þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2018 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-3099750 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
P.O. Box 10212 | |
56 Top Gallant Road | |
Stamford, CT | 06902-7700 |
(Address of principal executive offices) | (Zip Code) |
(203) 316-1111 | |
(Registrant’s telephone number, including area code) |
Title of each class | Name of each exchange on which registered | |
Common Stock, $.0005 par value per share | New York Stock Exchange |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o |
Smaller reporting company o | Emerging growth company o |
• | Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of the enterprise through research and other reports, briefings, proprietary tools, access to our analysts and advisors, peer networking services and membership programs that enable our clients to make better decisions. Gartner's traditional strengths in IT, marketing and supply chain research were enhanced in 2017 with Gartner's acquisition of CEB Inc., which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, finance, sales and legal. |
• | Conferences (formerly called Events) provides business professionals across the organization the opportunity to learn, share and network. From our flagship CIO conference Gartner IT Symposium, to industry-leading conferences focused on specific business roles and topics, to member-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice live. |
• | Consulting provides customized solutions to unique client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving IT performance with a focus on cost, performance, efficiency and quality. |
• | RESEARCH. Gartner delivers independent, objective advice to leaders across the enterprise, primarily through a subscription-based digital media service. Gartner research is the fundamental building block for all Gartner services. We combine our proprietary research methodologies with extensive industry and academic relationships to create Gartner solutions that address each role across the enterprise. Within the Research segment, Global Technology Sales ("GTS") delivers products and services to users and providers of technology, while Global Business Sales ("GBS") delivers products and services to all other functional leaders. |
• | CONFERENCES. Gartner attracts more than 80,000 business and technology professionals and industry-leading technology providers to its 70+ conferences worldwide each year. Attendees experience sessions led by Gartner analysts and advisors, cutting-edge technology solutions, peer exchange workshops, one-on-one analyst and advisor meetings, consulting diagnostic workshops, keynotes and more. They also provide attendees with an opportunity to interact with business executives from the world’s leading technology companies. In addition to role-specific summits and workshop-style seminars, Gartner holds its unique, flagship IT Symposium/XpoTM in nine locations worldwide annually. Since the addition of CEB, we’ve expanded to host 700+ more intimate live meetings each year, as well as 250+ exclusive C-level meetings through the Evanta brand. |
• | CONSULTING. Gartner Consulting deepens relationships with our largest research and advisory clients by extending the reach of our research through custom consulting engagements. Gartner Consulting brings together our unique research insight, benchmarking data, problem-solving methodologies and hands-on experience to improve the return on a client’s IT investment. Our consultants provide fact-based consulting services to help clients use and manage IT to optimize business performance. |
• | Superior research content - We believe that we create the broadest, highest-quality and most relevant research coverage across all major functional roles in the enterprise. Our research analysis generates unbiased insight that we believe is timely, thought-provoking and comprehensive, and that is known for its high quality, independence and objectivity. |
• | Our leading brand name - We have provided critical, trusted insight under the Gartner name for nearly 40 years. |
• | Our global footprint and established customer base - We have a global presence with clients in more than 100 countries on six continents. A substantial portion of our revenue is derived from sales outside of the United States. |
• | Experienced management team - Our management team is composed of research veterans and experienced industry executives with long tenure at Gartner. |
• | Substantial operating leverage in our business model - We have the ability to distribute our intellectual property and expertise across multiple platforms, including research publications, consulting engagements, conferences and executive programs, to derive incremental revenue and profitability. |
• | Vast network of analysts, advisors and consultants - As of December 31, 2018, we had 2,114 research analysts and expert advisors and 718 experienced consultants located around the world. Our analysts and advisors collectively speak 59 languages and are located in 26 countries, enabling us to cover vast aspects of business and technology on a global basis. |
• | delivering high-quality and timely analysis and advice to our clients; |
• | understanding and anticipating market trends and the changing needs of our clients; and |
• | providing products and services of the quality and timeliness necessary to withstand competition. |
• | delivering consistent, high-quality consulting services to our clients; |
• | tailoring our consulting services to the changing needs of our clients; and |
• | our ability to match the skills and competencies of our consulting staff to the skills required for the fulfillment of existing or potential consulting engagements. |
Period | Total Number of Shares Purchased (#) | Average Price Paid Per Share ($) | Total Number of Shares Purchased Under Announced Program (#) | Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in billions) | |||||||||
October | 424,708 | $ | 145.46 | 424,400 | $ | 1.0 | |||||||
November | 80,944 | 143.50 | 71,011 | 1.0 | |||||||||
December | 733,365 | 133.68 | 733,044 | $ | 0.9 | ||||||||
Total for the quarter | 1,239,017 | $ | 138.36 | 1,228,455 |
(In thousands, except per share data) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
STATEMENT OF OPERATIONS DATA: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Research | $ | 3,105,764 | $ | 2,471,280 | $ | 1,857,001 | $ | 1,614,904 | $ | 1,479,976 | ||||||||||
Conferences | 410,461 | 337,903 | 268,605 | 251,835 | 227,707 | |||||||||||||||
Consulting | 353,667 | 327,661 | 318,934 | 296,317 | 313,758 | |||||||||||||||
Other | 105,562 | 174,650 | — | — | — | |||||||||||||||
Total revenues | $ | 3,975,454 | $ | 3,311,494 | $ | 2,444,540 | $ | 2,163,056 | $ | 2,021,441 | ||||||||||
Operating income (loss) | $ | 259,715 | $ | (6,329 | ) | $ | 305,141 | $ | 287,997 | $ | 286,162 | |||||||||
Net income | $ | 122,456 | $ | 3,279 | $ | 193,582 | $ | 175,635 | $ | 183,766 | ||||||||||
PER SHARE DATA: | ||||||||||||||||||||
Basic income per share | $ | 1.35 | $ | 0.04 | $ | 2.34 | $ | 2.09 | $ | 2.06 | ||||||||||
Diluted income per share | $ | 1.33 | $ | 0.04 | $ | 2.31 | $ | 2.06 | $ | 2.03 | ||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 90,827 | 88,466 | 82,571 | 83,852 | 89,337 | |||||||||||||||
Diluted | 92,122 | 89,790 | 83,820 | 85,056 | 90,719 | |||||||||||||||
OTHER DATA: | ||||||||||||||||||||
Cash and cash equivalents | $ | 156,368 | 538,908 | $ | 474,233 | $ | 372,976 | $ | 365,302 | |||||||||||
Total assets | 6,201,474 | 7,283,173 | 2,367,335 | 2,168,517 | 1,904,351 | |||||||||||||||
Long-term debt | 2,146,514 | 2,943,341 | 672,500 | 790,000 | 385,000 | |||||||||||||||
Stockholders’ equity (deficit) | 850,757 | 983,465 | 60,878 | (132,400 | ) | 161,171 | ||||||||||||||
Cash provided by operating activities | $ | 471,158 | 254,517 | $ | 365,632 | $ | 345,561 | $ | 346,779 |
• | In 2017 the Company acquired CEB Inc. The operating results of CEB have been included in the Company's operating results since the acquisition date. The Company also made acquisitions in the other periods presented in the table. Note 2 — Acquisitions and Divestitures in the Notes to Consolidated Financial Statements provides additional information. |
• | In 2018 the Company divested all three of the non-core businesses that comprised its Other segment. Note 2 –Acquisitions and Divestitures in the Notes provides additional information. |
• | In 2018 and 2017 we had $107.2 million and $158.5 million, respectively, of acquisition and integration charges related to our acquisitions. Note 2 –Acquisitions and Divestitures in the Notes provides additional information. |
• | In 2017 we recorded a $59.6 million tax benefit related to the U.S. Tax Cuts and Jobs Act of 2017, which increased our diluted earnings per share by $0.66 per share. Note 10 — Income Taxes in the Notes provides additional information. |
• | In 2017 the Company borrowed approximately $2.8 billion. In 2018, the Company reduced its outstanding debt by $1.0 billion. Note 5 — Debt in the Notes provides additional information. |
• | In 2017 the Company issued 7.4 million shares of its common stock in connection with the CEB acquisition. Note 7 — Stockholders' Equity in the Notes provides additional information. |
• | We repurchased 2.1 million, 0.4 million, 0.6 million, 6.2 million and 5.9 million shares of our common stock in 2018, 2017, 2016, 2015 and 2014, respectively. We used $260.8 million, $41.3 million, $59.0 million, $509.0 million and $432.0 million in cash for share repurchases in 2018, 2017, 2016, 2015 and 2014, respectively. Note 7 — Stockholders’ Equity in the Notes provides additional information. |
• | Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of the enterprise through research and other reports, briefings, proprietary tools, access to our analysts and advisors, peer networking services and membership programs that enable our clients to make better decisions. Gartner's traditional strengths |
• | Conferences (formerly called Events) provides business professionals across the organization the opportunity to learn, share and network. From our flagship CIO conference Gartner IT Symposium, to industry-leading conferences focused on specific business roles and topics, to member-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice live. |
• | Consulting provides customized solutions to unique client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving IT performance with a focus on cost, performance, efficiency and quality. |
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 Conferences tickets) for which revenue is recognized when the deliverable is utilized. Our total contract value consists of Global Technology Sales contract value, which includes sales to users and providers of technology, and Global Business Sales contract value, which includes sales to all other functional leaders. | |
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. | ||
Conferences | Number of destination conferences represents the total number of hosted destination conferences completed during the period. Single day, local meetings are excluded. | |
Number of destination conferences attendees represents the total number of people who attend destination conferences. Single day, local meetings are excluded. | ||
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. | ||
• | 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 are recognized when the leads are provided to vendors. |
• | Conferences revenues are deferred and recognized upon the completion of the related conference or meeting. |
• | Consulting revenues are principally generated from fixed fee and time and material engagements. Revenues from fixed fee contracts are recognized as we work to satisfy our performance obligations. 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. |
December 31, | |||||||
2018 | 2017 | ||||||
Total fees receivable (1) | $ | 1,262,818 | $ | 1,189,543 | |||
Allowance for losses (2) | (7,700 | ) | (12,700 | ) | |||
Fees receivable, net | $ | 1,255,118 | $ | 1,176,843 |
(1) | Total fees receivable at December 31, 2017 included $26.7 million of contract assets. As a result of the Company's adoption of ASU No. 2014-09 on January 1, 2018, contract assets are now included in Prepaid expenses and other current assets on the Company's consolidated balance sheet at December 31, 2018. |
(2) | The allowance for losses at December 31, 2017 included $6.2 million that was attributable to the Company's revenue reserve. As a result of the Company's adoption of ASU No. 2014-09 on January 1, 2018, the revenue reserve balance is now included in Accounts payable and accrued liabilities on the Company's consolidated balance sheet at December 31, 2018. |
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Effect on Net Income - Increase (Decrease) | Increase (Decrease) % | |||||||||||
Total revenues | $ | 3,975,454 | $ | 3,311,494 | $ | 663,960 | 20 | % | ||||||
Costs and expenses: | ||||||||||||||
Cost of services and product development | 1,468,800 | 1,320,198 | (148,602 | ) | (11 | ) | ||||||||
Selling, general and administrative | 1,884,141 | 1,599,004 | (285,137 | ) | (18 | ) | ||||||||
Depreciation | 68,592 | 63,897 | (4,695 | ) | (7 | ) | ||||||||
Amortization of intangibles | 187,009 | 176,274 | (10,735 | ) | (6 | ) | ||||||||
Acquisition and integration charges | 107,197 | 158,450 | 51,253 | 32 | ||||||||||
Operating income (loss) | 259,715 | (6,329 | ) | 266,044 | >100 | |||||||||
Interest expense, net | (124,208 | ) | (124,936 | ) | 728 | 1 | ||||||||
Gain from divested operations | 45,447 | — | 45,447 | >100 | ||||||||||
Other income, net | 167 | 3,448 | (3,281 | ) | (95 | ) | ||||||||
Provision (benefit) for income taxes | 58,665 | (131,096 | ) | (189,761 | ) | >(100) | ||||||||
Net income | $ | 122,456 | $ | 3,279 | $ | 119,177 | >100% |
Geographic Region | Year Ended December 31, 2018 | Year Ended December 31, 2017 | Increase (Decrease) $ | Increase (Decrease) % | ||||||||||||
United States and Canada | $ | 2,514,952 | $ | 2,092,366 | $ | 422,586 | 20 | % | ||||||||
Europe, Middle East and Africa | 1,000,490 | 855,421 | 145,069 | 17 | ||||||||||||
Other International | 460,012 | 363,707 | 96,305 | 26 | ||||||||||||
Totals | $ | 3,975,454 | $ | 3,311,494 | $ | 663,960 | 20 | % |
Segment | Year Ended December 31, 2018 | Year Ended December 31, 2017 | Increase (Decrease) $ | Increase (Decrease) % | ||||||||||||
Research | $ | 3,105,764 | $ | 2,471,280 | $ | 634,484 | 26 | % | ||||||||
Conferences | 410,461 | 337,903 | 72,558 | 21 | ||||||||||||
Consulting | 353,667 | 327,661 | 26,006 | 8 | ||||||||||||
Other (1) | 105,562 | 174,650 | (69,088 | ) | (40 | ) | ||||||||||
Totals | $ | 3,975,454 | $ | 3,311,494 | $ | 663,960 | 20 | % |
(1) | During 2018, the Company divested all three of the non-core businesses that comprised its Other segment. |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | Effect on Net Income - Increase (Decrease) | Increase (Decrease) % | |||||||||||
Total revenues | $ | 3,311,494 | $ | 2,444,540 | $ | 866,954 | 35 | % | ||||||
Costs and expenses: | ||||||||||||||
Cost of services and product development | 1,320,198 | 945,648 | (374,550 | ) | (40 | ) | ||||||||
Selling, general and administrative | 1,599,004 | 1,089,184 | (509,820 | ) | (47 | ) | ||||||||
Depreciation | 63,897 | 37,172 | (26,725 | ) | (72 | ) | ||||||||
Amortization of intangibles | 176,274 | 24,797 | (151,477 | ) | >(100) | |||||||||
Acquisition and integration charges | 158,450 | 42,598 | (115,852 | ) | >(100) | |||||||||
Operating (loss) income | (6,329 | ) | 305,141 | (311,470 | ) | >(100) | ||||||||
Interest expense, net | (124,936 | ) | (25,116 | ) | (99,820 | ) | >(100) | |||||||
Other income, net | 3,448 | 8,406 | (4,958 | ) | (59 | ) | ||||||||
(Benefit) provision for income taxes | (131,096 | ) | 94,849 | 225,945 | >100 | |||||||||
Net income | $ | 3,279 | $ | 193,582 | $ | (190,303 | ) | (98 | )% |
Geographic Region | Year Ended December 31, 2017 | Year Ended December 31, 2016 | Increase (Decrease) $ | Increase (Decrease) % | ||||||||||
United States and Canada | $ | 2,092,366 | $ | 1,519,748 | $ | 572,618 | 38 | % | ||||||
Europe, Middle East and Africa | 855,421 | 616,721 | 238,700 | 39 | ||||||||||
Other International | 363,707 | 308,071 | 55,636 | 18 | ||||||||||
Totals | $ | 3,311,494 | $ | 2,444,540 | $ | 866,954 | 35 | % |
Segment | Year Ended December 31, 2017 | Year Ended December 31, 2016 | Increase (Decrease) $ | Increase (Decrease) % | ||||||||||
Research | $ | 2,471,280 | $ | 1,857,001 | $ | 614,279 | 33 | % | ||||||
Conferences | 337,903 | 268,605 | 69,298 | 26 | ||||||||||
Consulting | 327,661 | 318,934 | 8,727 | 3 | ||||||||||
Other | 174,650 | — | 174,650 | 100 | ||||||||||
Totals | $ | 3,311,494 | $ | 2,444,540 | $ | 866,954 | 35 | % |
• | Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of the enterprise through research and other reports, briefings, proprietary tools, access to our analysts and advisors, peer networking services and membership programs that enable our clients to make better decisions. Gartner's traditional strengths in IT, marketing and supply chain research were enhanced in 2017 with Gartner's acquisition of CEB Inc., which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, finance, sales and legal. |
• | Conferences (formerly called Events) provides business professionals across the organization the opportunity to learn, share and network. From our flagship CIO conference Gartner IT Symposium, to industry-leading conferences focused on specific business roles and topics, to member-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice live. |
• | Consulting provides customized solutions to unique client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving IT performance with a focus on cost, performance, efficiency and quality. |
As Of And For The Year Ended December 31, 2018 | As Of And For The Year Ended December 31, 2017 | Increase (Decrease) | Percentage Increase (Decrease) | As Of And For The Year Ended December 31, 2017 | As Of And For The Year Ended December 31, 2016 | Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||
Financial Measurements: | |||||||||||||||||||||||||
Revenues (1) | $3,105,764 | $2,471,280 | $ | 634,484 | 26 | % | $2,471,280 | $1,857,001 | $ | 614,279 | 33 | % | |||||||||||||
Gross contribution (1) | $2,144,097 | $1,653,014 | $ | 491,083 | 30 | % | $1,653,014 | $1,285,611 | $ | 367,403 | 29 | % | |||||||||||||
Gross contribution margin | 69 | % | 67 | % | 2 points | — | 67 | % | 69 | % | (2) points | — | |||||||||||||
Business Measurements: | |||||||||||||||||||||||||
Global Technology Sales (2): | |||||||||||||||||||||||||
Contract value (1), (3) | $2,556,000 | $2,238,000 | $ | 318,000 | 14 | % | $2,238,000 | $1,975,000 | $ | 263,000 | 13 | % | |||||||||||||
Client retention | 83 | % | 83 | % | — | — | 83 | % | 82 | % | 1 point | — | |||||||||||||
Wallet retention | 105 | % | 105 | % | — | — | 105 | % | 103 | % | 2 points | — | |||||||||||||
Global Business Sales (2): | |||||||||||||||||||||||||
Contract value (1), (3) | $607,000 | $601,000 | $ | 6,000 | 1 | % | $601,000 | $568,000 | 33,000 | 6 | % | ||||||||||||||
Client retention | 82 | % | 81 | % | 1 point | — | 81 | % | 76 | % | 5 points | — | |||||||||||||
Wallet retention | 95 | % | 100 | % | (5) points | — | 100 | % | 95 | % | 5 points | — |
(1) | Dollars in thousands. |
(2) | Global Technology Sales ("GTS") includes sales to users and providers of technology. Global Business Sales ("GBS") includes sales to all other functional leaders. |
(3) | Contract values are on a foreign exchange neutral basis and exclude certain amounts related to divested businesses. Additional information regarding our divestitures is included in Note 2 – Acquisitions and Divestitures in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. The contract values at December 31, 2016 include pre-acquisition CEB amounts that were calculated using Gartner's methodology as well as 2018 foreign exchange rates. |
As Of And For The Year Ended December 31, 2018 | As Of And For The Year Ended December 31, 2017 | Increase (Decrease) | Percentage Increase (Decrease) | As Of And For The Year Ended December 31, 2017 | As Of And For The Year Ended December 31, 2016 | Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||
Financial Measurements: | |||||||||||||||||||||||||
Revenues (1) | $410,461 | $337,903 | $ | 72,558 | 21 | % | $337,903 | $268,605 | $ | 69,298 | 26 | % | |||||||||||||
Gross contribution (1) | $207,260 | $163,480 | $ | 43,780 | 27 | % | $163,480 | $136,655 | $ | 26,825 | 20 | % | |||||||||||||
Gross contribution margin | 50 | % | 48 | % | 2 points | — | 48 | % | 51 | % | (3) points | — | |||||||||||||
Business Measurements: | |||||||||||||||||||||||||
Number of destination conferences (2) | 70 | 69 | 1 | 1 | % | 69 | 66 | 3 | 5 | % | |||||||||||||||
Number of destination conferences attendees (2) | 78,136 | 67,401 | 10,735 | 16 | % | 67,401 | 54,602 | 12,799 | 23 | % |
(1) | Dollars in thousands. |
(2) | Single day, local meetings are excluded. |
As Of And For The Year Ended December 31, 2018 | As Of And For The Year Ended December 31, 2017 | Increase (Decrease) | Percentage Increase (Decrease) | As Of And For The Year Ended December 31, 2017 | As Of And For The Year Ended December 31, 2016 | Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||||||
Financial Measurements: | |||||||||||||||||||||||||||||
Revenues (1) | $353,667 | $327,661 | $ | 26,006 | 8 | % | $327,661 | $318,934 | $ | 8,727 | 3 | % | |||||||||||||||||
Gross contribution (1) | $102,541 | $93,643 | $ | 8,898 | 10 | % | $93,643 | $89,734 | $ | 3,909 | 4 | % | |||||||||||||||||
Gross contribution margin | 29 | % | 29 | % | — | — | 29 | % | 28 | % | 1 point | — | |||||||||||||||||
Business Measurements: | |||||||||||||||||||||||||||||
Backlog (1) | $110,700 | $95,200 | $ | 15,500 | 16 | % | $95,200 | $88,600 | $ | 6,600 | 7 | % | |||||||||||||||||
Billable headcount | 718 | 669 | 49 | 7 | % | 669 | 628 | 41 | 7 | % | |||||||||||||||||||
Consultant utilization | 63 | % | 64 | % | (1) point | — | 64 | % | 66 | % | (2) points | — | |||||||||||||||||
Average annualized revenue per billable headcount (1) | $ | 375 | $ | 366 | $ | 9 | 2 | % | $ | 366 | $ | 383 | $ | (17 | ) | (4 | )% |
(1) | Dollars in thousands. |
As Of And For The Year Ended December 31, 2018 | As Of And For The Year Ended December 31, 2017 | Increase (Decrease) | Percentage Increase (Decrease) | |||||||||
Financial Measurements: | ||||||||||||
Revenues (1) | $105,562 | $174,650 | $ | (69,088 | ) | (40 | )% | |||||
Gross contribution (1) | $65,075 | $90,249 | $ | (25,174 | ) | (28 | )% | |||||
Gross contribution margin | 62 | % | 52 | % | 10 points | — |
(1) | Dollars in thousands. |
2018 vs. 2017 | 2017 vs. 2016 | ||||||||||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Increase (Decrease) | Year Ended December 31, 2017 | Year Ended December 31, 2016 | Increase (Decrease) | ||||||||||||||||||
Cash provided by operating activities | $ | 471,158 | $ | 254,517 | $ | 216,641 | $ | 254,517 | $ | 365,632 | $ | (111,115 | ) | ||||||||||
Cash provided by (used in) investing activities | 384,051 | (2,752,545 | ) | 3,136,596 | (2,752,545 | ) | (98,059 | ) | (2,654,486 | ) | |||||||||||||
Cash (used in) provided by financing activities | (1,257,115 | ) | 2,539,830 | (3,796,945 | ) | 2,539,830 | (174,686 | ) | 2,714,516 | ||||||||||||||
Net (decrease) increase in cash and cash equivalents | (401,906 | ) | 41,802 | (443,708 | ) | 41,802 | 92,887 | (51,085 | ) | ||||||||||||||
Effects of exchange rate changes | (6,489 | ) | 25,902 | (32,391 | ) | 25,902 | (5,640 | ) | 31,542 | ||||||||||||||
Beginning cash and cash equivalents | 567,058 | 499,354 | 67,704 | 499,354 | 412,107 | 87,247 | |||||||||||||||||
Ending cash and cash equivalents (1) | $ | 158,663 | $ | 567,058 | $ | (408,395 | ) | $ | 567,058 | $ | 499,354 | $ | 67,704 |
Commitment Description: | Due In Less Than 1 Year | Due In 2-3 Years | Due In 4-5 Years | Due In More Than 5 Years | Total | |||||||||||||||
Debt – principal and interest (1) | $ | 200,431 | $ | 372,973 | $ | 1,327,960 | $ | 884,030 | $ | 2,785,394 | ||||||||||
Operating leases (2) | 130,991 | 240,747 | 217,231 | 689,359 | 1,278,328 | |||||||||||||||
Deferred compensation arrangements (3) | 10,857 | 11,852 | 7,549 | 42,450 | 72,708 | |||||||||||||||
U.S. Tax Cuts and Job Act - transition tax (4) | 785 | 1,569 | 1,569 | 5,885 | 9,808 | |||||||||||||||
Other (5) | 38,753 | 35,133 | 16,474 | 24,654 | 115,014 | |||||||||||||||
Totals | $ | 381,817 | $ | 662,274 | $ | 1,570,783 | $ | 1,646,378 | $ | 4,261,252 |
(1) | Principal repayments of the Company's debt obligations are classified in the above table based on the contractual repayment dates. Interest payments due were based on the effective interest rates as of December 31, 2018. Note 5 — Debt in the Notes to Consolidated Financial Statements provides information regarding the Company's debt obligations. |
(2) | The Company leases various facilities, furniture, computer equipment, automobiles and equipment under non-cancelable operating lease agreements expiring between 2019 and 2032. The total commitment excludes approximately $372.0 million of estimated income from the subleasing of certain facilities. See Note 1 — Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements for additional information on the Company's leases. |
(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 In More Than 5 Years category since the Company cannot determine when the amounts will be paid. See Note 13 — Employee Benefits in the Notes to Consolidated Financial Statements for additional information regarding the Company's supplemental deferred compensation arrangements. |
