fds20181130_10q.htm

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 November 30, 2018

☐	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, a smaller reporting company or an emerging growth company. See 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 December 31, 2018 was 38,035,470.

FactSet Research Systems Inc.

Form 10-Q

For the Quarter Ended November 30, 2018

Index

		Page
Part I	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Statements of Income for the three months ended November 30, 2018 and 2017	3

	Consolidated Statements of Comprehensive Income for the three months ended November 30, 2018 and 2017	4

	Consolidated Balance Sheets at November 30, 2018 and August 31, 2018	5

	Consolidated Statements of Cash Flows for the three months ended November 30, 2018 and 2017	6

	Consolidated Statements of Changes in Stockholders’ Equity for the three months ended November 30, 2018 and 2017	7

	Notes to the Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	42

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Mine Safety Disclosures	43

Item 5.	Other Information	43

Item 6.	Exhibits	44

	Signatures	45

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.

	Three Months Ended November 30,
(In thousands, except per share data)	2018			2017
Revenue	$	351,640		$	329,141
Operating expenses
Cost of services		166,776			161,524
Selling, general and administrative		84,325			78,519
Total operating expenses		251,101			240,043

Operating income		100,539			89,098
Other (expense) income
Interest (expense), net of interest income		(4,596	)		(2,919	)
Income before income taxes		95,943			86,179

Provision for income taxes		11,647			15,800
Net income	$	84,296		$	70,379

Basic earnings per common share	$	2.21		$	1.80
Diluted earnings per common share	$	2.17		$	1.77

Basic weighted average common shares		38,106			39,085
Diluted weighted average common shares		38,809			39,680

	Three Months Ended November 30,
(In thousands)	2018			2017
Net income	$	84,296		$	70,379

Other comprehensive income (loss), net of tax
Net unrealized gain (loss) on cash flow hedges*		1,038			(476	)
Foreign currency translation adjustments		(9,504	)		8,466
Other comprehensive (loss) income		(8,466	)		7,990
Comprehensive income	$	75,830		$	78,369

	November 30, 2018			August 31, 2018
(In thousands, except share data)	(Unaudited)
ASSETS
Cash and cash equivalents	$	170,378		$	208,623
Investments		27,470			29,259
Accounts receivable, net of reserves of $4,518 at November 30, 2018 and $3,490 at August 31, 2018		159,890			156,639
Prepaid taxes		—			6,274
Prepaid expenses and other current assets		33,445			30,121
Total current assets		391,183			430,916

Property, equipment and leasehold improvements, net		101,566			100,545
Goodwill		694,897			701,833
Intangible assets, net		141,037			148,935
Deferred taxes		9,443			9,716
Other assets		27,801			27,502
TOTAL ASSETS	$	1,365,927		$	1,419,447

LIABILITIES
Accounts payable and accrued expenses	$	61,271		$	72,059
Accrued compensation		22,268			66,479
Deferred fees		40,808			49,700
Taxes payable		8,403			8,453
Dividends payable		24,372			24,443
Total current liabilities		157,122			221,134

Long-term debt		574,812			574,775
Deferred taxes		20,709			21,190
Deferred fees		9,480			7,833
Taxes payable		26,525			29,626
Deferred rent and other non-current liabilities		36,070			38,989
TOTAL LIABILITIES	$	824,718		$	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, 39,447,491 and 39,264,849 shares issued; 38,080,878 and 38,192,586 shares outstanding at November 30, 2018 and August 31, 2018, respectively		394			393
Additional paid-in capital		694,078			667,531
Treasury stock, at cost: 1,366,613 and 1,072,263 shares at November 30, 2018 and August 31, 2018, respectively		(278,146	)		(213,428	)
Retained earnings		184,071			122,843
Accumulated other comprehensive loss		(59,188	)		(51,439	)
TOTAL STOCKHOLDERS’ EQUITY	$	541,209		$	525,900

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,365,927		$	1,419,447

	Three Months Ended November 30,
(in thousands)	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	84,296		$	70,379
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		14,241			14,286
Stock-based compensation expense		8,435			7,481
Deferred income taxes		(689	)		875
Loss on sale of assets		181			17
Changes in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of reserves		(3,583	)		3,511
Accounts payable and accrued expenses		(10,522	)		8,604
Accrued compensation		(44,051	)		(40,384	)
Deferred fees		(7,250	)		(3,531	)
Taxes payable, net of prepaid taxes		7,489			7,401
Prepaid expenses and other assets		(957	)		(6,716	)
Deferred rent and other non-current liabilities		(1,126	)		(845	)
Other working capital accounts, net		(144	)		65
Net cash provided by operating activities		46,320			61,143

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments		(4,356	)		(6,942	)
Proceeds from maturity of investments		6,573			7,409
Purchases of property, equipment and leasehold improvements, net of proceeds from dispositions		(9,526	)		(5,912	)
Net cash used in investing activities		(7,309	)		(5,445	)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments		(24,252	)		(21,682	)
Repurchases of common stock		(64,718	)		(31,706	)
Other financing activities		—			442
Proceeds from employee stock plans		13,965			22,132
Net cash used by financing activities		(75,005	)		(30,814	)

Effect of exchange rate changes on cash and cash equivalents		(2,251	)		2,318
Net (decrease) increase in cash and cash equivalents		(38,245	)		27,202
Cash and cash equivalents at beginning of period		208,623			194,731
Cash and cash equivalents at end of period	$	170,378		$	221,933

(in thousands,	Common Stock				Additional Paid-in		Treasury Stock					Retained			Accumulated Other Comprehensive			Total Stockholders’
except per share data)	Shares		Par Value		Capital		Shares		Par Value			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													84,296						84,296
Other comprehensive (loss) income																(8,466	)		(8,466	)
Common stock issued for employee stock plans		130,031		1		18,112													18,113
Vesting of restricted stock		52,611						19,350		(4,277	)								(4,277	)
Repurchases of common stock								275,000		(60,441	)								(60,441	)
Stock-based compensation expense						8,435													8,435
Dividends declared													(24,372	)					(24,372	)
Cumulative effect of adoption of accounting standards*													1,304			717			2,021
Balance as of November 30, 2018		39,447,491	$	394	$	694,078		1,366,613	$	(278,146	)	$	184,071		$	(59,188	)	$	541,209

(in thousands,	Common Stock				Additional Paid-in		Treasury Stock					Retained			Accumulated Other Comprehensive			Total Stockholders’
except per share data)	Shares		Par Value		Capital		Shares		Par Value			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													70,379						70,379
Other comprehensive (loss) income																7,990			7,990
Common stock issued for employee stock plans		245,016		3		26,280													26,283
Vesting of restricted stock		11,278						4,220		(752	)								(752	)
Repurchases of common stock								165,026		(30,954	)								(30,954	)
Stock-based compensation expense						7,481													7,481
Dividends declared													(21,901	)					(21,901	)
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

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 workflows 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 November 30, 2018, 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 three 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, 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 updated 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 is not expected to have a material impact on the consolidated financial statements.

No other new accounting pronouncements issued or effective as of November 30, 2018 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.

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 will be recognized as an asset and amortized consistent with the associated revenue for providing the services, which prior to adoption was expensed. As a result, 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 ended November 30, 2018, 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 November 30,
(in thousands)	2018		2017
U.S.	$	222,203	$	208,768
Europe		97,765		91,727
Asia Pacific		31,672		28,646
Total Revenue	$	351,640	$	329,141

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 November 30, 2018 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 November 30, 2018 and August 31, 2018:

	Fair Value Measurements at November 30, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds ⁽¹⁾	$	22,001	$	—	$	—	$	22,001
Mutual funds ⁽²⁾		—		19,067		—		19,067
Certificates of deposit ⁽³⁾		—		8,403		—		8,403
Derivative instruments ⁽⁴⁾		—		108		—		108
Total assets measured at fair value	$	22,001	$	27,578	$	—	$	49,579


Liabilities
Derivative instruments ⁽⁴⁾	$	—	$	2,428	$	—	$	2,428
Total liabilities measured at fair value	$	—	$	2,428	$	—	$	2,428

	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 classified as Investments (short-term) on the consolidated balance sheets.

⁽³⁾

The Company’s certificates of deposit held for investment are not debt securities, classified as Level 2 and are valued at amortized cost, which approximates fair value. These certificates of deposit 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.

The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

(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, 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 three months ended November 30, 2018, 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 Only

As of November 30, 2018, 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 British Pound Sterling, Euro, Indian Rupee, Japanese Yen 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. 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 three 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 November 30, 2018, 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 50% 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)	November 30, 2018		August 31, 2018		November 30, 2018			August 31, 2018

Philippine Peso	$	45,000	$	52,000	$	(5	)	$	(1,230	)
Indian Rupee		43,080		50,780		(733	)		(1,490	)
Euro		17,181		26,312		(862	)		(503	)
British Pound Sterling		12,381		18,995		(720	)		(723	)
Total	$	117,642	$	148,087	$	(2,320	)	$	(3,946	)

As of November 30, 2018, the gross notional value of foreign currency forward contracts to purchase Philippine Pesos with U.S. dollars was PHP 2.4 billion. The gross notional value of foreign currency forward contracts to purchase Indian Rupees with U.S. dollars was Rs. 3.0 billion. The gross notional value of foreign currency forward contracts to purchase Euros with U.S. dollars was € 14.3 million. The gross notional value of foreign currency forward contracts to purchase British Pound Sterling with U.S. dollars was £ 9.1 million.

