Delaware
|
04-3099750
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification Number)
|
|
|
P.O. Box 10212
|
06902-7700
|
56 Top Gallant Road
|
(Zip Code)
|
Stamford, CT
|
|
(Address of principal executive offices)
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
630,016
|
|
|
$
|
474,233
|
|
Fees receivable, net of allowances of $10,000 and $7,400, respectively
|
874,283
|
|
|
643,013
|
|
||
Deferred commissions
|
143,063
|
|
|
141,410
|
|
||
Prepaid expenses and other current assets
|
164,921
|
|
|
84,540
|
|
||
Total current assets
|
1,812,283
|
|
|
1,343,196
|
|
||
Property, equipment and leasehold improvements, net
|
216,021
|
|
|
121,606
|
|
||
Goodwill
|
3,145,046
|
|
|
738,453
|
|
||
Intangible assets, net
|
1,564,465
|
|
|
76,801
|
|
||
Other assets
|
273,677
|
|
|
87,279
|
|
||
Total Assets
|
$
|
7,011,492
|
|
|
$
|
2,367,335
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
550,207
|
|
|
$
|
440,771
|
|
Deferred revenues
|
1,512,227
|
|
|
989,478
|
|
||
Current portion of long-term debt
|
419,601
|
|
|
30,000
|
|
||
Total current liabilities
|
2,482,035
|
|
|
1,460,249
|
|
||
Long-term debt, net of deferred financing fees
|
2,922,229
|
|
|
664,391
|
|
||
Other liabilities
|
743,818
|
|
|
181,817
|
|
||
Total Liabilities
|
6,148,082
|
|
|
2,306,457
|
|
||
Stockholders’ Equity
|
|
|
|
|
|
||
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for September 30, 2017 and 156,234,415 shares issued for December 31, 2016
|
82
|
|
|
78
|
|
||
Additional paid-in capital
|
1,748,610
|
|
|
863,127
|
|
||
Accumulated other comprehensive loss, net
|
(1,216
|
)
|
|
(49,683
|
)
|
||
Accumulated earnings
|
1,539,978
|
|
|
1,644,005
|
|
||
Treasury stock, at cost, 72,956,127 and 73,583,172 common shares, respectively
|
(2,424,044
|
)
|
|
(2,396,649
|
)
|
||
Total Stockholders’ Equity
|
863,410
|
|
|
60,878
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
7,011,492
|
|
|
$
|
2,367,335
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||
Research
|
$
|
653,443
|
|
|
$
|
466,877
|
|
|
$
|
1,778,481
|
|
|
$
|
1,371,157
|
|
Consulting
|
72,117
|
|
|
73,707
|
|
|
242,404
|
|
|
237,876
|
|
||||
Events
|
44,953
|
|
|
33,475
|
|
|
171,427
|
|
|
132,290
|
|
||||
Talent Assessment & Other
|
57,572
|
|
|
—
|
|
|
104,673
|
|
|
—
|
|
||||
Total revenues
|
828,085
|
|
|
574,059
|
|
|
2,296,985
|
|
|
1,741,323
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Cost of services and product development
|
332,207
|
|
|
223,122
|
|
|
921,820
|
|
|
666,585
|
|
||||
Selling, general and administrative
|
421,163
|
|
|
269,902
|
|
|
1,133,633
|
|
|
799,322
|
|
||||
Depreciation
|
17,340
|
|
|
9,531
|
|
|
45,637
|
|
|
27,390
|
|
||||
Amortization of intangibles
|
51,224
|
|
|
6,221
|
|
|
123,014
|
|
|
18,614
|
|
||||
Acquisition and integration charges
|
30,500
|
|
|
16,557
|
|
|
142,104
|
|
|
32,958
|
|
||||
Total costs and expenses
|
852,434
|
|
|
525,333
|
|
|
2,366,208
|
|
|
1,544,869
|
|
||||
Operating (loss) income
|
(24,349
|
)
|
|
48,726
|
|
|
(69,223
|
)
|
|
196,454
|
|
||||
Interest expense, net
|
(38,762
|
)
|
|
(5,932
|
)
|
|
(88,624
|
)
|
|
(19,294
|
)
|
||||
Other income, net
|
1,171
|
|
|
1,954
|
|
|
1,653
|
|
|
5,086
|
|
||||
(Loss) income before income taxes
|
(61,940
|
)
|
|
44,748
|
|
|
(156,194
|
)
|
|
182,246
|
|
||||
(Benefit) provision for income taxes
|
(13,760
|
)
|
|
14,264
|
|
|
(52,166
|
)
|
|
55,149
|
|
||||
Net (loss) income
|
$
|
(48,180
|
)
|
|
$
|
30,484
|
|
|
$
|
(104,028
|
)
|
|
$
|
127,097
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.53
|
)
|
|
$
|
0.37
|
|
|
$
|
(1.19
|
)
|
|
$
|
1.54
|
|
Diluted
|
$
|
(0.53
|
)
|
|
$
|
0.36
|
|
|
$
|
(1.19
|
)
|
|
$
|
1.52
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
90,624
|
|
|
82,638
|
|
|
87,585
|
|
|
82,549
|
|
||||
Diluted
|
90,624
|
|
|
83,803
|
|
|
87,585
|
|
|
83,761
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) income
|
$
|
(48,180
|
)
|
|
$
|
30,484
|
|
|
$
|
(104,028
|
)
|
|
$
|
127,097
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
46,319
|
|
|
(3,032
|
)
|
|
51,714
|
|
|
2,371
|
|
||||
Interest rate swaps – net change in deferred loss
|
1,302
|
|
|
3,214
|
|
|
(3,396
|
)
|
|
(5,865
|
)
|
||||
Pension – net change in deferred actuarial loss
|
52
|
|
|
37
|
|
|
149
|
|
|
112
|
|
||||
Other comprehensive (loss) income, net of tax
|
47,673
|
|
|
219
|
|
|
48,467
|
|
|
(3,382
|
)
|
||||
Comprehensive (loss) income
|
$
|
(507
|
)
|
|
$
|
30,703
|
|
|
$
|
(55,561
|
)
|
|
$
|
123,715
|
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2017
|
|
2016
|
||||
Operating activities:
|
|
|
|
|
|
||
Net (loss) income
|
$
|
(104,028
|
)
|
|
$
|
127,097
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
168,651
|
|
|
46,004
|
|
||
Stock-based compensation expense
|
67,930
|
|
|
36,128
|
|
||
Deferred taxes
|
(99,450
|
)
|
|
(13,415
|
)
|
||
Amortization and write-off of deferred financing fees
|
13,236
|
|
|
2,611
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||
Fees receivable, net
|
(15,090
|
)
|
|
26,242
|
|
||
Deferred commissions
|
3,231
|
|
|
12,376
|
|
||
Prepaid expenses and other current assets
|
(32,159
|
)
|
|
(43,402
|
)
|
||
Other assets
|
(76,548
|
)
|
|
21,597
|
|
||
Deferred revenues
|
198,353
|
|
|
114,197
|
|
||
Accounts payable, accrued, and other liabilities
|
108,141
|
|
|
(47,172
|
)
|
||
Cash provided by operating activities
|
232,267
|
|
|
282,263
|
|
||
Investing activities:
|
|
|
|
|
|
||
Additions to property, equipment and leasehold improvements
|
(75,619
|
)
|
|
(36,877
|
)
|
||
Acquisitions - cash paid (net of cash acquired)
|
(2,634,809
|
)
|
|
(29,363
|
)
|
||
Cash used in investing activities
|
(2,710,428
|
)
|
|
(66,240
|
)
|
||
Financing activities:
|
|
|
|
|
|
||
Proceeds from employee stock purchase plan
|
8,550
|
|
|
6,931
|
|
||
Proceeds from borrowings
|
3,025,000
|
|
|
747,500
|
|
||
Payments for deferred financing fees
|
(51,171
|
)
|
|
(4,975
|
)
|
||
Payments on borrowings
|
(339,624
|
)
|
|
(827,500
|
)
|
||
Purchases of treasury stock
|
(37,188
|
)
|
|
(52,889
|
)
|
||
Cash provided by (used in) financing activities
|
2,605,567
|
|
|
(130,933
|
)
|
||
Net increase in cash and cash equivalents
|
127,406
|
|
|
85,090
|
|
||
Effects of exchange rates on cash and cash equivalents
|
28,377
|
|
|
7,668
|
|
||
Cash and cash equivalents, beginning of period
|
474,233
|
|
|
372,976
|
|
||
Cash and cash equivalents, end of period
|
$
|
630,016
|
|
|
$
|
465,734
|
|
Aggregate consideration (1):
|
CEB
|
|
L2
|
|
Total
|
||||||
Cash paid at close (2), (3)
|
$
|
2,687,704
|
|
|
$
|
134,199
|
|
|
$
|
2,821,903
|
|
Additional cash paid (2)
|
12,465
|
|
|
—
|
|
12,465
|
|
||||
Fair value of Gartner equity awards (4)
|
818,660
|
|
|
—
|
|
818,660
|
|
||||
Total (5)
|
$
|
3,518,829
|
|
|
$
|
134,199
|
|
|
$
|
3,653,028
|
|
|
(1)
|
Includes the total consideration transferred for
100%
of the outstanding capital stock of the acquired businesses.