(4) | The amount due represents the Company's cash payable for the transition tax liability under the U.S. Tax Cut and Jobs Act of 2017 which is reduced by certain unrelated credits and attributes. The Company currently expects to pay the transition tax over approximately eight years. |
(5) | Other includes (i) contractual commitments for software, building maintenance, telecom and other services; (ii) amounts due for share repurchase transactions that occurred in late December 2018 but were settled in cash in January 2019; and (iii) projected cash contributions to the Company's defined benefit pension plans. See Note 13 — Employee Benefits in the Notes to Consolidated Financial Statements for additional information regarding the Company's defined benefit pension plans. |
2018 | ||||||||||||||||
(In thousands, except per share data) | First | Second | Third | Fourth | ||||||||||||
Revenues | $ | 963,565 | $ | 1,001,336 | $ | 921,674 | $ | 1,088,878 | ||||||||
Operating (loss) income | (8,711 | ) | 86,096 | 52,724 | 129,606 | |||||||||||
Net (loss) income | (19,587 | ) | 46,270 | 11,753 | 84,020 | |||||||||||
Net (loss) income per share (1): | ||||||||||||||||
Basic | $ | (0.22 | ) | $ | 0.51 | $ | 0.13 | $ | 0.93 | |||||||
Diluted | $ | (0.22 | ) | $ | 0.50 | $ | 0.13 | $ | 0.92 |
2017 | ||||||||||||||||
(In thousands, except per share data) | First | Second | Third | Fourth | ||||||||||||
Revenues | $ | 625,169 | $ | 843,731 | $ | 828,085 | $ | 1,014,509 | ||||||||
Operating income (loss) | 53,514 | (98,388 | ) | (24,349 | ) | 62,894 | ||||||||||
Net income (loss) (2) | 36,433 | (92,281 | ) | (48,180 | ) | 107,307 | ||||||||||
Net income (loss) per share (1), (2): | ||||||||||||||||
Basic | $ | 0.44 | $ | (1.03 | ) | $ | (0.53 | ) | $ | 1.18 | ||||||
Diluted | $ | 0.43 | $ | (1.03 | ) | $ | (0.53 | ) | $ | 1.16 |
(1) | The aggregate of the four quarters’ basic and diluted earnings per common share may not equal the reported full calendar year amounts due to the effects of share repurchases, dilutive equity compensation and rounding. |
(2) | In December 2017, the Company recorded a $59.6 million tax benefit related to the U.S. Tax Cuts and Jobs Act of 2017. The tax benefit increased our net income and our basic and diluted income per share for the fourth quarter of 2017 by approximately $0.66 per share and $0.65 per share, respectively. See Note 10 — Income Taxes in the Notes to Consolidated Financial Statements for additional information regarding the impact of the U.S. Tax Cuts and Jobs Act of 2017. |
EXHIBIT NUMBER | DESCRIPTION OF DOCUMENT | |
Agreement and Plan of Merger by and among the Company, Cobra Acquisition Corp. and CEB Inc., dated as of January 5, 2017. | ||
Restated Certificate of Incorporation of the Company. | ||
Bylaws as amended through February 2, 2012. | ||
Form of Certificate for Common Stock as of June 2, 2005. | ||
Credit Agreement, dated as of June 17, 2016, among the Company, the several lenders from time to time parties thereto, and JPMorgan Chase Bank, N.A. as administrative agent. | ||
Guarantee and Collateral Agreement, dated as of June 17, 2016, among the Company and certain of its subsidiaries, in favor of JPMorgan Chase Bank, N.A. as administrative agent. | ||
Commitment Letter among the Company, JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA, dated January 5, 2017. | ||
First Amendment to Credit Agreement, dated as of January 20, 2017, among the Company, the several lenders from time to time parties thereto, and JPMorgan Chase Bank, N.A. as administrative agent, filed as of January 24, 2017. | ||
Second Amendment, dated as of March 20, 2017, among the Company, each other Loan Party party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. | ||
Incremental Amendment, dated as of April 5, 2017, among the Company, each other Loan Party party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. | ||
364-Day Bridge Credit Agreement, dated as of April 5, 2017, among the Company, each other Loan Party party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. | ||
Indenture (including form of Notes), dated as of March 30, 2017, among the Company, the guarantors named therein and U.S. Bank National Association, as trustee, relating to the $800,000,000 aggregate principal amount of 5.125% Senior Notes due 2025. | ||
Amended and Restated Lease dated April 16, 2010 between Soundview Farms and the Company for premises at 56 Top Gallant Road, 70 Gatehouse Road, and 88 Gatehouse Road, Stamford, Connecticut. | ||
First Amendment to Amended and Restated Lease dated April 16, 2010 between Soundview Farms and the Company for premises at 56 Top Gallant Road, 70 Gatehouse Road, and 88 Gatehouse Road, Stamford, Connecticut. | ||
2011 Employee Stock Purchase Plan. | ||
2003 Long -Term Incentive Plan, as amended and restated effective June 4, 2009. | ||
Gartner, Inc. Long-Term Incentive Plan, as amended and restated effective January 31, 2019. | ||
Amended and Restated Employment Agreement between Eugene A. Hall and the Company dated as of February 14, 2019. | ||
Company Deferred Compensation Plan, effective January 1, 2009. | ||
Form of 2017 Stock Appreciation Right Agreement for executive officers. |
Form of 2017 Performance Stock Unit Agreement for executive officers. | ||
Form of 2017 Restricted Stock Unit Agreement for certain officers. | ||
Form of 2018 Stock Appreciation Right Agreement for executive officers. | ||
Form of 2018 Performance Stock Unit Agreement for executive officers. | ||
Form of 2019 Stock Appreciation Right Agreement for executive officers. | ||
Form of 2019 Performance Stock Unit Agreement for executive officers. | ||
Form of Restricted Stock Unit Agreement for non-employee directors. | ||
Separation Agreement and Release of Claims, dated October 12, 2017, between the Company and Per Anders Waern. | ||
Subsidiaries of Registrant. | ||
23.1* | Consent of Independent Registered Public Accounting Firm. | |
24.1* | Power of Attorney (see Signature Page). | |
31.1* | Certification of chief executive officer under Section 302 of the Sarbanes-Oxley Act of 2002. | |
Certification of chief financial officer under Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification under Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed with this document. |
+ | Management compensation plan or arrangement. |
(1) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 5, 2017. |
(2) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 6, 2005. |
(3) | Incorporated by reference from the Company’s Current Report on Form 8-K filed on February 7, 2012. |
(4) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on August 4, 2016. |
(5) | Incorporated by reference from the Company’s Current Report on form 8-K filed on January 24, 2017. |
(6) | Incorporated by reference from the Company’s Current Report on form 8-K filed on March 21, 2017. |
(7) | Incorporated by reference from the Company’s Current Report on form 8-K filed on April 6, 2017. |
(8) | Incorporated by reference from the Company’s Current Report on form 8-K filed on March 30, 2017. |
(9) | Incorporated by reference from the Company’s Quarterly Report on form 10-Q filed on August 9, 2010. |
(10) | Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) filed on April 18, 2011. |
(11) | Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) filed on April 21, 2009 |
(12) | Incorporated by reference from the Company’s Annual Report on Form 10-K filed on February 20, 2009. |
(13) | Incorporated by reference from the Company’s Current Report on Form 8-K dated on February 7, 2017. |
(14) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on November 2, 2017. |
(15) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2018. |
(16) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on August 1, 2018. |
(17) | Incorporated by reference from the Company’s Annual Report on Form 10-K filed on February 22, 2018. |
December 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 156,368 | $ | 538,908 | |||
Fees receivable, net of allowances of $7,700 and $12,700, respectively | 1,255,118 | 1,176,843 | |||||
Deferred commissions | 235,016 | 205,260 | |||||
Prepaid expenses and other current assets | 165,237 | 124,632 | |||||
Assets held-for-sale | — | 542,965 | |||||
Total current assets | 1,811,739 | 2,588,608 | |||||
Property, equipment and leasehold improvements, net | 267,665 | 221,507 | |||||
Goodwill | 2,923,136 | 2,987,294 | |||||
Intangible assets, net | 1,042,565 | 1,292,022 | |||||
Other assets | 156,369 | 193,742 | |||||
Total Assets | $ | 6,201,474 | $ | 7,283,173 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 710,113 | $ | 666,821 | |||
Deferred revenues | 1,745,244 | 1,630,198 | |||||
Current portion of long-term debt | 165,578 | 379,721 | |||||
Liabilities held-for-sale | — | 145,845 | |||||
Total current liabilities | 2,620,935 | 2,822,585 | |||||
Long-term debt, net of deferred financing fees | 2,116,109 | 2,899,124 | |||||
Other liabilities | 613,673 | 577,999 | |||||
Total Liabilities | 5,350,717 | 6,299,708 | |||||
Stockholders’ Equity: | |||||||
Preferred stock: | |||||||
$.01 par value, authorized 5,000,000 shares; none issued or outstanding | — | — | |||||
Common stock: | |||||||
$.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods | 82 | 82 | |||||
Additional paid-in capital | 1,823,710 | 1,761,383 | |||||
Accumulated other comprehensive (loss) income, net | (39,867 | ) | 1,508 | ||||
Accumulated earnings | 1,755,432 | 1,647,284 | |||||
Treasury stock, at cost, 73,899,977 and 72,779,205 common shares, respectively | (2,688,600 | ) | (2,426,792 | ) | |||
Total Stockholders’ Equity | 850,757 | 983,465 | |||||
Total Liabilities and Stockholders’ Equity | $ | 6,201,474 | $ | 7,283,173 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Revenues: | |||||||||||
Research | $ | 3,105,764 | $ | 2,471,280 | $ | 1,857,001 | |||||
Conferences | 410,461 | 337,903 | 268,605 | ||||||||
Consulting | 353,667 | 327,661 | 318,934 | ||||||||
Other | 105,562 | 174,650 | — | ||||||||
Total revenues | 3,975,454 | 3,311,494 | 2,444,540 | ||||||||
Costs and expenses: | |||||||||||
Cost of services and product development | 1,468,800 | 1,320,198 | 945,648 | ||||||||
Selling, general and administrative | 1,884,141 | 1,599,004 | 1,089,184 | ||||||||
Depreciation | 68,592 | 63,897 | 37,172 | ||||||||
Amortization of intangibles | 187,009 | 176,274 | 24,797 | ||||||||
Acquisition and integration charges | 107,197 | 158,450 | 42,598 | ||||||||
Total costs and expenses | 3,715,739 | 3,317,823 | 2,139,399 | ||||||||
Operating income (loss) | 259,715 | (6,329 | ) | 305,141 | |||||||
Interest income | 2,566 | 3,011 | 2,449 | ||||||||
Interest expense | (126,774 | ) | (127,947 | ) | (27,565 | ) | |||||
Gain from divested operations | 45,447 | — | — | ||||||||
Other income, net | 167 | 3,448 | 8,406 | ||||||||
Income (loss) before income taxes | 181,121 | (127,817 | ) | 288,431 | |||||||
Provision (benefit) for income taxes | 58,665 | (131,096 | ) | 94,849 | |||||||
Net income | $ | 122,456 | $ | 3,279 | $ | 193,582 | |||||
Net income per share: | |||||||||||
Basic | $ | 1.35 | $ | 0.04 | $ | 2.34 | |||||
Diluted | $ | 1.33 | $ | 0.04 | $ | 2.31 | |||||
Weighted average shares outstanding: | |||||||||||
Basic | 90,827 | 88,466 | 82,571 | ||||||||
Diluted | 92,122 | 89,790 | 83,820 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income | $ | 122,456 | $ | 3,279 | $ | 193,582 | |||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Foreign currency translation adjustments | (31,245 | ) | 47,363 | (5,986 | ) | ||||||
Interest rate swaps - net change in deferred gain or loss | (10,844 | ) | 3,892 | 1,670 | |||||||
Pension plans - net change in deferred actuarial loss | 123 | (64 | ) | (965 | ) | ||||||
Other comprehensive (loss) income, net of tax | (41,966 | ) | 51,191 | (5,281 | ) | ||||||
Comprehensive income | $ | 80,490 | $ | 54,470 | $ | 188,301 |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income, Net | Accumulated Earnings | Treasury Stock | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||
Balance at December 31, 2015 | $ | 78 | $ | 818,546 | $ | (44,402 | ) | $ | 1,450,684 | $ | (2,357,306 | ) | $ | (132,400 | ) | ||||||||
Adoption of ASU No. 2016-09 | — | — | — | (261 | ) | — | (261 | ) | |||||||||||||||
Net income | — | — | — | 193,582 | — | 193,582 | |||||||||||||||||
Other comprehensive loss | — | — | (5,281 | ) | — | — | (5,281 | ) | |||||||||||||||
Issuances under stock plans | — | (2,080 | ) | — | — | 12,419 | 10,339 | ||||||||||||||||
Common share repurchases | — | — | — | — | (51,762 | ) | (51,762 | ) | |||||||||||||||
Stock-based compensation expense | — | 46,661 | — | — | — | 46,661 | |||||||||||||||||
Balance at December 31, 2016 | 78 | 863,127 | (49,683 | ) | 1,644,005 | (2,396,649 | ) | 60,878 | |||||||||||||||
Net income | — | — | — | 3,279 | — | 3,279 | |||||||||||||||||
Other comprehensive income | — | — | 51,191 | — | — | 51,191 | |||||||||||||||||
Issuances under stock plans and for acquisition | 4 | 819,313 | — | — | 11,129 | 830,446 | |||||||||||||||||
Common share repurchases | — | — | — | — | (41,272 | ) | (41,272 | ) | |||||||||||||||
Stock-based compensation expense | — | 78,943 | — | — | — | 78,943 | |||||||||||||||||
Balance at December 31, 2017 | 82 | 1,761,383 | 1,508 | 1,647,284 | (2,426,792 | ) | 983,465 | ||||||||||||||||
Adoption of ASU No. 2018-02 | — | — | 591 | (591 | ) | — | — | ||||||||||||||||
Adoption of ASU No. 2016-16 | — | — | — | (13,717 | ) | — | (13,717 | ) | |||||||||||||||
Net income | — | — | — | 122,456 | — | 122,456 | |||||||||||||||||
Other comprehensive loss | — | — | (41,966 | ) | — | — | (41,966 | ) | |||||||||||||||
Issuances under stock plans | — | (3,845 | ) | — | — | 14,026 | 10,181 | ||||||||||||||||
Common share repurchases | — | — | — | — | (275,834 | ) | (275,834 | ) | |||||||||||||||
Stock-based compensation expense | — | 66,172 | — | — | — | 66,172 | |||||||||||||||||
Balance at December 31, 2018 | $ | 82 | $ | 1,823,710 | $ | (39,867 | ) | $ | 1,755,432 | $ | (2,688,600 | ) | $ | 850,757 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Operating activities: | |||||||||||
Net income | $ | 122,456 | $ | 3,279 | $ | 193,582 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 255,601 | 240,171 | 61,969 | ||||||||
Stock-based compensation expense | 66,172 | 78,943 | 46,661 | ||||||||
Deferred taxes | 1,524 | (217,414 | ) | (2,648 | ) | ||||||
Gain on extinguishment of debt | — | — | (2,500 | ) | |||||||
Gain from divested operations | (45,447 | ) | — | — | |||||||
Amortization and write-off of deferred financing fees | 13,815 | 15,062 | 3,082 | ||||||||
Changes in assets and liabilities, net of acquisitions and divestitures: | |||||||||||
Fees receivable, net | (115,003 | ) | (368,516 | ) | (68,661 | ) | |||||
Deferred commissions | (31,247 | ) | (61,393 | ) | (18,673 | ) | |||||
Prepaid expenses and other current assets | (50,551 | ) | 13,251 | (21,604 | ) | ||||||
Other assets | 11,456 | (18,529 | ) | 20,005 | |||||||
Deferred revenues | 187,147 | 382,852 | 97,979 | ||||||||
Accounts payable, accrued, and other liabilities | 55,235 | 186,811 | 56,440 | ||||||||
Cash provided by operating activities | 471,158 | 254,517 | 365,632 | ||||||||
Investing activities: | |||||||||||
Additions to property, equipment and leasehold improvements | (126,873 | ) | (110,765 | ) | (49,863 | ) | |||||
Acquisitions - cash paid (net of cash acquired) | (15,855 | ) | (2,641,780 | ) | (48,196 | ) | |||||
Divestitures - cash received (net of cash transferred) | 526,779 | — | — | ||||||||
Cash provided by (used in) in investing activities | 384,051 | (2,752,545 | ) | (98,059 | ) | ||||||
Financing activities: | |||||||||||
Proceeds from employee stock purchase plan | 14,689 | 11,711 | 9,250 | ||||||||
Proceeds from borrowings | — | 3,025,000 | 715,000 | ||||||||
Payments for deferred financing fees | — | (51,171 | ) | (4,975 | ) | ||||||
Payments on borrowings | (1,010,972 | ) | (404,438 | ) | (835,000 | ) | |||||
Purchases of treasury stock | (260,832 | ) | (41,272 | ) | (58,961 | ) | |||||
Cash (used in) provided by financing activities | (1,257,115 | ) | 2,539,830 | (174,686 | ) | ||||||
Net (decrease) increase in cash and cash equivalents and restricted cash | (401,906 | ) | 41,802 | 92,887 | |||||||
Effects of exchange rates on cash and cash equivalents and restricted cash | (6,489 | ) | 25,902 | (5,640 | ) | ||||||
Cash and cash equivalents and restricted cash, beginning of period | 567,058 | 499,354 | 412,107 | ||||||||
Cash and cash equivalents and restricted cash, end of period | $ | 158,663 | $ | 567,058 | $ | 499,354 | |||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | 117,500 | $ | 98,500 | $ | 23,400 | |||||
Income taxes, net of refunds received | $ | 95,800 | $ | 76,100 | $ | 86,300 |
Useful Life | December 31, | |||||||||
Category | (Years) | 2018 | 2017 | |||||||
Computer equipment and software | 2-7 | $ | 210,955 | $ | 189,015 | |||||
Furniture and equipment | 3-8 | 85,002 | 67,288 | |||||||
Leasehold improvements | 2-15 | 218,405 | 175,716 | |||||||
514,362 | 432,019 | |||||||||
Less — accumulated depreciation and amortization | (246,697 | ) | (210,512 | ) | ||||||
Property, equipment and leasehold improvements, net | $ | 267,665 | $ | 221,507 |
December 31, 2018 | Customer Relationships | Software | Content | Other | Total | |||||||||||||||
Gross cost at December 31, 2017 (1) | $ | 1,200,316 | $ | 123,424 | $ | 104,313 | $ | 54,929 | $ | 1,482,982 | ||||||||||
Divestitures (2) | (45,175 | ) | (321 | ) | (473 | ) | (160 | ) | (46,129 | ) | ||||||||||
Write-off of fully amortized intangible assets | (303 | ) | (11,715 | ) | (669 | ) | (3,311 | ) | (15,998 | ) | ||||||||||
Foreign currency translation impact and other (3) | (23,182 | ) | (687 | ) | (4,329 | ) | 204 | (27,994 | ) | |||||||||||
Gross cost | 1,131,656 | 110,701 | 98,842 | 51,662 | 1,392,861 | |||||||||||||||
Accumulated amortization (4) | (184,918 | ) | (38,901 | ) | (92,717 | ) | (33,760 | ) | (350,296 | ) | ||||||||||
Balance at December 31, 2018 | $ | 946,738 | $ | 71,800 | $ | 6,125 | $ | 17,902 | $ | 1,042,565 |
December 31, 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 (5) | 1,253,312 | 180,787 | 141,707 | 24,384 | 1,600,190 | |||||||||||||||
Write-off of fully amortized intangible assets | — | — | (4,227 | ) | — | (4,227 | ) | |||||||||||||
Reclassified as held-for-sale (6) | (140,156 | ) | (69,012 | ) | (38,593 | ) | (2,711 | ) | (250,472 | ) | ||||||||||
Foreign currency translation impact | 23,791 | (4,376 | ) | 1,698 | (389 | ) | 20,724 | |||||||||||||
Gross cost (1) | 1,200,316 | 123,424 | 104,313 | 54,929 | 1,482,982 | |||||||||||||||
Accumulated amortization (4) | (92,983 | ) | (26,344 | ) | (47,475 | ) | (24,158 | ) | (190,960 | ) | ||||||||||
Balance at December 31, 2017 (1) | $ | 1,107,333 | $ | 97,080 | $ | 56,838 | $ | 30,771 | $ | 1,292,022 |
(1) | Excludes certain amounts related to held-for-sale operations. |
(2) | Represents amounts related to divested businesses. See Note 2 — Acquisitions and Divestitures for additional information. |
(3) | Includes the foreign currency translation impact and certain other adjustments. |
(4) | Finite-lived intangible assets are amortized using the straight-line method over the following periods: Customer relationships—4 to 13 years; Software—3 to 7 years; Content—1.5 to 5 years; and Other —2 to 5 years. |
(5) | The additions were primarily due to the Company's acquisitions of CEB Inc. and L2, Inc. during April 2017 and March 2017, respectively. See Note 2 — Acquisitions and Divestitures for additional information. |
(6) | Represents amounts reclassified (net) as held-for-sale assets related to the CEB Talent Assessment business. See Note 2 — Acquisitions and Divestitures for additional information. |
2019 | $ | 129,394 | |
2020 | 122,756 | ||
2021 | 102,338 | ||
2022 | 92,801 | ||
2023 and thereafter | 595,276 | ||
$ | 1,042,565 |
Research | Conferences | Consulting | Other | Total | |||||||||||||||
Balance at December 31, 2016 (1) | $ | 595,450 | $ | 46,523 | $ | 96,480 | $ | — | $ | 738,453 | |||||||||
Additions due to acquisitions (2) | 2,042,514 | 140,914 | — | 274,363 | 2,457,791 | ||||||||||||||
Reclassified as held-for-sale (3) | — | — | — | (212,994 | ) | (212,994 | ) | ||||||||||||
Foreign currency translation impact | (18,287 | ) | 483 | 1,318 | 20,530 | 4,044 | |||||||||||||
Balance at December 31, 2017 | 2,619,677 | 187,920 | 97,798 | 81,899 | 2,987,294 | ||||||||||||||
Divestitures (4) | (2,500 | ) | — | — | (90,078 | ) | (92,578 | ) | |||||||||||
Foreign currency translation impact and other (5) | 21,241 | (266 | ) | (734 | ) | 8,179 | 28,420 | ||||||||||||
Balance at December 31, 2018 | $ | 2,638,418 | $ | 187,654 | $ | 97,064 | $ | — | $ | 2,923,136 |
(1) | The Company does not have any accumulated goodwill impairment losses. |
(2) | The 2017 goodwill additions are due to the acquisitions of CEB Inc. and L2, Inc. during April 2017 and March 2017, respectively. See Note 2 – Acquisitions and Divestitures for additional information. |
(3) | Represents amounts reclassified as held-for-sale assets related to the CEB Talent Assessment business. See Note 2 – Acquisitions and Divestitures for additional information. |
(4) | Represents amounts related to divested businesses. See Note 2 – Acquisitions and Divestitures for additional information. |
(5) | Includes the foreign currency translation impact and certain measurement period adjustments related to the acquisition of CEB Inc. |
December 31, | ||||||||||||||||
2018 | 2017 | 2016 | 2015 | |||||||||||||
Cash and cash equivalents | $ | 156,368 | $ | 538,908 | $ | 474,233 | $ | 372,976 | ||||||||
Restricted cash classified in (1), (2): | ||||||||||||||||
Prepaid expenses and other current assets | 2,295 | 15,148 | 25,121 | 13,505 | ||||||||||||
Other assets | — | 3,002 | — | 25,626 | ||||||||||||
Cash classified as held-for-sale (3) | — | 10,000 | — | — | ||||||||||||
Cash and cash equivalents and restricted cash per the Consolidated Statements of Cash Flows | $ | 158,663 | $ | 567,058 | $ | 499,354 | $ | 412,107 |
(1) | Restricted cash consists of escrow accounts established in connection with certain of the Company's business acquisitions. Generally, such cash is restricted to use due to provisions contained in the underlying asset purchase agreement. The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims, etc.). |
(2) | Restricted cash is recorded in Prepaid expenses and other current assets and Other assets in the Company's consolidated balance sheets with the short-term or long-term classification dependent on the projected timing of disbursements to the sellers. |
(3) | Represents cash classified as a held-for-sale asset for the CEB Talent Assessment business that was acquired as part of the CEB Inc. acquisition. See Note 2 — Acquisitions and Divestitures for additional information. |
(1) | Identifying the contract with the customer; |
(2) | Identifying the performance obligations in the contract; |
(3) | Determining the transaction price for the contract; |
(4) | Allocating the transaction price to the performance obligations in the contract; and |
(5) | Recognizing revenue when (or as) performance obligations are satisfied. |
Research | Conferences | Consulting | Other (1) | Total | |||||||||||
Primary Geographic Markets: (2) | |||||||||||||||
United States and Canada | $ | 1,994,016 | $ | 256,219 | $ | 205,874 | $ | 58,843 | $ | 2,514,952 | |||||
Europe, Middle East and Africa | 737,129 | 105,909 | 119,258 | 38,194 | 1,000,490 | ||||||||||
Other International | 374,619 | 48,333 | 28,535 | 8,525 | 460,012 | ||||||||||
Total revenues | $ | 3,105,764 | $ | 410,461 | $ | 353,667 | $ | 105,562 | $ | 3,975,454 |
Research | Conferences | Consulting | Other (1) | Total | |||||||||||
Primary Geographic Markets: (2) | |||||||||||||||
United States and Canada | $ | 1,600,847 | $ | 210,698 | $ | 188,022 | $ | 92,799 | $ | 2,092,366 | |||||
Europe, Middle East and Africa | 597,943 | 86,567 | 111,792 | 59,119 | 855,421 | ||||||||||
Other International | 272,490 | 40,638 | 27,847 | 22,732 | 363,707 | ||||||||||
Total revenues | $ | 2,471,280 | $ | 337,903 | $ | 327,661 | $ | 174,650 | $ | 3,311,494 |
Research | Conferences | Consulting | Other | Total | |||||||||||
Primary Geographic Markets: (2) | |||||||||||||||
United States and Canada | $ | 1,178,575 | $ | 162,162 | $ | 179,011 | $ | — | $ | 1,519,748 | |||||
Europe, Middle East and Africa | 434,753 | 72,926 | 109,042 | — | 616,721 | ||||||||||
Other International | 243,673 | 33,517 | 30,881 | — | 308,071 | ||||||||||
Total revenues | $ | 1,857,001 | $ | 268,605 | $ | 318,934 | $ | — | $ | 2,444,540 |
(1) | The decline in Other segment revenues in 2018 compared to 2017 was due to divestitures. Information regarding the divestitures is included in Note 2 – Acquisitions and Divestitures. |
(2) | Revenues are reported based on where the sale is fulfilled. |
Research | Conferences | Consulting | Other | Total | |||||||||||
Timing of Revenue Recognition: | |||||||||||||||
Transferred over time (1) | $ | 2,851,176 | $ | — | $ | 294,397 | $ | 86,667 | $ | 3,232,240 | |||||
Transferred at a point in time (2) | 254,588 | 410,461 | 59,270 | 18,895 | 743,214 | ||||||||||
Total revenues | $ | 3,105,764 | $ | 410,461 | $ | 353,667 | $ | 105,562 | $ | 3,975,454 |
Research | Conferences | Consulting | Other | Total | |||||||||||
Timing of Revenue Recognition: | |||||||||||||||
Transferred over time (1) | $ | 2,275,377 | $ | — | $ | 269,720 | $ | 141,331 | $ | 2,686,428 | |||||
