in Millions, ₱ in Billions, ₨ in Billions	Feb. 28, 2019 PHP (₱)	Feb. 28, 2019 USD ($)	Feb. 28, 2019 GBP (£)	Feb. 28, 2019 EUR (€)	Feb. 28, 2019 INR (₨)	Aug. 31, 2018 USD ($)
Gross Notional Value	₱ 2.1	$ 111,239	£ 4.9	€ 25.7	₨ 2.5	$ 148,087
Fair Value Asset (Liability)		(1,613)				(3,946)
Philippines, Pesos
Gross Notional Value		39,000				52,000
Fair Value Asset (Liability)		680				(1,230)
India, Rupees
Gross Notional Value		35,580				50,780
Fair Value Asset (Liability)		(1,506)				(1,490)
Euro Member Countries, Euro
Gross Notional Value		29,977				26,312
Fair Value Asset (Liability)		(622)				(503)
United Kingdom, Pounds
Gross Notional Value		6,682				18,995
Fair Value Asset (Liability)		$ (165)				$ (723)

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Note 6 - Derivative Instruments - Fair Value Amounts of Derivative Instruments and Gains (Details) - Foreign Exchange Contract [Member] - Cash Flow Hedging [Member] - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	Feb. 28, 2019	Aug. 31, 2018
Prepaid Expenses and Other Current Assets [Member]
Derivative assets	$ 533	$ 90
Other Assets [Member]
Derivative assets	147
Accounts Payable and Accrued Liabilities [Member]
Derivative liabilities	2,044	1,731
Deferred Rent and Other Noncurrent Liabilities [Member]
Derivative liabilities	$ 249	$ 2,305

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Note 6 - Derivative Instruments - Derivatives in Cash Flow Hedging Relationships (Details) - Cash Flow Hedging [Member] - Designated as Hedging Instrument [Member] - Foreign Exchange Contract [Member] - Selling, General and Administrative Expenses [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Foreign currency forward contracts	$ 321	$ (1,346)	$ 2,264	$ (1,345)
Foreign currency forward contracts	$ (385)	$ 824	$ (784)	$ 1,589

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Note 7 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss - Reclassified Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Foreign currency translation adjustments, pre-tax	$ 5,026	$ 9,400	$ (4,478)	$ 17,866
Foreign currency translation adjustments	5,026	9,400	(4,478)	17,866
Net unrealized gain (loss) on cash flow hedges recognized in AOCL, pre-tax	706	(2,170)	2,332	(2,934)
Net unrealized gain (loss) on cash flow hedges recognized in AOCL	527	(1,268)	1,565	(1,744)
Other comprehensive income (loss), pre-tax	5,732	7,230	(2,146)	14,932
Other comprehensive income (loss)	$ 5,553	$ 8,132	$ (2,913)	$ 16,122

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Note 7 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss - Components of Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Feb. 28, 2019	Aug. 31, 2018
Accumulated unrealized (gains) losses on cash flow hedges, net of tax	$ (1,204)	$ (3,486)
Accumulated foreign currency translation adjustments	(52,431)	(47,953)
Total accumulated other comprehensive loss	$ (53,635)	$ (51,439)

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Note 8 - Segment Information (Details Textual) $ in Thousands	3 Months Ended
	Feb. 28, 2019 USD ($)	Aug. 31, 2018 USD ($)
Number of Reportable Segments	3
Goodwill, Ending Balance	$ 700,029	$ 701,833
UNITED STATES
Goodwill, Ending Balance	$ 386,195	386,195
Goodwill Percentage Per Segment	55.00%
Europe [Member]
Goodwill, Ending Balance	$ 310,901	312,694
Goodwill Percentage Per Segment	44.00%
Asia Pacific [Member]
Goodwill, Ending Balance	$ 2,933	$ 2,944
Goodwill Percentage Per Segment	1.00%