Counterparty Credit Risk

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. 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. 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. 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. The Company does not expect any losses as a result of default of its counterparties.

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	November 30, 2018		August 31, 2018
Derivatives designated as hedging instruments	Assets: Foreign Currency Forward Contracts
	Prepaid expenses and other current assets	$	108	$	90

	Liabilities: Foreign Currency Forward Contracts
	Accounts payable and accrued expenses	$	1,742	$	1,731
	Deferred rent and other non-current liabilities	$	686	$	2,305

All derivatives were designated as hedging instruments as of November 30, 2018 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 November 30, 2018 and 2017, 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

2018

2017

(Effective Portion)

2018

2017

Foreign currency forward contracts

1,943

)

SG&A

(399

)

763

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 November 30, 2018, the Company estimates that $1.6 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 November 30, 2018, and August 31, 2018, there were no net settlements recorded on the consolidated balance sheets.

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

The components of other comprehensive (loss) income for the three months ended November 30, 2018 and 2017 are as follows:

	November 30, 2018						November 30, 2017
(in thousands)	Pre-tax			Net of tax			Pre-tax			Net of tax
Foreign currency translation adjustments	$	(9,504	)	$	(9,504	)	$	8,466		$	8,466
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		1,626			1,038			(764	)		(476	)
Other comprehensive (loss) income	$	(7,878	)	$	(8,466	)	$	7,702		$	7,990

The components of AOCL are as follows:

(in thousands)	November 30, 2018			August 31, 2018
Accumulated unrealized (gain) losses on cash flow hedges, net of tax	$	(1,732	)	$	(3,486	)
Accumulated foreign currency translation adjustments		(57,457	)		(47,953	)
Total accumulated other comprehensive loss	$	(59,189	)	$	(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 European 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 $694.9 million of goodwill reported by the Company at November 30, 2018, 58% was recorded in the U.S. segment, 41% in the European 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 November 30, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	222,203	$	97,765	$	31,672	$	351,640
Segment operating income		43,841		39,089		17,609		100,539
Total assets		719,961		536,042		109,924		1,365,927
Capital expenditures		4,105		1,263		4,158		9,526

For the three months ended November 30, 2017	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	208,768	$	91,727	$	28,646	$	329,141
Segment operating income		40,771		32,970		15,357		89,098
Total assets		719,491		603,848		107,263		1,430,602
Capital expenditures		3,545		1,524		843		5,912

9. GOODWILL

Changes in the carrying amount of goodwill by segment for the three months ended November 30, 2018 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		—		(6,867	)		(69	)		(6,936	)
Balance at November 30, 2018	$	386,195	$	305,827		$	2,875		$	694,897

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 November 30, 2018 was 12.2 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 three months of fiscal 2019. Amortizable intangible assets are tested for impairment, if indicators of impairment are present, based on 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 November 30, 2018 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	33,327	$	20,991	$	12,336
Client relationships		97,512		30,866		66,646
Software technology		105,613		47,301		58,312
Non-compete agreements		4,825		2,581		2,244
Trade names		4,040		2,541		1,499
Total	$	245,317	$	104,280	$	141,037

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 $5.9 million and $6.2 million for the three months ended November 30, 2018 and 2017, respectively. As of November 30, 2018, 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 nine months)	$	17,818
2020		22,921
2021		21,018
2022		18,500
2023		13,752
Thereafter		47,028
Total	$	141,037

11. COMMON STOCK AND EARNINGS PER SHARE

On November 13, 2018, 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 December 18, 2018 to common stockholders of record at the close of business on November 30, 2018.

Shares of common stock outstanding were as follows:

	Three Months ended November 30,
(in thousands)	2018			2017
Balance, beginning of year (September 1)		38,192			39,023
Common stock issued for employee stock plans		183			256
Repurchase of common stock from employees⁽¹⁾		(19	)		(4	)
Repurchase of common stock under the share repurchase program		(275	)		(165	)
Balance at November 30, 2018 and 2017, respectively		38,081			39,110

⁽¹⁾

For the three months ended November 30, 2018 and 2017, the Company repurchased 19,350 and 4,220 shares, or $4.3 million and $0.8 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 November 30, 2018
Basic EPS
Income available to common stockholders	$	84,296		38,106	$	2.21
Diluted EPS
Dilutive effect of stock options and restricted stock				703
Income available to common stockholders plus assumed conversions	$	84,296		38,809	$	2.17
For the three months ended November 30, 2017
Basic EPS
Income available to common stockholders	$	70,379		39,085	$	1.80
Diluted EPS
Dilutive effect of stock options and restricted stock				595
Income available to common stockholders plus assumed conversions	$	70,379		39,680	$	1.77

Dilutive potential common shares consist of stock options and unvested restricted stock awards. There were no stock options or unvested restricted stock awards excluded from the calculation of diluted EPS for the three months ended November 30, 2018. There were 552,389 stock options excluded from the calculation of diluted EPS for the three months ended November 30, 2017, because their inclusion would have been anti-dilutive.

Performance-based stock options are omitted from the calculation of diluted EPS until the performance criteria is probable of being achieved. At November 30, 2018 and November 30, 2017, the number of performance-based stock option grants excluded from the calculation of diluted EPS was 206,417 and 332,338, respectively.

12. STOCKHOLDERS’ EQUITY

Preferred Stock

At November 30, 2018 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 November 30, 2018 and August 31, 2018, there were 150,000,000 shares of common stock ($.01 par value per share) authorized, of which 39,447,491 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 November 30, 2018, and August 31, 2018, there were 1,366,613 and 1,072,263 shares of treasury stock (at cost) outstanding.

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 November 30, 2018 and 2017, the Company repurchased 275,000 shares for $60.4 million and 164,920 shares for $30.9 million, respectively. As of November 30, 2018, $181.3 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 three months of fiscal 2019, previously granted restricted stock awards of 52,611 shares vested and were included in common stock outstanding as of November 30, 2018 (recorded net of 19,350 shares repurchased from employees at a cost of $4.3 million to cover their cost of taxes upon vesting of the restricted stock). During the same comparable period a year ago, 11,278 shares of previously granted restricted stock awards vested and were included in common stock outstanding as of November 30, 2017 (recorded net of 4,220 shares repurchased from employees at a cost of $0.8 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 quarter 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

Fiscal 2018
First Quarter	$	0.56	November 30, 2017	$	21,901	December 19, 2017

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.

Stock Option Activity

During the first three months of fiscal 2019, FactSet granted 454,598 stock options with a weighted average exercise price of $221.93 to existing employees of the Company.

A summary of stock option activity for the three months ended November 30, 2018 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

The total number of in-the-money options exercisable as of November 30, 2018 was 1.2 million with a weighted average exercise price of $137.58. The aggregate intrinsic value of in-the-money stock options exercisable at November 30, 2018 and August 31, 2018 was $120.0 million and $105.3 million, respectively. The aggregate intrinsic value represents the difference between the Company’s closing stock price as of November 30, 2018 of $234.49, 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 November 30, 2018 and 2017 was $10.8 million and $18.0 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 material performance-based awards outstanding as of November 30, 2018.

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 November 30, 2018, 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%	$	2,014	$	6,870
90%	$	2,265	$	6,619
100%	$	2,517	$	6,367

* Amounts represent the cumulative catch-up adjustment to be recorded if there was a change in the vesting percentage as of November 30, 2018.

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 three months of fiscal 2019, FactSet granted 41,102 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 November 30, 2018, a total of 131,140 restricted stock awards were unvested and outstanding, which results in unamortized stock-based compensation of $17.6 million to be recognized as stock-based compensation expense over the remaining weighted average vesting period of 3.8 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 (restricted stock awards)		41		$	212.66
Forfeited		(1	)	$	200.18
Vested		(52	)⁽¹⁾	$	113.44
Balance at November 30, 2018		131		$	172.48

⁽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.

As of November 30, 2018 and August 31, 2018, the aggregate fair value of unvested restricted stock was $30.8 million and $32.8 million, respectively. Aggregate fair value of unvested restricted stock represents the Company’s closing stock prices of $234.49 and $229.39 on November 30, 2018 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 November 30, 2018 and 2017 was $11.6 million and $2.0 million in each period, 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	)		—
Granted – performance-based options		—			—
Restricted stock awards granted⁽¹⁾		(103	)		—
Share-based awards canceled/forfeited⁽²⁾		25			—
Balance at November 30, 2018		5,765			282

⁽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 November 30, 2018, employees purchased 13,095 shares at a price of $197.34 as compared to 19,589 shares at a price of $134.39 for the three months ended November 30, 2017. At November 30, 2018, the ESPP had 255,847 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 and $2.8 million in employer matching contributions for its U.S. defined contribution plan during the three months ended November 30, 2018 and 2017, 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

The Company recognized total stock-based compensation expense of $8.4 million and $7.5 million during the three months ended November 30, 2018 and 2017, respectively. As of November 30, 2018, $95.2 million of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of 3.5 years. There was no stock-based compensation capitalized as of November 30, 2018 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.