Transferred at a point in time (2) | 195,903 | 337,903 | 57,941 | 33,319 | 625,066 | ||||||||||
Total revenues | $ | 2,471,280 | $ | 337,903 | $ | 327,661 | $ | 174,650 | $ | 3,311,494 |
Research | Conferences | Consulting | Other | Total | |||||||||||
Timing of Revenue Recognition: | |||||||||||||||
Transferred over time (1) | $ | 1,710,786 | $ | — | $ | 267,809 | $ | — | $ | 1,978,595 | |||||
Transferred at a point in time (2) | 146,215 | 268,605 | 51,125 | — | 465,945 | ||||||||||
Total revenues | $ | 1,857,001 | $ | 268,605 | $ | 318,934 | $ | — | $ | 2,444,540 |
(1) | These Research revenues were recognized in connection with performance obligations that were satisfied over time using a time-elapsed output method to measure progress. The corresponding Consulting revenues were recognized over time using labor hours as an input measurement basis. Other revenues in this category were recognized using either a time-elapsed output method, performance-based milestone approach or labor hours, depending on the nature of the underlying customer contract. |
(2) | The revenues in this category were recognized in connection with performance obligations that were satisfied at the point in time the contractual deliverables were provided to the customer. |
December 31, | |||||||
2018 | 2017 | ||||||
Assets: | |||||||
Fees receivable, gross (1) | $ | 1,262,818 | $ | 1,162,871 | |||
Contract assets (2) | $ | 26,119 | $ | 26,672 | |||
Contract liabilities: | |||||||
Deferred revenues (current liability) (3) | $ | 1,745,244 | $ | 1,630,198 | |||
Non-current deferred revenues (3) | 21,194 | 16,205 | |||||
Total contract liabilities | $ | 1,766,438 | $ | 1,646,403 | |||
(1) | Fees receivable represent the unconditional right of payment from our customers and include both billed and unbilled amounts. |
(2) | Contract assets represent recognized revenue for which we do not have an unconditional right to payment as of the balance sheet date because the project may be subject to a progress billing milestone or some other billing restriction. In the accompanying Consolidated Balance Sheets, contract assets are recorded in Prepaid expenses and other current assets as of December 31, 2018 and Fees receivable, net as of December 31, 2017. |
(3) | Deferred revenues represent amounts (i) for which the Company has received an upfront customer payment or (ii) that pertain to recognized fees receivable. Both situations occur before the completion of our performance obligation(s). |
2018 | 2017 | ||||||
Liability balance at beginning of the period | $ | 12,961 | $ | — | |||
Charges and adjustments, net (1) | 69,790 | 13,087 | |||||
Payments, net of $2,515 in sublease rent during 2018 | (26,087 | ) | (126 | ) | |||
Liability balance at end of the period (2) | $ | 56,664 | $ | 12,961 |
(1) | During 2018, the Company recognized $7.5 million of expense for changes in the original estimates of its exit cost obligations. The corresponding amount for 2017 was a benefit of $10.1 million. |
(2) | In total, we estimate that the Company will make net cash payments of approximately $90.6 million for exit costs in connection with the activities described herein. Through December 31, 2018, in the aggregate, we have expensed $82.9 million and had net cash outlays of $26.2 million related to such activities. |
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 (4) | 818,660 | — | 818,660 | ||||||||
Total | $ | 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 and for cash flow reporting purposes, the Company paid a total of approximately $2.64 billion in cash for acquisitions in 2017. |
(3) | The Company borrowed a total of approximately $2.8 billion in conjunction with the CEB acquisition (see Note 5 — Debt for additional information). |
(4) | Consists of the fair value of (i) Gartner common stock issued (see Note 7 — Stockholders' Equity for additional information) and (ii) stock-based compensation replacement awards. |
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 | 53,610 | 1,167 | 54,777 | ||||||||
Property, equipment and leasehold improvements | 51,399 | 663 | 52,062 | ||||||||
Goodwill (1) | 2,349,589 | 108,202 | 2,457,791 | ||||||||
Finite-lived intangible assets (2) | 1,584,300 | 15,890 | 1,600,190 | ||||||||
Other assets | 66,818 | 13,067 | 79,885 | ||||||||
Total assets | 4,475,862 | 152,118 | 4,627,980 | ||||||||
Liabilities: | |||||||||||
Accounts payable and accrued liabilities | 142,134 | 3,050 | 145,184 | ||||||||
Deferred revenues (current) | 246,472 | 13,200 | 259,672 | ||||||||
Other liabilities | 568,427 | 1,669 | 570,096 | ||||||||
Total liabilities | 957,033 | 17,919 | 974,952 | ||||||||
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. |
(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. |
(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, Conferences and Other segments. Had the Company acquired CEB in prior periods, the impact to the Company's operating results would have been material, and as a result the following pro forma consolidated financial information is presented as if CEB had been acquired by the Company on January 1, 2016 (in thousands, except per share amounts): |
Twelve Months Ended | ||||||||
December 31, | ||||||||
2017 | 2016 | |||||||
Pro forma total revenue | $ | 3,726,470 | $ | 3,183,070 | ||||
Pro forma net income (loss) | 150,167 | (241,423 | ) | |||||
Pro forma basic and diluted income (loss) per share | $ | 1.66 | $ | (2.68 | ) |
(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 and segment results for 2017. Had the Company acquired L2 in prior periods, the impact to the Company's operating results would not have been material, and as |
December 31, | |||||||
2018 | 2017 | ||||||
Benefit plan-related assets | $ | 75,653 | $ | 97,525 | |||
Non-current deferred tax assets | 34,494 | 31,067 | |||||
Other | 46,222 | 65,150 | |||||
Total other assets | $ | 156,369 | $ | 193,742 |
December 31, | |||||||
2018 | 2017 | ||||||
Accounts payable | $ | 37,508 | $ | 49,000 | |||
Payroll and employee benefits payable | 143,803 | 120,278 | |||||
Severance and retention bonus payable | 28,292 | 44,685 | |||||
Bonus payable | 170,719 | 162,710 | |||||
Commissions payable | 126,844 | 108,969 | |||||
Taxes payable | 19,725 | 46,758 | |||||
Other accrued liabilities | 183,222 | 134,421 | |||||
Total accounts payable and accrued liabilities | $ | 710,113 | $ | 666,821 |
December 31, | |||||||
2018 | 2017 | ||||||
Non-current deferred revenue | $ | 21,194 | $ | 16,205 | |||
Long-term taxes payable | 66,304 | 66,386 | |||||
Benefit plan-related liabilities | 96,033 | 118,868 | |||||
Lease-related matters | 165,374 | 115,840 | |||||
Non-current deferred tax liabilities | 214,687 | 206,338 | |||||
Other | 50,081 | 54,362 | |||||
Total other liabilities | $ | 613,673 | $ | 577,999 |
December 31, | ||||||||
Description: | 2018 | 2017 | ||||||
2016 Credit Agreement - Term loan A facility (1) | $ | 1,355,062 | $ | 1,429,312 | ||||
2016 Credit Agreement - Term loan B facility (2) | — | 496,250 | ||||||
2016 Credit Agreement - Revolving credit facility (1), (3) | 155,000 | 595,000 | ||||||
Senior notes (4) | 800,000 | 800,000 | ||||||
Other (5) | 2,030 | 2,500 | ||||||
Principal amount outstanding (6), (7) | 2,312,092 | 3,323,062 | ||||||
Less: deferred financing fees (8) | (30,405 | ) | (44,217 | ) | ||||
Net balance sheet carrying amount | $ | 2,281,687 | $ | 3,278,845 |
(1) | The contractual annualized interest rate as of December 31, 2018 on the Term loan A facility and the revolving credit facility was 4.02%, which consisted of a floating eurodollar base rate of 2.52% plus a margin of 1.50%. However, the Company has interest rate swap contracts that effectively convert the floating eurodollar base rates on amounts outstanding to a fixed base rate. |
(2) | The Term loan B facility was completely repaid in 2018. |
(3) | The Company had $1.0 billion of available borrowing capacity on the revolver (not including the expansion feature) as of December 31, 2018. |
(4) | Consists of $800.0 million principal amount of Senior Notes outstanding. The Senior Notes pay a fixed rate of 5.125% and mature on April 1, 2025. |
(5) | Consists of a 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. The loan may be repaid at any time by the Company without penalty. |
(6) | The weighted average annual effective rate on the Company's total debt outstanding for 2018, including the effects of its interest rate swaps discussed below, was 4.17%. |
(7) | The contractual due dates of principal amounts by year on the debt outstanding as of December 31, 2018 were as follows: $102.6 million in 2019; $139.7 million in 2020; $37.6 million in 2021; $1.23 billion in 2022; and $800.0 million in 2025. |
(8) | Deferred financing fees are being amortized to Interest expense over the term of the related debt obligation. The Company wrote off approximately $6.9 million of deferred financing fees in 2018 related to the repayment of the Term loan B facility. During 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. |
Year ended December 31, | |||
2019 | $ | 130,991 | |
2020 | 121,802 | ||
2021 | 118,945 | ||
2022 | 111,117 | ||
2023 | 106,113 | ||
Thereafter | 689,360 | ||
Total minimum lease payments (1) | $ | 1,278,328 |
Issued Shares | Treasury Stock Shares | ||||
Balance at December 31, 2015 | 156,234,415 | 73,896,245 | |||
Issuances under stock plans | — | (923,696 | ) | ||
Purchases for treasury (1) | — | 610,623 | |||
Balance at December 31, 2016 | 156,234,415 | 73,583,172 | |||
Issued in connection with the acquisition of CEB | 7,367,652 | — | |||
Issuances under stock plans | — | (1,186,150 | ) | ||
Purchases for treasury (1) | — | 382,183 | |||
Balance at December 31, 2017 | 163,602,067 | 72,779,205 | |||
Issuances under stock plans | — | (933,246 | ) | ||
Purchases for treasury (1), (2) | — | 2,054,018 | |||
Balance at December 31, 2018 | 163,602,067 | 73,899,977 |
(1) | The Company used a total of $260.8 million, $41.3 million and $59.0 million in cash for share repurchases in 2018, 2017 and 2016, respectively. |
(2) | The number of shares repurchased in 2018 includes shares repurchased in December 2018 that settled in January 2019. |
Interest Rate Swaps | Defined Benefit Pension Plans | Foreign Currency Translation Adjustments | Total | ||||||||||||
Balance - December 31, 2017 | $ | 2,483 | $ | (5,861 | ) | $ | 4,886 | $ | 1,508 | ||||||
Adoption of ASU No. 2018-02 (2) | 591 | — | — | 591 | |||||||||||
Other comprehensive income (loss) activity during the period: | |||||||||||||||
Change in AOCI/L before reclassifications to income | (9,447 | ) | — | 29,066 | 19,619 | ||||||||||
Reclassifications from AOCI/L to income (3), (4), (5) | (1,397 | ) | 123 | (60,311 | ) | (61,585 | ) | ||||||||
Other comprehensive income (loss) for the period | (10,844 | ) | 123 | (31,245 | ) | (41,966 | ) | ||||||||
Balance - December 31, 2018 | $ | (7,770 | ) | $ | (5,738 | ) | $ | (26,359 | ) | $ | (39,867 | ) |
Interest Rate Swaps | Defined Benefit Pension Plans | Foreign Currency Translation Adjustments | Total | ||||||||||||
Balance - December 31, 2016 | $ | (1,409 | ) | $ | (5,797 | ) | $ | (42,477 | ) | $ | (49,683 | ) | |||
Other comprehensive income (loss) activity during the period: | |||||||||||||||
Change in AOCI/L before reclassifications to income | (1,492 | ) | — | 47,363 | 45,871 | ||||||||||
Reclassifications from AOCI/L to income (3), (4) | 5,384 | (64 | ) | — | 5,320 | ||||||||||
Other comprehensive income (loss) for the period | 3,892 | (64 | ) | 47,363 | 51,191 | ||||||||||
Balance - December 31, 2017 | $ | 2,483 | $ | (5,861 | ) | $ | 4,886 | $ | 1,508 |
Award type | 2018 | 2017 | 2016 | |||||||||
Stock appreciation rights | $ | 6.3 | $ | 5.6 | $ | 5.6 | ||||||
Restricted stock units | 59.2 | 72.6 | 40.4 | |||||||||
Common stock equivalents | 0.7 | 0.7 | 0.7 | |||||||||
Total (1) | $ | 66.2 | $ | 78.9 | $ | 46.7 |
Expense category line item | 2018 | 2017 | 2016 | |||||||||
Cost of services and product development | $ | 28.1 | $ | 25.8 | $ | 21.9 | ||||||
Selling, general and administrative | 36.2 | 35.5 | 24.8 | |||||||||
Acquisition and integration charges (2) | 1.9 | 17.6 | — | |||||||||
Total (1) | $ | 66.2 | $ | 78.9 | $ | 46.7 |
(1) | Includes charges of $19.4 million, $22.9 million and $19.4 million during 2018, 2017 and 2016, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis. |
(2) | These charges are the result of (i) the acceleration of the vesting of certain restricted stock units related to the CEB acquisition and (ii) restricted stock units granted in connection with the CEB integration process. |
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, 2017 | 1.2 | $ | 76.73 | $ | 17.35 | 4.28 | ||||||
Granted | 0.3 | 114.26 | 25.63 | 6.11 | ||||||||
Exercised | (0.3 | ) | 60.67 | 15.10 | n/a | |||||||
Outstanding at December 31, 2018 (1) (2) | 1.2 | $ | 89.45 | $ | 19.88 | 4.33 | ||||||
Vested and exercisable at December 31, 2018 (2) | 0.5 | $ | 75.73 | $ | 17.02 | 3.24 |
(1) | As of December 31, 2018, 0.7 million of the total SARs outstanding were unvested. The Company expects that substantially all of those unvested awards will vest in future periods. |
(2) | As of December 31, 2018, the total SARs outstanding had an intrinsic value of $46.0 million. On such date, SARs vested and exercisable had an intrinsic value of $26.9 million. |
2018 | 2017 | 2016 | ||||||
Expected dividend yield (1) | — | % | — | % | — | % | ||
Expected stock price volatility (2) | 21 | % | 22 | % | 22 | % | ||
Risk-free interest rate (3) | 2.5 | % | 1.8 | % | 1.1 | % | ||
Expected life in years (4) | 4.52 | 4.53 | 4.39 |
(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, 2017 | 1.5 | $ | 91.47 | |||
Granted (1) | 0.7 | 112.96 | ||||
Vested and released | (0.7 | ) | 88.69 | |||
Forfeited | (0.1 | ) | 104.95 | |||
Outstanding at December 31, 2018 (2) (3) | 1.4 | $ | 101.75 |
(1) | The 0.7 million of RSUs granted during 2018 consisted of 0.3 million of performance-based RSUs awarded to executives and 0.4 million of service-based RSUs awarded to non-executive employees and non-management board members. The performance-based awards include RSUs in final settlement of 2017 grants and approximately 0.2 million of RSUs representing the target amount of the grant for 2018 that is tied to an increase in Gartner’s total contract value for such year. The number of performance-based RSUs for 2018 that could have been earned ranged from 0% to 200% of the target amount. The actual increase in Gartner’s total contract value for 2018 as measured on December 31, 2018 yielded approximately 144% of the target amount. The incremental awards based on the actual achievement under the 2018 grant will be issued in 2019. |
(2) | The Company expects that substantially all of the RSUs outstanding will vest in future periods. |
(3) | As of December 31, 2018, the weighted average remaining contractual term of the RSUs outstanding was approximately 1.1 years. |
Common Stock Equivalents ("CSEs") | Per Share Weighted Average Grant Date Fair Value | |||||
Outstanding at December 31, 2017 | 110,013 | $ | 23.19 | |||
Granted | 5,550 | 131.49 | ||||
Converted to shares of Common Stock upon grant | (5,783 | ) | 93.45 | |||
Outstanding at December 31, 2018 | 109,780 | $ | 24.96 |
2018 | 2017 | 2016 | |||||||||
Numerator: | |||||||||||
Net income used for calculating basic and diluted earnings per common share | $ | 122,456 | $ | 3,279 | $ | 193,582 | |||||
Denominator: (1) | |||||||||||
Weighted average common shares used in the calculation of basic earnings per share | 90,827 | 88,466 | 82,571 | ||||||||
Common share equivalents associated with stock-based compensation plans | 1,295 | 1,324 | 1,249 | ||||||||
Shares used in the calculation of diluted earnings per share | 92,122 | 89,790 | 83,820 | ||||||||
Earnings per share: (2) | |||||||||||
Basic | $ | 1.35 | $ | 0.04 | $ | 2.34 | |||||
Diluted | $ | 1.33 | $ | 0.04 | $ | 2.31 |
(1) | The Company repurchased 2.1 million, 0.4 million and 0.6 million shares of its Common Stock in 2018, 2017 and 2016, respectively. |
(2) | Both basic and diluted earnings per share for 2017 include a tax benefit of approximately $0.66 per share related to the U.S. Tax Cuts and Jobs Act of 2017. Note 10 — Income Taxes provides information about the Company's income taxes. |
2018 | 2017 | 2016 | |||||||||
Anti-dilutive common share equivalents as of December 31 (in millions): (a) | — | 0.3 | 0.2 | ||||||||
Average market price per share of Common Stock during the year | $ | 135.60 | $ | 116.09 | $ | 92.58 |
2018 | 2017 | 2016 | |||||||||
U.S. | $ | 34,159 | $ | (135,757 | ) | $ | 182,178 | ||||
Non-U.S. | 146,962 | 7,940 | 106,253 | ||||||||
Income (loss) before income taxes | $ | 181,121 | $ | (127,817 | ) | $ | 288,431 |
2018 | 2017 | 2016 | |||||||||
Current tax expense: | |||||||||||
U.S. federal | $ | 2,817 | $ | 48,339 | $ | 58,616 | |||||
State and local | 6,969 | 434 | 11,292 | ||||||||
Foreign | 45,042 | 38,602 | 27,536 | ||||||||
Total current | 54,828 | 87,375 | 97,444 | ||||||||
Deferred tax (benefit) expense: | |||||||||||
U.S. federal | 12,462 | (176,046 | ) | (61 | ) | ||||||
State and local | 1,258 | (14,363 | ) | (349 | ) | ||||||
Foreign | (13,795 | ) | (25,898 | ) | (1,626 | ) | |||||
Total deferred | (75 | ) | (216,307 | ) | (2,036 | ) | |||||
Total current and deferred | 54,753 | (128,932 | ) | 95,408 | |||||||
Benefit (expense) relating to interest rate swaps used to increase (decrease) equity | 3,840 | (2,477 | ) | (1,113 | ) | ||||||
Benefit from stock transactions with employees used to increase equity | 58 | 46 | 52 | ||||||||
Benefit relating to defined-benefit pension adjustments used to increase equity | 14 | 267 | 502 | ||||||||
Total tax expense (benefit) | $ | 58,665 | $ | (131,096 | ) | $ | 94,849 |
December 31, | |||||||
2018 | 2017 | ||||||
Accrued liabilities | $ | 96,292 | $ | 80,557 | |||
Loss and credit carryforwards | 14,830 | 59,502 | |||||
Assets relating to equity compensation | 19,653 | 24,874 | |||||
Other assets | 14,092 | 30,236 | |||||
Gross deferred tax assets | 144,867 | 195,169 | |||||
Property, equipment, and leasehold improvements | (3,421 | ) | (962 | ) | |||
Intangible assets | (214,580 | ) | (372,542 | ) | |||
Prepaid expenses | (41,926 | ) | (35,126 | ) | |||
Other liabilities | (61,068 | ) | (6,584 | ) | |||
Gross deferred tax liabilities | (320,995 | ) | (415,214 | ) | |||
Valuation allowance | (4,066 | ) | (3,192 | ) | |||
Net deferred tax liabilities | $ | (180,194 | ) | $ | (223,237 | ) |
2018 | 2017 | 2016 | ||||||
Statutory tax rate | 21.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of federal benefit | — | 3.6 | 2.3 | |||||
Effect of non-U.S. operations | (10.6 | ) | 5.9 | (6.1 | ) | |||
Change in the reserve for tax contingencies | 15.7 | (2.8 | ) | 3.2 | ||||
Law changes | (1.3 | ) | 41.8 | — | ||||
Stock-based compensation expense | (5.3 | ) | 11.0 | (3.8 | ) | |||
Nondeductible acquisition costs | 0.9 | (7.9 | ) | 2.6 | ||||
Nondeductible meals and entertainment costs | 2.7 | (3.5 | ) | 1.1 | ||||
Gains/Losses on divested operations and held-for-sale assets | 12.2 | 13.1 | — | |||||
Limitation on executive compensation | 2.7 | (0.1 | ) | — | ||||
Foreign-derived intangible income | (2.0 | ) | — | — | ||||
Change in the valuation allowance | 0.5 | 3.0 | (0.2 | ) | ||||
Goodwill | (3.8 | ) | — | — | ||||
Other items, net | (0.3 | ) | 3.5 | (1.2 | ) | |||
Effective tax rate | 32.4 | % | 102.6 | % | 32.9 | % |
2018 | 2017 | ||||||
Beginning balance | $ | 60,269 | $ | 37,099 | |||
Additions based on tax positions related to the current year | 27,371 | 10,883 | |||||
Additions for tax positions of prior years | 14,691 | 24,299 | |||||
Reductions for tax positions of prior years | (3,939 | ) | (10,613 | ) | |||
Reductions for expiration of statutes | (6,293 | ) | (1,368 | ) | |||
Settlements | (472 | ) | (1,769 | ) | |||
Change in foreign currency exchange rates | (1,278 | ) | 1,738 | ||||
Ending balance | $ | 90,349 | $ | 60,269 |
Derivative Contract Type | Number of Contracts | Notional Amounts | Fair Value Asset (Liability), Net (3) | Balance Sheet Line Item | Unrealized Loss Recorded in AOCI/L | ||||||||||||
Interest rate swaps (1) | 7 | $ | 2,100,000 | $ | (10,681 | ) | Other liabilities | $ | (7,770 | ) | |||||||
Foreign currency forwards (2) | 135 | 927,375 | (1,942 | ) | Accrued liabilities | — | |||||||||||
Total | 142 | $ | 3,027,375 | $ | (12,623 | ) | $ | (7,770 | ) |
Derivative Contract Type | Number of Contracts | Notional Amounts | Fair Value Asset (Liability), Net (3) | Balance Sheet Line Item | Unrealized Gain Recorded in AOCI/L | ||||||||||||
Interest rate swaps (1) | 5 | $ | 1,400,000 | $ | 3,412 | Other assets | $ | 2,483 | |||||||||
Foreign currency forwards (2) | 137 | 686,764 | 448 | Other current assets | — | ||||||||||||
Total | 142 | $ | 2,086,764 | $ | 3,860 | $ | 2,483 |
(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 the fair value of the swaps are deferred and are recorded in AOCI/L, net of tax effect. Note 5 — Debt provides additional information. |
(2) | The Company has foreign exchange transaction risk because 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 income, net because the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding foreign currency forward exchange contracts at December 31, 2018 matured by the end of January 2019. |
(3) | See Note 12 — Fair Value Disclosures for the determination of the fair value of these instruments. |
Amount recorded in: | 2018 | 2017 | 2016 | |||||||||
Interest (income) expense, net (1) | $ | (1.9 | ) | $ | 7.9 | $ | 7.6 | |||||
Other expense (income), net (2) | 10.4 | (0.8 | ) | 0.3 | ||||||||
Total expense, net | $ | 8.5 | $ | 7.1 | $ | 7.9 |
(1) | Consists of interest (income) expense from interest rate swap contracts. |
(2) | Consists of net realized and unrealized gains and losses on foreign currency forward contracts. |
Description: | December 31, 2018 | December 31, 2017 | ||||||
Assets: | ||||||||
Values based on Level 1 inputs: | ||||||||
Deferred compensation plan assets (1) | $ | 8,956 | $ | 29,108 | ||||
Total Level 1 inputs | 8,956 | 29,108 | ||||||
Values based on Level 2 inputs: | ||||||||
Deferred compensation plan assets (1) | 57,690 | 59,017 | ||||||
Foreign currency forward contracts (2) | 1,318 | 2,053 | ||||||
Interest rate swap contracts (3) | — | 3,412 | ||||||
Total Level 2 inputs | 59,008 | 64,482 | ||||||
Total Assets | $ | 67,964 | $ | 93,590 | ||||
Liabilities: | ||||||||
Values based on Level 2 inputs: | ||||||||
Deferred compensation plan liabilities (1) | $ | 68,570 | $ | 89,900 | ||||
Foreign currency forward contracts (2) | 3,260 | 1,605 | ||||||
Interest rate swap contracts (3) | 10,681 | — | ||||||
Senior Notes due 2025 (4) | 776,160 | 837,560 | ||||||
Total Level 2 inputs | 858,671 | 929,065 | ||||||
Total Liabilities | $ | 858,671 | $ | 929,065 |
(1) | The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees (see Note 13 — Employee Benefits). The assets consist of investments in money market funds, mutual funds and company-owned life insurance contracts. The money market funds consist of cash equivalents while the mutual fund investments consist of publicly-traded and quoted equity shares. The Company considers the fair value of these assets to be based on Level 1 inputs, and such assets had fair values of $9.0 million and $29.1 million as of December 31, 2018 and 2017, respectively. The carrying amounts of the life insurance contracts equal their cash surrender values. Cash surrender value represents the estimated amount that the Company would receive upon termination of a contract, which approximates fair value. The Company considers life insurance contracts to be valued based on Level 2 inputs, and such assets had fair values of $57.7 million and $59.0 million at December 31, 2018 and 2017, respectively. 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 (see Note 11 — Derivatives and Hedging). Valuation of these 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 that hedge the risk of variability from interest payments on its borrowings (see Note 5 — Debt). The fair value of interest rate swaps is based on mark-to-market valuations prepared by a third-party broker. Those 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 5 — Debt, the Company has $800.0 million of principal amount fixed-rate Senior Notes due in 2025. 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. |
2018 | 2017 | 2016 | |||||||||
Service cost | $ | 3,145 | $ | 2,820 | $ | 2,780 | |||||
Interest cost | 840 | 765 | 850 | ||||||||
Expected return on plan assets | (475 | ) | (360 | ) | (375 | ) | |||||
Recognition of actuarial loss | 340 | 350 | 200 | ||||||||
Total defined benefit pension plan expense | $ | 3,850 | $ | 3,575 | $ | 3,455 |
2018 | 2017 | 2016 | ||||||
Weighted average discount rate (1) | 1.81 | % | 1.78 | % | 1.78 | % | ||
Average compensation increase | 2.58 | % | 2.66 | % | 2.67 | % |
(1) | Discount rates are typically determined by utilizing the yields on long-term corporate or government bonds in the relevant country with a duration consistent with the expected term of the underlying pension obligations. |
2018 | 2017 | 2016 | |||||||||
Projected benefit obligation at beginning of year | $ | 45,450 | $ | 38,400 | $ | 35,870 | |||||
Service cost | 3,145 | 2,820 | 2,780 | ||||||||
Interest cost | 840 | 765 | 850 | ||||||||
Actuarial loss (gain) due to assumption changes and plan experience | (430 | ) | 690 | 1,480 | |||||||
Additions and contractual termination benefits | (950 | ) | (860 | ) | — | ||||||
Benefits paid (1) | (1,400 | ) | (920 | ) | (1,640 | ) | |||||
Foreign currency impact | (1,765 | ) | 4,555 | (940 | ) | ||||||
Projected benefit obligation at end of year (2) | $ | 44,890 | $ | 45,450 | $ | 38,400 |