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Note 8 - Segment Information - Results of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018	Aug. 31, 2018
Revenue from clients	$ 354,895	$ 335,231	$ 706,535	$ 664,372
Segment operating income	108,688	95,485	209,227	184,583
Total assets	1,464,994	1,472,492	1,464,994	1,472,492	$ 1,419,447
Capital expenditures	11,957	6,463	21,482	12,375
UNITED STATES
Revenue from clients	223,315	208,900	445,518	417,668
Segment operating income	45,696	38,527	89,537	79,298
Total assets	792,573	733,045	792,573	733,045
Capital expenditures	7,254	3,729	11,358	7,274
Europe [Member]
Revenue from clients	98,933	96,206	196,698	187,933
Segment operating income	43,248	36,993	82,337	69,963
Total assets	556,526	634,472	556,526	634,472
Capital expenditures	434	755	1,697	2,279
Asia Pacific [Member]
Revenue from clients	32,647	30,125	64,319	58,771
Segment operating income	19,744	19,965	37,353	35,322
Total assets	115,895	104,975	115,895	104,975
Capital expenditures	$ 4,269	$ 1,979	$ 8,427	$ 2,822

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Note 9 - Goodwill (Details Textual) $ in Thousands	3 Months Ended	6 Months Ended
	Aug. 31, 2018 USD ($)	Feb. 28, 2019
Number of Reporting Units		3
Goodwill, Impairment Loss	$ 0

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Note 9 - Goodwill - Changes in the Carrying Amount of Goodwill by Segment (Details) $ in Thousands	6 Months Ended
	Feb. 28, 2019 USD ($)
Beginning Balance	$ 701,833
Foreign currency translations	(1,804)
Ending Balance	700,029
UNITED STATES
Beginning Balance	386,195
Foreign currency translations
Ending Balance	386,195
Europe [Member]
Beginning Balance	312,694
Foreign currency translations	(1,793)
Ending Balance	310,901
Asia Pacific [Member]
Beginning Balance	2,944
Foreign currency translations	(11)
Ending Balance	$ 2,933

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Note 10 - Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	12 years 109 days
Impairment of Intangible Assets (Excluding Goodwill), Total	$ 0	$ 0
Amortization of Intangible Assets, Total	$ 5,800	$ 6,200	$ 11,700	$ 12,400

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Note 10 - Intangible Assets - Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	Feb. 28, 2019	Aug. 31, 2018
Gross Carrying Amount	$ 247,442	$ 248,289
Accumulated Amortization	111,033	99,354
Net Carrying Amount	136,409	148,935
Data Content [Member]
Gross Carrying Amount	34,135	33,992
Accumulated Amortization	21,835	20,990
Net Carrying Amount	12,300	13,002
Customer Relationships [Member]
Gross Carrying Amount	98,148	98,882
Accumulated Amortization	32,801	29,387
Net Carrying Amount	65,347	69,495
Computer Software, Intangible Asset [Member]
Gross Carrying Amount	106,231	106,505
Accumulated Amortization	50,837	44,231
Net Carrying Amount	55,394	62,274
Noncompete Agreements [Member]
Gross Carrying Amount	4,860	4,840
Accumulated Amortization	2,815	2,381
Net Carrying Amount	2,045	2,459
Trade Names [Member]
Gross Carrying Amount	4,068	4,070
Accumulated Amortization	2,745	2,365
Net Carrying Amount	$ 1,323	$ 1,705

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Note 10 - Intangible Assets - Estimated Amortization Expense (Details) $ in Thousands	Feb. 28, 2019 USD ($)
2019 (remaining six months)	$ 11,927
2020	23,216
2021	21,252
2022	18,666
2023	13,844
Thereafter	47,504
Total	$ 136,409

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Note 11 - Common Stock and Earnings Per Share (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended		6 Months Ended
	Feb. 15, 2019	Mar. 19, 2019	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Common Stock, Dividends, Per Share, Cash Paid	$ 0.64
Payments of Dividends, Total					$ 48,442	$ 43,406
Shares Paid for Tax Withholding for Share Based Compensation					27,852	5,563
Payments Related to Tax Withholding for Share-based Compensation					$ 6,100	$ 1,000
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			447,709	0	447,709	0
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount				0		0
Performance Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			206,417	309,800	206,417	309,800
Subsequent Event [Member]
Payments of Dividends, Total		$ 24,400

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Note 11 - Common Stock and Earnings Per Share - Shares of Common Stock Outstanding (Details) - shares		3 Months Ended		6 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Balance (in shares)				38,192,586	39,023,000
Common stock issued for employee stock plans (in shares)				426,000	495,000
Repurchase of common stock (in shares)		(214,945)	(420,000)	(489,945)	(584,920)
Balance (in shares)		38,100,165	38,927,000	38,100,165	38,927,000
Repurchase of Common Stock from Employees [Member]
Repurchase of common stock (in shares)	[1]			(28,000)	(6,000)
Share Repurchase Program [Member]
Repurchase of common stock (in shares)				(490,000)	(585,000)

[1] For the six months ended February 28, 2019 and 2018, the Company repurchased 27,852 and 5,563 shares, or $6.1 million and $1.0 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock.