|
(2)
|
The cash paid at close represents the gross contractual amount paid. The Company paid the additional
$12.5 million
in cash in third quarter 2017. Net of cash acquired from these businesses and for cash flow reporting purposes, the Company paid
$2.63 billion
in cash.
|
(3)
|
The Company borrowed a total of approximately
$2.78 billion
in conjunction with the CEB acquisition (see Note 7 — Debt for additional information).
|
(4)
|
Consists of the fair value of (i) Gartner common stock issued (see Note 8 — Equity for additional information) and (ii) stock-based compensation replacement awards.
|
(5)
|
The Company may also be required to pay up to an additional
$20.8 million
in cash for L2 which is contingent on the achievement of certain employment conditions by several key employees. This amount is being recognized as compensation expense over approximately
three
years.
|
|
CEB
(3)
|
|
L2
(4)
|
|
Total
|
||||||
Assets:
|
|
|
|
|
|
||||||
Cash
|
$
|
194,706
|
|
|
$
|
4,852
|
|
|
$
|
199,558
|
|
Fees receivable
|
175,440
|
|
|
8,277
|
|
|
183,717
|
|
|||
Prepaid expenses and other current assets
|
52,032
|
|
|
1,167
|
|
|
53,199
|
|
|||
Property, equipment and leasehold improvements
|
51,751
|
|
|
663
|
|
|
52,414
|
|
|||
Goodwill
(1)
|
2,267,087
|
|
|
109,779
|
|
|
2,376,866
|
|
|||
Finite-lived intangible assets
(2)
|
1,574,100
|
|
|
15,890
|
|
|
1,589,990
|
|
|||
Other assets
|
182,720
|
|
|
12,321
|
|
|
195,041
|
|
|||
Total assets
|
$
|
4,497,836
|
|
|
$
|
152,949
|
|
|
$
|
4,650,785
|
|
Liabilities:
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities
|
$
|
130,544
|
|
|
$
|
3,050
|
|
|
$
|
133,594
|
|
Deferred revenues (current)
|
246,472
|
|
|
13,200
|
|
|
259,672
|
|
|||
Other liabilities
|
601,991
|
|
|
2,500
|
|
|
604,491
|
|
|||
Total liabilities
|
$
|
979,007
|
|
|
$
|
18,750
|
|
|
$
|
997,757
|
|
Net assets acquired
|
$
|
3,518,829
|
|
|
$
|
134,199
|
|
|
$
|
3,653,028
|
|
|
(1)
|
The Company believes the goodwill resulting from the acquisitions is supportable based on anticipated synergies. For CEB, among the factors contributing to the anticipated synergies are a broader market presence, expanded product offerings and market opportunities, and an acceleration of CEB's growth by leveraging Gartner's global infrastructure and best practices in sales productivity and other areas. None of the recorded goodwill is expected to be deductible for tax purposes. See Note 6 — Goodwill and Intangible Assets for additional information.
|
(2)
|
All of the acquired intangible assets are finite-lived. The determination of the fair value of the finite-lived intangible assets required management judgment and the consideration of a number of factors. In determining the fair values, management primarily relied on income valuation methodologies, in particular discounted cash flow models. The use of discounted cash flow models required the use of estimates, significant among them projected cash flows related to the particular asset; the useful lives of the particular assets; the selection of royalty and discount rates used in the models; and certain published industry benchmark data. In establishing the estimated useful lives of the finite-lived intangible assets, the Company relied on both internally-generated data for similar assets as well as certain published industry benchmark data. We believe the values we have assigned to the finite-lived intangible assets are both reasonable and supportable. See Note 6 — Goodwill and Intangible Assets for additional information regarding the finite-lived intangible assets.
|
(3)
|
The Company's financial statements include the operating results of CEB beginning on April 5, 2017, the date of acquisition. CEB's operating results and the related goodwill are being reported as part of the Company's Research, Events, and Talent Assessment & Other segments. The Company recorded certain measurement period adjustments for the CEB preliminary purchase price allocation during the third quarter of 2017, primarily related to certain tenant improvement incentives, which increased Prepaid expenses and Other assets, with a reduction to goodwill.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Pro forma total revenue
|
$
|
891,003
|
|
|
$
|
756,083
|
|
|
$
|
2,664,450
|
|
|
$
|
2,233,942
|
|
Pro forma net (loss)
|
(7,283
|
)
|
|
(40,825
|
)
|
|
(71,122
|
)
|
|
(133,379
|
)
|
||||
Pro forma basic and diluted (loss) per share
|
(0.08
|
)
|
|
(0.45
|
)
|
|
(0.79
|
)
|
|
(1.48
|
)
|
(4)
|
The Company's financial statements include the operating results of L2 beginning on March 9, 2017, the acquisition date. L2's operating results were not material to the Company's consolidated operating results and segment results for either the three or nine months ended September 30, 2017. Had the Company acquired L2 in prior periods, the impact to the Company's operating results would not have been material, and as a result pro forma financial information for L2 for prior periods has not been presented. L2's operating results and the related goodwill are being reported as part of the Company's Research segment.
|
|
For the period ended September 30, 2017
|
||
Liability balance at December 31, 2016
|
$
|
—
|
|
Charges during the six months ended June 30, 2017
|
20,149
|
|
|
Liability balance at June 30, 2017
|
20,149
|
|
|
Charges and adjustments during the three months ended September 30, 2017
|
974
|
|
|
Liability balance at September 30, 2017
|
$
|
21,123
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income used for calculating basic and diluted (loss) income per common share
|
$
|
(48,180
|
)
|
|
$
|
30,484
|
|
|
$
|
(104,028
|
)
|
|
$
|
127,097
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common shares used in the calculation of basic (loss) income per share
|
90,624
|
|
|
82,638
|
|
|
87,585
|
|
|
82,549
|
|
||||
Common stock equivalents associated with stock-based compensation plans (1), (2)
|
—
|
|
|
1,165
|
|
|
—
|
|
|
1,212
|
|
||||
Shares used in the calculation of diluted (loss) income per share
|
90,624
|
|
|
83,803
|
|
|
87,585
|
|
|
83,761
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic (loss) income per share
|
$
|
(0.53
|
)
|
|
$
|
0.37
|
|
|
$
|
(1.19
|
)
|
|
$
|
1.54
|
|
Diluted (loss) income per share
|
$
|
(0.53
|
)
|
|
$
|
0.36
|
|
|
$
|
(1.19
|
)
|
|
$
|
1.52
|
|
|
(1)
|
For the three and nine months ended September 30, 2016, certain common stock equivalents were not included in the computation of diluted income per share because the effect would have been anti-dilutive. These common share equivalents totaled less than
0.2 million
for both 2016 periods.