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.

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 November 30,	2018					2017
Term structure of risk-free interest rate		1.28%	-	2.41	%		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				$56.77					$48.27
Weighted average exercise price				$221.93					$189.98
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 termination 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 November 30, 2018, shares available for future grant under the Director Plan was 282,398. 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.

There were no stock options granted to the Company’s non-employee Directors during the first quarter of fiscal 2019 or fiscal 2018, respectively.

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 three months of fiscal 2019, there were 41,102 restricted stock awards granted with a weighted average grant date fair value of $212.66. During the first three 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 November 30, 2018, employees purchased 13,095 shares at a weighted average price of $197.34 as compared to 19,589 shares at a weighted average price of $134.39 for the three months ended November 30, 2017. Stock-based compensation expense recorded during the three months ended November 30, 2018 and 2017, relating to the ESPP, was $0.5 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 November 30,	2018			2017
Risk-free interest rate		2.27	%		1.11	%
Expected life (months)		3			3
Expected volatility		8.96	%		7.97	%
Dividend yield		1.10	%		1.42	%
Weighted average estimated fair value	$	38.63		$	25.79

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.

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 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 November 30,
(in thousands)	2018			2017
Income before income taxes	$	95,943		$	86,179
Provision for income taxes	$	11,647		$	15,800
Effective tax rate		12.1	%		18.3	%

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 the first quarter of fiscal 2019 compared to the same period a year ago is primarily due to the reduction of the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. The first quarter of fiscal 2019 also included a $2.3 million revision to the one-time transition tax on accumulated earnings and profits of foreign subsidiaries, initially recorded during the third quarter of fiscal 2018. The effective tax rate is lower than the applicable U.S. federal rate in both periods presented above due to R&D tax benefits and excess tax benefits associated with share-based payments.

While the Company has not finalized the accounting for the tax effects of the TCJA, FactSet has made a reasonable estimate and will continue to refine its calculations, as needed. In addition, the estimates may also 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)	November 30, 2018			August 31, 2018
Deferred tax assets:
Receivable reserve	$	583		$	599
Depreciation on property, equipment and leasehold improvements		2,050			1,032
Deferred rent		7,462			7,711
Stock-based compensation		15,341			14,827
Purchased intangible assets, including acquired technology		(24,643	)		(24,059	)
Other		8,650			9,606
Total deferred tax assets	$	9,443		$	9,716

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

(in thousands)	November 30, 2018			August 31, 2018
Deferred tax liabilities:
Stock-based compensation	$	(1,007	)	$	(946	)
Purchased intangible assets, including acquired technology		21,030			22,429
Other		686			(293	)
Total deferred tax liabilities	$	20,709		$	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 November 30, 2018, the Company had gross unrecognized tax benefits totaling $9.8 million recorded as non-current taxes payable within the consolidated balance sheet. This amount includes $1.2 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 three 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		497
Additions for tax positions of prior years		110
Unrecognized income tax benefits at November 30, 2018	$	9,830

In the normal course of business, the Company’s tax filings are subject to audit by federal, state and foreign tax authorities. At November 30, 2018, 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)

November 30,

2018

August 31,

2018

2017 Revolving Credit Facility (maturity date of March 17, 2020)

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. 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 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.

In conjunction with FactSet’s entrance into the 2017 Credit Agreement, the Company borrowed $575.0 million in the form of a LIBOR rate loan under the 2017 Revolving Credit Facility. Proceeds from the 2017 Revolving Credit Facility were also used to fund FactSet’s acquisition of BISAM.

All outstanding loan amounts are reported as Long-term debt within the consolidated balance sheet at November 30, 2018. For the three months ended November 30, 2018 and 2017, the Company recorded interest expense of $4.7 million and $3.4 million on its outstanding debt amounts, respectively. The principal balance is payable in full on the maturity date. As of November 30, 2018, 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 November 30, 2018.

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 November 30, 2018, the Company leased 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 will take 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 fiscal 2019, 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 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 November 30, 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 (remaining nine months)	$	30,377
2020		37,996
2021		35,504
2022		32,862
2023		30,574
Thereafter		230,189
Total	$	397,502

For the three months ended November 30, 2018 and November 30, 2017, rent expense (including operating costs) for all operating leases amounted to $13.4 million and $13.0 million, respectively. As of November 30, 2018, deferred rent reported within the consolidated balance sheet totaled $36.5 million compared to $39.4 million as of August 31, 2018, of which $32.4 million and $39.4 million were reported as a non-current liability within the line item Deferred Rent and Other Non-Current Liabilities as of November 30, 2018 and August 31, 2018, respectively.

Approximately $1.1 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 November 30, 2018. 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 November 30, 2018, 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 three 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 November 30, 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 to determine if a notice of intent 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 November 30, 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 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 November 30, 2018, the Company’s largest individual client accounted for approximately 2.5% 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 November 30, 2018, the receivable reserve was $4.5 million compared to a reserve of $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. FactSet has incorporated counterparty 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. FactSet 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 FactSet has executed these derivative transactions. 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. To mitigate counterparty credit risk, FactSet enters into contracts with large financial institutions and regularly reviews its credit exposure balances, as well as the creditworthiness of the counterparties. 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 three months ended November 30, 2018 and 2017, respectively.

Document And Entity Information - shares

Consolidated Statements of Income (Unaudited) - USD ($)
shares in Thousands, $ in Thousands

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) - USD ($)
$ in Thousands

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
$ in Thousands

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)
$ in Thousands

Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands

Consolidated Statement 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]

Note 1 - Organization and Nature of Business

ORGANIZATION AND NATURE

OF BUSINESS

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 workflows 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.

Note 2 - Basis of Presentation

BASIS OF PRESENTATION

-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

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

-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.

Note 3 - Recent Accounting Pronouncements

RECENT

ACCOUNTING PRONOUNCEMENTS

As of

November 30, 2018,

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

new standards or updates adopted during the

first

three

months of fiscal

2019

that had a material impact on the consolidated financial statements.

New Accounting Standards or Updates Recently Adopted

Revenue Recognition

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.

$2.5

million, or

$2.0

million net of tax, 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

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

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

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

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 updated 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

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

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

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

Goodwill Impairment Test

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

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

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 is

not

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

other new accounting pronouncements issued or effective as of

November 30, 2018

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

Note 4 - Revenue Recognition

REVENUE RECOGNITION

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

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.

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.

$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 ended

November 30, 2018,

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

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

Segment Information for further information on revenues by geographic region.

The following table presents this disaggregation of revenue by geography:

	Three months ended November 30,
(in thousands)	2018		2017
U.S.	$	222,203	$	208,768
Europe		97,765		91,727
Asia Pacific		31,672		28,646
Total Revenue	$	351,640	$	329,141

Note 5 - Fair Value Measures

FAIR

VALUE MEASURES

Fair Value Hierarchy

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

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

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

Level

– 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

Level

– 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

Level

assets or liabilities held by the Company as of

November 30, 2018

August 31, 2018.

(

) 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

November 30, 2018

and

August 31, 2018:

	Fair Value Measurements at November 30, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds (1)	$	22,001	$	—	$	—	$	22,001
Mutual funds (2)		—		19,067		—		19,067
Certificates of deposit ( 3 )		—		8,403		—		8,403
Derivative instruments (4 )		—		108		—		108
Total assets measured at fair value	$	22,001	$	27,578	$	—	$	49,579


Liabilities
Derivative instruments (4)	$	—	$	2,428	$	—	$	2,428
Total liabilities measured at fair value	$	—	$	2,428	$	—	$	2,428

	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

(

)

and included in Cash and cash equivalents within

the

consolidated balance s

heets.

(

)

and are classified as I

nvestments (short-term) on the consolidated balance s

heets.

(

)

The Company’s certificates of deposit held for investment are

not

debt securities, classified as Level

and are valued at amortized cost, which approximates fair value.

These certificates of deposit 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.

(

)

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

The Company did

not

have any transfers between Level

and Level

fair value measurements during the periods presented.

(

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

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, 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

three

months ended

November 30, 2018,

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

nly

As of

November 30, 2018,

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

in the fair value hierarchy.

Note 6 - Derivative Instruments

. DERIVATIVE INSTRUMENTS

Cash Flow Hedges

not

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

discontinuance of cash flow hedges during the

first

three

months of fiscal

2019

and

2018,

and as such,

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

As of

November 30, 2018,

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

50%

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)	November 30, 2018		August 31, 2018		November 30, 2018			August 31, 2018

Philippine Peso	$	45,000	$	52,000	$	(5	)	$	(1,230	)
Indian Rupee		43,080		50,780		(733	)		(1,490	)
Euro		17,181		26,312		(862	)		(503	)
British Pound Sterling		12,381		18,995		(720	)		(723	)
Total	$	117,642	$	148,087	$	(2,320	)	$	(3,946	)

As of

November 30, 2018,

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

2.4

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

3.0

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

14.3

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

9.1

million.