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Note 11 - Common Stock and Earnings Per Share - Weighted Average Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Income available to common stockholders, net income (numerator)	$ 84,702	$ 53,137	$ 168,998	$ 123,516
Basic weighted average common shares (in shares)	38,055	38,991	38,081	39,038
Income available to common stockholders, per share amount (in dollars per share)	$ 2.23	$ 1.36	$ 4.44	$ 3.16
Dilutive effect of stock options and restricted stock, weighted average common share (denominator) (in shares)	564	855	633	725
Income available to common stockholders plus assumed conversions, net income (numerator)	$ 84,702	$ 53,137	$ 168,998	$ 123,516
Diluted weighted average common shares (in shares)	38,619	39,846	38,714	39,763
Income available to common stockholders plus assumed conversions, per share amount (in dollars per share)	$ 2.19	$ 1.33	$ 4.37	$ 3.11
Basic earnings per common share (in dollars per share)	2.23	1.36	4.44	3.16
Diluted earnings per common share (in dollars per share)	$ 2.19	$ 1.33	$ 4.37	$ 3.11

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Note 12 - Stockholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended					6 Months Ended
	Jan. 31, 2018	Feb. 28, 2019		Nov. 30, 2018	[2]	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018	Aug. 31, 2018
Preferred Stock, Shares Authorized		10,000,000					10,000,000		10,000,000
Preferred Stock, Par or Stated Value Per Share		$ 0.01					$ 0.01		$ 0.01
Preferred Stock, Shares Outstanding, Ending Balance		0					0		0
Common Stock, Shares Authorized		150,000,000					150,000,000		150,000,000
Common Stock, Par or Stated Value Per Share		$ 0.01					$ 0.01		$ 0.01
Common Stock, Shares, Issued, Total		39,690,225					39,690,225		39,264,849
Treasury Stock, Shares, Retired	13,292,689
Treasury Stock, Retired, Cost Method, Amount
Treasury Stock, Shares, Ending Balance		1,590,060					1,590,060		1,072,263
Treasury Stock, Shares, Acquired		214,945				420,000	489,945	584,920
Treasury Stock, Value, Acquired, Cost Method		$ 44,143				$ 81,938	$ 104,584	$ 112,892
Stock Repurchase Program, Remaining Authorized Repurchase Amount		$ 137,200					$ 137,200
Shares Paid for Tax Withholding for Share Based Compensation							27,852	5,563
Payments Related to Tax Withholding for Share-based Compensation							$ 6,100	$ 1,000
Preferred Stock, Shares Issued, Total		0					0		0
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period		23,000	[1]	52,000			75,530	14,839
Treasury Stock [Member]
Treasury Stock, Shares, Retired						13,292,689		13,292,689
Treasury Stock, Retired, Cost Method, Amount	$ (1,700,000)					$ (1,697,206)		$ (1,697,206)
Treasury Stock, Shares, Acquired		214,945				420,000	489,945	585,026
Treasury Stock, Value, Acquired, Cost Method		$ 44,143				$ 81,938	$ 104,584	$ 112,892
Common Stock [Member]
Treasury Stock, Shares, Retired						13,292,689		13,292,689
Treasury Stock, Retired, Cost Method, Amount	100					$ 133		$ 133
Treasury Stock, Shares, Acquired
Treasury Stock, Value, Acquired, Cost Method
Additional Paid-in Capital [Member]
Treasury Stock, Retired, Cost Method, Amount	186,700					186,717		186,717
Treasury Stock, Value, Acquired, Cost Method
Retained Earnings [Member]
Treasury Stock, Retired, Cost Method, Amount	$ 1,500,000					1,510,356		1,510,355
Treasury Stock, Value, Acquired, Cost Method

[1] The majority of the vested restricted stock awards related to the final vesting of awards granted on February 9, 2015, which vested 100% on the four year anniversary date of the grant.