(1) | The Company projects the following benefit payments will be made in future years directly to plan participants: $1.2 million in 2019; $1.5 million in 2020; $1.6 million in 2021; $1.7 million in 2022; $2.1 million in 2023; and $12.1 million in total in the five years thereafter. |
(2) | Measured as of December 31. |
Funded status of the plans: | 2018 | 2017 | 2016 | ||||||||
Projected benefit obligation | $ | 44,890 | $ | 45,450 | $ | 38,400 | |||||
Pension plan assets at fair value (1) | (19,460 | ) | (18,475 | ) | (14,465 | ) | |||||
Funded status – shortfall (2) | $ | 25,430 | $ | 26,975 | $ | 23,935 |
Amounts recorded in the Consolidated Balance Sheets for the plans: | |||||||||||
Other liabilities — accrued pension obligation (2) | $ | 25,430 | $ | 26,975 | $ | 23,935 | |||||
Stockholders’ equity — deferred actuarial loss (3) | $ | (5,738 | ) | $ | (5,861 | ) | $ | (5,797 | ) |
(1) | The pension plan assets are held by third-party trustees and are invested in a diversified portfolio of equities, high quality government and corporate bonds, and other investments. The assets are primarily valued based on Level 1 and Level 2 inputs under the fair value hierarchy in FASB ASC Topic 820, with the majority of the invested assets considered to be of low-to-medium investment risk. The Company projects a future long-term rate of return on these plan assets of 2.45%, which it believes is reasonable based on the composition of the assets and both current and projected market conditions. For the year ended December 31, 2018, the Company contributed $3.0 million to these plans, and benefits paid directly by the Company to participants were $1.4 million. |
(2) | The Funded status - shortfall represents the amount of the projected benefit obligation that the Company has not funded with a third-party trustee. This amount is a liability of the Company and is recorded in Other liabilities on the Company’s Consolidated Balance Sheets. |
(3) | The deferred actuarial loss as of December 31, 2018 is recorded in AOCI/L and will be reclassified out of AOCI/L and recognized as pension expense over approximately 13 years, subject to certain limitations set forth in FASB ASC Topic 715. The impact of this amortization on pension expense in 2019 is projected to result in approximately $0.2 million of additional expense. The amortization of deferred actuarial losses from AOCI/L to pension expense in each of the three years ended December 31, 2018 was immaterial. |
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Research | Conferences | Consulting | Other | Consolidated | |||||||||||||||
2018 | |||||||||||||||||||
Revenues | $ | 3,105,764 | $ | 410,461 | $ | 353,667 | $ | 105,562 | $ | 3,975,454 | |||||||||
Gross contribution | 2,144,097 | 207,260 | 102,541 | 65,075 | 2,518,973 | ||||||||||||||
Corporate and other expenses | (2,259,258 | ) | |||||||||||||||||
Operating income | $ | 259,715 | |||||||||||||||||
Research | Conferences | Consulting | Other | Consolidated | |||||||||||||||
2017 | |||||||||||||||||||
Revenues | $ | 2,471,280 | $ | 337,903 | $ | 327,661 | $ | 174,650 | $ | 3,311,494 | |||||||||
Gross contribution | 1,653,014 | 163,480 | 93,643 | 90,249 | 2,000,386 | ||||||||||||||
Corporate and other expenses | (2,006,715 | ) | |||||||||||||||||
Operating loss | $ | (6,329 | ) | ||||||||||||||||
Research | Conferences | Consulting | Other | Consolidated | |||||||||||||||
2016 | |||||||||||||||||||
Revenues | $ | 1,857,001 | $ | 268,605 | $ | 318,934 | $ | — | $ | 2,444,540 | |||||||||
Gross contribution | 1,285,611 | 136,655 | 89,734 | — | 1,512,000 | ||||||||||||||
Corporate and other expenses | (1,206,859 | ) | |||||||||||||||||
Operating income | $ | 305,141 |
2018 | 2017 | 2016 | ||||||||||
Total segment gross contribution | $ | 2,518,973 | $ | 2,000,386 | $ | 1,512,000 | ||||||
Costs and expenses: | ||||||||||||
Cost of services and product development - unallocated (1) | 12,319 | 9,090 | 13,108 | |||||||||
Selling, general and administrative | 1,884,141 | 1,599,004 | 1,089,184 | |||||||||
Depreciation and amortization | 255,601 | 240,171 | 61,969 | |||||||||
Acquisition and integration charges | 107,197 | 158,450 | 42,598 | |||||||||
Operating income (loss) | 259,715 | (6,329 | ) | 305,141 | ||||||||
Interest expense and other, net | 124,041 | 121,488 | 16,710 | |||||||||
Gain from divested operations | 45,447 | — | — | |||||||||
Provision (benefit) for income taxes | 58,665 | (131,096 | ) | 94,849 | ||||||||
Net income | $ | 122,456 | $ | 3,279 | $ | 193,582 |
(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. |
2018 | 2017 | 2016 | |||||||||
Long-lived assets: (1) | |||||||||||
United States and Canada | $ | 305,928 | $ | 288,735 | $ | 143,921 | |||||
Europe, Middle East and Africa | 67,306 | 84,840 | 42,326 | ||||||||
Other International | 50,800 | 41,674 | 24,630 | ||||||||
Total long-lived assets | $ | 424,034 | $ | 415,249 | $ | 210,877 |
(1) | Excludes goodwill, intangible assets and held-for-sale assets. |
Balance at Beginning of Year | Additions Charged to Expense | Additions Charged Against Revenues | Deductions from Reserve | Reclassification to Accounts Payable and Accrued Liabilities | Balance at End of Year | ||||||||||||||||||
2018: | |||||||||||||||||||||||
Bad debt allowance (1) | $ | 12,700 | $ | 12,500 | $ | — | $ | (11,300 | ) | $ | (6,200 | ) | $ | 7,700 | |||||||||
2017: | |||||||||||||||||||||||
Bad debt allowance and revenue reserve (1) | $ | 7,400 | $ | 16,600 | $ | 5,500 | $ | (16,800 | ) | $ | — | $ | 12,700 | ||||||||||
2016: | |||||||||||||||||||||||
Bad debt allowance and revenue reserve | $ | 6,900 | $ | 4,750 | $ | 4,850 | $ | (9,100 | ) | $ | — | $ | 7,400 |
Gartner, Inc. | |||
Date: | February 22, 2019 | By: | /s/ Eugene A. Hall |
Eugene A. Hall | |||
Chief Executive Officer |
Name | Title | Date | ||
/s/ Eugene A. Hall | Director and Chief Executive Officer | February 22, 2019 | ||
Eugene A. Hall | (Principal Executive Officer) | |||
/s/ Craig W. Safian | Executive Vice President and Chief Financial Officer | February 22, 2019 | ||
Craig W. Safian | (Principal Financial and Accounting Officer) | |||
/s/ Peter E. Bisson | Director | February 22, 2019 | ||
Peter E. Bisson | ||||
/s/ Richard J. Bressler | Director | February 22, 2019 | ||
Richard J. Bressler | ||||
/s/ Raul E. Cesan | Director | February 22, 2019 | ||
Raul E. Cesan | ||||
/s/ Karen E. Dykstra | Director | February 22, 2019 | ||
Karen E. Dykstra | ||||
/s/ Anne Sutherland Fuchs | Director | February 22, 2019 | ||
Anne Sutherland Fuchs | ||||
/s/ William O. Grabe | Director | February 22, 2019 | ||
William O. Grabe | ||||
/s/ Stephen G. Pagliuca | Director | February 22, 2019 | ||
Stephen G. Pagliuca | ||||
/s/ Eileen Serra | Director | February 22, 2019 | ||
Eileen Serra | ||||
/s/ James C. Smith | Director | February 22, 2019 | ||
James C. Smith |
By: | /s/ James C. Smith James C. Smith, Chairman of the Board of Directors |
Dated: | By: For Gartner, Inc. |
Dated: | By: Eugene A. Hall |
(a) | General Rule. Except as otherwise provided in this Agreement, the right to exercise this SAR will vest in accordance with the vesting schedule set forth in the notice of grant which constitutes part of this Agreement. Shares scheduled to vest on any date will vest only if the Grantee remains in Continued Service (as defined below) through such date. Subject to the following subsections of this Paragraph 3, should the Grantee’s Continued Service end at any time (the “Termination Date”) while the SAR remains outstanding, any unvested portion of this SAR will be immediately cancelled. |
(b) | Termination of Continued Service due to Death or Disability. If the Grantee’s termination of Continued Service is due to the Grantee’s death or Disability, the unvested portion of this SAR shall vest in full on the Termination Date. For the avoidance of doubt, if a Grantee’s Continued Service terminates due to his or her death or Disability and the Grantee is eligible for a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement, such termination of Continued Service shall be governed by this Paragraph 3(b) and shall not be treated as a Retirement. |
(c) | Termination of Continued Service due to Retirement-Eligible Voluntary Resignation During the Year of Grant. If termination of Continued Service is due to a voluntary resignation and the Grantee is eligible for a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement, occurring during the calendar year in which the grant was made, the unvested portion of the SAR shall continue to vest after the Termination Date as set forth in the notice of grant, despite the termination of Continued Service; provided, that (i) the portion of the SAR that will continue to vest will be limited as set forth in Paragraph 3(e) below depending on the Grantee’s age at Retirement, and (ii) the number of Shares to which this SAR pertains will be reduced to equal the percentage of days in that year in which the Grantee was in Continued Service (i.e., for the avoidance of doubt, the number of Shares will equal the number specified in the notice of grant, multiplied by the number of days from January 1 for which the Grantee was in Continued Service, divided by 365). |
(d) | Termination of Continued Service due to Retirement-Eligible Voluntary Resignation After the Year of Grant or Retirement-Eligible Termination without Cause. If the Grantee is eligible for a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement and his or her termination of Continued Service is due to (i) a voluntary resignation occurring any time after the calendar year in which the grant was made, or (ii) an involuntary termination without Cause, other than pursuant to a Qualifying Termination (which treatment is governed exclusively by Paragraph 3(f)), the unvested portion of the SAR shall continue to vest after the Termination Date as set forth in the notice of grant, despite the termination of Continued Service; provided, that the portion of the SAR that will continue to vest will be limited as set forth in Paragraph 3(e) below depending on the Grantee’s age at Retirement. |
(e) | Portion of SAR Subject to Continued Vesting Upon Retirement. If the Grantee’s Continued Service terminates due to a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement and: |
(i) | The Grantee is less than age 60 on the Termination Date, the unvested portion of the SAR that would have vested by its terms within the twelve (12) months from the Termination Date shall continue to vest as set forth in the notice of grant, despite the termination of Continued Service; |
(ii) | The Grantee is age 60 (but less than age 61) on the Termination Date, the unvested portion of the SAR that would have vested by its terms within the twenty-four (24) months from the Termination Date shall continue to vest as set forth in the notice of grant, despite the termination of Continued Service; |
(iii) | The Grantee is age 61 (but less than age 62) on the Termination Date, the unvested portion of the SAR that would have vested by its terms within the thirty-six (36) months from the Termination Date shall continue to vest as set forth in the notice of grant, despite the termination of Continued Service; and |
(iv) | The Grantee is age 62 or older on the Termination Date, the entire unvested portion of the SAR shall continue to vest after the Termination Date as set forth in the notice of grant, despite the termination of Continued Service. |
(f) | Qualifying Termination following a Change of Control. Unless the Grantee’s employment, severance or other written agreement with the Company provides more favorable treatment, in the event that the Grantee’s Continued Service is terminated without Cause (including as a result of the elimination of his or her position) during the twelve (12) months following a Change of Control (a “Qualifying Termination”), the unvested portion of the SAR shall vest on the Termination Date. For the avoidance of doubt, (i) to the extent that the Grantee is eligible for a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement and he or she experiences a Qualifying Termination, the vesting provisions set forth in this Paragraph 3(f) (not Paragraph 3(d)) shall control, and (ii) Section 13.10 of the Plan does not apply to the SAR granted hereunder. |
(g) | Other Conditions. Notwithstanding anything herein to the contrary, the vesting terms set forth in this Paragraph 3 are contingent upon the Grantee being in full compliance with all the terms of this Agreement at the time of vesting. The Committee, in its discretion, may accelerate the vesting of the balance, or some lesser portion of the balance, of the SARs at any time, subject to the terms of the Plan. If so accelerated, such SARs will be considered as having vested as of the date specified by the Committee. |
Termination Scenario | Post-Termination Exercise Period |
• Involuntary termination for Cause • Involuntary termination without Cause (not Retirement-eligible) • Voluntary resignation (not Retirement-eligible) | Earlier of Expiration Date or ninety (90) days after the date of termination of Continued Service (excluding any period during which Grantee is prohibited from trading under the Company’s Insider Trading Policy) |
• Death • Disability • Qualifying Termination | Earlier of Expiration Date or twelve (12) months after the date of termination of Continued Service |
• Retirement-eligible involuntary termination without Cause • Retirement-eligible voluntary resignation | Through the Expiration Date |
(a) | General Rule. Except as otherwise provided in this Agreement, the PSUs awarded by this Agreement are scheduled to vest in accordance with the vesting schedule set forth in the notice of grant. PSUs scheduled to vest on a particular date will vest only if the Grantee remains in Continued Service (as defined below) through such date. Subject to the following subsections of this Paragraph 3, should the Grantee’s Continued Service end at any time (the “Termination Date”) while the PSUs remain outstanding, any unvested PSUs will be immediately cancelled. |
(b) | Termination of Continued Service due to Death or Disability. If the Grantee’s termination of Continued Service is due to the Grantee’s death or Disability, the unvested portion of the PSUs shall vest in full on the Termination Date. For the avoidance of doubt, if a Grantee’s Continued Service terminates due to his or her death or Disability and the Grantee is eligible for a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement, such termination of Continued Service shall be governed by this Paragraph 3(b) and shall not be treated as a Retirement. |
(c) | Termination of Continued Service due to Retirement-Eligible Voluntary Resignation During the Year of Grant. If termination of Continued Service is due to a voluntary resignation and the Grantee is eligible for a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement, occurring during the calendar year in which the grant was made, the unvested portion of the PSUs shall continue to vest after the Termination Date as set forth in the notice of grant, despite the termination of Continued Service; provided, that (i) the number of PSUs that will continue to vest will be limited as set forth in Paragraph 3(e) below depending on the Grantee’s age at Retirement, and (ii) the target number of PSUs so granted will be reduced to equal the percentage of days in that year in which the Grantee was in Continued Service (i.e., for the avoidance of doubt, the target number of PSUs will equal the number specified in the notice of grant, multiplied by the number of days from January 1 for which the Grantee was in Continued Service, divided by 365). |
(d) | Termination of Continued Service due to Retirement-Eligible Voluntary Resignation After the Year of Grant or Retirement-Eligible Termination without Cause. If the Grantee is eligible for a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement and his or her termination of Continued Service is due to (i) a voluntary resignation occurring any time after the calendar year in which the grant was made, or (ii) an involuntary termination without Cause, other than pursuant to a Qualifying Termination (which treatment is governed exclusively by Paragraph 3(f)), the unvested portion of the PSUs shall continue to vest after the Termination Date as set forth in the notice of grant, despite the termination of Continued Service; provided, that the number of PSUs that will continue to vest will be limited as set forth in Paragraph 3(e) below depending on the Grantee’s age at Retirement. |
(e) | Number of PSUs Subject to Continued Vesting Upon Retirement. If the Grantee’s Continued Service terminates due to a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement and: |
(i) | The Grantee is less than age 60 on the Termination Date, the unvested portion of the PSUs that would have vested by its terms within the twelve (12) months from the Termination Date shall continue to vest as set forth in the notice of grant, despite the termination of Continued Service; |
(ii) | The Grantee is age 60 (but less than age 61) on the Termination Date, the unvested portion of the PSUs that would have vested by its terms within the twenty-four (24) months from the Termination Date shall continue to vest as set forth in the notice of grant, despite the termination of Continued Service; |
(iii) | The Grantee is age 61 (but less than age 62) on the Termination Date, the unvested portion of the PSUs that would have vested by its terms within the thirty-six (36) months from the Termination Date shall continue to vest as set forth in the notice of grant, despite the termination of Continued Service; and |
(iv) | The Grantee is age 62 or older on the Termination Date, the entire unvested portion of the PSUs shall continue to vest after the Termination Date as set forth in the notice of grant, despite the termination of Continued Service. |
(f) | Qualifying Termination following a Change of Control. Unless the Grantee’s employment, severance or other written agreement with the Company provides more favorable treatment, in the event that the Grantee’s Continued Service is involuntarily terminated without Cause (including as a result of the elimination of his or her position) during the twelve (12) months following a Change of Control (“Qualifying Termination”), the unvested portion of the PSUs shall vest on the Termination Date, with the performance goals hereunder being deemed achieved at one-hundred percent (100%) of the target level of performance. For the avoidance of doubt, (i) to the extent that the Grantee is eligible for a Retirement in accordance with the requirements set forth in Paragraph 28 of this Agreement and he or she experiences a Qualifying Termination, the vesting provisions set forth in this Paragraph 3(f) (not Paragraph 3(d)) shall control, and (ii) Section 13.10 of the Plan does not apply to the PSUs granted hereunder. |
(g) | Other Conditions. Notwithstanding anything herein to the contrary, (i) the vesting terms set forth in this Paragraph 3 are contingent upon the Grantee being in full compliance with all the terms of this Agreement at the time of vesting, and (ii) in the case of PSUs as to which the Performance Adjustment referred to in the notice of grant has not been made at the Termination Date, the PSUs that will be deemed vested on the Termination Date or otherwise pursuant to this Paragraph 3 shall be determined, and shall vest, when such Performance Adjustment has occurred. |
Subsidiaries | State/Country | |
Burton Group, Inc. | Utah, USA | |
Capterra, Inc. | Delaware, USA | |
Computer Financial Consultants, Inc. | Delaware, USA | |
Computer Financial Consultants, Limited | United Kingdom | |
Dataquest, Inc. | California, USA | |
G.G. Properties, Ltd. | Bermuda | |
Gartner Advisory (Singapore) PTE LTD. | Singapore | |
Gartner Australasia PTY Limited ( including branch in New Zealand) | Australia | |
Gartner Austria GmbH | Austria | |
Gartner Belgium BVBA ( including branch in Luxembourg) | Belgium | |
Gartner Canada Co. | Nova Scotia, Canada | |
Gartner Consulting (Beijing) Co., LTD. | China | |
Gartner Denmark ApS | Denmark | |
Gartner Deutschland, GmbH | Germany | |
Gartner do Brasil Servicos De Pesquisas LTDA. | Brazil | |
Gartner Espana, S.L. ( including branch in Portugal) | Spain | |
Gartner Europe Holdings, B.V. | The Netherlands | |
Gartner France S.A.R.L. | France | |
Gartner Finland Oy | Finland | |
Gartner Gulf FZ, LLC - ( including branch in Abu Dhabi) | United Arab Emirates | |
Gartner Group Taiwan LTD. | Taiwan | |
Gartner Group (Thailand) Ltd. | Thailand | |
Gartner Holdings Ireland UC | Ireland | |
Gartner Holdings, LLC | Delaware, USA | |
Gartner Hong Kong, Limited | Hong Kong | |
Gartner India Research & Advisory Services Private Ltd. | India | |
Gartner Investments I, LLC | Delaware, USA | |
Gartner Investments II, LLC | Delaware, USA | |
Gartner Ireland Limited | Ireland | |
Gartner Italia, S.r.L. | Italy | |
Gartner Israel Advisory Ltd. | Israel | |
Gartner Japan Ltd. | Japan | |
Gartner Mexico S. de R. L. de C.V. | Mexico | |
Gartner Nederland B.V. | The Netherlands | |
Gartner Norge A.S. | Norway | |
Gartner Poland SP z.o.o | Poland | |
Gartner Research & Advisory Korea Co., Ltd. | Korea | |
Gartner Research & Advisory (Malaysia) Ltd. | Malaysia | |
Gartner Research Holdings Ltd. | Bermuda |
Gartner RUS LLC | Russia | |
Gartner Saudi Arabia Ltd. | Saudi Arabia | |
Gartner South Africa (Pty) Ltd. | South Africa | |
Gartner Sverige AB | Sweden | |
Gartner Switzerland GmbH | Switzerland | |
Gartner Turkey Teknoloji Arastirma ve Danismanlik Hizmetleri Limited Sirketi | Turkey | |
Gartner U.K. Limited | United Kingdom | |
1422722 Ontario, Inc. | Canada | |
Meta Group GmbH | Germany | |
META Saudi Arabia | Saudi Arabia | |
Nubera eBusiness, S.L. | Spain | |
Machina Research USA, Inc. | Delaware, USA | |
Newco 5CL Limited | United Kingdom | |
Rapture World Limited | United Kingdom | |
SCM World US, Inc. | Delaware, USA | |
SCM World Limited | United Kingdom | |
Senexx Israel Ltd. | Israel | |
L2 Think Tank Holdings Ltd | Ireland | |
L2 Think Tank International Holdings | Ireland | |
L2 UK Limited | United Kingdom | |
L2, Inc. | Delaware, USA | |
Sircleit, Inc. | Delaware, USA | |
Software Advice, Inc. | California, USA | |
Sports Leadership Acquisition Co. | Delaware, USA | |
Talent Assessment Holding Ltd. | United Kingdom | |
The Research Board, Inc. | Delaware, USA | |
Valtera Corporation US | Illinois, USA | |
CEB Australia PTY Limited | Australia | |
CEB ( Barbados) SRL | Barbados | |
CEB Global Holdings Limited | United Kingdom | |
CEB Global Limited | United Kingdom | |
CEB Holdings Australia PTY Limited | Australia | |
CEB Holdings UK 1 Limited | United Kingdom | |
CEB Holdings UK 2 Limited | United Kingdom | |
CEB Inc. | Delaware, USA | |
CEB India Private Limited | Gurgaon | |
CEB International Holdings, Inc | Delaware, USA | |
CEB Singapore Pte. Limited | Singapore | |
CFO Forum Australia PTY Ltd | Australia | |
CXO Acquisition Co | Delaware, USA | |
Evanta Ventures Inc. | Delaware, USA | |
HR Director Forum PTY Ltd | Australia |
(1) | I have reviewed this Annual Report on Form 10-K of Gartner, Inc.; |
(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; |
(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 we 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 |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (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 |
(5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Eugene A. Hall |
Eugene A. Hall |
Chief Executive Officer |
Date: February 22, 2019 |
(1) | I have reviewed this Annual Report on Form 10-K of Gartner, Inc.; |
(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; |
(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 we 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 |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (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 |
(5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Craig W. Safian |
Craig W. Safian |
Chief Financial Officer |
Date: February 22, 2019 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Eugene A. Hall | |
Name: | Eugene A. Hall |
Title: | Chief Executive Officer |
Date: February 22, 2019 | |
/s/ Craig W. Safian | |
Name: | Craig W. Safian |
Title: | Chief Financial Officer |
Date: February 22, 2019 |
Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Jan. 31, 2019 |
Jun. 30, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | GARTNER INC | ||
Entity Central Index Key | 0000749251 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 89,711,737 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 11,675,031,229 |
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fees receivable, allowances | $ 7,700 | $ 12,700 |
Preferred stock par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value (in Dollars per share) | $ 0.0005 | $ 0.0005 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 163,602,067 | 156,234,415 |
Treasury stock, Shares | 73,899,977 | 72,779,205 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Revenues: | |||
Total revenues | $ 3,975,454 | $ 3,311,494 | $ 2,444,540 |
Costs and expenses: | |||
Cost of services and product development | 1,468,800 | 1,320,198 | 945,648 |
Selling, general and administrative | 1,884,141 | 1,599,004 | 1,089,184 |
Depreciation | 68,592 | 63,897 | 37,172 |
Amortization of intangibles | 187,009 | 176,274 | 24,797 |
Acquisition and integration charges | 107,197 | 158,450 | 42,598 |
Total costs and expenses | 3,715,739 | 3,317,823 | 2,139,399 |
Operating income (loss) | 259,715 | (6,329) | 305,141 |