|
(2)
|
Approximately
1.4 million
common stock equivalents for both the three and nine months ended September 30, 2017 were completely excluded from the calculation of diluted (loss) per share because they were anti-dilutive.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
Award type
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Stock appreciation rights
|
|
$
|
1.1
|
|
|
$
|
1.3
|
|
|
$
|
5.2
|
|
|
$
|
4.3
|
|
Restricted stock units
|
|
13.2
|
|
|
8.0
|
|
|
62.3
|
|
|
31.3
|
|
||||
Common stock equivalents
|
|
0.1
|
|
|
0.2
|
|
|
0.5
|
|
|
0.5
|
|
||||
Total (1)
|
|
$
|
14.4
|
|
|
$
|
9.5
|
|
|
$
|
68.0
|
|
|
$
|
36.1
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
Expense category line item
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cost of services and product development
|
|
$
|
6.1
|
|
|
$
|
4.6
|
|
|
$
|
21.5
|
|
|
$
|
17.0
|
|
Selling, general and administrative
|
|
7.1
|
|
|
4.9
|
|
|
30.8
|
|
|
19.1
|
|
||||
Acquisition and integration charges (2)
|
|
1.2
|
|
|
—
|
|
|
15.7
|
|
|
—
|
|
||||
Total (1)
|
|
$
|
14.4
|
|
|
$
|
9.5
|
|
|
$
|
68.0
|
|
|
$
|
36.1
|
|
|
|
Stock Appreciation Rights ("SARs") (in millions)
|
|
Per Share
Weighted
Average
Exercise Price
|
|
Per Share
Weighted
Average
Grant Date
Fair Value
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|||||
Outstanding at December 31, 2016
|
1.3
|
|
|
$
|
66.22
|
|
|
$
|
15.77
|
|
|
4.40
|
Granted
|
0.3
|
|
|
99.07
|
|
|
22.02
|
|
|
6.35
|
||
Exercised
|
(0.3
|
)
|
|
51.25
|
|
|
14.74
|
|
|
n/a
|
||
Outstanding at September 30, 2017 (1) (2)
|
1.3
|
|
|
76.64
|
|
|
17.36
|
|
|
4.57
|
||
Vested and exercisable at September 30, 2017 (2)
|
0.6
|
|
|
$
|
64.71
|
|
|
$
|
15.60
|
|
|
3.49
|
|
|
Nine Months Ended
|
||||
|
September 30,
|
||||
|
2017
|
|
2016
|
||
Expected dividend yield (1)
|
—
|
%
|
|
—
|
%
|
Expected stock price volatility (2)
|
22
|
%
|
|
22
|
%
|
Risk-free interest rate (3)
|
1.8
|
%
|
|
1.1
|
%
|
Expected life in years (4)
|
4.5
|
|
|
4.4
|
|
|
(1)
|
The expected dividend yield assumption was based on both the Company's historical and anticipated dividend payouts. Historically, the Company has not paid cash dividends on its Common Stock.
|
(2)
|
The determination of expected stock price volatility was based on both historical Common Stock prices and implied volatility from publicly traded options in the Common Stock.
|
(3)
|
The risk-free interest rate was based on the yield of a U.S. Treasury security with a maturity similar to the expected life of the award.
|
(4)
|
The expected life represents the Company’s estimate of the weighted average period of time the SARs are expected to be outstanding (that is, the period between the service inception date and the expected exercise date).
|
|
Restricted
Stock Units
("RSUs")
(in millions)
|
|
Per Share
Weighted
Average
Grant Date
Fair Value
|
|||
Outstanding at December 31, 2016
|
1.3
|
|
|
$
|
73.19
|
|
Granted (1) (2)
|
1.1
|
|
|
105.45
|
|
|
Vested and released
|
(0.7
|
)
|
|
78.44
|
|
|
Forfeited
|
(0.1
|
)
|
|
93.18
|
|
|
Outstanding at September 30, 2017 (3) (4)
|
1.6
|
|
|
$
|
91.37
|
|
|
(1)
|
The
1.1 million
of RSUs granted during the nine months ended
September 30, 2017
consisted of
0.2 million
of performance-based RSUs awarded to executives and
0.9 million
of service-based RSUs awarded to non-executive employees and non-management board members. The
0.2 million
of performance-based RSUs represents the target amount of the grant for the year, which is tied to an increase in the Company's total contract value for 2017. Total contract value for this determination represents the value attributable to all of the Company's subscription-related contracts but not including CEB contract value. The final number of performance-based RSUs that will ultimately be awarded for 2017 ranges from
0%
to
200%
of the target amount, with the final number dependent on the actual increase in total contract value for 2017 as measured on December 31, 2017. If the specified minimum level of achievement is not met, the performance-based RSUs will be forfeited in their entirety and any previously recorded compensation expense will be reversed.
|
(2)
|
Includes
0.6 million
of RSUs awarded to employees that joined Gartner as a result of the CEB acquisition.
|
(3)
|
The Company expects that substantially all of the RSUs outstanding will vest in future periods.
|
(4)
|
As of September 30, 2017, the weighted average remaining contractual term of the RSUs outstanding was approximately
1.4
years.
|
|
Common
Stock
Equivalents
("CSEs")
|
|
Per Share
Weighted
Average
Grant Date
Fair Value
|
|||
Outstanding at December 31, 2016
|
107,338
|
|
|
$
|
20.74
|
|
Granted
|
4,382
|
|
|
118.75
|
|
|
Converted to shares of Common Stock upon grant
|
(3,177
|
)
|
|
118.71
|
|
|
Outstanding at September 30, 2017
|
108,543
|
|
|
$
|
21.82
|
|
|
•
|
Research
- includes our previous Gartner Research segment as well as the results of CEB’s core subscription-based best practice and decision support research activities. In addition, Research now includes our Strategic Advisory Services ("SAS") business, which was previously included in the Consulting segment. Research consists primarily of subscription-based research products, access to research inquiry, peer networking services, and membership programs.
|
•
|
Consulting
- includes our previous Gartner Consulting segment except, as noted above, the results of our SAS business are now included in the Research segment. Consulting consists primarily of consulting and measurement engagements.
|
•
|
Events
- includes our previous Gartner Events segment and the results of CEB’s former Evanta business and destination event activities. Events consists of various symposia, conferences, exhibitions, and destination activities.
|
•
|
Talent Assessment & Other
- this is a new segment for Gartner and it includes CEB's previously disclosed Talent Assessment business as well as certain CEB non-subscription based talent products and services. On October 4, 2017, the Company announced that it has initiated a process to explore and evaluate strategic alternatives for the Talent Assessment business, which is a substantial part of the Talent Assessment & Other segment. See Note 14 — Subsequent Event for additional information.
