Leases

6 Months Ended

Feb. 28, 2021

LEASES

FactSet primarily leases real estate for office space under various operating lease agreements. FactSet reviews new arrangements at inception to evaluate whether the Company obtains substantially all the economic benefits of and has the right to control the use of an asset. If FactSet determines that an arrangement qualifies as a lease, a lease liability and a corresponding lease ROU asset are recognized on the lease commencement date. As of February 28, 2021, the Company’s leases have remaining terms ranging from less than one year to just over 14 years.

In determining the amount of lease payments used in measuring each lease ROU asset and lease liability, FactSet elected the package of practical expedients permitted under the transition guidance, which permits the Company not to reassess under the new standard the prior conclusions about lease identification, lease classification, and initial direct costs. FactSet did not elect the use-of-hindsight practical expedient in determining the lease term and in assessing impairment. FactSet elected the practical expedient not to separate lease components from non-lease components but, rather, to combine them into one single lease component, which FactSet recognizes over the expected lease term on a straight-line expense basis in occupancy costs (a component of selling, general and administrative ("SG&A") expense). The Company has also elected to apply the short-term lease exception to not recognize lease ROU assets and lease liabilities for leases with a term of 12 months or less. FactSet will recognize these lease payments on a straight-line basis over the lease term in Occupancy costs (a component of SG&A expense).

The adoption of the lease standard primarily related to the Company’s real estate operating leases. As of February 28, 2021, the Company recognized $256.0 million of Lease right-of-use assets, net (initially measured as the lease liabilities, adjusted for deferred rent and lease incentives) and combined Current and Long-term lease liabilities of $309.4 million in the Consolidated Balance Sheet. The lease ROU assets and lease liabilities recognized did not include any renewal or termination options that were not yet reasonably certain to be exercised.

Lease liabilities are measured as the present value of the future minimum lease payments, which includes fixed lease payments and certain qualifying index-based variable payments, over the lease term. The present value is calculated using FactSet’s incremental borrowing rate ("IBR") within the geography where the leased asset is located as there is no rate implicit in the Company’s operating lease arrangements. As FactSet does not have any outstanding public debt, the Company estimates the IBR based on FactSet’s estimated credit rating and available market information. The IBR is determined at lease commencement, or as of September 1, 2019 for operating leases in existence upon adoption of ASC 842. The IBR is subsequently reassessed upon any modification to the lease arrangement.

The following table reconciles FactSet’s future undiscounted cash flows related to the Company’s operating leases and the reconciliation to the Current and Long-term lease liabilities as of February 28, 2021:


(in thousands)	Minimum Lease Payments
Fiscal Years Ended August 31,
2021 (remaining six months)	$	22,125
2022	43,185
2023	40,119
2024	38,244
2025	36,386
Thereafter	198,535
Total	$	378,594
Less: Imputed interest	69,201
Present value	$	309,393

The components of lease cost related to the operating leases were as follows:


	Three Months Ended				Six Months Ended
	February 28,		February 29,		February 28,		February 29,
(in millions)	2021		2020		2021		2020
Operating lease cost1	$	10.8	$	9.8	$	21.5	$	20.4
Variable lease cost2	$	4.3	$	4.4	$	7.7	$	9.5

1.Operating lease costs included costs associated with fixed lease payments and index-based variable payments that qualified for lease accounting under ASC 842, Leases and complied with the practical expedients and exceptions elected by FactSet.

2.Variable lease costs were not included in the measurement of lease liabilities and primarily included variable non-lease costs and leases that qualified for the short-term lease exception. These variable non-lease costs included costs that were not fixed at the lease commencement date and are not dependent on an index or rate. These costs relate to utilities, real estate taxes, insurance and maintenance.

The following table summarizes the Company's lease term and discount rate assumptions related to the operating leases recorded on the Consolidated Balance Sheets:


	February 28, 2021		August 31, 2020
Weighted average remaining lease term (in years)	9.7		10.1
Weighted average discount rate (IBR)	4.2	%	4.2	%

The following table summarizes supplemental cash flow information related to the Company's operating leases:


	Six Months Ended
	February 28,		February 29,
(in thousands)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities	$	20.0	$	19.7
Lease ROU assets obtained in exchange for lease liabilities	$	5.8	$	21.6