Interest income | 2,566 | 3,011 | 2,449 |
Interest expense | (126,774) | (127,947) | (27,565) |
Gain from divested operations | 45,447 | 0 | 0 |
Other income, net | 167 | 3,448 | 8,406 |
Income (loss) before income taxes | 181,121 | (127,817) | 288,431 |
Provision (benefit) for income taxes | 58,665 | (131,096) | 94,849 |
Net income | $ 122,456 | $ 3,279 | $ 193,582 |
Net income per share: | |||
Basic (in dollars per share) | $ 1.35 | $ 0.04 | $ 2.34 |
Diluted (in dollars per share) | $ 1.33 | $ 0.04 | $ 2.31 |
Weighted average shares outstanding: | |||
Basic (in shares) | 90,827 | 88,466 | 82,571 |
Diluted (in shares) | 92,122 | 89,790 | 83,820 |
Research | |||
Revenues: | |||
Total revenues | $ 3,105,764 | $ 2,471,280 | $ 1,857,001 |
Conferences | |||
Revenues: | |||
Total revenues | 410,461 | 337,903 | 268,605 |
Consulting | |||
Revenues: | |||
Total revenues | 353,667 | 327,661 | 318,934 |
Other | |||
Revenues: | |||
Total revenues | $ 105,562 | $ 174,650 | $ 0 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 122,456 | $ 3,279 | $ 193,582 |
Other comprehensive (loss) income, net of tax: | |||
Foreign currency translation adjustments | (31,245) | 47,363 | (5,986) |
Interest rate swaps - net change in deferred gain or loss | (10,844) | 3,892 | 1,670 |
Pension plans - net change in deferred actuarial loss | 123 | (64) | (965) |
Other comprehensive (loss) income, net of tax | (41,966) | 51,191 | (5,281) |
Comprehensive income | $ 80,490 | $ 54,470 | $ 188,301 |
Business and Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Business. Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their goals and build the successful organizations of tomorrow. We believe we have an unmatched combination of expert-led, practitioner-sourced and data-driven research that steers clients toward the right decisions on the issues that matter most. We’re a trusted advisor and an objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size. Segments. Gartner currently delivers its products and services globally through three business segments: Research, Conferences (formerly called Events) and Consulting. Our revenues by business segment are discussed below under the heading "Adoption of new accounting standards." When used in these notes, the terms “Gartner,” “Company,” “we,” “us” or “our” refer to Gartner, Inc. and its consolidated subsidiaries. During 2018, the Company divested all three of the non-core businesses that comprised its Other segment, each of which were acquired as part of the acquisition of CEB Inc. in April 2017. As a result of these divestitures and the movement of a small residual product in the Other segment into the Research business, the Company is no longer recording any additional operating activity in the Other segment effective September 1, 2018. Additional information regarding the divestitures is included in Note 2 –Acquisitions and Divestitures. Basis of presentation. The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270 for financial information and with the applicable instructions of U.S. Securities and Exchange Commission (“SEC”) Regulation S-X. The fiscal year of Gartner is the twelve-month period from January 1 through December 31. All references to 2018, 2017 and 2016 herein refer to the fiscal year unless otherwise indicated. Principles of consolidation. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Use of estimates. The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of fees receivable, goodwill, intangible assets and other long-lived assets, as well as tax accruals and other liabilities. In addition, estimates are used in revenue recognition, income tax expense or benefit, performance-based compensation charges, depreciation and amortization. Management believes its use of estimates in the accompanying consolidated financial statements to be reasonable. Management continually evaluates and revises its estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. Management adjusts these estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time. As a result, differences between our estimates and actual results could be material and would be reflected in the Company’s consolidated financial statements in future periods. Business acquisitions. The Company had business acquisitions in both 2017 and 2016 and information related to those acquisitions is included in Note 2 – Acquisitions and Divestitures. The Company accounts for business acquisitions in accordance with the acquisition method of accounting as prescribed by FASB ASC Topic 805, Business Combinations. The acquisition method of accounting requires the Company to record the net assets and liabilities acquired based on their estimated fair values as of the acquisition date, with any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to be recorded to goodwill. Under the acquisition method, the operating results of acquired companies are included in the Company's consolidated financial statements beginning on the date of acquisition. The determination of the fair values of intangible and other assets acquired in acquisitions requires management judgment and the consideration of a number of factors, significant among them the historical financial performance of the acquired businesses and projected performance, estimates surrounding customer turnover, as well as assumptions regarding the level of competition and the cost to reproduce certain assets. Establishing the useful lives of the intangible assets also requires management judgment and the evaluation of a number of factors, among them the expected use of the asset, historical client retention rates, consumer awareness and trade name history, as well as any contractual provisions that could limit or extend an asset's useful life. The Company classifies charges that are directly-related to its acquisitions in the line Acquisition and integration charges in the Consolidated Statements of Operations. The Company recorded $107.2 million, $158.5 million and $42.6 million of such charges in 2018, 2017 and 2016, respectively. Information related to those charges is included in Note 2 – Acquisitions and Divestitures. Revenue recognition. On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers" ("ASU No. 2014-09"). ASU No. 2014-09 and related amendments required changes in our revenue recognition policies as well as enhanced disclosures. The Company adopted ASU No. 2014-09 using the modified retrospective method of adoption. Under this 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 adoption of ASU No. 2014-09 did not have a material impact on the Company’s consolidated financial statements. Prior to January 1, 2018, the Company recognized revenue in accordance with then-existing U.S. GAAP and SEC Staff Accounting Bulletin No. 104, "Revenue Recognition" (“prior GAAP”). Under both ASU No. 2014-09 and prior GAAP, revenue can only be recognized when all of the required criteria are met. Information regarding our adoption of ASU No. 2014-09 and its impact on the Company's consolidated financial statements and related disclosures is provided below under the heading "Adoption of new accounting standards." Allowance for losses. The Company maintains an allowance for losses that is comprised of a bad debt allowance and, through December 31, 2017, a revenue reserve. Because the adoption of ASU No. 2014-09 on January 1, 2018 discussed above affected the allowance for losses, information regarding the allowance is provided below under the heading "Adoption of new accounting standards." Cost of services and product development (“COS”). COS expense includes the direct costs incurred in the creation and delivery of our products and services. These costs primarily relate to personnel. Selling, general and administrative (“SG&A”). SG&A expense includes direct and indirect selling costs, general and administrative costs, and charges against earnings related to uncollectible accounts. Commission expense. The Company records deferred commissions upon the signing of customer contracts and amortizes the deferred amount as commission expense over a period that considers various relevant factors. Commission expense is included in SG&A expense in the Consolidated Statements of Operations. Additional information regarding deferred commissions and the amortization of such costs is provided below under the heading "Adoption of new accounting standards." Stock-based compensation expense. The Company accounts for stock-based compensation awards in accordance with FASB ASC Topics 505 and 718 and SEC Staff Accounting Bulletins No. 107 and No. 110. Stock-based compensation expense for equity awards is based on the fair value of the award on the date of grant. The Company recognizes stock-based compensation expense over the period that the related service is performed, which is generally the same as the vesting period of the underlying award. During 2018, 2017 and 2016, the Company recognized $66.2 million, $78.9 million and $46.7 million, respectively, of stock-based compensation expense. Effective January 1, 2016, the Company adopted ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU No. 2016-09"), which mandated certain changes in accounting for stock-based compensation. Among other things, ASU No. 2016-09 permits companies to make an entity-wide accounting policy election to recognize forfeitures of share-based compensation awards as they occur or make an estimate by applying a forfeiture rate each quarter. The Company previously estimated forfeitures but elected to change its accounting policy and account for forfeitures as they occur. ASU No. 2016-09 requires this change in accounting policy to be applied using a cumulative effect adjustment to accumulated earnings as of the beginning of the period in which the rule is adopted. Accordingly, the Company recorded a $0.3 million decrease to its opening accumulated earnings effective January 1, 2016. Income taxes. The Company uses the asset and liability method of accounting for income taxes. We estimate our income taxes in each of the jurisdictions where we operate. This process involves estimating our current tax expense or benefit together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. When assessing the realizability of deferred tax assets, we consider if it is more likely than not that some or all of the deferred tax assets will not be realized. In making this assessment, we consider the availability of loss carryforwards, projected reversals of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning strategies. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained based on the technical merits of the position. The Company adopted ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory," on January 1, 2018. Information regarding our adoption of this new accounting standard and its impact on the Company's consolidated financial statements is provided below under the heading "Adoption of new accounting standards." Cash and cash equivalents. Includes cash and all highly liquid investments with original maturities of three months or less, which are considered cash equivalents. The carrying value of cash equivalents approximates fair value due to their short-term maturity. Investments with maturities of more than three months are classified as marketable securities. Interest earned is classified in Interest income in the Consolidated Statements of Operations. On January 1, 2018, the Company adopted ASU No. 2016-18, "Restricted Cash" ("ASU No. 2016-18"). ASU No. 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on an entity's statement of cash flows. A table presenting the beginning-of-period and end-of-period cash amounts from the Company's Consolidated Balance Sheets and the total cash amounts presented in the accompanying Consolidated Cash Flow Statements is provided below under the heading "Adoption of new accounting standards." Property, equipment and leasehold improvements. The Company leases all of its facilities and certain equipment. These leases are all classified as operating leases in accordance with FASB ASC Topic 840, Leases. The cost of these operating leases, including any contractual rent increases, rent concessions and landlord incentives, is recognized ratably over the life of the related lease agreement. Lease expense was $93.5 million, $87.9 million and $38.0 million in 2018, 2017 and 2016, respectively. Equipment, leasehold improvements and other fixed assets owned by the Company are recorded at cost less accumulated depreciation. Except for leasehold improvements, these fixed assets are depreciated using the straight-line method over the estimated useful life of the underlying asset. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the improvement or the remaining term of the related lease. The Company's total depreciation expense was $68.6 million, $63.9 million and $37.2 million in 2018, 2017 and 2016, respectively. The Company's total fixed assets, less accumulated depreciation and amortization, consisted of the following (in thousands):
The Company incurs costs to develop internal-use software used in its operations, and certain of those costs meeting the criteria outlined in FASB ASC Topic 350, "Intangibles - Goodwill and Other," are capitalized and amortized over future periods. Net capitalized development costs for internal-use software were $37.4 million and $26.9 million at December 31, 2018 and 2017, respectively, which is included in the Computer equipment and software category above. Amortization expense for capitalized internal-use software development costs, which is classified in Depreciation in the Consolidated Statements of Operations, totaled $13.2 million, $9.9 million and $8.8 million in 2018, 2017 and 2016, respectively. Finite-lived intangible assets. The Company has finite-lived intangible assets that are amortized against earnings using the straight-line method over the expected useful life of the underlying asset. Changes in intangible assets subject to amortization during the two-year period ended December 31, 2018 were as follows (in thousands):
Amortization expense related to finite-lived intangible assets was $187.0 million, $176.3 million and $24.8 million in 2018, 2017 and 2016, respectively. The estimated future amortization expense by year for finite-lived intangible assets is as follows (in thousands):
Goodwill. Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired. Evaluations of the recoverability of goodwill are performed in accordance with FASB ASC Topic 350, which requires an annual assessment of potential goodwill impairment at the reporting unit level and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. The annual assessment of the recoverability of recorded goodwill can be based on either a qualitative or quantitative assessment or a combination of the two approaches. Both methods utilize estimates which, in turn, require judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the resulting estimates are subject to uncertainty. If our annual goodwill impairment evaluation determines that the fair value of a reporting unit is less than its related carrying amount, we may recognize an impairment charge. In connection with our most recent annual impairment test of goodwill during the quarter ended September 30, 2018, which indicated no impairment of recorded goodwill, the Company utilized the quantitative approach in assessing the fair values of its reporting units relative to their respective carrying values. The following table presents changes to the carrying amount of goodwill by segment, including the Company's Other segment, during the two-year period ended December 31, 2018 (in thousands):
Impairment of long-lived assets. The Company's long-lived assets primarily consist of intangible assets other than goodwill and property, equipment and leasehold improvements. The Company reviews its long-lived asset groups for impairment whenever events or changes in circumstances indicate that the carrying amount of the respective asset may not be recoverable. Such evaluation may be based on a number of factors, including current and projected operating results and cash flows, and changes in management’s strategic direction as well as external economic and market factors. The Company evaluates the recoverability of these assets by determining whether their carrying values can be recovered through undiscounted future operating cash flows. If events or circumstances indicate that the carrying values might not be recoverable based on undiscounted future operating cash flows, an impairment loss would be recognized. The amount of impairment, if any, is measured based on the difference between the projected discounted future operating cash flows, using a discount rate reflecting the Company’s average cost of funds, and the carrying value of the asset. The Company did not record any impairment charges for long-lived asset groups during the three-year period ended December 31, 2018. Pension obligations. The Company has defined benefit pension plans in several of its international locations (see Note 13 — Employee Benefits). Benefits earned under these plans are generally based on years of service and level of employee compensation. The Company accounts for its defined benefit plans in accordance with the requirements of FASB ASC Topic 715. The Company determines the periodic pension expense and related liabilities for these plans through actuarial assumptions and valuations. The Company recognized $3.9 million, $3.6 million and $3.5 million of pension expense in 2018, 2017 and 2016, respectively. Debt. The Company presents amounts borrowed in the Consolidated Balance Sheets at amortized cost, net of deferred financing fees. Interest accrued on amounts borrowed is classified as Interest expense in the Consolidated Statements of Operations. The Company had $2.3 billion of principal amount of debt outstanding at December 31, 2018 compared to $3.3 billion at December 31, 2017, which reflects the Company's significant principal repayments on its debt subsequent to the completion of the CEB Inc. acquisition. Note 5 — Debt provides information regarding the Company's debt. Foreign currency exposure. The functional currency of our foreign subsidiaries is typically the local currency. All assets and liabilities of foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at average exchange rates for the year. The resulting translation adjustments are recorded as foreign currency translation adjustments, a component of Accumulated other comprehensive (loss) income, net within the Stockholders’ Equity section of the Consolidated Balance Sheets. Currency transaction gains or losses arising from transactions denominated in currencies other than the functional currency of a subsidiary are recognized in results of operations in Other income, net within the Consolidated Statements of Operations. The Company had net currency transaction gains (losses) of $9.2 million, $(5.5) million and $(0.4) million in 2018, 2017 and 2016, respectively. The Company enters into foreign currency forward exchange contracts to mitigate the effects of adverse fluctuations in foreign currency exchange rates on certain transactions. Those contracts generally have short durations and are recorded at fair value with both realized and unrealized gains and losses recorded in Other income, net. The net gain (loss) from foreign currency forward exchange contracts was $(10.4) million, $0.8 million and $(0.3) million in 2018, 2017 and 2016, respectively. Comprehensive income. The Company reports comprehensive income in a separate statement called the Consolidated Statements of Comprehensive Income, which is included herein. The Company's comprehensive income disclosures are included in Note 7 — Stockholders' Equity. Fair value disclosures. The Company has a limited number of assets and liabilities that are adjusted to fair value at each balance sheet date. The Company’s fair value disclosures are included in Note 12 — Fair Value Disclosures. Concentrations of credit risk. Assets that may subject the Company to concentration of credit risk consist primarily of short-term, highly liquid investments classified as cash equivalents, fees receivable, contract assets, interest rate swaps and a pension reinsurance asset. The majority of the Company’s cash equivalent investments and its interest rate swap contracts are with investment grade commercial banks. Fees receivable and contract asset balances deemed to be collectible from customers have limited concentration of credit risk due to our diverse customer base and geographic dispersion. The Company’s pension reinsurance asset (see Note 13 — Employee Benefits) is maintained with a large international insurance company that was rated investment grade as of December 31, 2018 and 2017. Stock repurchase programs. The Company records the cost to repurchase its own common shares as treasury stock. During 2018, 2017 and 2016, the Company used $260.8 million, $41.3 million and $59.0 million, respectively, in cash for stock repurchases (see Note 7 — Stockholders’ Equity for additional information). Shares repurchased by the Company are added to treasury shares and are not retired. Adoption of new accounting standards. The Company adopted the accounting standards described below during 2018: Certain Tax Effects Stranded In Accumulated Other Comprehensive Income — On April 1, 2018, the Company early adopted ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU No. 2018-02"). ASU No. 2018-02 provides an entity with the option to reclassify to retained earnings the tax effects from items that have been stranded in accumulated other comprehensive income as a result of the U.S. Tax Cuts and Jobs Act of 2017 (the “Act”). Entities can adopt ASU No. 2018-02 using one of two transition methods: (i) retrospective to each period wherein the income tax effects of the Act related to items remaining in accumulated other comprehensive income are recognized or (ii) at the beginning of the period of adoption. Gartner elected to early adopt ASU No. 2018-02 as of the beginning of the second quarter of 2018, which resulted in a reclassification of $0.6 million of stranded tax amounts related to the Act from Accumulated other comprehensive (loss) income, net to Accumulated earnings. ASU No. 2018-02 had no impact on the Company's operating results in 2018. Stock Compensation Award Modifications — On January 1, 2018, the Company adopted ASU No. 2017-09, "Compensation—Stock Compensation - Scope of Modification Accounting" ("ASU No. 2017-09"). ASU No. 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The adoption of ASU No. 2017-09 had no impact on the Company's consolidated financial statements. Retirement Benefits Cost Presentation — On January 1, 2018, the Company adopted ASU No. 2017-07, "Compensation—Retirement Benefits" ("ASU No. 2017-07"). ASU No. 2017-07 improves the reporting of net benefit cost in the financial statements, provides additional guidance on the presentation of net benefit cost in the income statement and clarifies the components eligible for capitalization. The adoption of ASU No. 2017-07 had an immaterial impact on the classification of benefit expense on the Company's Consolidated Statements of Operations. Partial Sales of Non-financial Assets — On January 1, 2018, the Company adopted ASU No. 2017-05, "Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-financial Assets" ("ASU No. 2017-05"). ASU No. 2017-05 clarifies the scope of the FASB’s guidance on non-financial asset derecognition as well as the accounting for partial sales of non-financial assets. It conforms the derecognition guidance on non-financial assets with the model for revenue transactions. The adoption of ASU No. 2017-05 had no impact on the Company's consolidated financial statements. Definition of a Business — On January 1, 2018, the Company adopted ASU No. 2017-01, "Clarifying the Definition of a Business" ("ASU No. 2017-01"). ASU No. 2017-01 changes the U.S. GAAP definition of a business. Such change can impact the accounting for asset purchases, acquisitions, goodwill impairment and other assessments. The adoption of ASU No. 2017-01 had no impact on the Company's consolidated financial statements. Presentation of Restricted Cash — On January 1, 2018, the Company adopted ASU No. 2016-18, "Restricted Cash" ("ASU No. 2016-18"). ASU No. 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on an entity's statement of cash flows. ASU No. 2016-18 must be applied using a retrospective transition method to each comparative period presented in an entity's financial statements. As a result of the adoption of ASU No. 2016-18, the Company's restricted cash balances are now included in the beginning-of-period and end-of-period total amounts presented on the accompanying Consolidated Statements of Cash Flows. When compared to the Company's previously issued statement of cash flows for 2017, the adoption of ASU No. 2016-18 resulted in: (i) an increase of $7.0 million in cash used in investing activities; (ii) an increase of $18.2 million in the end-of-period total cash amount; and (iii) an increase of $25.1 million in the beginning-of-period total cash amount. The corresponding effects on the statement of cash flows for 2016 were: (i) an increase of $14.0 million in cash used in investing activities; (ii) an increase of $25.1 million in the end-of-period total cash amount; and (iii) an increase of $39.1 million in the beginning-of-period total cash amount. Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company's Consolidated Balance Sheets and the total cash amounts presented in the accompanying Consolidated Cash Flow Statements (in thousands).