|
Three Months Ended September 30, 2017
|
Research
|
|
Consulting
|
|
Events
|
|
Talent Assessment & Other
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
653,443
|
|
|
$
|
72,117
|
|
|
$
|
44,953
|
|
|
$
|
57,572
|
|
|
$
|
828,085
|
|
Gross contribution
|
436,222
|
|
|
16,188
|
|
|
16,011
|
|
|
31,215
|
|
|
499,636
|
|
|||||
Corporate and other expenses
|
|
|
|
|
|
|
|
|
|
|
|
(523,985
|
)
|
||||||
Operating (loss)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(24,349
|
)
|
Three Months Ended September 30, 2016
|
Research
|
|
Consulting
|
|
Events
|
|
Talent Assessment & Other
|
|
Consolidated
|
||||||||||
Revenues (1)
|
$
|
466,877
|
|
|
$
|
73,707
|
|
|
$
|
33,475
|
|
|
$
|
—
|
|
|
$
|
574,059
|
|
Gross contribution (1)
|
322,646
|
|
|
18,215
|
|
|
14,529
|
|
|
—
|
|
|
355,390
|
|
|||||
Corporate and other expenses
|
|
|
|
|
|
|
|
|
|
|
|
(306,664
|
)
|
||||||
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
$
|
48,726
|
|
Nine Months Ended September 30, 2017
|
Research
|
|
Consulting
|
|
Events
|
|
Talent Assessment & Other
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
1,778,481
|
|
|
$
|
242,404
|
|
|
$
|
171,427
|
|
|
$
|
104,673
|
|
|
$
|
2,296,985
|
|
Gross contribution
|
1,187,906
|
|
|
71,558
|
|
|
79,313
|
|
|
48,512
|
|
|
1,387,289
|
|
|||||
Corporate and other expenses
|
|
|
|
|
|
|
|
|
|
|
|
(1,456,512
|
)
|
||||||
Operating (loss)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(69,223
|
)
|
Nine Months Ended September 30, 2016
|
Research
|
|
Consulting
|
|
Events
|
|
Talent Assessment & Other
|
|
Consolidated
|
||||||||||
Revenues (1)
|
$
|
1,371,157
|
|
|
$
|
237,876
|
|
|
$
|
132,290
|
|
|
$
|
—
|
|
|
$
|
1,741,323
|
|
Gross contribution (1)
|
954,276
|
|
|
71,110
|
|
|
63,574
|
|
|
—
|
|
|
1,088,960
|
|
|||||
Corporate and other expenses
|
|
|
|
|
|
|
|
|
|
|
|
(892,506
|
)
|
||||||
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
$
|
196,454
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total segment gross contribution
|
$
|
499,636
|
|
|
$
|
355,390
|
|
|
$
|
1,387,289
|
|
|
$
|
1,088,960
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of services and product development - unallocated (1)
|
3,758
|
|
|
4,453
|
|
|
12,124
|
|
|
14,222
|
|
||||
Selling, general and administrative
|
421,163
|
|
|
269,902
|
|
|
1,133,633
|
|
|
799,322
|
|
||||
Depreciation and amortization
|
68,564
|
|
|
15,752
|
|
|
168,651
|
|
|
46,004
|
|
||||
Acquisition and integration charges
|
30,500
|
|
|
16,557
|
|
|
142,104
|
|
|
32,958
|
|
||||
Operating (loss) income
|
(24,349
|
)
|
|
48,726
|
|
|
(69,223
|
)
|
|
196,454
|
|
||||
Interest expense and other, net
|
37,591
|
|
|
3,978
|
|
|
86,971
|
|
|
14,208
|
|
||||
(Benefit) provision for income taxes
|
(13,760
|
)
|
|
14,264
|
|
|
(52,166
|
)
|
|
55,149
|
|
||||
Net (loss) income
|
$
|
(48,180
|
)
|
|
$
|
30,484
|
|
|
$
|
(104,028
|
)
|
|
$
|
127,097
|
|
|
(1)
|
The unallocated amounts consist of certain bonus and related fringe costs recorded in consolidated Cost of services and product development expense that are not allocated to segment expense. The Company's policy is to only allocate bonus and related fringe charges to segments for up to
100%
of the segment employee's target bonus. Amounts above
100%
are absorbed by corporate.
|
|
Research
|
|
Consulting
|
|
Events
|
|
Talent Assessment & Other
|
|
Total
|
||||||||||
Balance at December 31, 2016 (1)
|
$
|
595,450
|
|
|
$
|
96,480
|
|
|
$
|
46,523
|
|
|
$
|
—
|
|
|
$
|
738,453
|
|
Additions due to acquisitions (2)
|
1,717,750
|
|
|
—
|
|
|
123,423
|
|
|
535,693
|
|
|
2,376,866
|
|
|||||
Foreign currency translation impact
|
23,183
|
|
|
1,375
|
|
|
1,462
|
|
|
3,707
|
|
|
29,727
|
|
|||||
Balance at September 30, 2017
|
$
|
2,336,383
|
|
|
$
|
97,855
|
|
|
$
|
171,408
|
|
|
$
|
539,400
|
|
|
$
|
3,145,046
|
|
|
(1)
|
The Company does
not
have any accumulated goodwill impairment losses.
|
(2)
|
The goodwill additions are due to the acquisitions of CEB and L2 during April 2017 and March 2017, respectively (see Note 2 for additional information regarding our recent acquisitions).
|
September 30, 2017
|
|
Customer
Relationships |
|
Software
|
|
Content
|
|
Other
|
|
Total
|
||||||||||
Gross cost at December 31, 2016
|
|
$
|
63,369
|
|
|
$
|
16,025
|
|
|
$
|
3,728
|
|
|
$
|
33,645
|
|
|
$
|
116,767
|
|
Additions due to acquisitions (1)
|
|
1,251,000
|
|
|
181,000
|
|
|
143,500
|
|
|
14,490
|
|
|
1,589,990
|
|
|||||
Write-off of fully amortized intangible assets
|
|
—
|
|
|
—
|
|
|
(4,227
|
)
|
|
—
|
|
|
(4,227
|
)
|
|||||
Foreign currency translation impact
|
|
12,073
|
|
|
1,194
|
|
|
6,080
|
|
|
496
|
|
|
19,843
|
|
|||||
Gross cost
|
|
1,326,442
|
|
|
198,219
|
|
|
149,081
|
|
|
48,631
|
|
|
1,722,373
|
|
|||||
Accumulated amortization (2)
|
|
(75,173
|
)
|
|
(24,419
|
)
|
|
(36,884
|
)
|
|
(21,432
|
)
|
|
(157,908
|
)
|
|||||
Balance at September 30, 2017
|
|
$
|
1,251,269
|
|
|
$
|
173,800
|
|
|
$
|
112,197
|
|
|
$
|
27,199
|
|
|
$
|
1,564,465
|
|
December 31, 2016
|
|
Customer
Relationships |
|
Software
|
|
Content
|
|
Other
|
|
Total
|
||||||||||
Gross cost
|
|
$
|
63,369
|
|
|
$
|
16,025
|
|
|
$
|
3,728
|
|
|
$
|
33,645
|
|
|
$
|
116,767
|
|
Accumulated amortization (2)
|
|
(16,744
|
)
|
|
(8,904
|
)
|
|
(2,033
|
)
|
|
(12,285
|
)
|
|
(39,966
|
)
|
|||||
Balance at December 31, 2016
|
|
$
|
46,625
|
|
|
$
|
7,121
|
|
|
$
|
1,695
|
|
|
$
|
21,360
|
|
|
$
|
76,801
|
|
|
2017 (remaining three months)
|
$
|
59,743
|
|
2018
|
222,102
|
|
|
2019
|
165,855
|
|
|
2020
|
158,981
|
|
|
2021
|
138,639
|
|
|
Thereafter
|
819,145
|
|
|
|
$
|
1,564,465
|
|
|
|
Balance
|
|
Balance
|
||||
|
|
September 30,
|
|
December 31,
|
||||
Description:
|
|
2017
|
|
2016
|
||||
2016 Credit Agreement - Term loan A facility (1)
|
|
$
|
1,447,875
|
|
|
$
|
585,000
|
|
2016 Credit Agreement - Term loan B facility (1)
|
|
497,500
|
|
|
—
|
|
||
2016 Credit Agreement - Revolving credit facility (1), (2)
|
|
640,000
|
|
|
115,000
|
|
||
Senior notes (3)
|
|
800,000
|
|
|
—
|
|
||
Other (4)
|
|
2,500
|
|
|
2,500
|
|
||
Principal amount outstanding (5)
|
|
$
|
3,387,875
|
|
|
$
|
702,500
|
|
Less: deferred financing fees (6)
|
|
(46,045
|
)
|
|
(8,109
|
)
|
||
Net balance sheet carrying amount
|
|
$
|
3,341,830
|
|
|
$
|
694,391
|
|
|
(1)
|
The contractual annualized interest rate as of
September 30, 2017
on the Term loan A and B facilities was
3.23%
, which consisted of a floating eurodollar base rate of
1.23%
plus a margin of
2.00%
. The contractual annualized interest rate on the revolving credit facility was
3.73%
, which consisted of a floating eurodollar base rate of
1.23%
plus a margin of
2.50%
. However, the Company has interest rate swap contracts which effectively convert the floating eurodollar base rates on a portion of the amounts outstanding to a fixed base rate.
|
(2)
|
The Company had
$534.0 million
of available borrowing capacity on the revolver (not including the expansion feature) as of
September 30, 2017
.
|
(3)
|
Consists of
$800.0 million
principal amount of Senior Notes outstanding, which the Company issued on
March 30, 2017
to finance in part the CEB acquisition. The Senior Notes pay a fixed rate of
5.125%
and have an
eight
year maturity.