Counterparty Credit Risk

not

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

not

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

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	November 30, 2018		August 31, 2018
Derivatives designated as hedging instruments	Assets : Foreign Currency Forward Contracts
	Prepaid expenses and other current assets	$	108	$	90

	Liabilities : Foreign Currency Forward Contracts
	Accounts payable and accrued expenses	$	1,742	$	1,731
	Deferred rent and other non-current liabilities	$	686	$	2,305

All derivatives were designated as hedging instruments as of

November 30, 2018

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

November 30, 2018

and

2017,

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	2018		2017			(Effective Portion)	2018			2017
Foreign currency forward contracts	$	1,943	$	(1	)	SG&A	$	(399	)	$	763

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

November 30, 2018,

the Company estimates that

$1.6

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

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

November 30, 2018,

and

August 31, 2018,

there were

net settlements recorded on the consolidated balance sheets.

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

. OTHER COMPREHENSIVE INCOME (

LOSS

)

AND ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of other comprehensive (loss) income for the

three

months ended

November 30, 2018

and

2017

are as follows:

	November 30, 2018						November 30, 2017
(in thousands)	Pre-tax			Net of tax			Pre-tax			Net of tax
Foreign currency translation adjustments	$	(9,504	)	$	(9,504	)	$	8,466		$	8,466
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		1,626			1,038			(764	)		(476	)
Other comprehensive (loss) income	$	(7,878	)	$	(8,466	)	$	7,702		$	7,990

The components of AOCL are as follows:

(in thousands)	November 30, 2018			August 31, 2018
Accumulated unrealized (gain) losses on cash flow hedges, net of tax	$	(1,732	)	$	(3,486	)
Accumulated foreign currency translation adjustments		(57,457	)		(47,953	)
Total accumulated other comprehensive loss	$	(59,189	)	$	(51,439	)

Note 8 - Segment Information

. 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.

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.

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

$694.9

million of goodwill reported by the Company at

November 30, 2018,

58%

was recorded in the U.S. segment,

41%

in the European segment and the remaining

in the Asia Pacific segment.

(in thousands) For the three months ended November 30, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	222,203	$	97,765	$	31,672	$	351,640
Segment operating income		43,841		39,089		17,609		100,539
Total assets		719,961		536,042		109,924		1,365,927
Capital expenditures		4,105		1,263		4,158		9,526

For the three months ended November 30, 2017	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	208,768	$	91,727	$	28,646	$	329,141
Segment operating income		40,771		32,970		15,357		89,098
Total assets		719,491		603,848		107,263		1,430,602
Capital expenditures		3,545		1,524		843		5,912

Note 9 - Goodwill

. GOODWILL

Changes in the carrying amount of goodwill by segment for the

three

months ended

November 30, 2018

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		—		(6,867	)		(69	)		(6,936	)
Balance at November 30, 2018	$	386,195	$	305,827		$	2,875		$	694,897

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

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

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

Note 10 - Intangible Assets

. INTANGIBLE ASSETS

November 30, 2018

was

12.2

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

changes to the estimate of the remaining useful lives during the

first

three

months of fiscal

2019.

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

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

assigned residual values.

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

At November 30, 2018 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	33,327	$	20,991	$	12,336
Client relationships		97,512		30,866		66,646
Software technology		105,613		47,301		58,312
Non-compete agreements		4,825		2,581		2,244
Trade names		4,040		2,541		1,499
Total	$	245,317	$	104,280	$	141,037

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

$5.9

million and

$6.2

million for the

three

months ended

November 30, 2018

and

2017,

respectively. As of

November 30, 2018,

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 nine months)	$	17,818
2020		22,921
2021		21,018
2022		18,500
2023		13,752
Thereafter		47,028
Total	$	141,037

Note 11 - Common Stock and Earnings Per Share

. COMMON STOCK AND EARNINGS PER SHARE

November 13, 2018,

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

December 18, 2018

to common stockholders of record at the close of business on

November 30, 2018.

Shares of common stock outstanding were as follows:

	Three Months ended November 30,
(i n thousands)	2018			2017
Balance, beginning of year (September 1)		38,192			39,023
Common stock issued for employee stock plans		183			256
Repurchase of common stock from employees (1)		(19	)		(4	)
Repurchase of common stock under the share repurchase program		(275	)		(165	)
Balance at November 30, 2018 and 2017, respectively		38,081			39,110

(

)

For the

three

months ended

November

30,

201

and

201

, the Company repurchased

9,350

and

220

shares, or $

4.3

million and

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 November 30, 2018
Basic EPS
Income available to common stockholders	$	84,296		38,106	$	2.21
Diluted EPS
Dilutive effect of stock options and restricted stock				703
Income available to common stockholders plus assumed conversions	$	84,296		38,809	$	2.17
For the three months ended November 30, 2017
Basic EPS
Income available to common stockholders	$	70,379		39,085	$	1.80
Diluted EPS
Dilutive effect of stock options and restricted stock				595
Income available to common stockholders plus assumed conversions	$	70,379		39,680	$	1.77

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

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

three

months ended

November 30, 2018.

There were

552,389

stock options excluded from the calculation of diluted EPS for the

three

months ended

November 30, 2017,

because their inclusion would have been anti-dilutive.

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

November 30, 2018

and

November 30, 2017,

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

206,417

and

332,338,

respectively.

Note 12 - Stockholders' Equity

TOCK

HOLDERS’ E

QUITY

Preferred Stock

November 30, 2018

and

August 31, 2018,

there were

10,000,000

shares of preferred stock (

$0.01

par value per share) authorized, of which

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

November 30, 2018

and

August 31, 2018,

there were

150,000,000

shares of common stock (

$.01

par value per share) authorized, of which

39,447,491

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

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

November 30, 2018,

and

August 31, 2018,

there were

1,366,613

and

1,072,263

shares of treasury stock (at cost) outstanding.

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

November 30, 2018

and

2017,

the Company repurchased

275,000

shares for

$60.4

million and

164,920

shares for

$30.9

million, respectively. As of

November 30, 2018,

$181.3

million remains authorized for future share repurchases.

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

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

three

months of fiscal

2019,

previously granted restricted stock awards of

52,611

shares vested and were included in common stock outstanding as of

November 30, 2018 (

recorded net of

19,350

shares repurchased from employees at a cost of

$4.3

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

11,278

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

November 30, 2017 (

recorded net of

4,220

shares repurchased from employees at a cost of

$0.8

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

quarter 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

Fiscal 2018
First Quarter	$	0.56	November 30, 2017	$	21,901	December 19, 2017

Note 13 - Employee Stock Option and Retirement Plans

. EMPLOYEE STOCK OPTION AND RETIREMENT PLANS

Stock Option Awards

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.

Stock Option Activity

During the

first

three

months of fiscal

2019,

FactSet granted

454,598

stock options with a weighted average exercise price of

$221.93

to existing employees of the Company.

A summary of stock option activity for the

three

months ended

November 30, 2018

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

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

November 30, 2018

was

1.2

million with a weighted average exercise price of

$137.58.

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

November 30, 2018

and

August 31, 2018

was

$120.0

million and

$105.3

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

November 30, 2018

$234.49,

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

November 30, 2018

and

2017

was

$10.8

million and

$18.0

million, respectively.

Performance-based

Equity Awards

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

The following summarizes material performance-based awards outstanding as of

November 30, 2018.

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

November 30, 2018,

FactSet does

not

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

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%	$	2,014	$	6,870
90%	$	2,265	$	6,619
100%	$	2,517	$	6,367

* Amounts represent the cumulative catch-up adjustment to be recorded if there was a change in the vesting percentage as of

November 30,

201

Restricted Stock Awards

Restricted Stock Awards Activity

During the

first

three

months of fiscal

2019,

FactSet granted

41,102

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

November 30, 2018,

a total of

131,140

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

$17.6

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

3.8

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 (restricted stock awards)		41		$	212.66
Forfeited		(1	)	$	200.18
Vested		(52	) (1)	$	113.44
Balance at November 30, 2018		131		$	172.48

(

)

The

majority of the vested

restricted stock

awards

relate

the final vesting of

awards

grant

November 1, 2013

which

cliff vested

after

three

year

November 1, 2016

and

after

five

years on

November 1, 2018.

As of

November 30, 2018

and

August 31, 2018,

the aggregate fair value of unvested restricted stock was

$30.8

million and

$32.8

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

$234.49

and

$229.39

November 30, 2018

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

November 30, 2018

and

2017

was

$11.6

million and

$2.0

million in each period, 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	)		—
Granted – performance-based options		—			—
Restricted stock awards granted (1)		(103	)		—
Share-based awards canceled/forfeited (2)		25			—
Balance at November 30, 2018		5,765			282

(

)

Each restricted stock award granted is equivalent to

2.5

shares granted under the Company’s Option Plan.

(

)

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

November 30, 2018,

employees purchased

13,095

shares at a price of

$197.34

as compared to

19,589

shares at a price of

$134.39

for the

three

months ended

November 30, 2017.