Income Taxes — On January 1, 2018, the Company adopted ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory" ("ASU No. 2016-16"). ASU No. 2016-16 accelerates the recognition of taxes on certain intra-entity transactions. U.S. GAAP previously required deferral of the income tax implications of an intercompany sale of assets until the assets were sold to a third party or recovered through use. Under ASU No. 2016-16, the seller’s tax effects and the buyer’s deferred taxes on asset transfers are immediately recognized upon the sale. Pursuant to the transition rules in ASU No. 2016-16, any taxes attributable to pre-2018 intra-entity transfers that were previously deferred should be accelerated and recorded to accumulated earnings on the date of adoption. As a result of this transition rule, certain of the Company's balance sheet income tax accounts pertaining to pre-2018 intra-entity transfers, which aggregated $13.7 million, were reversed against accumulated earnings on January 1, 2018. Pursuant to the provisions of ASU No. 2016-16, the Company recorded an income tax benefit of $6.8 million in 2018 related to intra-entity transfers upon the merger of certain foreign subsidiaries. ASU No. 2016-16 could have a material impact on the Company's consolidated financial statements in the future, depending on the nature, size and tax consequences of intra-entity transfers, if any. Statement of Cash Flows — On January 1, 2018, the Company adopted ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments" ("ASU No. 2016-15"). ASU No. 2016-15 sets forth classification requirements for certain cash flow transactions. The adoption of ASU No. 2016-15 had no impact on the Company's consolidated financial statements. Financial Instruments Recognition and Measurement — On January 1, 2018, the Company adopted ASU No. 2016-01, "Financial Instruments Overall - Recognition and Measurement of Financial Assets and Liabilities" ("ASU No. 2016-01"), to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Among the significant changes required by ASU No. 2016-01 is that equity investments are to be measured at fair value with changes in fair value recognized in net income. The adoption of ASU No. 2016-01 had no impact on the Company's consolidated financial statements. Revenue Recognition — On January 1, 2018, the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers," as amended ("ASU No. 2014-09"). The adoption of the standard did not have a material impact on the Company's consolidated financial statements. However, as required by ASU No. 2014-09, the Company's disclosures around revenue recognition have been significantly expanded. Additionally, the Company's accounting policies have been updated to reflect the adoption of ASU No. 2014-09. The following sections provide an overview of the Company's revenues by segment along with the required disclosures under the new revenue recognition standard. Our business and our revenues Gartner currently delivers its products and services globally through three business segments: Research, Conferences and Consulting. Our revenues from those business segments are discussed below. Research Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of an enterprise through research and other reports, briefings, proprietary tools, access to our analysts and advisors, peer networking services and membership programs that enable our clients to make better decisions. Gartner's traditional strengths in information technology (“IT”), marketing and supply chain research were enhanced in 2017 with Gartner's acquisition of CEB Inc., which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, finance, sales and legal. Research revenues are mainly derived from subscription contracts for research products, representing approximately 90% of the segment’s revenue. The related revenues are deferred and recognized ratably over the applicable contract term (i.e., as we provide services over the contract period). Fees derived from assisting organizations in selecting the right business software for their needs are recognized at a point in time (i.e., when the lead is provided to the vendor). The Company enters into subscription contracts for research products that generally are for twelve-month periods or longer. Approximately 75% to 80% of our annual and multi-year Research subscription contracts provide for billing of the first full service period upon signing. In subsequent years, multi-year subscription contracts are normally billed prior to the contract’s anniversary date. Our other Research subscription contracts are usually invoiced in advance, commencing with the contract signing, on (i) a quarterly, monthly or other recurring basis or (ii) in accordance with a customized invoicing schedule. Research contracts are generally non-cancelable and non-refundable, except for government contracts that may have cancellation or fiscal funding clauses, which historically have not produced material cancellations. It is our policy to record the amount of a subscription contract that is billable as a fee receivable at the time the contract is signed with a corresponding amount as deferred revenue because the contract represents a legally enforceable claim. Conferences Conferences (formerly called Events) provides business professionals across the organization the opportunity to learn, share and network. From our flagship CIO conference Gartner IT Symposium, to industry-leading conferences focused on specific business roles and topics, to member-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice live. We earn revenues from both the attendees and exhibitors at our conferences and meetings. Attendees are generally invoiced for the full attendance fee upon their completion of an online registration form or their signing of a contract, while exhibitors typically make several individual payments commencing with the signing of a contract. We collect almost all of the invoiced amounts in advance of the related activity, resulting in the recording of deferred revenue. We recognize both the attendee and exhibitor revenue as we satisfy our related performance obligations (i.e., when the related activity is held). The Company defers certain costs directly related to specific conferences and meetings and expenses those costs in the period during which the related activity occurs. The Company's policy is to defer only those costs that are incremental and directly attributable to a specific activity, primarily prepaid site and production services costs. Other costs of organizing and producing our activities, primarily Company personnel and non-conference specific expenses, are expensed in the period incurred. At the end of each fiscal quarter, the Company assesses whether the expected direct costs of producing a scheduled activity will exceed the projected revenues. If such costs are expected to exceed revenues, the Company records the expected loss in the period determined. Consulting Consulting provides customized solutions to unique client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving IT performance with a focus on cost, performance, efficiency and quality, and contract optimization services. Consulting revenues, primarily derived from custom consulting and measurement services, are principally generated from fixed fee or time and materials engagements. Revenues from fixed fee engagements are recognized as we work to satisfy our performance obligations, while revenues from time and materials engagements are recognized as work is delivered and/or services are provided. In both of these circumstances, we satisfy our performance obligations and control of the services are passed to our customers over time (i.e., during the duration of the contract or consulting engagement). On a contract-by-contract basis, we typically use actual labor hours incurred compared to total expected labor hours to measure the Company’s performance in respect of our fixed fee engagements. If our labor and other costs on an individual contract are expected to exceed the total contract value or the contract’s funded ceiling amount, the Company reflects an adjustment to the contract’s overall profitability in the period determined. Revenues related to contract optimization engagements are contingent in nature and are only recognized at the point in time when all of the conditions related to their payment have been satisfied. Consulting customers are invoiced based on the specific terms and conditions in their underlying contracts. We typically invoice our Consulting customers after we have satisfied some or all of the related performance obligations and the related revenue has been recognized. We record fees receivable for amounts that are billed or billable. We also record contract assets, which represent amounts for which we have recognized revenue but lack the unconditional right to payment as of the balance sheet date due to our required continued performance under the relevant contract, progress billing milestones or other billing-related restrictions. The Company’s contract assets are discussed below. Overview of ASU No. 2014-09 ASU No. 2014-09 requires a five-step evaluative process that consists of:
ASU No. 2014-09 is intended to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses in previously existing revenue recognition rules; provide a more robust framework for addressing revenue recognition issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and provide more useful information to users of financial statements through improved disclosures. The Company adopted ASU No. 2014-09 using the modified retrospective method of adoption. Under this 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 adoption of ASU No. 2014-09 did not result in a cumulative effect adjustment to the Company's Accumulated earnings in its consolidated financial statements. However, the adoption of the new standard required reclassifications of certain amounts presented in the Company’s consolidated balance sheet. As of January 1, 2018, these items were (i) the reclassification of certain fees receivable that met the definition of a contract asset, aggregating $26.7 million, from Fees receivable, net to Prepaid expenses and other current assets; and (ii) the reclassification of a refund liability, aggregating $6.2 million, from the allowance for fees receivable to Accounts payable and accrued liabilities. Related to our adoption of ASU No. 2014-09, we elected to (i) apply the provisions of this new accounting guidance only to contracts that were not completed at the date of initial application and (ii) utilize a practical expedient whereby we reflected the aggregate effect of all contract modifications that occurred prior to January 1, 2018 (rather than retrospectively restating the affected contracts) when identifying our satisfied and unsatisfied performance obligations, determining the transaction prices with our customers, and allocating such transaction prices to our satisfied and unsatisfied performance obligations. These two elections had no financial impact. Prior to January 1, 2018, the Company recognized revenue in accordance with then-existing U.S. GAAP and SEC Staff Accounting Bulletin No. 104, "Revenue Recognition" (“prior GAAP”). Under both ASU No. 2014-09 and prior GAAP, revenue can only be recognized when all of the required criteria are met. Although there were certain changes to the Company’s revenue recognition policies and procedures effective January 1, 2018 with the adoption of ASU No. 2014-09, there were no material differences between the pattern and timing of revenue recognition under ASU No. 2014-09 and prior GAAP. The accompanying Consolidated Statements of Operations present revenues net of any sales or value-added taxes that we collect from customers and remit to government authorities. ASU No. 2014-09 requires that we assess at inception all of the promises in a customer contract to determine if a promise is a separate performance obligation. To identify our performance obligations, we consider all of the services promised in a customer contract, regardless of whether they are explicitly stated or implied by customary business practices. If we conclude that a service is separately identifiable and distinct from the other offerings in a contract, we account for such a promise as a separate performance obligation. If a customer contract has more than one performance obligation, then the total contract consideration is allocated among the separate deliverables based on their stand-alone selling prices, which are determined based on the prices at which the Company discretely sells the stand-alone services. If a contract includes a discount or other pricing concession, the transaction price is allocated among the performance obligations on a proportionate basis using the relative stand-alone selling prices of the individual deliverables being transferred to the customer, unless the discount or other pricing concession can be ascribed to specifically identifiable performance obligations. The contracts with our customers delineate the final terms and conditions of the underlying arrangements, including product descriptions, subscription periods, deliverables, quantities and the price of each service purchased. Since the transaction price of almost all of our customer contracts is typically agreed upon upfront and generally does not fluctuate during the duration of the contract, variable consideration is insignificant. The Company may engage in certain financing transactions with customers but these arrangements have been limited in number and not material. Required Disclosures under ASU No. 2014-09 ASU No. 2014-09 requires significantly expanded disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. These additional disclosures are provided below. Disaggregated Revenues We believe that disaggregating the Company’s revenues by primary geographic location and the timing of when revenue is recognized achieves the disclosure objectives in ASU No. 2014-09. Our disaggregated revenue information by reportable segment, including our Other segment, is presented for the years indicated in the tables below (in thousands). Year Ended December 31, 2018
Year Ended December 31, 2017
Year Ended December 31, 2016
The Company’s revenues are generated primarily through direct sales to clients by domestic and international sales forces and a network of independent international sales agents. Most of the Company’s products and services are provided on an integrated worldwide basis and, because of this integrated delivery approach, it is not practical to precisely separate our revenues by geographic location. Accordingly, revenue information presented in the above tables is based on internal allocations, which involve certain management estimates and judgments. Year Ended December 31, 2018
Year Ended December 31, 2017
Year Ended December 31, 2016
Determining a measure of progress for performance obligations that are satisfied over time and when control transfers for performance obligations that are satisfied at a point in time requires us to make judgments that affect the timing of when revenue is recognized. A key factor in this determination is when the customer is able to direct the use of, and can obtain substantially all of the benefits from, the deliverable. For performance obligations recognized in accordance with a time-elapsed output method, the Company’s efforts are expended consistently throughout the contractual period and the Company transfers control evenly by providing stand-ready services. For performance obligations satisfied under our Consulting fixed fee and time and materials engagements, we believe that labor hours are the best measure of depicting the Company’s progress because labor output corresponds directly to the value of the Company’s performance to date as control is transferred. In our Other segment, we selected a method to assess the completion of our performance obligations that best aligned with the specific characteristics of the individual customer contract. We believe that these methods to measure progress provide a reasonable and supportable determination as to when we transfer services to our customers. For customer contracts that are greater than one year in duration, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2018 was approximately $2.7 billion. The Company expects to recognize $1,620.4 million, $874.5 million and $186.5 million of this revenue (most of which pertains to Research) during the year ending December 31, 2019, the year ending December 31, 2020 and thereafter, respectively. The Company applies a practical expedient allowed in ASU No. 2014-09 and, accordingly, it does not disclose such performance obligation information for customer contracts that have original durations of one year or less. Our performance obligations for contracts meeting this ASU No. 2014-09 disclosure exclusion primarily include: (i) stand-ready services under Research subscription contracts; (ii) holding conferences where attendees and exhibitors can participate; and (iii) providing customized Consulting solutions for clients under fixed fee and time and materials engagements. The remaining duration of these performance obligations is generally less than one year, which aligns with the period that the parties have enforceable rights and obligations under the affected contracts. Customer Contract Assets and Liabilities The timing of the recognition of revenues, and the amount and timing of our billings and cash collections, as well as upfront customer payments, result in the recording of both assets and liabilities on our Consolidated Balance Sheets. The payment terms and conditions in our customer contracts vary. In some cases, customers prepay and, in other cases, after we conduct a credit evaluation, payment may be due in arrears. Because the timing of the delivery of our services typically differs from the timing of customer payments, the Company recognizes either a contract asset (we perform either fully or partially under the contract but a contingency remains) or a contract liability (upfront customer payments precede our performance, resulting in deferred revenue). Amounts recorded as contract assets are reclassified to fees receivable when all of the outstanding conditions have been resolved and our right to payment becomes unconditional. Contracts with payments due in arrears are also recognized as fees receivable. As our contractual performance obligations are satisfied over time or at a point in time, the Company correspondingly relieves its contract liabilities and records the associated revenue. The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers, excluding held-for-sale businesses (in thousands):
During 2018, the Company recognized $1,287.8 million of revenue that was attributable to deferred revenues that were recorded at December 31, 2017. That amount primarily consisted of (i) Research and Other revenues that were recognized ratably as control of the goods or services passed to the customer and (ii) Conferences revenue pertaining to conferences that occurred during the reporting period. In 2018, the Company recorded no material impairments related to its contract assets. In the normal course of business, the Company does not recognize revenues from performance obligations satisfied in prior periods. Allowance for Losses and the Revenue Reserve As of December 31, 2017, the Company maintained an allowance for losses that included a bad debt allowance and a revenue reserve. Provisions to the Company’s allowance for losses were charged against earnings as either a reduction in revenues or an increase in expense. Effective with the adoption of ASU No. 2014-09 on January 1, 2018, the allowance for losses, which is classified as an offset to the gross amount of fees receivable, and the related charge against earnings (i.e., bad debt expense) is now comprised solely of estimated uncollectible fees receivable due to credit and other associated risks. The revenue reserve previously reported as part of the allowance for losses has been reclassified and is now reported as a liability in accordance with ASU No. 2014-09. The revenue reserve is maintained for amounts deemed to be uncollectible for reasons other than bad debt. When determining the amount of the revenue reserve, the Company uses an expected-value method that is based on current estimates and a portfolio of data from its historical experience. Due to the common characteristics and similar attributes of our customers and contracts, which provide relevant and predictive evidence about our projected future liability, an expected-value method is reasonable and appropriate. However, the determination of the revenue reserve is inherently judgmental and requires the use of certain estimates. Changes in estimates are recorded in the period that they are identified. As of December 31, 2018, the revenue reserve balance was $7.4 million and adjustments to the account in 2018 were not significant. The allowance for losses for bad debts is based on historical loss experience, an assessment of current economic conditions, the aging of outstanding receivables, the financial health of specific clients and probable losses. This evaluation is inherently judgmental and requires the use of estimates. The allowance for losses for bad debts is periodically re-evaluated and adjusted as more information about the ultimate collectability of fees receivable becomes available. Circumstances that could cause such allowance for losses to increase include changes in our clients’ liquidity and credit quality, other factors negatively impacting our clients’ ability to pay their obligations as they come due, and the effectiveness of our collection efforts. Costs of obtaining and fulfilling a customer contract Upon the signing of a customer contract, the Company capitalizes the related commission as a recoverable direct incremental cost of obtaining the underlying contract and records a corresponding commission payable. No other amounts are capitalized as a cost of obtaining or fulfilling a customer contract because no expenditures have been identified that meet the requisite capitalization criteria. For Research, Consulting and Other, we generally use the straight-line method of amortization for deferred commissions over a period that is based on the projected recoverability for such costs, using factors such as the underlying contract period, the timing of when the corresponding revenues will be earned and the anticipated term of the engagement. For Conferences, deferred commissions are expensed during the period when the related conference occurs. Under all circumstances, deferred commissions are amortized over a period that does not exceed one year. During 2018, 2017 and 2016, such amortization expense was $304.8 million, $230.5 million and $180.2 million, respectively, and was included in SG&A expense in the accompanying Consolidated Statements of Operations. The Company recorded no material impairments of its deferred commissions during the three-year period ended December 31, 2018. Accounting standards issued but not yet adopted. The FASB has issued accounting standards that had not yet become effective as of December 31, 2018 and may impact the Company’s consolidated financial statements or related disclosures in future periods. Those standards and their potential impact are discussed below. Accounting standards effective in 2019 Targeted Improvements to Accounting for Hedging Activities — In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging" ("ASU No. 2017-12"). ASU No. 2017-12 is intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition to that main objective, the standard makes certain targeted improvements to simplify the application of hedge accounting guidance in current U.S. GAAP. On January 1, 2019, the Company adopted ASU No. 2017-12. The adoption of ASU No. 2017-12 had no impact on the Company's consolidated financial statements. Leases — In February 2016, the FASB issued ASU No. 2016-02, "Leases," as amended ("ASU No. 2016-02"), which substantively modifies the accounting and disclosure requirements for lease arrangements. U.S. GAAP prior to the issuance of ASU No. 2016-02 provided that lease arrangements meeting certain criteria were not recorded on an entity's balance sheet. ASU No. 2016-02 significantly changed the accounting for leases because a right-of-use ("ROU") model is now used whereby a lessee must record an ROU asset and a lease liability on its balance sheet for most of its leases. Under ASU No. 2016-02, leases are classified as either operating or financing arrangements, with such classification affecting the pattern of expense recognition in an entity's income statement. ASU No. 2016-02 also requires significantly expanded disclosures to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows related to leases. The Company adopted ASU No. 2016-02 on January 1, 2019 using a modified retrospective approach. We elected to use an available practical expedient that is permitted under ASU No. 2016-02 to record the required cumulative effect adjustments to the opening balance sheet in the period of adoption rather than in the earliest comparative period presented. As such, the Company's historical consolidated financial statements will not be restated. Certain other permitted practical expedients were used by the Company upon adoption of the standard, including: (i) combining lease and nonlease components as a single lease component for purposes of the recognition and measurement requirements under ASU No. 2016-02; (ii) not reassessing a lease arrangement to determine if its classification should be changed under ASU No. 2016-02; and (iii) not reassessing initial direct costs for leases that were in existence on January 1, 2019. On adoption effective January 1, 2019, ASU No. 2016-02 will materially impact our consolidated balance sheets in the future because application of the ROU model yields a significant increase in both our assets and liabilities from our lease arrangements (all of which are operating leases) that have not previously been recorded on the Company’s consolidated balance sheets. We currently expect that the adoption of the standard will result in the recognition of operating lease liabilities ranging from $835.0 million to $855.0 million based on the present value of the Company’s remaining minimum lease payments, while the corresponding ROU assets will range from $637.0 million to $657.0 million. The Company’s consolidated statements of operations, stockholders' equity and cash flows will not be materially impacted by the adoption of the standard. The Company will provide the required disclosures under the standard in its Form 10-Q filing for the quarterly period ending March 31, 2019. Accounting standards effective in 2020 Implementation Costs in a Cloud Computing Arrangement — In August 2018, the FASB issued ASU No. 2018-15, "Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract" ("ASU No. 2018-15"). ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Costs that are capitalized under ASU No. 2018-15 will be expensed over the term of the cloud computing arrangement. ASU No. 2018-15 is effective for Gartner on January 1, 2020, with early adoption permitted. ASU No. 2018-15 may be adopted using either a retroactive or prospective method. The adoption of ASU No. 2018-15 is currently not expected to have a material impact on the Company's consolidated financial statements. Defined Benefit Plan Disclosures — In August 2018, the FASB issued ASU No. 2018-14, "Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans" ("ASU No. 2018-14"). ASU No. 2018-14, which is part of the FASB's broader disclosure framework project, modifies and supplements the current U.S. GAAP annual disclosure requirements for employers that sponsor defined benefit pension plans. ASU No. 2018-14 is effective for Gartner for the year ending December 31, 2020, with early adoption permitted. ASU No. 2018-14 must be adopted on a retroactive basis and applied to each comparative period presented in an entity's financial statements. We are evaluating the potential impact of adopting ASU No. 2018-14; however, we do not currently expect it to have a material impact on the Company's consolidated financial statements. Fair Value Measurement Disclosures — In August 2018, the FASB issued ASU No. 2018-13, "Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement" ("ASU No. 2018-13"). ASU No. 2018-13, which is part of the FASB's broader disclosure framework project, modifies and supplements the current U.S. GAAP disclosure requirements pertaining to fair value measurements, with an emphasis on Level 3 disclosures of the valuation hierarchy. ASU No. 2018-13 is effective for Gartner on January 1, 2020, with early adoption permitted. The adoption of ASU No. 2018-13 is currently not expected to have a material impact on the Company's consolidated financial statements. Goodwill Impairment — In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other - Simplifying the Test for Goodwill Impairment" ("ASU No. 2017-04"). ASU No. 2017-04 simplifies the determination of the amount of goodwill to be potentially charged off by eliminating Step 2 of the goodwill impairment test under current U.S. GAAP. ASU No. 2017-04 is effective for Gartner on January 1, 2020. The adoption of ASU No. 2017-04 is currently not expected to have a material impact on the Company's consolidated financial statements. Financial Instrument Credit Losses — In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses" ("ASU No. 2016-13"). ASU No. 2016-13 amends the current financial instrument impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU No. 2016-13 is effective for Gartner on January 1, 2020, with early adoption permitted. We are currently evaluating the potential impact of ASU No. 2016-13 on our consolidated financial statements. The FASB continues to work on a number of other significant accounting standards which, if issued, could materially impact the Company's accounting policies and disclosures in future periods. As these standards have not yet been issued, the effective dates and potential impact are unknown. |
Acquisitions and Divestiture |
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Mergers, Acquisitions And Dispositions Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND DIVESTITURE | ACQUISITIONS AND DIVESTITURES The Company accounts for business acquisitions in accordance with the acquisition method of accounting as prescribed by FASB ASC Topic 805, Business Combinations. The acquisition method of accounting requires the Company to record the net assets and liabilities acquired based on their estimated fair values as of the acquisition date, with any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to be recorded to goodwill. Under the acquisition method, the operating results of acquired companies are included in the Company's consolidated financial statements beginning on the date of acquisition. The Company recognized $107.2 million, $158.5 million and $42.6 million of acquisition and integration charges in 2018, 2017 and 2016, respectively. Acquisition and integration charges reflect additional costs and expenses resulting from our acquisitions and include, among other items, professional fees, severance, stock-based compensation charges and accruals for exit costs for certain acquisition-related office space in Arlington, Virginia that the Company does not intend to occupy. During 2018, exit costs represented the single largest component of our acquisition and integration charges. The table below presents a summary of the activity related to our accrual for exit costs at all of our facilities for the years ended December 31, 2018 and 2017 (in thousands). There was no such activity in 2016.
Acquisitions The Company did not have any business acquisitions in 2018. 2017 CEB On April 5, 2017, the Company acquired 100% of the outstanding capital stock of CEB for an aggregate purchase price of $3.5 billion. The consideration transferred by Gartner included approximately $2.7 billion in cash and $818.7 million in fair value of Gartner common shares. CEB was a publicly-held company headquartered in Arlington, Virginia with approximately 4,900 employees. CEB's primary business was to serve as a leading provider of subscription-based, best practice research and analysis focusing on human resources, sales, finance, IT, and legal. CEB served executives and professionals at corporate and middle market institutions in over 70 countries. L2 On March 9, 2017, the Company acquired 100% of the outstanding capital stock of L2, a privately-held firm based in New York City with 150 employees, for an aggregate purchase price of $134.2 million. L2 is a subscription-based research business that benchmarks the digital performance of brands. Total consideration transferred The following table summarizes the aggregate consideration paid for these acquisitions during 2017 (in thousands):
Allocation of Purchase Price The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisitions of L2 and CEB (in thousands):
The pro forma results have been prepared in accordance with U.S. GAAP and include the following pro forma adjustments: (a) An increase in interest expense and amortization of debt issuance costs related to the financing of the CEB acquisition. Note 5 — Debt provides further information regarding the Company's borrowings related to the CEB acquisition. (b) A change in revenue as a result of the required fair value adjustment to deferred revenue. (c) An adjustment for additional depreciation and amortization expense as a result of the purchase price allocation for finite-lived intangible assets and property, equipment, and leasehold improvements.