|
(4)
|
Consists of a
$2.5 million
State of Connecticut economic development loan with a
3.00%
fixed rate of interest. The loan was originated in 2012 and has a
10
year maturity. Principal payments are deferred for the first
five
years and the loan may be repaid at any point by the Company without penalty.
|
(5)
|
The average annual effective rates on the Company's total debt outstanding for the three and nine months ended
September 30, 2017
, including the effect of its interest rate swaps discussed below, were
4.01%
and
3.73%
, respectively.
|
(6)
|
The deferred financing fees are being amortized to Interest expense, net over the term of the respective debt obligation. During the nine months ended September 30, 2017, the Company paid
$51.2 million
in additional deferred financing fees and recorded a charge of approximately
$6.1 million
for the write-off of deferred financing fees related to the prior financing arrangement.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Number of shares repurchased (1)
|
26,725
|
|
|
9,882
|
|
|
348,236
|
|
|
542,792
|
|
||||
Cash paid for repurchased shares (in thousands) (2)
|
$
|
3,275
|
|
|
$
|
922
|
|
|
$
|
37,188
|
|
|
$
|
52,889
|
|
|
|
Interest Rate
Swaps
|
|
Defined
Benefit
Pension Plans
|
|
Foreign
Currency
Translation
Adjustments
|
|
Total
|
||||||||
Balance - June 30, 2017
|
$
|
(6,107
|
)
|
|
$
|
(5,700
|
)
|
|
$
|
(37,082
|
)
|
|
$
|
(48,889
|
)
|
Changes during the period:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in AOCL/I before reclassifications to income
|
9
|
|
|
—
|
|
|
46,319
|
|
|
46,328
|
|
||||
Reclassifications from AOCL/I to income during the period (2), (3)
|
1,293
|
|
|
52
|
|
|
—
|
|
|
1,345
|
|
||||
Other comprehensive (loss) income for the period
|
1,302
|
|
|
52
|
|
|
46,319
|
|
|
47,673
|
|
||||
Balance – September 30, 2017
|
$
|
(4,805
|
)
|
|
$
|
(5,648
|
)
|
|
$
|
9,237
|
|
|
$
|
(1,216
|
)
|
|
Interest Rate
Swaps |
|
Defined
Benefit Pension Plans |
|
Foreign
Currency Translation Adjustments |
|
Total
|
||||||||
Balance – June 30, 2016
|
$
|
(12,158
|
)
|
|
$
|
(4,757
|
)
|
|
$
|
(31,088
|
)
|
|
$
|
(48,003
|
)
|
Changes during the period:
|
|
|
|
|
|
|
|
||||||||
Change in AOCL/I before reclassifications to income
|
2,076
|
|
|
—
|
|
|
(3,032
|
)
|
|
(956
|
)
|
||||
Reclassifications from AOCL/I to income during the period (2), (3)
|
1,138
|
|
|
37
|
|
|
—
|
|
|
1,175
|
|
||||
Other comprehensive (loss) income for the period
|
3,214
|
|
|
37
|
|
|
(3,032
|
)
|
|
219
|
|
||||
Balance – September 30, 2016
|
$
|
(8,944
|
)
|
|
$
|
(4,720
|
)
|
|
$
|
(34,120
|
)
|
|
$
|
(47,784
|
)
|
|
Interest Rate
Swaps |
|
Defined
Benefit Pension Plans |
|
Foreign
Currency Translation Adjustments |
|
Total
|
||||||||
Balance – December 31, 2016
|
$
|
(1,409
|
)
|
|
$
|
(5,797
|
)
|
|
$
|
(42,477
|
)
|
|
$
|
(49,683
|
)
|
Changes during the period:
|
|
|
|
|
|
|
|
||||||||
Change in AOCL/I before reclassifications to income
|
(6,912
|
)
|
|
—
|
|
|
51,714
|
|
|
44,802
|
|
||||
Reclassifications from AOCL/I to income during the period (2), (3)
|
3,516
|
|
|
149
|
|
|
—
|
|
|
3,665
|
|
||||
Other comprehensive (loss) income for the period
|
(3,396
|
)
|
|
149
|
|
|
51,714
|
|
|
48,467
|
|
||||
Balance – September 30, 2017
|
$
|
(4,805
|
)
|
|
$
|
(5,648
|
)
|
|
$
|
9,237
|
|
|
$
|
(1,216
|
)
|
|
Interest Rate
Swaps |
|
Defined
Benefit Pension Plans |
|
Foreign
Currency Translation Adjustments |
|
Total
|
||||||||
Balance – December 31, 2015
|
$
|
(3,079
|
)
|
|
$
|
(4,832
|
)
|
|
$
|
(36,491
|
)
|
|
$
|
(44,402
|
)
|
Changes during the period:
|
|
|
|
|
|
|
|
||||||||
Change in AOCL/I before reclassifications to income
|
(9,376
|
)
|
|
—
|
|
|
2,371
|
|
|
(7,005
|
)
|
||||
Reclassifications from AOCL/I to income during the period (2), (3)
|
3,511
|
|
|
112
|
|
|
—
|
|
|
3,623
|
|
||||
Other comprehensive (loss) income for the period
|
(5,865
|
)
|
|
112
|
|
|
2,371
|
|
|
(3,382
|
)
|
||||
Balance – September 30, 2016
|
$
|
(8,944
|
)
|
|
$
|
(4,720
|
)
|
|
$
|
(34,120
|
)
|
|
$
|
(47,784
|
)
|
|
(1)
|
Amounts in parentheses represent debits (deferred losses).
|
(2)
|
The reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net of tax effect. See Note 10 – Derivatives and Hedging for information regarding the hedges.
|
(3)
|
The reclassifications related to defined benefit pension plans were recorded in Selling, general and administrative expense, net of tax effect. See Note 12 – Employee Benefits for information regarding the Company’s defined benefit pension plans.
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||
Derivative Contract Type
|
|
Number of
Outstanding
Contracts
|
|
Notional
Amounts
|
|
Fair Value
Asset
(Liability), Net
(3)
|
|
Balance
Sheet
Line Item
|
|
Unrealized
Loss Recorded
in OCI
|
|||||||
Interest rate swaps (1)
|
|
5
|
|
|
$
|
1,400,000
|
|
|
$
|
(8,009
|
)
|
|
Other liabilities
|
|
$
|
(4,805
|
)
|
Foreign currency forwards (2)
|
|
29
|
|
|
102,262
|
|
|
(88
|
)
|
|
Accrued liabilities
|
|
—
|
|
|||
Total
|
|
34
|
|
|
$
|
1,502,262
|
|
|
$
|
(8,097
|
)
|
|
|
|
$
|
(4,805
|
)
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|||||||
Derivative Contract Type
|
|
Number of
Outstanding
Contracts
|
|
Notional
Amounts
|
|
Fair Value
Asset
(Liability), Net
(3)
|
|
Balance
Sheet
Line Item
|
|
Unrealized
Loss Recorded
in OCI
|
|||||||
Interest rate swaps (1)
|
|
3
|
|
|
$
|
700,000
|
|
|
$
|
(2,349
|
)
|
|
Other liabilities
|
|
$
|
(1,409
|
)
|
Foreign currency forwards (2)
|
|
84
|
|
|
86,946
|
|
|
(320
|
)
|
|
Accrued liabilities
|
|
—
|
|
|||
Total
|
|
87
|
|
|
$
|
786,946
|
|
|
$
|
(2,669
|
)
|
|
|
|
$
|
(1,409
|
)
|
|
(1)
|
The swaps have been designated and are accounted for as cash flow hedges of the forecasted interest payments on borrowings. As a result, changes in fair value of the swaps are deferred and are recorded in AOCL/I, net of tax effect (see Note 7 — Debt for additional information).
|
(2)
|
The Company has foreign exchange transaction risk since it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other expense, net since the Company does not designate these contracts as hedges for accounting purposes. All of the contracts outstanding at
September 30, 2017
matured by the end of October 2017.