[2] The majority of the vested restricted stock awards related to the final vesting of awards granted on November 1, 2013, which cliff vested 60% after three years on November 1, 2016 and 40% after five years on November 1, 2018.

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Note 12 - Stockholders' Equity - Dividends Declared (Details) - USD ($)	3 Months Ended
	Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Nov. 30, 2017
Dividends Per Share of Common Stock (in dollars per share)	$ 0.64	$ 0.64	$ 0.56	$ 0.56
Record Date	Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Nov. 30, 2017
Total $ Amount	$ 24,385	$ 24,372	$ 21,799	$ 21,901
Payment Date	Mar. 19, 2019	Dec. 18, 2018	Mar. 20, 2018	Dec. 19, 2017

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Note 13 - Employee Stock Option and Retirement Plans (Details Textual) - USD ($)				1 Months Ended	3 Months Ended			6 Months Ended		18 Months Ended
	Feb. 09, 2019	Dec. 19, 2017	Nov. 01, 2013	Jun. 30, 2017	Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Aug. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance					3,216,000	3,457,000		3,216,000		3,216,000	3,143,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance					$ 164.42	$ 162.68		$ 164.42		$ 164.42	$ 153.05
Share Price					$ 235.17			$ 235.17		$ 235.17
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total					$ 87,200,000			$ 87,200,000		$ 87,200,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition					3 years 109 days
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent					85.00%
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate					10.00%			10.00%		10.00%
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Contribution Limit					$ 25,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans					12,624		14,805	25,719		34,394
Treasury Stock Acquired, Average Cost Per Share					$ 199.36		$ 171.23	$ 198.33		$ 150.25
Common Stock, Capital Shares Reserved for Future Issuance					243,223			243,223		243,223
Defined Contribution Plan, Employer Discretionary Contribution Amount					$ 2,600,000		$ 2,600,000	$ 5,200,000	$ 5,500,000
LTIP [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value					$ 15,500,000		17,200,000	$ 26,300,000	$ 35,200,000
Employee Stock Option [Member] | LTIP [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		5 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance					460,713			460,713		460,713
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance					$ 221.74			$ 221.74		$ 221.74
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number					1,200,000			1,200,000		1,200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price					$ 138.41			$ 138.41		$ 138.41
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value					$ 116,500,000			$ 116,500,000		$ 116,500,000	$ 105,300,000
Employee Stock Option [Member] | LTIP [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years
Performance Shares [Member] | BI-SAM Technologies [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				206,417
Performance Shares [Member] | BI-SAM Technologies [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage				40.00%				0.00%
Performance Shares [Member] | BI-SAM Technologies [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage				20.00%				80.00%
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross								41,153
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period						41,000			961
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value						$ 212.66		$ 212.66	$ 182.17
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance					107,000	131,000		107,000		107,000	143,000
Restricted Stock [Member] | LTIP [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period					5 years
Share Price					$ 235.17			$ 235.17		$ 235.17	$ 229.39
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	100.00%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					41,153
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value					$ 212.66
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance					106,558			106,558		106,558
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total					$ 16,100,000			$ 16,100,000		$ 16,100,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition								3 years 219 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Nonvested					25,100,000			$ 25,100,000		$ 25,100,000	$ 32,800,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Pre-Tax Intrinsic Value					$ 5,100,000		$ 700,000	$ 16,700,000	$ 2,700,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Share Equivalent					2.5			2.5		2.5
Restricted Stock [Member] | LTIP [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			60.00%
Restricted Stock [Member] | LTIP [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			40.00%