November 30, 2018,

the ESPP had

255,847

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 and

$2.8

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

three

months ended

November 30, 2018

and

2017,

respectively. Contributions to foreign benefit plans were

not

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

Note 14 - Stock-based Compensation

. STOCK-BASED COMPENSATION

The Company recognized total stock-based compensation expense of

$8.4

million and

$7.5

million during the

three

months ended

November 30, 2018

and

2017,

respectively. As of

November 30, 2018,

$95.2

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

3.5

years. There was

stock-based compensation capitalized as of

November 30, 2018

August 31, 2018,

respectively.

Employee Stock Option Fair Value Determinations

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.

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.

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 November 30,	2018					2017
Term structure of risk-free interest rate		1.28%	-	2.41	%		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				$56.77					$48.27
Weighted average exercise price				$221.93					$189.98
Fair value as a percentage of exercise price				25.6	%				25.4	%

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

November 30, 2018,

shares available for future grant under the Director Plan was

282,398.

The expiration date of the Director Plan is

December 19, 2027.

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.

There were

stock options granted to the Company’s non-employee Directors during the

first

quarter of fiscal

2019

or fiscal

2018,

respectively.

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

three

months of fiscal

2019,

there were

41,102

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

$212.66.

During the

first

three

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

November 30, 2018,

employees purchased

13,095

shares at a weighted average price of

$197.34

as compared to

19,589

shares at a weighted average price of

$134.39

for the

three

months ended

November 30, 2017.

Stock-based compensation expense recorded during the

three

months ended

November 30, 2018

and

2017,

relating to the ESPP, was

$0.5

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 November 30,	2018			2017
Risk-free interest rate		2.27	%		1.11	%
Expected life (months)		3			3
Expected volatility		8.96	%		7.97	%
Dividend yield		1.10	%		1.42	%
Weighted average estimated fair value	$	38.63		$	25.79

Accuracy of Fair Value Estimates

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

vesting or hedging restrictions and are fully transferable.

Note 15 - Income Taxes

. INCOME TAXES

Provision for Income Taxes

The provision for income taxes is as follows:

	Three months ended November 30,
(in thousands)	2018			2017
Income before income taxes	$	95,943		$	86,179
Provision for income taxes	$	11,647		$	15,800
Effective tax rate		12.1	%		18.3	%

may

not

be predictable. The lower effective tax rate for the

first

quarter of fiscal

2019

compared to the same period a year ago is primarily due to the reduction of the U.S. corporate tax rate from

35%

21%,

effective

January 1, 2018.

The

first

quarter of fiscal

2019

also included a

$2.3

million revision to the

one

-time transition tax on accumulated earnings and profits of foreign subsidiaries, initially recorded during the

third

quarter of fiscal

2018.

The effective tax rate is lower than the applicable U.S. federal rate in both periods presented above due to R&D tax benefits and excess tax benefits associated with share-based payments.

While the Company has

not

finalized the accounting for the tax effects of the TCJA, FactSet has made a reasonable estimate and will continue to refine its calculations, as needed. In addition, the estimates

may

also 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)	November 30, 2018			August 31, 2018
Deferred tax assets:
Receivable reserve	$	583		$	599
Depreciation on property, equipment and leasehold improvements		2,050			1,032
Deferred rent		7,462			7,711
Stock-based compensation		15,341			14,827
Purchased intangible assets, including acquired technology		(24,643	)		(24,059	)
Other		8,650			9,606
Total deferred tax assets	$	9,443		$	9,716

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

(in thousands)	November 30, 2018			August 31, 2018
Deferred tax liabilities:
Stock-based compensation	$	(1,007	)	$	(946	)
Purchased intangible assets, including acquired technology		21,030			22,429
Other		686			(293	)
Total deferred tax liabilities	$	20,709		$	21,190

Unrecognized Tax Positions

not

(greater than

50%

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

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

November 30, 2018,

the Company had gross unrecognized tax benefits totaling

$9.8

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

$1.2

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

months. However, FactSet has

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

months.

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

first

three

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		497
Additions for tax positions of prior years		110
Unrecognized income tax benefits at November 30, 2018	$	9,830

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

November 30, 2018,

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

DEBT

FactSet’s debt obligations consisted of the following:

(in thousands)		November 30, 2018				August 31, 2018
2017 Revolving Credit Facility (maturity date of March 17, 2020)		$	575,000			$	575,000

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. 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

1.00%.

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

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.

In conjunction with FactSet’s entrance into the

2017

Credit Agreement, the Company borrowed

$575.0

million in the form of a LIBOR rate loan under the

2017

Revolving Credit Facility. Proceeds from the

2017

Revolving Credit Facility were also used to fund FactSet’s acquisition of BISAM.

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

November 30, 2018.

For the

three

months ended

November 30, 2018

and

2017,

the Company recorded interest expense of

$4.7

million and

$3.4

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

November 30, 2018,

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

November 30, 2018.

Note 17 - Commitments and Contingencies

. 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

November 30, 2018,

the Company leased 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. The Company will take 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 fiscal

2019,

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

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

November 30, 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 (remaining nine months)	$	30,377
2020		37,996
2021		35,504
2022		32,862
2023		30,574
Thereafter		230,189
Total	$	397,502

For the

three

months ended

November 30, 2018

and

November 30, 2017,

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

$13.4

million and

$13.0

million, respectively. As of

November 30, 2018,

deferred rent reported within the consolidated balance sheet totaled

$36.5

million compared to

$39.4

million as of

August 31, 2018,

of which

$32.4

million and

$39.4

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

November 30, 2018

and

August 31, 2018,

respectively.

Approximately

$1.1

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

November 30, 2018.

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

November 30, 2018,

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

Purchase Commitments with Suppliers

August 31, 2018,

the Company had total purchase commitments with suppliers of

$79.0

million. There were

material changes in the Company’s purchase commitments during the

first

three

months of fiscal

2019.

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

November 30, 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 to determine if a notice of intent 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

November 30, 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

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.

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

single client represented

10%

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

November 30, 2018,

the Company’s largest individual client accounted for approximately

2.5%

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

November 30, 2018,

the receivable reserve was

$4.5

million compared to a reserve of

$3.5

million as of

August 31, 2018.

Derivative Instruments

not

available for FactSet, the Company’s credit risk is determined based on using a simple average of CDS spreads for peer companies. To mitigate counterparty credit risk, FactSet enters into contracts with large financial institutions and regularly reviews its credit exposure balances, as well as the creditworthiness of the counterparties. 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.

single vendor or data supplier represented more than

10%

of FactSet's total data expenses for the

three

months ended

November 30, 2018

and

2017,

respectively.

Significant Accounting Policies (Policies)

New Accounting Standards or Updates Recently Adopted

Revenue Recognition

May 2014

and

July 2015,

The standard allows

two

first

quarter of fiscal

2019.

$2.5

million, or

$2.0

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

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,

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,

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,

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,

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

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,

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 updated issued by the FASB in

August 2018,

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

Recent Accounting Standards or Updates

Not

Yet Effective

Leases

February 2016,

first

quarter of fiscal

2020,

with early adoption in fiscal

2019

not

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

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

Goodwill Impairment Test

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

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

August 2017,

first

quarter of fiscal

2020,

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

not

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

other new accounting pronouncements issued or effective as of

November 30, 2018

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

Note 4 - Revenue Recognition (Tables)

	Three months ended November 30,
(in thousands)	2018		2017
U.S.	$	222,203	$	208,768
Europe		97,765		91,727
Asia Pacific		31,672		28,646
Total Revenue	$	351,640	$	329,141

Note 5 - Fair Value Measures (Tables)

	Fair Value Measurements at November 30, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Corporate money market funds (1)	$	22,001	$	—	$	—	$	22,001
Mutual funds (2)		—		19,067		—		19,067
Certificates of deposit ( 3 )		—		8,403		—		8,403
Derivative instruments (4 )		—		108		—		108
Total assets measured at fair value	$	22,001	$	27,578	$	—	$	49,579


Liabilities
Derivative instruments (4)	$	—	$	2,428	$	—	$	2,428
Total liabilities measured at fair value	$	—	$	2,428	$	—	$	2,428

	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

Note 6 - Derivative Instruments (Tables)

	Gross Notional Value				Fair Value (Liability) Asset
Currency Hedged (in thousands, in U.S. dollars)	November 30, 2018		August 31, 2018		November 30, 2018			August 31, 2018

Philippine Peso	$	45,000	$	52,000	$	(5	)	$	(1,230	)
Indian Rupee		43,080		50,780		(733	)		(1,490	)
Euro		17,181		26,312		(862	)		(503	)
British Pound Sterling		12,381		18,995		(720	)		(723	)
Total	$	117,642	$	148,087	$	(2,320	)	$	(3,946	)

Designation of Derivatives (in thousands)	Balance Sheet Location	November 30, 2018		August 31, 2018
Derivatives designated as hedging instruments	Assets : Foreign Currency Forward Contracts
	Prepaid expenses and other current assets	$	108	$	90

	Liabilities : Foreign Currency Forward Contracts
	Accounts payable and accrued expenses	$	1,742	$	1,731
	Deferred rent and other non-current liabilities	$	686	$	2,305