|
(3)
|
See Note 11 — Fair Value Disclosures for the determination of the fair value of these instruments.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
Amount recorded in:
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest expense, net (1)
|
|
$
|
2,154
|
|
|
$
|
1,895
|
|
|
$
|
5,860
|
|
|
$
|
5,851
|
|
Other (income), net (2)
|
|
(1,764
|
)
|
|
(814
|
)
|
|
(960
|
)
|
|
(239
|
)
|
||||
Total expense, net
|
|
$
|
390
|
|
|
$
|
1,081
|
|
|
$
|
4,900
|
|
|
$
|
5,612
|
|
|
(1)
|
Consists of interest expense from interest rate swap contracts.
|
(2)
|
Consists of net realized and unrealized gains and losses on foreign currency forward contracts.
|
|
|
Fair Value
|
|
Fair Value
|
||||
Description:
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Assets:
|
|
|
|
|
|
|
||
Values based on Level 1 inputs:
|
|
|
|
|
||||
Deferred compensation plan assets (1)
|
|
$
|
12,478
|
|
|
$
|
10,247
|
|
Total Level 1 inputs
|
|
12,478
|
|
|
10,247
|
|
||
Values based on Level 2 inputs:
|
|
|
|
|
||||
Deferred compensation plan assets (1)
|
|
31,050
|
|
|
27,847
|
|
||
Foreign currency forward contracts (2)
|
|
64
|
|
|
165
|
|
||
Total Level 2 inputs
|
|
31,114
|
|
|
28,012
|
|
||
Total Assets
|
|
$
|
43,592
|
|
|
$
|
38,259
|
|
Liabilities:
|
|
|
|
|
|
|
||
Values based on Level 2 inputs:
|
|
|
|
|
||||
Deferred compensation plan liabilities (1)
|
|
$
|
48,793
|
|
|
$
|
43,075
|
|
Foreign currency forward contracts (2)
|
|
152
|
|
|
485
|
|
||
Interest rate swap contracts (3)
|
|
8,009
|
|
|
2,349
|
|
||
Senior Notes due 2025 (4)
|
|
844,448
|
|
|
—
|
|
||
Total Level 2 inputs
|
|
901,402
|
|
|
45,909
|
|
||
Total Liabilities
|
|
$
|
901,402
|
|
|
$
|
45,909
|
|
|
(1)
|
The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees. The assets consist of investments in money market and mutual funds, and company-owned life insurance contracts, all of which are valued based on Level 1 or Level 2 valuation inputs. The related deferred compensation plan liabilities are recorded at fair value, or the estimated amount needed to settle the liability, which the Company considers to be a Level 2 input.
|
(2)
|
The Company enters into foreign currency forward exchange contracts to hedge the effects of adverse fluctuations in foreign currency exchange rates. Valuation of the foreign currency forward contracts is based on observable foreign currency exchange rates in active markets, which the Company considers a Level 2 input.
|
(3)
|
The Company has interest rate swap contracts which hedge the risk of variability from interest payments on its borrowings (see Note 7 — Debt). The fair value of the swaps is based on mark-to-market valuations prepared by a third-party broker. The valuations are based on observable interest rates from recently executed market transactions and other observable market data, which the Company considers Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker through the use of an electronic quotation service.
|
(4)
|
As discussed in Note 7 — Debt, the Company issued
$800.0 million
of principal amount fixed-rate Senior Notes due 2025 on March 30, 2017. The estimated fair value of the notes was derived from quoted market prices provided by an independent dealer which the Company considers to be a Level 2 input.
|
BUSINESS SEGMENT
|
|
BUSINESS MEASUREMENTS
|
Research
|
|
Total contract value
represents the value attributable to all of our subscription-related contracts. It is calculated as the annualized value of all contracts in effect at a specific point in time, without regard to the duration of the contract. Total contract value primarily includes Research deliverables for which revenue is recognized on a ratable basis, as well as other deliverables (primarily Events tickets) for which revenue is recognized when the deliverable is utilized.
|
|
|
|
|
|
Client retention rate
represents a measure of client satisfaction and renewed business relationships at a specific point in time. Client retention is calculated on a percentage basis by dividing our current clients, who were also clients a year ago, by all clients from a year ago. Client retention is calculated at an enterprise level, which represents a single company or customer.
|
|
|
|
|
|
Wallet retention rate
represents a measure of the amount of contract value we have retained with clients over a twelve-month period. Wallet retention is calculated on a percentage basis by dividing the contract value of clients, who were clients one year ago, by the total contract value from a year ago, excluding the impact of foreign currency exchange. When wallet retention exceeds client retention, it is an indication of retention of higher-spending clients, or increased spending by retained clients, or both. Wallet retention is calculated at an enterprise level, which represents a single company or customer.
|
|
|
|
Consulting
|
|
Consulting backlog
represents future revenue to be derived from in-process consulting and measurement engagements.
|
|
|
|
|
|
Utilization rate
represents a measure of productivity of our consultants. Utilization rates are calculated for billable headcount on a percentage basis by dividing total hours billed by total hours available to bill.
|
|
|
|
|
|
Billing Rate
represents earned billable revenue divided by total billable hours.
|
|
|
|
|
|
Average annualized revenue per billable headcount
represents a measure of the revenue generating ability of an average billable consultant and is calculated periodically by multiplying the average billing rate per hour times the utilization percentage times the billable hours available for one year.
|
|
|
|
Events
|
|
Number of events
represents the total number of hosted events completed during the period. Single day, local events are excluded.
|
|
|
|
|
|
Number of attendees
represents the total number of people who attend events. Single day, local events are excluded.
|
|
|
|
•
|
Research revenues are mainly derived from subscription contracts for research products. The related revenues are deferred and recognized ratably over the applicable contract term. Fees derived from assisting organizations in selecting the right business software for their needs is recognized when the leads are provided to vendors.
|
•
|
Consulting revenues are principally generated from fixed fee and time and material engagements. Revenues from fixed fee contracts are recognized on a proportional performance basis. Revenues from time and materials engagements are recognized as work is delivered and/or services are provided. Revenues related to contract optimization contracts are contingent in nature and are only recognized upon satisfaction of all conditions related to their payment.
|
•
|
Events revenues are deferred and recognized upon the completion of the related symposium, conference or exhibition.
|
•
|
Talent Assessment & Other revenues arising from knowledge and skill assessment services are recognized depending on the nature of the underlying contract: (i) ratably over the term of the service period; (ii) upon delivery; or (iii) on a proportional performance basis. Revenues from training programs and survey and questionnaire products are primarily recognized upon delivery of the service.