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Note 13 - Employee Stock Option and Retirement Plans - Summary of Stock Option Activity (Details) - $ / shares			3 Months Ended				6 Months Ended
	Jan. 15, 2019	Jan. 12, 2018	Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Nov. 30, 2017	Feb. 28, 2019	Feb. 28, 2018
Balance (in shares)			3,457,000	3,143,000			3,143,000
Balance, weighted average price per share (in dollars per share)			$ 162.68	$ 153.05			$ 153.05
Granted, weighted average price per share (in dollars per share)			$ 207.84		$ 192.11		$ 221.74	$ 190.04
Exercised (in shares)			(207,000)	(117,000)
Exercised, weighted average price per share (in dollars per share)			$ 136.30	$ 132.81
Forfeited (in shares)			(61,000)	(24,000)
Forfeited, weighted average price per share (in dollars per share)			$ 152.19	$ 169.47
Balance (in shares)			3,216,000	3,457,000			3,216,000
Balance, weighted average price per share (in dollars per share)			$ 164.42	$ 162.68			$ 164.42
Non Performance Based [Member]
Granted (in shares)			6,115	454,598	15,363	553,942
Granted, weighted average price per share (in dollars per share)			$ 207.84	$ 221.93	$ 192.11	$ 189.98
LTIP [Member] | Non Performance Based [Member]
Granted (in shares)			6,000	455,000
Granted, weighted average price per share (in dollars per share)			$ 207.84	$ 221.93
Director Plan [Member]
Granted (in shares)	20,576	18,963	21,000
Granted, weighted average price per share (in dollars per share)			$ 207.88

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Note 13 - Stock Option and Retirement Plans - Changes to the Current Estimate of the Vesting Percentage and Related Expense (Details) - Performance Shares [Member] - BI-SAM Technologies [Member] $ in Thousands	6 Months Ended
	Feb. 28, 2019 USD ($)
Share-based Compensation Award, Tranche One [Member]
Cumulative Catch-up Adjustment		[1]
Remaining Expense to be Recognized
Share-based Compensation Award, Tranche Two [Member]
Cumulative Catch-up Adjustment	2,369	[1]
Remaining Expense to be Recognized	4,738
Share-based Compensation Award, Tranche Three [Member]
Cumulative Catch-up Adjustment	2,665	[1]
Remaining Expense to be Recognized	5,331
Share-based Compensation Award, Tranche Four [Member]
Cumulative Catch-up Adjustment	2,961	[1]
Remaining Expense to be Recognized	$ 5,923

[1] Amounts represent the cumulative catch-up adjustment to be recorded if there were a change in the vesting percentage as of February 28, 2019.

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Note 13 - Stock Option and Retirement Plans - Changes to the Current Estimate of the Vesting Percentage and Related Expense (Details) (Parentheticals) - Performance Shares [Member] - BI-SAM Technologies [Member]	1 Months Ended	6 Months Ended
	Jun. 30, 2017	Feb. 28, 2019
Share-based Compensation Award, Tranche One [Member]
Vesting percentage	40.00%	0.00%
Share-based Compensation Award, Tranche Two [Member]
Vesting percentage	20.00%	80.00%
Share-based Compensation Award, Tranche Three [Member]
Vesting percentage		90.00%
Share-based Compensation Award, Tranche Four [Member]
Vesting percentage		100.00%

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Note 13 - Employee Stock Option and Retirement Plans - Summary of Restricted Stock Award (Details) - Restricted Stock [Member] - $ / shares	3 Months Ended				6 Months Ended
	Feb. 28, 2019		Nov. 30, 2018		Feb. 28, 2019	Feb. 28, 2018
Restricted stock balance (in shares)	131,000		143,000		143,000
Restricted stock balance, weighted average grant date fair value (in dollars per share)	$ 172.48		$ 139.34		$ 139.34
Restricted stock granted (in shares)			41,000			961
Restricted stock granted, weighted average grant date fair value (in dollars per share)			$ 212.66		$ 212.66	$ 182.17
Restricted stock forfeited (in shares)	(1,000)		(1,000)
Restricted stock forfeited, weighted average grant date fair value (in dollars per share)	$ 184.64		$ 200.18
Restricted stock vested (in shares)	(23,000)	[1]	(52,000)	[2]	(75,530)	(14,839)
Restricted stock vested, weighted average grant date fair value (in dollars per share)	$ 136.58		$ 113.44
Restricted stock balance (in shares)	107,000		131,000		107,000
Restricted stock balance, weighted average grant date fair value (in dollars per share)	$ 187.62		$ 172.48		$ 187.62

[1] The majority of the vested restricted stock awards related to the final vesting of awards granted on February 9, 2015, which vested 100% on the four year anniversary date of the grant.

[2] The majority of the vested restricted stock awards related to the final vesting of awards granted on November 1, 2013, which cliff vested 60% after three years on November 1, 2016 and 40% after five years on November 1, 2018.