(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	2018		2017			(Effective Portion)	2018			2017
Foreign currency forward contracts	$	1,943	$	(1	)	SG&A	$	(399	)	$	763

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

	November 30, 2018						November 30, 2017
(in thousands)	Pre-tax			Net of tax			Pre-tax			Net of tax
Foreign currency translation adjustments	$	(9,504	)	$	(9,504	)	$	8,466		$	8,466
Net unrealized gain (loss) on cash flow hedges recognized in AOCL		1,626			1,038			(764	)		(476	)
Other comprehensive (loss) income	$	(7,878	)	$	(8,466	)	$	7,702		$	7,990

(in thousands)	November 30, 2018			August 31, 2018
Accumulated unrealized (gain) losses on cash flow hedges, net of tax	$	(1,732	)	$	(3,486	)
Accumulated foreign currency translation adjustments		(57,457	)		(47,953	)
Total accumulated other comprehensive loss	$	(59,189	)	$	(51,439	)

Note 8 - Segment Information (Tables)

(in thousands) For the three months ended November 30, 2018	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	222,203	$	97,765	$	31,672	$	351,640
Segment operating income		43,841		39,089		17,609		100,539
Total assets		719,961		536,042		109,924		1,365,927
Capital expenditures		4,105		1,263		4,158		9,526

For the three months ended November 30, 2017	U.S.		Europe		Asia Pacific		Total
Revenue from clients	$	208,768	$	91,727	$	28,646	$	329,141
Segment operating income		40,771		32,970		15,357		89,098
Total assets		719,491		603,848		107,263		1,430,602
Capital expenditures		3,545		1,524		843		5,912

Note 9 - Goodwill (Tables)

(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		—		(6,867	)		(69	)		(6,936	)
Balance at November 30, 2018	$	386,195	$	305,827		$	2,875		$	694,897

Note 10 - Intangible Assets (Tables)

At November 30, 2018 (in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Data content	$	33,327	$	20,991	$	12,336
Client relationships		97,512		30,866		66,646
Software technology		105,613		47,301		58,312
Non-compete agreements		4,825		2,581		2,244
Trade names		4,040		2,541		1,499
Total	$	245,317	$	104,280	$	141,037

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

Fiscal Year (in thousands)	Estimated Amortization Expense
2019 (remaining nine months)	$	17,818
2020		22,921
2021		21,018
2022		18,500
2023		13,752
Thereafter		47,028
Total	$	141,037

Note 11 - Common Stock and Earnings Per Share (Tables)

	Three Months ended November 30,
(i n thousands)	2018			2017
Balance, beginning of year (September 1)		38,192			39,023
Common stock issued for employee stock plans		183			256
Repurchase of common stock from employees (1)		(19	)		(4	)
Repurchase of common stock under the share repurchase program		(275	)		(165	)
Balance at November 30, 2018 and 2017, respectively		38,081			39,110

(in thousands, except per share data)	Net Income (Numerator)		Weighted Average Common Shares (Denominator)		Per Share Amount
For the three months ended November 30, 2018
Basic EPS
Income available to common stockholders	$	84,296		38,106	$	2.21
Diluted EPS
Dilutive effect of stock options and restricted stock				703
Income available to common stockholders plus assumed conversions	$	84,296		38,809	$	2.17
For the three months ended November 30, 2017
Basic EPS
Income available to common stockholders	$	70,379		39,085	$	1.80
Diluted EPS
Dilutive effect of stock options and restricted stock				595
Income available to common stockholders plus assumed conversions	$	70,379		39,680	$	1.77

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

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+ Details

Note 12 - Stockholders' Equity (Tables)

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

Fiscal 2018
First Quarter	$	0.56	November 30, 2017	$	21,901	December 19, 2017

Note 13 - Employee Stock Option and Retirement Plans (Tables)

(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

Vesting Percentage (in thousands)	Cumulative Catch-up Adjustment*		Remaining Expense to be Recognized
0% (current expectation)	$	—	$	—
80%	$	2,014	$	6,870
90%	$	2,265	$	6,619
100%	$	2,517	$	6,367

(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 (restricted stock awards)		41		$	212.66
Forfeited		(1	)	$	200.18
Vested		(52	) (1)	$	113.44
Balance at November 30, 2018		131		$	172.48

(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	)		—
Granted – performance-based options		—			—
Restricted stock awards granted (1)		(103	)		—
Share-based awards canceled/forfeited (2)		25			—
Balance at November 30, 2018		5,765			282

Note 14 - Stock-based Compensation (Tables)

Three months ended November 30,	2018					2017
Term structure of risk-free interest rate		1.28%	-	2.41	%		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				$56.77					$48.27
Weighted average exercise price				$221.93					$189.98
Fair value as a percentage of exercise price				25.6	%				25.4	%

Three months ended November 30,	2018			2017
Risk-free interest rate		2.27	%		1.11	%
Expected life (months)		3			3
Expected volatility		8.96	%		7.97	%
Dividend yield		1.10	%		1.42	%
Weighted average estimated fair value	$	38.63		$	25.79

Note 15 - Income Taxes (Tables)

	Three months ended November 30,
(in thousands)	2018			2017
Income before income taxes	$	95,943		$	86,179
Provision for income taxes	$	11,647		$	15,800
Effective tax rate		12.1	%		18.3	%

(in thousands)	November 30, 2018			August 31, 2018
Deferred tax assets:
Receivable reserve	$	583		$	599
Depreciation on property, equipment and leasehold improvements		2,050			1,032
Deferred rent		7,462			7,711
Stock-based compensation		15,341			14,827
Purchased intangible assets, including acquired technology		(24,643	)		(24,059	)
Other		8,650			9,606
Total deferred tax assets	$	9,443		$	9,716

(in thousands)	November 30, 2018			August 31, 2018
Deferred tax liabilities:
Stock-based compensation	$	(1,007	)	$	(946	)
Purchased intangible assets, including acquired technology		21,030			22,429
Other		686			(293	)
Total deferred tax liabilities	$	20,709		$	21,190

(in thousands)
Unrecognized income tax benefits at August 31, 2018	$	9,223
Additions based on tax positions related to the current year		497
Additions for tax positions of prior years		110
Unrecognized income tax benefits at November 30, 2018	$	9,830

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

Note 16 - Debt (Tables)

(in thousands)		November 30, 2018				August 31, 2018
2017 Revolving Credit Facility (maturity date of March 17, 2020)		$	575,000			$	575,000

Note 17 - Commitments and Contingencies (Tables)

(in thousands) Years ended August 31,	Minimum Lease Payments

2019 (remaining nine months)	$	30,377
2020		37,996
2021		35,504
2022		32,862
2023		30,574
Thereafter		230,189
Total	$	397,502

Note 3 - Recent Accounting Pronouncements (Details Textual) - Accounting Standards Update 2014-09 [Member]
$ in Millions

Note 4 - Revenue Recognition (Details Textual) - Accounting Standards Update 2014-09 [Member]
$ in Millions

Note 4 - Revenue Recognition - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands

Note 5 - Fair Value Measures (Details Textual) - USD ($)
$ in Thousands

Note 5 - Fair Value Measures - Assets and Liabilities Measured at Fair Value (Details) - USD ($)
$ in Thousands

Note 6 - Derivative Instruments (Details Textual)
$ in Thousands, € in Millions, £ in Millions, ₱ in Billions, ₨ in Billions

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

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

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

Note 7 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss - Reclassified Out of Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Thousands

Note 7 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss - Components of Other Comprehensive Loss (Details) - USD ($)
$ in Thousands

Note 8 - Segment Information (Details Textual)
$ in Thousands

Note 8 - Segment Information - Results of Operations (Details) - USD ($)
$ in Thousands

Note 9 - Goodwill (Details Textual)
$ in Thousands

Note 9 - Goodwill - Changes in the Carrying Amount of Goodwill by Segment (Details)
$ in Thousands

Note 10 - Intangible Assets (Details Textual) - USD ($)
$ in Thousands

Note 10 - Intangible Assets - Identifiable Intangible Assets (Details) - USD ($)
$ in Thousands

Note 10 - Intangible Assets - Estimated Amortization Expense (Details)
$ in Thousands

Note 11 - Common Stock and Earnings Per Share (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands

Note 11 - Common Stock and Earnings Per Share - Shares of Common Stock Outstanding (Details) - shares

Note 11 - Common Stock and Earnings Per Share - Weighted Average Shares Outstanding (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

Note 12 - Stockholders' Equity (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands

	•	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

	As of and for the Three months ended November 30,
(in millions, except client and user counts)	2018		2017		Change
Revenue	$	351.6	$	329.1		6.8	%
Operating income	$	100.5	$	89.1		12.8	%
Net income	$	84.3	$	70.4		19.8	%
Diluted EPS	$	2.17	$	1.77		22.6	%
Organic ASV⁽¹⁾	$	1,400.4	$	1,316.8		6.3	%
Organic ASV + professional services⁽²⁾	$	1,422.5	$	1,334.2		6.6	%
Clients⁽³⁾		5,297		4,809		10.1	%
Users		115,209		88,593		30.0	%