2016 On November 9, 2016, the Company acquired 100% of the outstanding capital stock of Machina Research Limited ("Machina"), a privately-held firm based in London with 16 employees. The Company paid approximately $4.5 million in cash at close. Machina provides clients with subscription-based research that provides strategic insight and market intelligence in areas such as IOT ("internet of things"). On June 28, 2016, the Company acquired 100% of the outstanding capital stock of Newco 5CL Limited (which operates under the trade name "SCM World"), a privately-held firm based in London with 60 employees, for $34.2 million in cash paid at close. SCM World is a leading cross-industry peer network and learning community providing subscription-based research and conferences for supply chain executives. Net of cash acquired with the business and for cash flow reporting purposes, the Company paid approximately $27.9 million in cash for SCM World. The acquisition of SCM World also included an earn-out provision. The fair value of the earn-out was recorded on the acquisition date as part of the cost of the acquisition and was subsequently adjusted with a charge against earnings. The Company recorded $32.4 million of goodwill and $5.9 million of amortizable intangible assets for these two acquisitions and an immaterial amount of other assets on a net basis. The operating results and the related goodwill are reported as part of the Company's Research and Conferences segments. The Company also recorded an additional $1.9 million of additional goodwill in 2016 related to a prior year acquisition. Divestitures During 2018, the Company completed the divestiture of all three of the non-core businesses comprising its Other segment, all of which were acquired in the CEB acquisition in April 2017. These three businesses contributed approximately $97.3 million of revenue and $60.5 million of gross contribution in 2018. The Company used the cash proceeds from these divestitures to pay down outstanding debt. Additional information regarding the Other segment divestitures is provided below: CEB Challenger training business On August 31, 2018, the Company sold its CEB Challenger training business for $119.1 million and realized approximately $116.0 million in cash, which is net of working capital adjustments and certain closing costs. The Company recorded a pretax gain on the sale of approximately $8.3 million. CEB Workforce Survey and Analytics business On May 1, 2018, the Company sold its CEB Workforce Survey and Analytics business for $28.0 million and realized approximately $26.4 million in cash, which is net of certain closing expenses. The Company recorded a pretax gain on the sale of approximately $8.8 million. CEB Talent Assessment business On April 3, 2018, the Company sold its CEB Talent Assessment business for $403.0 million and realized approximately $375.8 million in cash from the sale, which is net of cash transferred with the business and certain closing expenses. The Company recorded a pretax gain of approximately $15.5 million on the sale. Other asset sales During 2018, the Company also received $8.6 million in cash proceeds as well as other consideration and recorded a net pretax gain of approximately $12.8 million from the sale of certain non-core assets acquired in the CEB transaction. This includes the October 31, 2018 sale of a small Research segment product called Metrics That Matter. |
Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER ASSETS | OTHER ASSETS Other assets consist of the following (in thousands):
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Accounts Payable, Accrued, and Other Liabilities |
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ACCOUNTS PAYABLE, ACCRUED, AND OTHER LIABILITIES | ACCOUNTS PAYABLE, ACCRUED, AND OTHER LIABILITIES Accounts payable and accrued liabilities consist of the following (in thousands):
Other liabilities consist of the following (in thousands):
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Debt |
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DEBT | DEBT 2016 Credit Agreement The Company entered into a term loan and revolving credit facility on June 17, 2016 (the "2016 Credit Agreement"). As discussed below, the 2016 Credit Agreement was amended three times during 2017 in conjunction with the acquisition of CEB. The 2016 Credit Agreement, as amended, provided for a $1.5 billion Term loan A facility, a $500.0 million Term loan B facility and a $1.2 billion revolving credit facility. The 2016 Credit Agreement contains certain customary restrictive loan covenants, including, among others, financial covenants that apply a maximum leverage ratio and a minimum interest expense coverage ratio, and covenants limiting Gartner’s ability to incur indebtedness, grant liens, make acquisitions, merge, dispose of assets, pay dividends, repurchase stock, make investments and enter into certain transactions with affiliates. The Company was in full compliance with the covenants as of December 31, 2018. In 2017 the Company borrowed a total of approximately $2.8 billion for the CEB acquisition. The Company borrowed $1.675 billion under the 2016 Credit Agreement, which consisted of $900.0 million under an increased Term loan A facility, $500.0 million under a new Term loan B facility and $275.0 million on an existing revolving credit facility. The $1.675 billion drawn under the 2016 Credit Agreement, along with the funds raised through the issuance of $800.0 million Senior Notes and a $300.0 million 364-day Bridge Credit Facility, were used to fund the CEB acquisition and related costs. The funds borrowed under the 364-day Bridge Credit Facility were completely repaid during 2017 and the borrowings under the Term loan B facility were completely repaid during 2018. On January 20, 2017, the Company entered into a first amendment to the 2016 Credit Agreement, which was entered into to permit the acquisition of CEB and the incurrence of additional debt to finance, in part, the acquisition and repay certain debt of CEB, and to modify certain covenants. On March 20, 2017, the Company entered into a second amendment to the 2016 Credit Agreement. The second amendment was also entered into in connection with the acquisition of CEB and was executed primarily to extend the maturity date of the Term loan A facility and the revolving credit facility through March 20, 2022 and to revise the interest rate and amortization schedule. On April 5, 2017, in conjunction with the closing of the CEB acquisition, the Company entered into a third amendment to the 2016 Credit Agreement, which increased the aggregate principal amount of the existing Term loan A facility by $900.0 million and added the Term loan B facility in an aggregate principal amount of $500.0 million. The Term loan A facility is being repaid in 16 consecutive quarterly installments that commenced on June 30, 2017, plus a final payment to be made on March 20, 2022. The additional amount drawn under the Term loan A facility during 2017 has the same maturity date and is subject to the same interest, repayment terms, amortization schedules, representations and warranties, affirmative and negative covenants and events of default as the amounts outstanding under such facility prior to entry by the Company into the third amendment. The revolving credit facility may be borrowed, repaid, and re-borrowed through March 20, 2022, at which time all amounts must be repaid. Amounts borrowed under the Term loan A facility and the revolving credit facility bear interest at a rate equal to, at the Company's option, either: (i) the greatest of: (x) the Administrative Agent’s prime rate; (y) the rate calculated by the New York Federal Reserve Bank for federal funds transactions plus 1/2 of 1%; and (z) the eurodollar rate (adjusted for statutory reserves) plus 1%, in each case plus a margin equal to between 0.125% and 1.50%, depending on Gartner’s consolidated leverage ratio as of the end of the four consecutive fiscal quarters most recently ended; or (ii) the eurodollar rate (adjusted for statutory reserves) plus a margin equal to between 1.125% and 2.50%, depending on Gartner’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended. During 2018 the Company repaid the entire $496.3 million outstanding under the Term loan B facility. The Term loan B facility was scheduled to mature on April 5, 2024 and the amounts outstanding thereunder bore interest at a rate per annum equal to, at the option of Gartner, (i) adjusted LIBOR plus 2.00% or (ii) an alternate base rate plus 1.00%. 364-day Bridge Credit Facility On April 5, 2017, the Company entered into a senior unsecured 364-day Bridge Credit Facility in an aggregate principal amount of $300.0 million, which was immediately drawn down to fund a portion of the purchase price associated with the CEB acquisition. The Company repaid the entire $300.0 million of the 364-day Bridge Credit Facility during 2017. Senior Notes On March 30, 2017, the Company issued $800.0 million aggregate principal amount of 5.125% Senior Notes due 2025 (the “Senior Notes”). The proceeds of the Senior Notes were used to fund a portion of the purchase price associated with the CEB acquisition. The Senior Notes were issued at an issue price of 100.0% and bear interest at a fixed rate of 5.125% per annum. Interest on the Senior Notes is payable on April 1 and October 1 of each year. The Senior Notes mature on April 1, 2025. The Company may redeem some or all of the Senior Notes at any time on or after April 1, 2020 for cash at the redemption prices set forth in the Note Indenture, plus accrued and unpaid interest to, but not including, the redemption date. Prior to April 1, 2020, the Company may redeem up to 40% of the aggregate principal amount of the Senior Notes with the proceeds of certain equity offerings at a redemption price of 105.125% plus accrued and unpaid interest to, but not including, the redemption date. In addition, the Company may redeem some or all of the Senior Notes prior to April 1, 2020 at a redemption price of 100% of the principal amount of the Senior Notes plus accrued and unpaid interest to, but not including, the redemption date, plus a “make-whole” premium. If the Company experiences certain kinds of changes of control, it will be required to offer to purchase the Senior Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest. The Senior Notes are the Company’s general unsecured senior obligations, and are effectively subordinated to all of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s non-guarantor subsidiaries, equal in right of payment to all of the Company’s and Company’s guarantor subsidiaries’ existing and future senior indebtedness and senior in right of payment to all of the Company’s future subordinated indebtedness, if any. Outstanding Borrowings The following table summarizes the Company’s total outstanding borrowings (in thousands):
Interest Rate Swaps The Company has five active fixed-for-floating interest rate swap contracts with a total notional value of $1.4 billion that mature through 2022. The Company designates the swaps as accounting hedges of the forecasted interest payments on $1.4 billion of the Company’s variable-rate borrowings. The Company pays base fixed rates on these swaps ranging from 1.53% to 2.13% and in return receives a floating eurodollar base rate on 30-day notional borrowings. The Company has also entered into two additional forward-starting, fixed-for-floating interest rate swap contracts with a combined notional value of $700.0 million that will hedge a portion of the Company's variable-rate borrowings upon the maturity of three of the currently active swap contracts in late 2019. The Company accounts for the interest rate swap contracts as cash flow hedges in accordance with FASB ASC Topic 815. Since the swaps hedge forecasted interest payments, changes in the fair value of the swaps are recorded in accumulated other comprehensive income (loss), a component of equity, as long as the swaps continue to be highly effective hedges of the designated interest rate risk. Any ineffective portion of a change in the fair value of the hedges is recorded in earnings. All of the Company's swaps were considered highly effective hedges of the forecasted interest payments as of both December 31, 2018 and 2017. The interest rate swaps had a net negative fair value (liability) of $10.7 million as of December 31, 2018 and a net positive fair value (asset) of $3.4 million as of December 31, 2017. Such amounts were deferred and recorded in Accumulated other comprehensive (loss) income, net of tax effect. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Contractual Lease Commitments. The Company leases various facilities, computer and office equipment, furniture, and other assets under non-cancelable operating lease agreements expiring between 2019 and 2038. Future minimum annual cash payments under those operating lease agreements as of December 31, 2018 were as follows (in thousands):
(1) Excludes approximately $372.0 million of sublease income. Legal Matters. The Company is involved in legal proceedings and litigation arising in the ordinary course of business. We believe that the potential liability, if any, in excess of amounts already accrued from all proceedings, claims and litigation will not have a material effect on our financial position, cash flows or results of operations when resolved in a future period. Indemnifications. The Company has various agreements that may obligate us to indemnify the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arising in the normal course of business under which we customarily agree to hold the other party harmless against losses arising from a breach of representations related to such matters as title to assets sold and licensed or certain intellectual property rights. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of the Company’s obligations and the unique facts of each particular agreement. Historically, payments made by us under these agreements have not been material. As of December 31, 2018, the Company did not have any material payment obligations under any such indemnification agreements. |
Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Common stock. Holders of Gartner’s Common Stock, par value $.0005 per share (“Common Stock”) are entitled to one vote per share on all matters to be voted by stockholders. The Company does not currently pay cash dividends on its Common Stock. Also, our 2016 Credit Agreement contains a negative covenant that may limit our ability to pay dividends. The following table summarizes transactions relating to our Common Stock for the three years ended December 31, 2018:
Share Issuance Related to the Acquisition of CEB. On April 5, 2017, the Company issued 7.4 million of its common shares at a fair value of $109.65 per common share as part of the consideration for the CEB acquisition. Note 2 — Acquisitions and Divestitures provides additional information regarding the CEB acquisition. The fair value of the Company's common stock was determined based on an average of the high and low prices of the common stock as reported by the New York Stock Exchange on April 5, 2017, the date of the acquisition. Share repurchase authorization. The Company has a $1.2 billion board authorization adopted in May 2015 to repurchase the Company's common stock, of which $0.9 billion remained available as of December 31, 2018. The Company may repurchase its common stock from time-to-time in amounts, at prices and in the manner that the Company deems appropriate, subject to the availability of stock, prevailing market conditions, the trading price of the stock, the Company’s financial performance and other conditions. Repurchases may be made through open market purchases (which may include repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended), accelerated share repurchases, private transactions or other transactions and will be funded from cash on hand and borrowings under our 2016 Credit Agreement. Accumulated Other Comprehensive Income (Loss), Net. The following tables disclose information about changes in Accumulated Other Comprehensive Income (Loss) ("AOCI/L") by component and the related amounts reclassified out of AOCI/L to income during the years indicated (net of tax, in thousands) (1): 2018
2017
(1) Amounts in parentheses represent debits (deferred losses). (2) See Note 1 - Business and Significant Accounting Policies for additional information regarding the Company's adoption of ASU No. 2018-02. (3) The reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net of tax effect. See Note 11 – Derivatives and Hedging for information regarding the hedges. (4) The reclassifications related to defined benefit pension plans were primarily recorded in Selling, general and administrative expense, net of tax effect. See Note 13 – Employee Benefits for information regarding the Company’s defined benefit pension plans. (5) The reclassification related to foreign currency translation adjustments in 2018 was recorded in Gain from divested operations. See Note 2 – Acquisitions and Divestitures for information regarding our divestitures in 2018. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company grants stock-based compensation awards as an incentive for employees and directors to contribute to the Company’s long-term success. The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents. As of December 31, 2018, the Company had 4.9 million shares of its common stock, par value $.0005 per share, (the "Common Stock") available for stock-based compensation awards under its 2014 Long-Term Incentive Plan. The Company accounts for stock-based compensation awards in accordance with FASB ASC Topics 505 and 718 and SEC Staff Accounting Bulletins No. 107 and No. 110. Stock-based compensation expense for equity awards is based on the fair value of the award on the date of grant. The Company recognizes stock-based compensation expense over the period that the related service is performed, which is generally the same as the vesting period of the underlying award. Currently, the Company issues treasury shares upon the exercise, release or settlement of stock-based compensation awards. Determining the appropriate fair value model and calculating the fair value of stock-based compensation awards requires the use of certain subjective assumptions, including the expected life of a stock-based compensation award and Common Stock price volatility. In addition, determining the appropriate periodic stock-based compensation expense requires management to estimate the likelihood of the achievement of certain performance targets. The assumptions used in calculating the fair values of stock-based compensation awards and the related periodic expense represent management’s best estimates, which involve inherent uncertainties and the application of judgment. As a result, if circumstances change and the Company deems it necessary in the future to modify the assumptions it made or to use different assumptions, or if the quantity and nature of the Company’s stock-based compensation awards changes, then the amount of expense may need to be adjusted and future stock-based compensation expense could be materially different from what has been recorded in the current period. Stock-Based Compensation Expense The Company recognized the following stock-based compensation expense by award type and expense category line item during the years ended December 31 (in millions):
As of December 31, 2018, the Company had $79.1 million of total unrecognized stock-based compensation cost, which is expected to be expensed over the remaining weighted average service period of approximately 2.3 years. Stock-Based Compensation Awards The disclosures presented below provide information regarding the Company’s stock-based compensation awards, all of which have been classified as equity awards in accordance with FASB ASC Topic 505. Stock Appreciation Rights Stock-settled stock appreciation rights ("SARs") permit the holder to participate in the appreciation of the value of the Common Stock. After the applicable vesting criteria have been satisfied, SARs are settled in shares of Common Stock upon exercise by the employee. SARs vest ratably over a four-year service period and expire seven years from the date of grant. The fair value of a SARs award is recognized as compensation expense on a straight-line basis over four years. SARs have only been awarded to the Company’s executive officers. When SARs are exercised, the number of shares of Common Stock issued is calculated as follows: (1) the total proceeds from the exercise of the SARs award (calculated as the closing price of the Common Stock as reported on the New York Stock Exchange on the date of exercise less the exercise price of the SARs award, multiplied by the number of SARs exercised) is divided by (2) the closing price of the Common Stock on the date of exercise. The Company withholds a portion of the shares of the Common Stock issued upon exercise to satisfy statutory tax withholding requirements. SARs recipients do not have any stockholder rights until the shares of Common Stock are issued in respect of the award, which is subject to the prior satisfaction of the vesting and other criteria relating to such grants. The following table summarizes changes in SARs outstanding during the year ended December 31, 2018:
n/a = not applicable
The fair value of a SARs award is determined on the date of grant using the Black-Scholes-Merton valuation model with the following weighted average assumptions for the years ended December 31:
Restricted Stock Units Restricted stock units ("RSUs") give the awardee the right to receive shares of Common Stock when the vesting conditions are met and certain restrictions lapse. Each RSU that vests entitles the awardee to one share of Common Stock. RSU awardees do not have any of the rights of a Gartner stockholder, including voting rights and the right to receive dividends and distributions, until the shares are released. The fair value of a RSU award is determined on the date of grant based on the closing price of the Common Stock as reported on the New York Stock Exchange on that date. Service-based RSUs vest ratably over four years and are expensed on a straight-line basis over the vesting period. Performance-based RSUs are subject to the satisfaction of both performance and service conditions, vest ratably over four years and are expensed on an accelerated basis over the vesting period. The following table summarizes the changes in RSUs outstanding during the year ended December 31, 2018:
Common Stock Equivalents Common stock equivalents ("CSEs") are convertible into Common Stock. Each CSE entitles the holder to one share of Common Stock. Members of our Board of Directors receive their directors’ fees in CSEs unless they opt to receive up to 50% of those fees in cash. Generally, CSEs have no defined term and are converted into shares of Common Stock when service as a director terminates unless the director has elected an accelerated release. The fair value of a CSE award is determined on the date of grant based on the closing price of the Common Stock as reported on the New York Stock Exchange on that date. CSEs vest immediately and, as a result, they are recorded as expense on the date of grant. The following table summarizes the changes in CSEs outstanding during the year ended December 31, 2018:
Employee Stock Purchase Plan The Company has an employee stock purchase plan (the “ESP Plan”) wherein eligible employees are permitted to purchase shares of Common Stock through payroll deductions, which may not exceed 10% of an employee’s compensation, or $23,750 in any calendar year, at a price equal to 95% of the closing price of the Common Stock as reported on the New York Stock Exchange at the end of each offering period. As of December 31, 2018, the Company had 0.7 million shares available for purchase under the ESP Plan. The ESP Plan is considered non-compensatory under FASB ASC Topic 718 and, as a result, the Company does not record stock-based compensation expense for employee share purchases. The Company received $14.7 million, $11.7 million and $9.3 million in cash from employee share purchases under the ESP Plan during 2018, 2017 and 2016, respectively. |
Computation of Earnings Per Share |
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COMPUTATION OF EARNINGS PER SHARE | COMPUTATION OF EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of shares of Common Stock outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in earnings. When the impact of common share equivalents is anti-dilutive, they are excluded from the calculation. The following table sets forth the calculation of basic and diluted earnings per share for the three years ended December 31 (in thousands, except per share data):
The following table presents the number of common share equivalents that were not included in the computation of diluted earnings per share in the above table because the effect would have been anti-dilutive. During periods with net income, these common share equivalents were anti-dilutive because their exercise price was greater than the average market value of a share of Common Stock during the period.
(a) Anti-dilutive common shares for 2018 were minimal. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The following is a summary of the components of the Company's income (loss) before income taxes for the years ended December 31 (in thousands):
The expense (benefit) for income taxes on the above income consists of the following components (in thousands):
Long-term deferred tax assets and liabilities are comprised of the following (in thousands):
Net deferred tax assets and net deferred tax liabilities were $34.5 million and $214.7 million as of December 31, 2018, respectively, and $30.5 million and $253.7 million as of December 31, 2017, respectively. These amounts are reported in Other assets and Other liabilities in the Consolidated Balance Sheets. Management has concluded it is more likely than not that the reversal of deferred tax liabilities and results of future operations will generate sufficient taxable income to realize the deferred tax assets, net of the valuation allowance at December 31, 2018. The valuation allowances of $4.1 million as of December 31, 2018 and $3.2 million as of December 31, 2017, primarily relate to net operating losses which are not likely to be realized. As of December 31, 2018, the Company had state and local tax net operating loss carryforwards of $35.2 million, of which $0.1 million expires within one to five years and $3.5 million expires within six to fifteen years and $31.6 million expires within sixteen to twenty years. The Company also had state tax credits of $2.2 million, a majority of which will expire in five to six years. As of December 31, 2018, the Company had non-U.S. net operating loss carryforwards of $5.0 million, of which $0.1 million expires over the next 20 years and $4.9 million can be carried forward indefinitely. These amounts have been reduced for associated unrecognized tax benefits, consistent with ASU No. 2013-11, "Income Taxes—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The differences between the U.S. federal statutory income tax rate and the Company’s effective tax rate on income before income taxes for the years ended December 31 follow:
The U.S. Tax Cuts and Jobs Act (the "Act”) was enacted on December 22, 2017. Among other things, the Act reduces the U.S. federal corporation tax rate from 35% to 21%, requires companies to pay a one-time transition tax on accumulated deferred foreign income (“ADFI”) of foreign subsidiaries that were previously tax deferred and creates a new tax on global intangible low-taxed income (“GILTI”) attributable to foreign subsidiaries. As of December 31, 2018, we have completed our accounting for the tax effects of enactment of the Act. We remeasured U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. We reduced our income tax expense by $13.8 and $123.2 million in 2018 and 2017, respectively for this item. The tax on ADFI is based on our total post-1986 earnings and profits ("E&P") of our foreign subsidiaries that were previously deferred from U.S. income taxes. We increased income tax expense by $8.4 million and $63.6 million in 2018 and 2017, respectively, for this one-time transition tax liability. Significant foreign tax credit and net operating loss carryovers will be utilized to reduce the transition tax liability. The Company has elected to pay the remaining cash tax liability of approximately $10.0 million over 8 years as permitted by the Act. The Act also created a new tax on GILTI attributable to foreign subsidiaries. Companies have the option to account for the GILTI tax as a period cost in the period incurred, or to recognize deferred taxes for temporary differences including outside basis differences expected to reverse as a result of the GILTI provisions. The Company has elected to account for the GILTI tax as a period cost in the period incurred. Various provisions of the Act are highly complex and remains unclear in certain respects. Additional guidance in the form of notices and proposed regulations have been issued, and further guidance is expected to be issued. Changes could be made to the proposed regulations, future legislation could be enacted, and more regulations and notices could be issued. We will continue to monitor and will reflect impacts in future financial statements as appropriate. In addition, many state and local tax jurisdictions are still determining how they will interpret the Act. Final state and local governments’ legislation or guidance relating to the Act may impact our financial results. In July 2015, the United States Tax Court (the “Court”) issued an opinion relating to the treatment of stock-based compensation expense in an inter-company cost-sharing arrangement. In its opinion, the Court held that affiliated companies may exclude stock-based compensation expense from their cost-sharing arrangement. The Internal Revenue Service is appealing the decision. Because of uncertainty related to the final resolution of this litigation and the recognition of potential benefits to the Company, the Company has not recorded any financial statement benefit related to open statute years associated with this matter. The Company will monitor developments related to this case and the potential impact of those developments on the Company’s consolidated financial statements. As of December 31, 2018 and 2017, the Company had unrecognized tax benefits of $90.3 million and $60.3 million, respectively. The increase is primarily attributable to positions taken with respect to intercompany transactions, taxable E&P, and state income tax positions. The unrecognized tax benefits as of December 31, 2018 related primarily to the exclusion of stock-based compensation expense from the Company’s cost sharing agreement, calculation of taxable E&P and related foreign tax credits, the ability to realize certain refund claims, and intercompany transactions. It is reasonably possible that unrecognized tax benefits will be decreased by $20.0 million within the next 12 months due to anticipated closure of audits, the expiration of certain statutes of limitation and closure of tax controversies. Included in the balance of unrecognized tax benefits at December 31, 2018 are potential benefits of $86.2 million that if recognized would reduce the effective tax rate on income from continuing operations. Also included in the balance of unrecognized tax benefits as of December 31, 2018 are potential benefits of $4.1 million that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes. The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, for the years ended December 31 (in thousands):
The Company accrues interest and penalties related to unrecognized tax benefits in its income tax provision. As of December 31, 2018 and 2017, the Company had $6.7 million and $6.4 million, respectively, of accrued interest and penalties related to unrecognized tax benefits. These amounts are in addition to the unrecognized tax benefits disclosed above. The total amount of interest and penalties recognized in the income tax provision for the years ended December 31, 2018 and 2017 was $0.7 million and $0.9 million, respectively. The number of years with open statutes of limitation varies depending on the tax jurisdiction. The Company’s statutes are open with respect to the U.S. federal jurisdiction for 2014 and forward, and India for 2003 and forward. For other major taxing jurisdictions including U.S. states, the United Kingdom, Canada, Japan, France and Ireland, the Company's statutes vary and are open as far back as 2011. Under U.S. GAAP, no provision for income taxes that may result from the remittance of earnings held overseas is required if the Company has the ability and intent to indefinitely reinvest such funds overseas. The Company continues to assert its intention to reinvest all accumulated undistributed foreign earnings in our non-U.S. operations, except in instances in which the repatriation of those earnings would result in minimal additional tax. Consequently, the Company has not recognized income tax expense that would result from the remittance of these earnings. The accumulated undistributed earnings of non-U.S. subsidiaries were approximately $171.0 million as of December 31, 2018. As a result of the Act, the income tax that would be payable if such earnings were not indefinitely invested is estimated at this time to be minimal. |
Derivatives and Hedging |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES AND HEDGING | DERIVATIVES AND HEDGING The Company enters into a limited number of derivative contracts to mitigate the cash flow risk associated with changes in interest rates on variable-rate debt and changes in foreign exchange rates on forecasted foreign currency transactions. The Company accounts for its outstanding derivative contracts in accordance with FASB ASC Topic 815, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value. The following tables provide information regarding the Company’s outstanding derivatives contracts as of the dates indicated (in thousands, except for number of contracts): December 31, 2018
December 31, 2017
At December 31, 2018, all of the Company’s derivative counterparties were investment grade financial institutions. The Company did not have any collateral arrangements with its derivative counterparties and none of the derivative contracts contained credit-risk related contingent features. The following table provides information regarding amounts recognized in the Consolidated Statements of Operations for derivative contracts for the years ended December 31 (in millions):
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Fair Value Disclosures |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES The Company’s financial instruments include cash equivalents, fees receivable from customers, accounts payable and accruals, all of which are normally short-term in nature. The Company believes that the carrying amounts of these financial instruments reasonably approximate their fair values due to their short-term nature. The Company’s financial instruments also include its outstanding variable-rate borrowings under the 2016 Credit Agreement. The Company believes that the carrying amounts of its variable-rate borrowings reasonably approximate their fair values because the rates of interest on those borrowings reflect current market rates of interest for similar instruments with comparable maturities. The Company enters into a limited number of derivatives transactions but does not enter into repurchase agreements, securities lending transactions or master netting arrangements. Receivables or payables that result from derivatives transactions are recorded gross in the Company’s Consolidated Balance Sheets. FASB ASC Topic 820 provides a framework for the measurement of fair value and a valuation hierarchy based on the transparency of inputs used in the valuation of assets and liabilities. Classification within the valuation hierarchy is based on the lowest level of input that is significant to the resulting fair value measurement. The valuation hierarchy contains three levels. Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs such as internally-created valuation models. The Company does not currently utilize Level 3 valuation inputs to remeasure any of its assets or liabilities. However, Level 3 inputs may be used by the Company in its required annual impairment review of recorded goodwill. Information regarding the periodic assessment of the Company’s goodwill is included in Note 1 — Business and Significant Accounting Policies. The Company does not typically transfer assets or liabilities between different levels of the valuation hierarchy. The following table presents the fair value of certain financial assets and liabilities (in thousands):
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Employee Benefits |
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Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFITS | EMPLOYEE BENEFITS Defined contribution plan. The Company has savings and investment plans (the “401k Plans”) covering substantially all U.S. employees. Company contributions are based on the level of employee contributions, up to a maximum of 4% of an employee’s eligible salary, subject to an annual maximum. For 2018, the maximum match was $7,200. Amounts expensed in connection with the 401k Plans totaled $36.7 million, $29.8 million and $22.9 million in 2018, 2017 and 2016, respectively. Deferred compensation plan. The Company has supplemental deferred compensation plans for the benefit of certain highly compensated officers, managers and other key employees. The plans' investment assets are recorded in Other assets on the Consolidated Balance Sheets at fair value. The value of these assets was $66.6 million and $88.1 million at December 31, 2018 and 2017, respectively (see Note 12 — Fair Value Disclosures for fair value information). The corresponding deferred compensation plan liability, which was $68.6 million and $89.9 million at December 31, 2018 and 2017, respectively, is carried at fair value, and is adjusted with a corresponding charge or credit to compensation expense to reflect the fair value of the amount owed to the employees and is classified in Other liabilities on the Consolidated Balance Sheets. Compensation expense recognized for all deferred compensation plans was $1.7 million, $0.4 million and $0.1 million in 2018, 2017 and 2016, respectively. Defined benefit pension plans. The Company has defined benefit pension plans in several of its international locations. Benefits paid under these plans are based on years of service and level of employee compensation. The Company's defined benefit pension plans are accounted for in accordance with FASB ASC Topics 715 and 960. The following are the components of defined benefit pension plan expense for the years ended December 31 (in thousands):
The following are the key assumptions used in the computation of pension expense for the years ended December 31:
The following table provides information related to changes in the projected benefit obligation for the years ended December 31 (in thousands):
The following table provides information regarding the funded status of the plans and related amounts recorded in the Company’s Consolidated Balance Sheets as of December 31 (in thousands):
The Company also maintains a reinsurance asset arrangement with a large international insurance company whose purpose is to provide funding for benefit payments for one of its plans. The reinsurance asset is not a pension plan asset but is an asset of the Company. At December 31, 2018 and 2017, the reinsurance asset was recorded at its cash surrender value of $9.0 million and $9.1 million, respectively, and classified in Other assets on the Company's Consolidated Balance Sheets. The Company believes that the cash surrender value approximates fair value and is equivalent to a Level 2 input under the FASB’s fair value hierarchy in FASB ASC Topic 820. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION During 2018, the Company divested all three of the non-core businesses that comprised its Other segment, each of which were acquired as part of the acquisition of CEB Inc. in April 2017. As a result of these divestitures and the movement of a small residual product in the Other segment into the Research business, the Company is no longer recording any additional operating activity in the Other segment effective September 1, 2018. Additional information regarding the divestitures is included in Note 2 – Acquisitions and Divestitures. Our products and services are currently delivered through three segments – Research, Conferences and Consulting, as follows:
The Company evaluates segment performance and allocates resources based on gross contribution margin. Gross contribution, as presented in the table below, is defined as operating income or loss excluding certain Cost of services and product development expenses, Selling, general and administrative expenses, Depreciation, Amortization of intangibles, and Acquisition and integration charges. Certain bonus and fringe benefit costs included in consolidated Cost of services and product development are not allocated to segment expense. The accounting policies used by the reportable segments are the same as those used by the Company. There are no intersegment revenues. The Company does not identify or allocate assets, including capital expenditures, by reportable segment. Accordingly, assets are not reported by segment because the information is not available by segment and is not reviewed in the evaluation of segment performance or in making decisions in the allocation of resources. The Company earns revenue from clients in many countries. Other than the United States, there is no individual country in which revenues from external clients represent 10% or more of the Company’s consolidated revenues. Additionally, no single client accounted for 10% or more of total revenue and the loss of a single client, in management’s opinion, would not have a material adverse effect on revenues. The following tables present information about the Company’s reportable segments for the periods indicated (in thousands):
The following table provides a reconciliation of total segment gross contribution to net income for the years ended December 31 (in thousands):
Disaggregated revenue information by reportable segment for the three years ended December 31, 2018, including our Other segment, is presented in Note 1 – Business and Significant Accounting Policies. Long-lived asset information by geographic location as of December 31 is summarized in the table below (in thousands).