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Note 13 - Employee Stock Option and Retirement Plans - Summary of Share-based Awards Available for Grant (Details) - shares		3 Months Ended
		Feb. 28, 2019	Nov. 30, 2018
LTIP [Member]
Balance (in shares)		5,765,000	6,298,000
Share-based awards canceled/forfeited (in shares)	[1]	65,000	25,000
Balance (in shares)		5,824,000	5,765,000
LTIP [Member] | Non Performance Based [Member]
Granted (in shares)			(455,000)
LTIP [Member] | Restricted Stock [Member]
Granted (in shares)	[2]		(103,000)
LTIP [Member] | Performance Shares [Member]
Granted (in shares)		(6,000)
Director Plan [Member]
Balance (in shares)		282,000	282,000
Share-based awards canceled/forfeited (in shares)	[1]	3,000
Balance (in shares)		263,956	282,000
Director Plan [Member] | Non Performance Based [Member]
Granted (in shares)
Director Plan [Member] | Restricted Stock [Member]
Granted (in shares)	[2]
Director Plan [Member] | Performance Shares [Member]
Granted (in shares)		(21,000)

[1] Under the Company's Option Plan, for each restricted stock award canceled/forfeited, an equivalent of 2.5 shares is added back to the available share-based awards balance.

[2] Each restricted stock award granted is equivalent to 2.5 shares granted under the Company's Option Plan.

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Note 14 - Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended					6 Months Ended			18 Months Ended
	Jan. 15, 2019	Jan. 12, 2018	Feb. 28, 2019	Nov. 30, 2018	Aug. 31, 2018	Feb. 28, 2018	Nov. 30, 2017	Feb. 28, 2019	Aug. 31, 2018	Feb. 28, 2018	Feb. 28, 2019
Allocated Share-based Compensation Expense, Total			$ 7,700			$ 7,900		$ 16,100		$ 15,400
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total			$ 87,200					87,200			$ 87,200
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			3 years 109 days
Employee Service Share-based Compensation, Allocation of Recognized Period Costs, Capitalized Amount			$ 0		$ 0			$ 0	$ 0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 207.84			$ 192.11		$ 221.74		$ 190.04
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 53.18			$ 48.82		$ 56.72		$ 48.29
Stock Issued During Period, Shares, Employee Stock Purchase Plans			12,624			14,805		25,719			34,394
Director Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	20,576	18,963	21,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 207.88
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 42.77	$ 38.76
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant			263,956	282,000	282,000			263,956	282,000		263,956
The 2008 Employee Stock Purchase Plan [Member]
Allocated Share-based Compensation Expense, Total			$ 500			$ 500		$ 1,000		$ 1,100
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 199.36			$ 171.23		$ 198.33		$ 150.25
Stock Issued During Period, Shares, Employee Stock Purchase Plans			12,624			14,805		25,719		34,394
Non Performance Based [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			6,115	454,598		15,363	553,942
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 207.84	$ 221.93		$ 192.11	$ 189.98
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value			53.18	56.77		$ 48.82	$ 48.27
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross								41,153
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value				$ 212.66				$ 212.66		$ 182.17
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				41,000						961

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Note 14 - Stock-based Compensation - Summary of Stock Option Weighted Average Assumptions of Employee Stock Options (Details) - $ / shares	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Expected life (years) (Year)
Dividend yield
Weighted average estimated fair value (in dollars per share)	$ 53.18	$ 48.82	$ 56.72	$ 48.29
Granted, weighted average price per share (in dollars per share)	$ 207.84	$ 192.11	$ 221.74	$ 190.04
Fair value as a percentage of exercise price
Minimum [Member]
Term structure of risk-free interest rate	2.48%	1.28%	1.28%	1.28%
Term structure of volatility	18.00%	19.00%	18.00%	19.00%
Weighted average estimated fair value (in dollars per share)	$ 53.18	$ 48.82	$ 56.72	$ 48.29
Granted, weighted average price per share (in dollars per share)	$ 207.84	$ 192.11	$ 221.74	$ 190.04
Maximum [Member]
Term structure of risk-free interest rate	3.14%	2.41%	3.14%	2.41%
Expected life (years) (Year)	7 years 36 days	7 years 146 days	7 years 36 days	7 years 146 days
Term structure of volatility	25.00%	29.00%	29.00%	29.00%
Dividend yield	1.15%	1.32%	1.16%	1.32%
Weighted average estimated fair value (in dollars per share)	$ 53.18	$ 48.82	$ 56.72	$ 48.29
Granted, weighted average price per share (in dollars per share)	$ 207.84	$ 192.11	$ 221.74	$ 190.04
Fair value as a percentage of exercise price	25.60%	25.40%	25.60%	25.40%