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Total fees receivable
|
$
|
884,283
|
|
|
$
|
650,413
|
|
Allowance for losses
|
(10,000
|
)
|
|
(7,400
|
)
|
||
Fees receivable, net
|
$
|
874,283
|
|
|
$
|
643,013
|
|
|
Three Months Ended September 30, 2017
|
|
Three Months Ended September 30, 2016
|
|
Income
Increase
(Decrease)
$
|
|
Increase
(Decrease)
%
|
|||||||
Total revenues
|
$
|
828,085
|
|
|
$
|
574,059
|
|
|
$
|
254,026
|
|
|
44
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cost of services and product development
|
332,207
|
|
|
223,122
|
|
|
(109,085
|
)
|
|
(49
|
)
|
|||
Selling, general and administrative
|
421,163
|
|
|
269,902
|
|
|
(151,261
|
)
|
|
(56
|
)
|
|||
Depreciation
|
17,340
|
|
|
9,531
|
|
|
(7,809
|
)
|
|
(82
|
)
|
|||
Amortization of intangibles
|
51,224
|
|
|
6,221
|
|
|
(45,003
|
)
|
|
>(100)
|
|
|||
Acquisition and integration charges
|
30,500
|
|
|
16,557
|
|
|
(13,943
|
)
|
|
(84
|
)
|
|||
Operating (loss) income
|
(24,349
|
)
|
|
48,726
|
|
|
(73,075
|
)
|
|
>(100)
|
|
|||
Interest expense, net
|
(38,762
|
)
|
|
(5,932
|
)
|
|
(32,830
|
)
|
|
>(100)
|
|
|||
Other income, net
|
1,171
|
|
|
1,954
|
|
|
(783
|
)
|
|
(40
|
)
|
|||
(Benefit) provision for income taxes
|
(13,760
|
)
|
|
14,264
|
|
|
28,024
|
|
|
>100
|
|
|||
Net (loss) income
|
$
|
(48,180
|
)
|
|
$
|
30,484
|
|
|
$
|
(78,664
|
)
|
|
>(100)%
|
|
|
Nine Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2016
|
|
Income
Increase
(Decrease)
$
|
|
Increase
(Decrease)
%
|
|||||||
Total revenues
|
$
|
2,296,985
|
|
|
$
|
1,741,323
|
|
|
$
|
555,662
|
|
|
32
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cost of services and product development
|
921,820
|
|
|
666,585
|
|
|
(255,235
|
)
|
|
(38
|
)
|
|||
Selling, general and administrative
|
1,133,633
|
|
|
799,322
|
|
|
(334,311
|
)
|
|
(42
|
)
|
|||
Depreciation
|
45,637
|
|
|
27,390
|
|
|
(18,247
|
)
|
|
(67
|
)
|
|||
Amortization of intangibles
|
123,014
|
|
|
18,614
|
|
|
(104,400
|
)
|
|
>(100)
|
|
|||
Acquisition and integration charges
|
142,104
|
|
|
32,958
|
|
|
(109,146
|
)
|
|
>(100)
|
|
|||
Operating (loss) income
|
(69,223
|
)
|
|
196,454
|
|
|
(265,677
|
)
|
|
>(100)
|
|
|||
Interest expense, net
|
(88,624
|
)
|
|
(19,294
|
)
|
|
(69,330
|
)
|
|
>(100)
|
|
|||
Other income, net
|
1,653
|
|
|
5,086
|
|
|
(3,433
|
)
|
|
(67
|
)
|
|||
(Benefit) provision for income taxes
|
(52,166
|
)
|
|
55,149
|
|
|
107,315
|
|
|
>100
|
|
|||
Net (loss) income
|
$
|
(104,028
|
)
|
|
$
|
127,097
|
|
|
(231,125
|
)
|
|
>(100)%
|
|
|
•
|
Research
- includes our previous Gartner Research segment as well as the results of CEB’s core subscription-based best practice and decision support research activities. In addition, Research now includes our traditional Gartner Strategic Advisory Services ("SAS") business, which was previously included in the Consulting segment. Research consists primarily of subscription-based research products, access to research inquiry, peer networking services, and membership programs.
|
•
|
Consulting
- includes our previous Gartner Consulting segment except, as noted above, the results of our SAS business are now included in the Research segment. Consulting consists primarily of consulting and measurement engagements.
|
•
|
Events
- includes the results of our previous Gartner Events segment and the results of CEB’s former Evanta business and destination event activities. Events provides IT, Supply chain, HR, Marketing, and other business professionals the opportunity to attend conferences to learn, share and network.
|
•
|
Talent Assessment & Other
- this is a new segment for Gartner and it includes CEB's previously disclosed Talent Assessment business as well as certain CEB non-subscription based talent products and services.
|
|
As Of And For The Three Months Ended September 30, 2017
|
|
As Of And For The Three Months Ended September 30, 2016
|
|
Increase
(Decrease)
|
|
Percentage
Increase
(Decrease)
|
|
For The Nine Months Ended September 30, 2017
|
|
For The Nine Months Ended September 30, 2016
|
|
Increase
(Decrease) |
|
Percentage
Increase (Decrease) |
||||||||||||||
Financial Measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues (1)
|
$
|
653,443
|
|
|
$
|
466,877
|
|
|
$
|
186,566
|
|
|
40
|
%
|
|
$
|
1,778,481
|
|
|
$
|
1,371,157
|
|
|
$
|
407,324
|
|
|
30
|
%
|
Gross contribution (1)
|
$
|
436,222
|
|
|
$
|
322,646
|
|
|
$
|
113,576
|
|
|
35
|
%
|
|
$
|
1,187,906
|
|
|
$
|
954,276
|
|
|
$
|
233,630
|
|
|
24
|
%
|
Gross contribution margin
|
67
|
%
|
|
69
|
%
|
|
(2) points
|
|
|
—
|
|
|
67
|
%
|
|
70
|
%
|
|
(3) points
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Business Measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Traditional Gartner:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total contract value (1)
|
$
|
2,063,000
|
|
|
$
|
1,815,000
|
|
|
$
|
248,000
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|||||||
Client retention
|
83
|
%
|
|
83
|
%
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
||||||||||
Wallet retention
|
104
|
%
|
|
104
|
%
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
||||||||||
CEB:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total contract value (1) (2)
|
$
|
571,000
|
|
|
$
|
578,000
|
|
|
$
|
(7,000
|
)
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Wallet retention
|
93
|
%
|
|
93
|
%
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Dollars in thousands.
|
(2)
|
The 2016 CEB contract value was calculated based on Gartner's 2017 foreign exchange rates.
|
|
As Of And For The Three Months Ended September 30, 2017
|
|
As Of And For The Three Months Ended September 30, 2016
|
|
Increase
(Decrease)
|
|
Percentage
Increase
(Decrease)
|
|
For The Nine Months Ended September 30, 2017
|
|
For The Nine Months Ended September 30, 2016
|
|
Increase
(Decrease)
|
|
Percentage
Increase
(Decrease)
|
||||||||||||||
Financial Measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues (1)
|
$
|
72,117
|
|
|
$
|
73,707
|
|
|
$
|
(1,590
|
)
|
|
(2
|
)%
|
|
$
|
242,404
|
|
|
$
|
237,876
|
|
|
$
|
4,528
|
|
|
2
|
%
|
Gross contribution (1)
|
$
|
16,188
|
|
|
$
|
18,215
|
|
|
$
|
(2,027
|
)
|
|
(11
|
)%
|
|
$
|
71,558
|
|
|
$
|
71,110
|
|
|
$
|
448
|
|
|
1
|
%
|
Gross contribution margin
|
22
|
%
|
|
25
|
%
|
|
(3) points
|
|
|
—
|
|
|
30
|
%
|
|
30
|
%
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Business Measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Backlog (1) (2)
|
$
|
91,400
|
|
|
$
|
89,900
|
|
|
$
|
1,500
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|||||||
Billable headcount
|
682
|
|
|
630
|
|
|
52
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
||||||||||
Consultant utilization
|
61
|
%
|
|
63
|
%
|
|
(2) points
|
|
|
—
|
|
|
64
|
%
|
|
66
|
%
|
|
(2) points
|
|
|
—
|
|
||||||
Average annualized revenue per billable headcount (1)
|
$
|
355
|
|
|
$
|
368
|
|
|
$
|
(13
|
)
|
|
(4
|
)%
|
|
$
|
364
|
|
|
$
|
387
|
|
|
$
|
(23
|
)
|
|
(6
|
)%
|
|
(1)
|
Dollars in thousands.
|
(2)
|
The September 30, 2016 traditional Gartner backlog of $89.9 million has been restated to reflect the reclassification of the SAS business.