	Three Months Ended November 30,
(In thousands)	2018		2017		Change
Revenues	$	351,640	$	329,141		6.8	%
Deferred revenue fair value adjustment⁽¹⁾		1,350		2,719
Currency impact (foreign currency movements)⁽²⁾		140		—
Organic revenues	$	353,130	$	331,860		6.4	%

	Three Months Ended November 30,
(In thousands, except per share data)	2018⁽¹⁾				2017⁽²⁾		Change
Operating income	$	100,539		$	89,098			12.8	%
Intangible asset amortization		5,893			6,158
Deferred revenue fair value adjustment		1,350			2,719
Other items		3,484			7,146
Adjusted operating income	$	111,266		$	105,121			5.8	%
Adjusted operating margin		31.5	%		31.7	%

Net income	$	84,296		$	70,379			19.8	%
Intangible asset amortization⁽³⁾		4,792			4,625
Deferred revenue fair value adjustment⁽⁴⁾		1,098			2,042
Other items⁽⁵⁾		2,832			5,367
Income tax items		(1,709	)		(1,547	)
Adjusted net income	$	91,309		$	80,866			12.9	%

Diluted earnings per common share	$	2.17		$	1.77			22.6	%
Intangible asset amortization		0.12			0.12
Deferred revenue fair value adjustment		0.03			0.05
Other items		0.07			0.14
Income tax items		(0.04	)		(0.04	)
Adjusted diluted earnings per common share	$	2.35		$	2.04			15.2	%
Weighted average common shares (Diluted)		38,809			39,680

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⁾

September 2018		15,000	$	224.48		15,000	$	238,383
October 2018		253,735	$	219.31		250,000	$	183,549
November 2018		25,615	$	222.70		10,000	$	181,309
Total		294,350				275,000

		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


	FACTSET RESEARCH SYSTEMS INC.
	(Registrant)

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


	/s/ MATTHEW J. MCNULTY
	Matthew J. McNulty
	Senior Vice President, Controller
	(Principal Accounting Officer)

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

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

Document And Entity Information - shares	3 Months Ended
Document And Entity Information - shares	Nov. 30, 2018	Dec. 31, 2018
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)		38,035,470
Document Type	10-Q
Document Period End Date	Nov. 30, 2018
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false

Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Revenue	$ 351,640	$ 329,141
Operating expenses
Cost of services	166,776	161,524
Selling, general and administrative	84,325	78,519
Total operating expenses	251,101	240,043
Operating income	100,539	89,098
Other (expense) income
Interest (expense), net of interest income	(4,596)	(2,919)
Income before income taxes	95,943	86,179
Provision for income taxes	11,647	15,800
Net income	$ 84,296	$ 70,379
Basic earnings per common share (in dollars per share)	$ 2.21	$ 1.80
Diluted earnings per common share (in dollars per share)	$ 2.17	$ 1.77
Basic weighted average common shares (in shares)	38,106	39,085
Diluted weighted average common shares (in shares)	38,809	39,680

Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Tax expense on the net unrealized gain on cash flow hedges	$ 288	$ 588

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Nov. 30, 2018	Aug. 31, 2018
ASSETS
Cash and cash equivalents	$ 170,378	$ 208,623
Investments	27,470	29,259
Accounts receivable, net of reserves of $4,518 at November 30, 2018 and $3,490 at August 31, 2018	159,890	156,639
Prepaid taxes		6,274
Prepaid expenses and other current assets	33,445	30,121
Total current assets	391,183	430,916
Property, equipment and leasehold improvements, net	101,566	100,545
Goodwill	694,897	701,833
Intangible assets, net	141,037	148,935
Deferred taxes	9,443	9,716
Other assets	27,801	27,502
TOTAL ASSETS	1,365,927	1,419,447
LIABILITIES
Accounts payable and accrued expenses	61,271	72,059
Accrued compensation	22,268	66,479
Deferred fees	40,808	49,700
Taxes payable	8,403	8,453
Dividends payable	24,372	24,443
Total current liabilities	157,122	221,134
Long-term debt	574,812	574,775
Deferred taxes	20,709	21,190
Deferred fees	9,480	7,833
Taxes payable	26,525	29,626
Deferred rent and other non-current liabilities	36,070	38,989
TOTAL LIABILITIES	824,718	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, 39,447,491 and 39,264,849 shares issued; 38,080,878 and 38,192,586 shares outstanding at November 30, 2018 and August 31, 2018, respectively	394	393
Additional paid-in capital	694,078	667,531
Treasury stock, at cost: 1,366,613 and 1,072,263 shares at November 30, 2018 and August 31, 2018, respectively	(278,146)	(213,428)
Retained earnings	184,071	122,843
Accumulated other comprehensive loss	(59,189)	(51,439)
TOTAL STOCKHOLDERS’ EQUITY	541,209	525,900
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,365,927	$ 1,419,447

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Nov. 30, 2018	Aug. 31, 2018
Accounts receivable, reserves	$ 4,518	$ 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)	39,447,491	39,264,849
Common stock, shares outstanding (in shares)	38,080,878	38,192,586
Treasury stock, shares (in shares)	1,366,613	1,072,263

Note 1 - Organization and Nature of Business	3 Months Ended
Note 1 - Organization and Nature of Business	Nov. 30, 2018
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 workflows 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.

Significant Accounting Policies (Policies)	3 Months Ended
Significant Accounting Policies (Policies)	Nov. 30, 2018
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, 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 updated 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 is not expected to have a material impact on the consolidated financial statements. No other new accounting pronouncements issued or effective as of November 30, 2018 have had or are expected to have an impact on the Company’s consolidated financial statements.

Note 3 - Recent Accounting Pronouncements (Details Textual) - Accounting Standards Update 2014-09 [Member] $ in Millions	Sep. 01, 2018 USD ($)
Cumulative Effect on Retained Earnings, before Tax	$ 2.5
Cumulative Effect on Retained Earnings, Net of Tax, Total	$ 2.0

Note 5 - Fair Value Measures (Details Textual) - USD ($) $ in Thousands	Nov. 30, 2018	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

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
	May 31, 2019	Nov. 30, 2018 USD ($)	Nov. 30, 2017 USD ($)	Aug. 31, 2020	Feb. 29, 2020	Nov. 30, 2018 PHP (₱)	Nov. 30, 2018 USD ($)	Nov. 30, 2018 GBP (£)	Nov. 30, 2018 EUR (€)	Nov. 30, 2018 INR (₨)	Aug. 31, 2018 USD ($)
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						₱ 2.4	$ 117,642	£ 9.1	€ 14.3	₨ 3	$ 148,087
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred		$ 1,600
Philippines, Pesos
Percent of Foreign Exchange Contracts Hedged		75.00%
Philippines, Pesos \| Foreign Exchange Contract [Member] \| Cash Flow Hedging [Member] \| Designated as Hedging Instrument [Member]
Derivative, Notional Amount							45,000				52,000
India, Rupees \| Foreign Exchange Contract [Member] \| Cash Flow Hedging [Member] \| Designated as Hedging Instrument [Member]
Derivative, Notional Amount							43,080				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							17,181				26,312
Euro Member Countries, Euro \| Scenario, Forecast [Member]
Percent of Foreign Exchange Contracts Hedged	50.00%
United Kingdom, Pounds \| Foreign Exchange Contract [Member] \| Cash Flow Hedging [Member] \| Designated as Hedging Instrument [Member]
Derivative, Notional Amount							$ 12,381				$ 18,995
United Kingdom, Pounds \| Scenario, Forecast [Member]
Percent of Foreign Exchange Contracts Hedged	50.00%

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	Nov. 30, 2018	Aug. 31, 2018
Prepaid Expenses and Other Current Assets [Member]
Derivative assets	$ 108	$ 90
Accounts Payable and Accrued Liabilities [Member]
Derivative liabilities	1,742	1,731
Deferred Rent and Other Noncurrent Liabilities [Member]
Derivative liabilities	$ 686	$ 2,305

Note 7 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss - Components of Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Nov. 30, 2018	Aug. 31, 2018
Accumulated unrealized (gain) losses on cash flow hedges, net of tax	$ (1,732)	$ (3,486)
Accumulated foreign currency translation adjustments	(57,457)	(47,953)
Total accumulated other comprehensive loss	$ (59,189)	$ (51,439)

Note 8 - Segment Information (Details Textual) $ in Thousands	3 Months Ended
	Nov. 30, 2018 USD ($)	Aug. 31, 2018 USD ($)
Number of Reportable Segments	3
Goodwill, Ending Balance	$ 694,897	$ 701,833
UNITED STATES
Goodwill, Ending Balance	$ 386,195	386,195
Goodwill Percentage Per Segment	58.00%
Europe [Member]
Goodwill, Ending Balance	$ 305,827	312,694
Goodwill Percentage Per Segment	41.00%
Asia Pacific [Member]
Goodwill, Ending Balance	$ 2,875	$ 2,944
Goodwill Percentage Per Segment	1.00%