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Note 14 - Stock-based Compensation - Summary of Stock Option Weighted Average Assumptions of Non-employee Director Stock Options (Details)	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Expected life (Year)
Dividend yield
Non Employee Directors Stock Option Plan [Member] | Employee Stock Option [Member]
Risk-free interest rate	2.51%	2.34%
Expected life (Year)	5 years 146 days	5 years 146 days
Expected volatility	20.50%	19.70%
Dividend yield	1.17%	1.16%

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Note 14 - Stock-based Compensation - Summary of Stock Option Weighted Average Assumptions, Employee Stock Purchase Plan (Details) - $ / shares	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Expected life (Year)
Dividend yield
Weighted average estimated fair value (in dollars per share)	$ 53.18	$ 48.82	$ 56.72	$ 48.29
The 2008 Employee Stock Purchase Plan [Member]
Risk-free interest rate	2.42%	1.45%	2.35%	1.26%
Expected life (Year)	90 days	90 days	90 days	90 days
Expected volatility	12.47%	13.90%	10.68%	10.52%
Dividend yield	1.09%	1.11%	1.10%	1.29%
Weighted average estimated fair value (in dollars per share)	$ 40.45	$ 35.02	$ 39.52	$ 29.76

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Note 15 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended			12 Months Ended
	Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Dec. 31, 2018	Dec. 31, 2017	Aug. 31, 2018
Tax Cuts and Jobs Act of 2017 Transition Tax for Accumulated Foreign Earnings Income Tax Expense	$ 1,100	$ 2,300	$ 23,200
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent				21.00%	35.00%
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability			$ 2,200
Tax Adjustments, Settlements, and Unusual Provisions	(2,400)
Unrecognized Tax Benefits, Ending Balance	10,986					$ 9,223
Unrecognized Tax Benefits, Interest on Income Taxes Accrued	$ 1,300

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Note 15 - Income Taxes - Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Income before income taxes	$ 104,349	$ 92,213	$ 200,292	$ 178,392
Provision for income taxes	$ 19,647	$ 39,076	$ 31,294	$ 54,876
Effective tax rate	18.80%	42.40%	15.60%	30.80%

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Note 15 - Income Taxes - Significant Components of Deferred Tax Assets (Details) - USD ($) $ in Thousands	Feb. 28, 2019	Aug. 31, 2018
Receivable reserve	$ 571	$ 599
Depreciation on property, equipment and leasehold improvements	3,110	1,032
Deferred rent	7,410	7,711
Stock-based compensation	13,333	14,827
Purchased intangible assets, including acquired technology	(25,269)	(24,059)
Other	7,582	9,606
Total deferred tax assets	6,737	9,716
Stock-based compensation	(1,077)	(946)
Purchased intangible assets, including acquired technology	20,368	22,429
Other	929	(293)
Total deferred tax liabilities	$ 20,220	$ 21,190

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Note 15 - Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) $ in Thousands	6 Months Ended
	Feb. 28, 2019 USD ($)
Unrecognized income tax benefits	$ 9,223
Additions based on tax positions related to the current year	1,493
Additions for tax positions of prior years	270
Unrecognized income tax benefits	$ 10,986

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Note 15 - Income Taxes - Major Tax Jurisdictions in Which the Company and Affiliates Operate and the Earliest Tax Year Subject to Examination (Details) - Minimum [Member]	6 Months Ended
	Feb. 28, 2019
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member]
Open tax years	2015 2016 2017 2018
State and Local Jurisdiction [Member]
Open tax years	2015 2016 2017 2018
Foreign Tax Authority [Member] | Her Majesty's Revenue and Customs (HMRC) [Member]
Open tax years	2015 2016 2017 2018
Foreign Tax Authority [Member] | Ministry of the Economy, Finance and Industry, France [Member]
Open tax years	2016 2017 2018
Foreign Tax Authority [Member] | Federal Ministry of Finance, Germany [Member]
Open tax years	2017 2018

