19.

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

August 31, 2018,

FactSet was leasing approximately

202,000

square feet of existing office space for its headquarters at

601

Merritt

Norwalk, Connecticut. On

February 14, 2018,

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

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

173,000

square feet of office space. FactSet expects to take possession of the newly leased property on or around

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 fiscal

2018,

the Company’s worldwide leased office space increased to approximately

1,750,000

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

2031.

Total minimum rental payments associated with the leases are recorded as rent expense (a component of

Selling,

General &

Administrative

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

August 31, 2018,

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	$	41,094
2020		37,846
2021		35,505
2022		32,819
2023		30,524
Thereafter		229,977
Total	$	407,765

During fiscal

2018,

2017

and

2016,

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

$54.6

million,

$48.4

million and

$43.2

million, respectively. At

August 31, 2018

and

2017,

deferred rent reported within the Consolidated Balance Sheets totaled

$39.4

million and

$37.4

million, of which

$33.6

million and

$33.5

million, respectively, was reported as a non-current liability within the line item Deferred Rent and Other Non-Current Liabilities

Approximately

$2.0

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

August 31, 2018.

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

August 31, 2018

and

2017,

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

and

2017,

the Company had total purchase commitments with suppliers of

$79.0

million and

$81.0

million, respectively. There were

material changes in the Company’s purchase commitments with suppliers during fiscal

2018.

Contingencies

Income Taxes

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

). 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

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

August 31, 2018,

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 in order to determine if a notice of intent to assess should be issued to FactSet. Based upon a preliminary review of their request, the Company believes the state

may

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

August 31, 2018.

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

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.