|
|
As Of And For The Three Months Ended September 30, 2017
|
|
As Of And For The Three Months Ended September 30, 2016
|
|
Increase
(Decrease)
|
|
Percentage
Increase
(Decrease)
|
|
For The Nine Months Ended September 30, 2017
|
|
For The Nine Months Ended September 30, 2016
|
|
Increase
(Decrease)
|
|
Percentage
Increase
(Decrease)
|
||||||||||||||
Financial Measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues (1)
|
$
|
44,953
|
|
|
$
|
33,475
|
|
|
$
|
11,478
|
|
|
34
|
%
|
|
$
|
171,427
|
|
|
$
|
132,290
|
|
|
$
|
39,137
|
|
|
30
|
%
|
Gross contribution (1)
|
$
|
16,011
|
|
|
$
|
14,529
|
|
|
$
|
1,482
|
|
|
10
|
%
|
|
$
|
79,313
|
|
|
$
|
63,574
|
|
|
$
|
15,739
|
|
|
25
|
%
|
Gross contribution margin
|
36
|
%
|
|
43
|
%
|
|
( 7) points
|
|
|
—
|
|
|
46
|
%
|
|
48
|
%
|
|
( 2) points
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Business Measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Traditional Gartner:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Number of events (2)
|
16
|
|
|
15
|
|
|
1
|
|
|
7
|
%
|
|
52
|
|
|
52
|
|
|
—
|
|
|
—
|
|
||||||
Number of attendees (2)
|
10,075
|
|
|
7,431
|
|
|
2,644
|
|
|
36
|
%
|
|
37,174
|
|
|
30,522
|
|
|
6,652
|
|
|
22
|
%
|
||||||
CEB:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Number of events (2)
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
|
|
|
|
|||||||||
Number of attendees (2)
|
565
|
|
|
767
|
|
|
(202
|
)
|
|
(26
|
)%
|
|
1,040
|
|
|
|
|
|
|
|
|
(1)
|
Dollars in thousands.
|
(2)
|
Single day, local events are excluded.
|
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||||
Financial Measurements:
|
|
|
|
|
|||
Revenues (1)
|
$
|
57,572
|
|
|
$
|
104,673
|
|
Gross contribution (1)
|
$
|
31,215
|
|
|
$
|
48,512
|
|
Gross contribution margin
|
54
|
%
|
|
46
|
%
|
|
(1)
|
Dollars in thousands.
|
|
Nine Months Ended
September 30, 2017 |
|
Nine Months Ended
September 30, 2016 |
|
Cash
Increase
(Decrease)
|
||||||
Cash provided by operating activities
|
$
|
232,267
|
|
|
$
|
282,263
|
|
|
$
|
(49,996
|
)
|
Cash used in investing activities
|
(2,710,428
|
)
|
|
(66,240
|
)
|
|
(2,644,188
|
)
|
|||
Cash provided by (used in) financing activities
|
2,605,567
|
|
|
(130,933
|
)
|
|
2,736,500
|
|
|||
Net increase in cash and cash equivalents
|
127,406
|
|
|
85,090
|
|
|
42,316
|
|
|||
Effects of exchange rates
|
28,377
|
|
|
7,668
|
|
|
20,709
|
|
|||
Beginning cash and cash equivalents
|
474,233
|
|
|
372,976
|
|
|
101,257
|
|
|||
Ending cash and cash equivalents
|
$
|
630,016
|
|
|
$
|
465,734
|
|
|
$
|
164,282
|
|
|
Commitment Description:
|
|
Due On Or Before December 31, 2017
|
|
Due During 2018 and 2019
|
|
Due During 2020 and 2021
|
|
Due After December 31, 2021
|
|
Total
|
||||||||||
Debt – principal and interest (1)
|
|
$
|
143,791
|
|
|
$
|
770,812
|
|
|
$
|
404,368
|
|
|
$
|
2,945,674
|
|
|
$
|
4,264,645
|
|
Operating leases (2)
|
|
49,233
|
|
|
188,981
|
|
|
157,138
|
|
|
621,337
|
|
|
1,016,689
|
|
|||||
Deferred compensation arrangement (3)
|
|
3,867
|
|
|
10,279
|
|
|
6,764
|
|
|
73,797
|
|
|
94,707
|
|
|||||
Other (4)
|
|
16,494
|
|
|
30,146
|
|
|
28,827
|
|
|
43,358
|
|
|
118,825
|
|
|||||
Totals
|
|
$
|
213,385
|
|
|
$
|
1,000,218
|
|
|
$
|
597,097
|
|
|
$
|
3,684,166
|
|
|
$
|
5,494,866
|
|
|
(1)
|
Principal repayments of the Company's debt obligations have been classified in the above table based on both contractual and anticipated repayment dates. Interest payments were based on the effective interest rates as of September 30, 2017. Note 7 — Debt in the Notes to the Condensed Consolidated Financial Statements provides additional information regarding the Company's debt obligations.
|
(2)
|
The Company leases various offices, furniture, computer equipment, automobiles and equipment under non-cancelable operating lease agreements expiring between 2017 and 2032.
|
(3)
|
The Company has supplemental deferred compensation arrangements with certain of its employees. Amounts payable with known payment dates have been classified in the above table based on those scheduled payment dates. Amounts payable whose payment dates are unknown have been included in the Due After December 31, 2021 category since the Company cannot determine when the amounts will be paid.
|
(4)
|
The Other category includes (i) contractual commitments for software, building maintenance, telecom and other services and (ii) projected cash contributions to the Company's defined benefit pension plans.
|
Period
|
|
Total
Number of
Shares
Purchased
|
|
Average
Price Paid
Per Share
|
|
Approximate
Dollar Value of Shares
that may yet be purchased
under our $1.2B Share Repurchase Program
(in billions) (1)
|
|||||
2017
|
|
|
|
|
|
|
|
|
|
||
July
|
|
10,202
|
|
|
$
|
126.25
|
|
|
|
|
|
August
|
|
13,294
|
|
|
119.31
|
|
|
|
|
||
September
|
|
3,229
|
|
|
124.04
|
|
|
|
|
||
Total for quarter
|
|
26,725
|
|
|
$
|
122.53
|
|
|
$
|
1.1
|
|
EXHIBIT
NUMBER
|
|
DESCRIPTION OF DOCUMENT
|
|
|
|
|
|
|
|
Form of 2017 Restricted Stock Unit for Certain Officers.
|
|
|
|
|
|
Gartner, Inc. Long-Term Incentive Plan, effective August 1, 2017 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Commission on August 2, 2017).
|
|
|
|
|
|
Certification of chief executive officer under Rule 13a — 14(a)/15d — 14(a).
|
|
|
|
|
|
Certification of chief financial officer under Rule 13a — 14(a)/15d — 14(a).
|
|
|
|
|
|
Certification under 18 U.S.C. 1350.
|
|
|
|
|
101*
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016, (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016, (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2017 and 2016, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (v) the Notes to Condensed Consolidated Financial Statements.
|
|
|
Gartner, Inc.
|
|
|
|
Date:
|
November 2, 2017
|
/s/ Craig W. Safian
|
|
|
Craig W. Safian
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
(a)
|
If termination of Continued Service is due to the Grantee’s death or Disability, the unvested portion of this Restricted Stock Unit shall vest in full on the Termination Date;
|
(b)
|
If termination of Continued Service is due to Retirement and the Grantee is less than age 60, the unvested portion of this Restricted Stock Unit that would have vested by its terms within twelve (12) months from the Termination Date shall continue to vest as set forth in the Notice of Grant despite the termination of service;
|
(c)
|
If termination of Continued Service is due to Retirement and the Grantee is age 60 on the Termination Date, the unvested portion of this Restricted Stock Unit that would have vested by its terms within twenty-four (24) months from the Termination Date shall continue to vest as set forth in the Notice of Grant despite the termination of service;
|
(d)
|
If termination of Continued Service is due to Retirement and the Grantee is age 61 on the Termination Date, the unvested portion of this Restricted Stock Unit that would have vested by its terms within thirty-six (36) months from the Termination Date shall continue to vest as set forth in the Notice of Grant despite the termination of service; or
|
(e)
|
If termination of Continued Service is due to Retirement and the Grantee is age 62 or older on the Termination Date, the entire unvested portion of this Restricted Stock Unit shall continue to vest as set forth in the Notice of grant despite the termination of Service;
|
(1)
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017
, of Gartner, Inc.;
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(2)
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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(3)
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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(4)
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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(5)
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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November 2, 2017
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/s/ Eugene A. Hall
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Eugene A. Hall
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Chief Executive Officer
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(1)
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I have reviewed this Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017
, of Gartner, Inc.;
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(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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(5)
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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November 2, 2017
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/s/ Craig W. Safian
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Craig W. Safian
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Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Eugene A. Hall
|
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Name: Eugene A. Hall
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Title: Chief Executive Officer
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Date: November 2, 2017
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/s/ Craig W. Safian
|
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Name: Craig W. Safian
|
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Title: Chief Financial Officer
|
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Date: November 2, 2017
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