Note 9 - Goodwill - Changes in the Carrying Amount of Goodwill by Segment (Details) $ in Thousands	3 Months Ended
	Nov. 30, 2018 USD ($)
Beginning Balance	$ 701,833
Foreign currency translations	(6,936)
Ending Balance	694,897
UNITED STATES
Beginning Balance	386,195
Foreign currency translations
Ending Balance	386,195
Europe [Member]
Beginning Balance	312,694
Foreign currency translations	(6,867)
Ending Balance	305,827
Asia Pacific [Member]
Beginning Balance	2,944
Foreign currency translations	(69)
Ending Balance	$ 2,875

Note 10 - Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	12 years 73 days
Impairment of Intangible Assets (Excluding Goodwill), Total	$ 0	$ 0
Amortization of Intangible Assets, Total	$ 5,900	$ 6,200

Note 10 - Intangible Assets - Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	Nov. 30, 2018	Aug. 31, 2018
Gross Carrying Amount	$ 245,317	$ 248,289
Accumulated Amortization	104,280	99,354
Net Carrying Amount	141,037	148,935
Data Content [Member]
Gross Carrying Amount	33,327	33,992
Accumulated Amortization	20,991	20,990
Net Carrying Amount	12,336	13,002
Customer Relationships [Member]
Gross Carrying Amount	97,512	98,882
Accumulated Amortization	30,866	29,387
Net Carrying Amount	66,646	69,495
Computer Software, Intangible Asset [Member]
Gross Carrying Amount	105,613	106,505
Accumulated Amortization	47,301	44,231
Net Carrying Amount	58,312	62,274
Noncompete Agreements [Member]
Gross Carrying Amount	4,825	4,840
Accumulated Amortization	2,581	2,381
Net Carrying Amount	2,244	2,459
Trade Names [Member]
Gross Carrying Amount	4,040	4,070
Accumulated Amortization	2,541	2,365
Net Carrying Amount	$ 1,499	$ 1,705

Note 10 - Intangible Assets - Estimated Amortization Expense (Details) $ in Thousands	Nov. 30, 2018 USD ($)
2019 (remaining nine months)	$ 17,818
2020	22,921
2021	21,018
2022	18,500
2023	13,752
Thereafter	47,028
Total	$ 141,037

Note 11 - Common Stock and Earnings Per Share (Details Textual) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended
	Dec. 18, 2018	Nov. 13, 2018	Nov. 30, 2018	Nov. 30, 2017
Common Stock, Dividends, Per Share, Cash Paid		$ 0.64
Payments of Dividends, Total			$ 24,252	$ 21,682
Shares Paid for Tax Withholding for Share Based Compensation			19,350	4,220
Payments Related to Tax Withholding for Share-based Compensation			$ 4,300	$ 800
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			0	552,389
Performance Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			206,417	332,338
Subsequent Event [Member]
Payments of Dividends, Total	$ 24,400

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
	Nov. 30, 2018	Nov. 30, 2017
Income available to common stockholders, net income (numerator)	$ 84,296	$ 70,379
Basic weighted average common shares (in shares)	38,106	39,085
Income available to common stockholders, per share amount (in dollars per share)	$ 2.21	$ 1.80
Dilutive effect of stock options and restricted stock, weighted average common share (denominator) (in shares)	703	595
Income available to common stockholders plus assumed conversions, net income (numerator)	$ 84,296	$ 70,379
Diluted weighted average common shares (in shares)	38,809	39,680
Income available to common stockholders plus assumed conversions, per share amount (in dollars per share)	$ 2.17	$ 1.77

Note 12 - Stockholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Jan. 31, 2018	Nov. 30, 2018	Nov. 30, 2017	Aug. 31, 2018
Preferred Stock, Shares Authorized		10,000,000		10,000,000
Preferred Stock, Par or Stated Value Per Share		$ 0.01		$ 0.01
Preferred Stock, Shares Outstanding, Ending Balance		0		0
Common Stock, Shares Authorized		150,000,000		150,000,000
Common Stock, Par or Stated Value Per Share		$ 0.01		$ 0.01
Common Stock, Shares, Issued, Total		39,447,491		39,264,849
Treasury Stock, Shares, Retired	13,292,689
Treasury Stock, Shares, Ending Balance		1,366,613		1,072,263
Treasury Stock, Shares, Acquired		275,000	164,920
Treasury Stock, Value, Acquired, Cost Method		$ 60,441	$ 30,954
Stock Repurchase Program, Remaining Authorized Repurchase Amount		$ 181,300
Shares Paid for Tax Withholding for Share Based Compensation		19,350	4,220
Payments Related to Tax Withholding for Share-based Compensation		$ 4,300	$ 800
Preferred Stock, Shares Issued, Total		0		0
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period		52,611	11,278
Treasury Stock [Member]
Treasury Stock, Retired, Cost Method, Amount	$ (1,700,000)
Treasury Stock, Shares, Acquired		275,000	165,026
Treasury Stock, Value, Acquired, Cost Method		$ 60,441	$ 30,954
Common Stock [Member]
Treasury Stock, Retired, Cost Method, Amount	100
Treasury Stock, Shares, Acquired
Treasury Stock, Value, Acquired, Cost Method
Additional Paid-in Capital [Member]
Treasury Stock, Retired, Cost Method, Amount	186,700
Treasury Stock, Value, Acquired, Cost Method
Retained Earnings [Member]
Treasury Stock, Retired, Cost Method, Amount	$ 1,500,000
Treasury Stock, Value, Acquired, Cost Method

Note 12 - Stockholders' Equity - Dividends Declared (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Dividends Per Share of Common Stock (in dollars per share)	$ 0.64	$ 0.56
Record Date	Nov. 30, 2018	Nov. 30, 2017
Total $ Amount	$ 24,372	$ 21,901
Payment Date	Dec. 18, 2018	Dec. 19, 2017

Note 13 - Employee Stock Option and Retirement Plans (Details Textual) - USD ($)			1 Months Ended	3 Months Ended
	Dec. 19, 2017	Nov. 01, 2013	Jun. 30, 2017	Nov. 30, 2018	Nov. 30, 2017	Aug. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance				3,457,000		3,143,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance				$ 162.68		$ 153.05
Share Price				$ 234.49
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				455,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total				$ 95,200,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				3 years 182 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%
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Contribution Limit				$ 25,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans				13,095	19,589
Treasury Stock Acquired, Average Cost Per Share				$ 197.34	$ 134.39
Common Stock, Capital Shares Reserved for Future Issuance				255,847
Defined Contribution Plan, Employer Discretionary Contribution Amount				$ 2,600,000	$ 2,800,000
LTIP [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value				$ 10,800,000	$ 18,000,000
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				454,598
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance				$ 221.93
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number				1,200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price				$ 137.58
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value				$ 120,000,000		$ 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, Equity Instruments Other than Options, Grants in Period				41,102	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	$ 182.17
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance				131,000		143,000
Restricted Stock [Member] \| LTIP [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				5 years
Share Price				$ 234.49		$ 229.39
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				41,102
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				131,140
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total				$ 17,600,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				3 years 292 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Nonvested				$ 30,800,000		$ 32,800,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Pre-Tax Intrinsic Value				$ 11,600,000	$ 2,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Share Equivalent				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%

Note 13 - Employee Stock Option and Retirement Plans - Summary of Stock Option Activity (Details) - $ / shares shares in Thousands	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Balance (in shares)	3,143
Balance (in dollars per share)	$ 153.05
Granted (in shares)	455
Granted (in dollars per share)	$ 221.93	$ 189.98
Exercised (in shares)	(117)
Exercised (in dollars per share)	$ 132.81
Forfeited (in shares)	(24)
Forfeited (in dollars per share)	$ 169.47
Balance (in shares)	3,457
Balance (in dollars per share)	$ 162.68

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	3 Months Ended
	Jun. 30, 2017	Nov. 30, 2018
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%

Note 14 - Stock-based Compensation - Summary of Stock Option Weighted Average Assumptions of Employee Stock Options (Details) - $ / shares	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Expected life (years) (Year)	7 years 36 days	7 years 146 days
Dividend yield	1.16%	1.32%
Weighted average estimated fair value (in dollars per share)	$ 56.77	$ 48.27
Granted (in dollars per share)	$ 221.93	$ 189.98
Fair value as a percentage of exercise price	25.60%	25.40%
Minimum [Member]
Term structure of risk-free interest rate	1.28%	1.28%
Term structure of volatility	18.00%	19.00%
Maximum [Member]
Term structure of risk-free interest rate	2.41%	2.41%
Term structure of volatility	29.00%	29.00%

Note 14 - Stock-based Compensation - Summary of Stock Option Weighted Average Assumptions of Non-employee Director Stock Options (Details) - $ / shares	3 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Expected life (Year)	7 years 36 days	7 years 146 days
Dividend yield	1.16%	1.32%
Non Employee Directors Stock Option Plan [Member] \| Employee Stock Option [Member]
Risk-free interest rate	2.27%	1.11%
Expected life (Year)	3 years	3 years
Expected volatility	8.96%	7.97%
Dividend yield	1.10%	1.42%
Weighted average estimated fair value (in dollars per share)	$ 38.63	$ 25.79