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Note 16 - Debt (Details Textual) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 17, 2017	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018
Interest Paid, Including Capitalized Interest, Operating and Investing Activities, Total			$ 5,100	$ 3,600	$ 9,900	$ 7,000
The 2017 Revolving Credit Facility [Member] | PNC Bank, National Associations [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 575,000
Line of Credit Facility, Maximum Amount Of Additional Borrowings		225,000
Line of Credit Facility, Minimum Borrowing Amount Required for Additional Borrowings		$ 25,000
Line of Credit Facility, Commitment Fee Amount					$ 0
The 2017 Revolving Credit Facility [Member] | PNC Bank, National Associations [Member] | Subsequent Event [Member]
Repayments of Long-term Lines of Credit	$ 575,000
The 2017 Revolving Credit Facility [Member] | PNC Bank, National Associations [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		1.00%
The 2019 Revolving Credit Facility [Member] | PNC Bank, National Associations [Member] | Subsequent Event [Member]
Line of Credit Facility, Maximum Borrowing Capacity	750,000
Line of Credit Facility, Maximum Amount Of Additional Borrowings	500,000
Line of Credit Facility, Minimum Borrowing Amount Required for Additional Borrowings	$ 25,000
The 2019 Revolving Credit Facility [Member] | PNC Bank, National Associations [Member] | London Interbank Offered Rate (LIBOR) [Member] | Subsequent Event [Member]
Debt Instrument, Basis Spread on Variable Rate	0.875%

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Note 16 - Debt - Debt Obligations (Details) - USD ($) $ in Thousands	Feb. 28, 2019	Aug. 31, 2018
Total Outstanding Debt	$ 574,848	$ 574,775
The 2017 Revolving Credit Facility [Member]
Total Outstanding Debt	$ 575,000	$ 575,000

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Note 17 - Commitments and Contingencies (Details Textual) $ in Thousands	3 Months Ended		6 Months Ended
	Feb. 28, 2019 USD ($) ft²	Feb. 28, 2018 USD ($)	Feb. 28, 2019 USD ($) ft²	Feb. 28, 2018 USD ($)	Aug. 31, 2018 USD ($)	Feb. 14, 2018 ft²
Operating Leases, Rent Expense, Total	$ 14,200	$ 13,500	$ 27,600	$ 26,500
Other Liabilities, Noncurrent, Total	36,420		36,420		$ 38,989
Letters of Credit Outstanding, Amount	$ 3,300		$ 3,300
Purchase Commitment, Remaining Minimum Amount Committed					$ 79,000
Largest Individual Client Percent Of Total Subscriptions	3.00%		3.00%
Percentage of Subscription from Ten Largest Clients					15.00%
Allowance for Doubtful Accounts Receivable, Ending Balance	$ 5,400		$ 5,400		$ 3,500
Deferred Rent [Member]
Other Liabilities, Total	36,900		36,900		39,400
Other Liabilities, Noncurrent, Total	$ 33,100		$ 33,100		$ 33,600
Non-cancelable Operating Lease [Member]
Area of Real Estate Property | ft²	2,015,000		2,015,000
Norwalk Connecticut [Member]
Area of Real Estate Property | ft²	202,000		202,000			173,000

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Note 17 - Commitments and Contingencies - Future Minimum Lease Commitments (Details) $ in Thousands	Aug. 31, 2018 USD ($)
2019 (remaining six months)	$ 21,353
2020	40,747
2021	38,723
2022	36,118
2023	34,001
Thereafter	252,132
Total	$ 423,074

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Note 18 - Subsequent Event (Details Textual) - The 2019 Revolving Credit Facility [Member] - PNC Bank, National Associations [Member] - Subsequent Event [Member] $ in Thousands	Mar. 29, 2019 USD ($)
Line of Credit Facility, Maximum Borrowing Capacity	$ 750,000
Line of Credit Facility, Maximum Amount Of Additional Borrowings	500,000
Line of Credit Facility, Minimum Borrowing Amount Required for Additional Borrowings	25,000
Proceeds from Long-term Lines of Credit	$ 575,000
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	0.875%