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Valuation and Qualifying Accounts |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
VALUATION AND QUALIFYING ACCOUNTS | VALUATION AND QUALIFYING ACCOUNTS The Company maintains an allowance for losses that is comprised of a bad debt allowance and, through December 31, 2017, a revenue reserve. Provisions are charged against earnings either as an increase to expense or, prior to 2018, a reduction in revenues. The following table summarizes activity in the Company’s allowance for losses for the years ended December 31 (in thousands):
(1) The allowance for losses at December 31, 2017 included $6.2 million that was attributable to the Company's revenue reserve. As a result of the Company's adoption of ASU No. 2014-09 on January 1, 2018, the revenue reserve balance is now included in Accounts payable and accrued liabilities on the Company's Consolidated Balance Sheet. Note 1 — Business and Significant Accounting Policies provides additional information regarding the Company's adoption of ASU No. 2014-09. |
Business and Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation | The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270 for financial information and with the applicable instructions of U.S. Securities and Exchange Commission (“SEC”) Regulation S-X. The fiscal year of Gartner is the twelve-month period from January 1 through December 31. All references to 2018, 2017 and 2016 herein refer to the fiscal year unless otherwise indicated. |
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Principles of consolidation | The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. |
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Use of estimates | The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of fees receivable, goodwill, intangible assets and other long-lived assets, as well as tax accruals and other liabilities. In addition, estimates are used in revenue recognition, income tax expense or benefit, performance-based compensation charges, depreciation and amortization. Management believes its use of estimates in the accompanying consolidated financial statements to be reasonable. Management continually evaluates and revises its estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. Management adjusts these estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time. As a result, differences between our estimates and actual results could be material and would be reflected in the Company’s consolidated financial statements in future periods. |
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Business acquisitions | The Company had business acquisitions in both 2017 and 2016 and information related to those acquisitions is included in Note 2 – Acquisitions and Divestitures. The Company accounts for business acquisitions in accordance with the acquisition method of accounting as prescribed by FASB ASC Topic 805, Business Combinations. The acquisition method of accounting requires the Company to record the net assets and liabilities acquired based on their estimated fair values as of the acquisition date, with any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to be recorded to goodwill. Under the acquisition method, the operating results of acquired companies are included in the Company's consolidated financial statements beginning on the date of acquisition. The determination of the fair values of intangible and other assets acquired in acquisitions requires management judgment and the consideration of a number of factors, significant among them the historical financial performance of the acquired businesses and projected performance, estimates surrounding customer turnover, as well as assumptions regarding the level of competition and the cost to reproduce certain assets. Establishing the useful lives of the intangible assets also requires management judgment and the evaluation of a number of factors, among them the expected use of the asset, historical client retention rates, consumer awareness and trade name history, as well as any contractual provisions that could limit or extend an asset's useful life. The Company classifies charges that are directly-related to its acquisitions in the line Acquisition and integration charges in the Consolidated Statements of Operations. The Company recorded $107.2 million, $158.5 million and $42.6 million of such charges in 2018, 2017 and 2016, respectively. Information related to those charges is included in Note 2 – Acquisitions and Divestitures. |
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Revenue recognition | On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers" ("ASU No. 2014-09"). ASU No. 2014-09 and related amendments required changes in our revenue recognition policies as well as enhanced disclosures. The Company adopted ASU No. 2014-09 using the modified retrospective method of adoption. Under this 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 adoption of ASU No. 2014-09 did not have a material impact on the Company’s consolidated financial statements. Prior to January 1, 2018, the Company recognized revenue in accordance with then-existing U.S. GAAP and SEC Staff Accounting Bulletin No. 104, "Revenue Recognition" (“prior GAAP”). Under both ASU No. 2014-09 and prior GAAP, revenue can only be recognized when all of the required criteria are met. Information regarding our adoption of ASU No. 2014-09 and its impact on the Company's consolidated financial statements and related disclosures is provided below under the heading "Adoption of new accounting standards." |
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Allowance for losses and the revenue reserve | Because the adoption of ASU No. 2014-09 on January 1, 2018 discussed above affected the allowance for losses, information regarding the allowance is provided below under the heading "Adoption of new accounting standards." |
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Cost of services and product development | COS expense includes the direct costs incurred in the creation and delivery of our products and services. These costs primarily relate to personnel. |
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Selling, general and administrative | SG&A expense includes direct and indirect selling costs, general and administrative costs, and charges against earnings related to uncollectible accounts. |
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Commissions expense | The Company records deferred commissions upon the signing of customer contracts and amortizes the deferred amount as commission expense over a period that considers various relevant factors. Commission expense is included in SG&A expense in the Consolidated Statements of Operations. Additional information regarding deferred commissions and the amortization of such costs is provided below under the heading "Adoption of new accounting standards." |
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Stock-based compensation expense | The Company accounts for stock-based compensation awards in accordance with FASB ASC Topics 505 and 718 and SEC Staff Accounting Bulletins No. 107 and No. 110. Stock-based compensation expense for equity awards is based on the fair value of the award on the date of grant. The Company recognizes stock-based compensation expense over the period that the related service is performed, which is generally the same as the vesting period of the underlying award. During 2018, 2017 and 2016, the Company recognized $66.2 million, $78.9 million and $46.7 million, respectively, of stock-based compensation expense. Effective January 1, 2016, the Company adopted ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU No. 2016-09"), which mandated certain changes in accounting for stock-based compensation. Among other things, ASU No. 2016-09 permits companies to make an entity-wide accounting policy election to recognize forfeitures of share-based compensation awards as they occur or make an estimate by applying a forfeiture rate each quarter. The Company previously estimated forfeitures but elected to change its accounting policy and account for forfeitures as they occur. ASU No. 2016-09 requires this change in accounting policy to be applied using a cumulative effect adjustment to accumulated earnings as of the beginning of the period in which the rule is adopted. Accordingly, the Company recorded a $0.3 million decrease to its opening accumulated earnings effective January 1, 2016. |
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Income taxes | The Company uses the asset and liability method of accounting for income taxes. We estimate our income taxes in each of the jurisdictions where we operate. This process involves estimating our current tax expense or benefit together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. When assessing the realizability of deferred tax assets, we consider if it is more likely than not that some or all of the deferred tax assets will not be realized. In making this assessment, we consider the availability of loss carryforwards, projected reversals of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning strategies. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained based on the technical merits of the position. The Company adopted ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory," on January 1, 2018. Information regarding our adoption of this new accounting standard and its impact on the Company's consolidated financial statements is provided below under the heading "Adoption of new accounting standards." |
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Cash and cash equivalents | Includes cash and all highly liquid investments with original maturities of three months or less, which are considered cash equivalents. The carrying value of cash equivalents approximates fair value due to their short-term maturity. Investments with maturities of more than three months are classified as marketable securities. Interest earned is classified in Interest income in the Consolidated Statements of Operations. On January 1, 2018, the Company adopted ASU No. 2016-18, "Restricted Cash" ("ASU No. 2016-18"). ASU No. 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on an entity's statement of cash flows. A table presenting the beginning-of-period and end-of-period cash amounts from the Company's Consolidated Balance Sheets and the total cash amounts presented in the accompanying Consolidated Cash Flow Statements is provided below under the heading "Adoption of new accounting standards." |
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Property, equipment and leasehold improvements | Equipment, leasehold improvements and other fixed assets owned by the Company are recorded at cost less accumulated depreciation. Except for leasehold improvements, these fixed assets are depreciated using the straight-line method over the estimated useful life of the underlying asset. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the improvement or the remaining term of the related lease. The Company leases all of its facilities and certain equipment. These leases are all classified as operating leases in accordance with FASB ASC Topic 840, Leases. The cost of these operating leases, including any contractual rent increases, rent concessions and landlord incentives, is recognized ratably over the life of the related lease agreement. Lease expense was $93.5 million, $87.9 million and $38.0 million in 2018, 2017 and 2016, respectively. The Company incurs costs to develop internal-use software used in its operations, and certain of those costs meeting the criteria outlined in FASB ASC Topic 350, "Intangibles - Goodwill and Other," are capitalized and amortized over future periods. Net capitalized development costs for internal-use software were $37.4 million and $26.9 million at December 31, 2018 and 2017, respectively, which is included in the Computer equipment and software category above. Amortization expense for capitalized internal-use software development costs, which is classified in Depreciation in the Consolidated Statements of Operations, totaled $13.2 million, $9.9 million and $8.8 million in 2018, 2017 and 2016, respectively. |
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Finite-Lived Intangible assets | The Company has finite-lived intangible assets that are amortized against earnings using the straight-line method over the expected useful life of the underlying asset. |
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Goodwill | Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired. Evaluations of the recoverability of goodwill are performed in accordance with FASB ASC Topic 350, which requires an annual assessment of potential goodwill impairment at the reporting unit level and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. The annual assessment of the recoverability of recorded goodwill can be based on either a qualitative or quantitative assessment or a combination of the two approaches. Both methods utilize estimates which, in turn, require judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the resulting estimates are subject to uncertainty. If our annual goodwill impairment evaluation determines that the fair value of a reporting unit is less than its related carrying amount, we may recognize an impairment charge. In connection with our most recent annual impairment test of goodwill during the quarter ended September 30, 2018, which indicated no impairment of recorded goodwill, the Company utilized the quantitative approach in assessing the fair values of its reporting units relative to their respective carrying values. |
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Impairment of long-lived assets | The Company's long-lived assets primarily consist of intangible assets other than goodwill and property, equipment and leasehold improvements. The Company reviews its long-lived asset groups for impairment whenever events or changes in circumstances indicate that the carrying amount of the respective asset may not be recoverable. Such evaluation may be based on a number of factors, including current and projected operating results and cash flows, and changes in management’s strategic direction as well as external economic and market factors. The Company evaluates the recoverability of these assets by determining whether their carrying values can be recovered through undiscounted future operating cash flows. If events or circumstances indicate that the carrying values might not be recoverable based on undiscounted future operating cash flows, an impairment loss would be recognized. The amount of impairment, if any, is measured based on the difference between the projected discounted future operating cash flows, using a discount rate reflecting the Company’s average cost of funds, and the carrying value of the asset. The Company did not record any impairment charges for long-lived asset groups during the three-year period ended December 31, 2018. |
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Pension obligations | The Company has defined benefit pension plans in several of its international locations (see Note 13 — Employee Benefits). Benefits earned under these plans are generally based on years of service and level of employee compensation. The Company accounts for its defined benefit plans in accordance with the requirements of FASB ASC Topic 715. The Company determines the periodic pension expense and related liabilities for these plans through actuarial assumptions and valuations. The Company recognized $3.9 million, $3.6 million and $3.5 million of pension expense in 2018, 2017 and 2016, respectively. |
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Debt | The Company presents amounts borrowed in the Consolidated Balance Sheets at amortized cost, net of deferred financing fees. Interest accrued on amounts borrowed is classified as Interest expense in the Consolidated Statements of Operations. The Company had $2.3 billion of principal amount of debt outstanding at December 31, 2018 compared to $3.3 billion at December 31, 2017, which reflects the Company's significant principal repayments on its debt subsequent to the completion of the CEB Inc. acquisition. Note 5 — Debt provides information regarding the Company's debt. |
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Foreign currency exposure | The functional currency of our foreign subsidiaries is typically the local currency. All assets and liabilities of foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at average exchange rates for the year. The resulting translation adjustments are recorded as foreign currency translation adjustments, a component of Accumulated other comprehensive (loss) income, net within the Stockholders’ Equity section of the Consolidated Balance Sheets. Currency transaction gains or losses arising from transactions denominated in currencies other than the functional currency of a subsidiary are recognized in results of operations in Other income, net within the Consolidated Statements of Operations. The Company had net currency transaction gains (losses) of $9.2 million, $(5.5) million and $(0.4) million in 2018, 2017 and 2016, respectively. The Company enters into foreign currency forward exchange contracts to mitigate the effects of adverse fluctuations in foreign currency exchange rates on certain transactions. Those contracts generally have short durations and are recorded at fair value with both realized and unrealized gains and losses recorded in Other income, net. The net gain (loss) from foreign currency forward exchange contracts was $(10.4) million, $0.8 million and $(0.3) million in 2018, 2017 and 2016, respectively. |
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Comprehensive income | The Company reports comprehensive income in a separate statement called the Consolidated Statements of Comprehensive Income, which is included herein. The Company's comprehensive income disclosures are included in Note 7 — Stockholders' Equity. |
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Fair value disclosures | The Company has a limited number of assets and liabilities that are adjusted to fair value at each balance sheet date. The Company’s fair value disclosures are included in Note 12 — Fair Value Disclosures. |
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Concentrations of credit risk | Assets that may subject the Company to concentration of credit risk consist primarily of short-term, highly liquid investments classified as cash equivalents, fees receivable, contract assets, interest rate swaps and a pension reinsurance asset. The majority of the Company’s cash equivalent investments and its interest rate swap contracts are with investment grade commercial banks. Fees receivable and contract asset balances deemed to be collectible from customers have limited concentration of credit risk due to our diverse customer base and geographic dispersion. The Company’s pension reinsurance asset (see Note 13 — Employee Benefits) is maintained with a large international insurance company that was rated investment grade as of December 31, 2018 and 2017. |
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Stock repurchase programs | The Company records the cost to repurchase its own common shares as treasury stock. During 2018, 2017 and 2016, the Company used $260.8 million, $41.3 million and $59.0 million, respectively, in cash for stock repurchases (see Note 7 — Stockholders’ Equity for additional information). Shares repurchased by the Company are added to treasury shares and are not retired. |
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Adoption of new accounting standards | Effective January 1, 2016, the Company adopted ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU No. 2016-09"), which mandated certain changes in accounting for stock-based compensation. Among other things, ASU No. 2016-09 permits companies to make an entity-wide accounting policy election to recognize forfeitures of share-based compensation awards as they occur or make an estimate by applying a forfeiture rate each quarter. The Company previously estimated forfeitures but elected to change its accounting policy and account for forfeitures as they occur. ASU No. 2016-09 requires this change in accounting policy to be applied using a cumulative effect adjustment to accumulated earnings as of the beginning of the period in which the rule is adopted. Accordingly, the Company recorded a $0.3 million decrease to its opening accumulated earnings effective January 1, 2016. The Company adopted the accounting standards described below during 2018: Certain Tax Effects Stranded In Accumulated Other Comprehensive Income — On April 1, 2018, the Company early adopted ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU No. 2018-02"). ASU No. 2018-02 provides an entity with the option to reclassify to retained earnings the tax effects from items that have been stranded in accumulated other comprehensive income as a result of the U.S. Tax Cuts and Jobs Act of 2017 (the “Act”). Entities can adopt ASU No. 2018-02 using one of two transition methods: (i) retrospective to each period wherein the income tax effects of the Act related to items remaining in accumulated other comprehensive income are recognized or (ii) at the beginning of the period of adoption. Gartner elected to early adopt ASU No. 2018-02 as of the beginning of the second quarter of 2018, which resulted in a reclassification of $0.6 million of stranded tax amounts related to the Act from Accumulated other comprehensive (loss) income, net to Accumulated earnings. ASU No. 2018-02 had no impact on the Company's operating results in 2018. Stock Compensation Award Modifications — On January 1, 2018, the Company adopted ASU No. 2017-09, "Compensation—Stock Compensation - Scope of Modification Accounting" ("ASU No. 2017-09"). ASU No. 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The adoption of ASU No. 2017-09 had no impact on the Company's consolidated financial statements. Retirement Benefits Cost Presentation — On January 1, 2018, the Company adopted ASU No. 2017-07, "Compensation—Retirement Benefits" ("ASU No. 2017-07"). ASU No. 2017-07 improves the reporting of net benefit cost in the financial statements, provides additional guidance on the presentation of net benefit cost in the income statement and clarifies the components eligible for capitalization. The adoption of ASU No. 2017-07 had an immaterial impact on the classification of benefit expense on the Company's Consolidated Statements of Operations. Partial Sales of Non-financial Assets — On January 1, 2018, the Company adopted ASU No. 2017-05, "Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-financial Assets" ("ASU No. 2017-05"). ASU No. 2017-05 clarifies the scope of the FASB’s guidance on non-financial asset derecognition as well as the accounting for partial sales of non-financial assets. It conforms the derecognition guidance on non-financial assets with the model for revenue transactions. The adoption of ASU No. 2017-05 had no impact on the Company's consolidated financial statements. Definition of a Business — On January 1, 2018, the Company adopted ASU No. 2017-01, "Clarifying the Definition of a Business" ("ASU No. 2017-01"). ASU No. 2017-01 changes the U.S. GAAP definition of a business. Such change can impact the accounting for asset purchases, acquisitions, goodwill impairment and other assessments. The adoption of ASU No. 2017-01 had no impact on the Company's consolidated financial statements. Presentation of Restricted Cash — On January 1, 2018, the Company adopted ASU No. 2016-18, "Restricted Cash" ("ASU No. 2016-18"). ASU No. 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on an entity's statement of cash flows. ASU No. 2016-18 must be applied using a retrospective transition method to each comparative period presented in an entity's financial statements. As a result of the adoption of ASU No. 2016-18, the Company's restricted cash balances are now included in the beginning-of-period and end-of-period total amounts presented on the accompanying Consolidated Statements of Cash Flows. When compared to the Company's previously issued statement of cash flows for 2017, the adoption of ASU No. 2016-18 resulted in: (i) an increase of $7.0 million in cash used in investing activities; (ii) an increase of $18.2 million in the end-of-period total cash amount; and (iii) an increase of $25.1 million in the beginning-of-period total cash amount. The corresponding effects on the statement of cash flows for 2016 were: (i) an increase of $14.0 million in cash used in investing activities; (ii) an increase of $25.1 million in the end-of-period total cash amount; and (iii) an increase of $39.1 million in the beginning-of-period total cash amount. Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company's Consolidated Balance Sheets and the total cash amounts presented in the accompanying Consolidated Cash Flow Statements (in thousands).
Income Taxes — On January 1, 2018, the Company adopted ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory" ("ASU No. 2016-16"). ASU No. 2016-16 accelerates the recognition of taxes on certain intra-entity transactions. U.S. GAAP previously required deferral of the income tax implications of an intercompany sale of assets until the assets were sold to a third party or recovered through use. Under ASU No. 2016-16, the seller’s tax effects and the buyer’s deferred taxes on asset transfers are immediately recognized upon the sale. Pursuant to the transition rules in ASU No. 2016-16, any taxes attributable to pre-2018 intra-entity transfers that were previously deferred should be accelerated and recorded to accumulated earnings on the date of adoption. As a result of this transition rule, certain of the Company's balance sheet income tax accounts pertaining to pre-2018 intra-entity transfers, which aggregated $13.7 million, were reversed against accumulated earnings on January 1, 2018. Pursuant to the provisions of ASU No. 2016-16, the Company recorded an income tax benefit of $6.8 million in 2018 related to intra-entity transfers upon the merger of certain foreign subsidiaries. ASU No. 2016-16 could have a material impact on the Company's consolidated financial statements in the future, depending on the nature, size and tax consequences of intra-entity transfers, if any. Statement of Cash Flows — On January 1, 2018, the Company adopted ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments" ("ASU No. 2016-15"). ASU No. 2016-15 sets forth classification requirements for certain cash flow transactions. The adoption of ASU No. 2016-15 had no impact on the Company's consolidated financial statements. Financial Instruments Recognition and Measurement — On January 1, 2018, the Company adopted ASU No. 2016-01, "Financial Instruments Overall - Recognition and Measurement of Financial Assets and Liabilities" ("ASU No. 2016-01"), to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Among the significant changes required by ASU No. 2016-01 is that equity investments are to be measured at fair value with changes in fair value recognized in net income. The adoption of ASU No. 2016-01 had no impact on the Company's consolidated financial statements. Revenue Recognition — On January 1, 2018, the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers," as amended ("ASU No. 2014-09"). The adoption of the standard did not have a material impact on the Company's consolidated financial statements. However, as required by ASU No. 2014-09, the Company's disclosures around revenue recognition have been significantly expanded. Additionally, the Company's accounting policies have been updated to reflect the adoption of ASU No. 2014-09. The following sections provide an overview of the Company's revenues by segment along with the required disclosures under the new revenue recognition standard. Our business and our revenues Gartner currently delivers its products and services globally through three business segments: Research, Conferences and Consulting. Our revenues from those business segments are discussed below. Research Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of an enterprise through research and other reports, briefings, proprietary tools, access to our analysts and advisors, peer networking services and membership programs that enable our clients to make better decisions. Gartner's traditional strengths in information technology (“IT”), marketing and supply chain research were enhanced in 2017 with Gartner's acquisition of CEB Inc., which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, finance, sales and legal. Research revenues are mainly derived from subscription contracts for research products, representing approximately 90% of the segment’s revenue. The related revenues are deferred and recognized ratably over the applicable contract term (i.e., as we provide services over the contract period). Fees derived from assisting organizations in selecting the right business software for their needs are recognized at a point in time (i.e., when the lead is provided to the vendor). The Company enters into subscription contracts for research products that generally are for twelve-month periods or longer. Approximately 75% to 80% of our annual and multi-year Research subscription contracts provide for billing of the first full service period upon signing. In subsequent years, multi-year subscription contracts are normally billed prior to the contract’s anniversary date. Our other Research subscription contracts are usually invoiced in advance, commencing with the contract signing, on (i) a quarterly, monthly or other recurring basis or (ii) in accordance with a customized invoicing schedule. Research contracts are generally non-cancelable and non-refundable, except for government contracts that may have cancellation or fiscal funding clauses, which historically have not produced material cancellations. It is our policy to record the amount of a subscription contract that is billable as a fee receivable at the time the contract is signed with a corresponding amount as deferred revenue because the contract represents a legally enforceable claim. Conferences Conferences (formerly called Events) provides business professionals across the organization the opportunity to learn, share and network. From our flagship CIO conference Gartner IT Symposium, to industry-leading conferences focused on specific business roles and topics, to member-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice live. We earn revenues from both the attendees and exhibitors at our conferences and meetings. Attendees are generally invoiced for the full attendance fee upon their completion of an online registration form or their signing of a contract, while exhibitors typically make several individual payments commencing with the signing of a contract. We collect almost all of the invoiced amounts in advance of the related activity, resulting in the recording of deferred revenue. We recognize both the attendee and exhibitor revenue as we satisfy our related performance obligations (i.e., when the related activity is held). The Company defers certain costs directly related to specific conferences and meetings and expenses those costs in the period during which the related activity occurs. The Company's policy is to defer only those costs that are incremental and directly attributable to a specific activity, primarily prepaid site and production services costs. Other costs of organizing and producing our activities, primarily Company personnel and non-conference specific expenses, are expensed in the period incurred. At the end of each fiscal quarter, the Company assesses whether the expected direct costs of producing a scheduled activity will exceed the projected revenues. If such costs are expected to exceed revenues, the Company records the expected loss in the period determined. Consulting Consulting provides customized solutions to unique client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving IT performance with a focus on cost, performance, efficiency and quality, and contract optimization services. Consulting revenues, primarily derived from custom consulting and measurement services, are principally generated from fixed fee or time and materials engagements. Revenues from fixed fee engagements are recognized as we work to satisfy our performance obligations, while revenues from time and materials engagements are recognized as work is delivered and/or services are provided. In both of these circumstances, we satisfy our performance obligations and control of the services are passed to our customers over time (i.e., during the duration of the contract or consulting engagement). On a contract-by-contract basis, we typically use actual labor hours incurred compared to total expected labor hours to measure the Company’s performance in respect of our fixed fee engagements. If our labor and other costs on an individual contract are expected to exceed the total contract value or the contract’s funded ceiling amount, the Company reflects an adjustment to the contract’s overall profitability in the period determined. Revenues related to contract optimization engagements are contingent in nature and are only recognized at the point in time when all of the conditions related to their payment have been satisfied. Consulting customers are invoiced based on the specific terms and conditions in their underlying contracts. We typically invoice our Consulting customers after we have satisfied some or all of the related performance obligations and the related revenue has been recognized. We record fees receivable for amounts that are billed or billable. We also record contract assets, which represent amounts for which we have recognized revenue but lack the unconditional right to payment as of the balance sheet date due to our required continued performance under the relevant contract, progress billing milestones or other billing-related restrictions. The Company’s contract assets are discussed below. Overview of ASU No. 2014-09 ASU No. 2014-09 requires a five-step evaluative process that consists of:
ASU No. 2014-09 is intended to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses in previously existing revenue recognition rules; provide a more robust framework for addressing revenue recognition issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and provide more useful information to users of financial statements through improved disclosures. The Company adopted ASU No. 2014-09 using the modified retrospective method of adoption. Under this 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 adoption of ASU No. 2014-09 did not result in a cumulative effect adjustment to the Company's Accumulated earnings in its consolidated financial statements. However, the adoption of the new standard required reclassifications of certain amounts presented in the Company’s consolidated balance sheet. As of January 1, 2018, these items were (i) the reclassification of certain fees receivable that met the definition of a contract asset, aggregating $26.7 million, from Fees receivable, net to Prepaid expenses and other current assets; and (ii) the reclassification of a refund liability, aggregating $6.2 million, from the allowance for fees receivable to Accounts payable and accrued liabilities. Related to our adoption of ASU No. 2014-09, we elected to (i) apply the provisions of this new accounting guidance only to contracts that were not completed at the date of initial application and (ii) utilize a practical expedient whereby we reflected the aggregate effect of all contract modifications that occurred prior to January 1, 2018 (rather than retrospectively restating the affected contracts) when identifying our satisfied and unsatisfied performance obligations, determining the transaction prices with our customers, and allocating such transaction prices to our satisfied and unsatisfied performance obligations. These two elections had no financial impact. Prior to January 1, 2018, the Company recognized revenue in accordance with then-existing U.S. GAAP and SEC Staff Accounting Bulletin No. 104, "Revenue Recognition" (“prior GAAP”). Under both ASU No. 2014-09 and prior GAAP, revenue can only be recognized when all of the required criteria are met. Although there were certain changes to the Company’s revenue recognition policies and procedures effective January 1, 2018 with the adoption of ASU No. 2014-09, there were no material differences between the pattern and timing of revenue recognition under ASU No. 2014-09 and prior GAAP. The accompanying Consolidated Statements of Operations present revenues net of any sales or value-added taxes that we collect from customers and remit to government authorities. ASU No. 2014-09 requires that we assess at inception all of the promises in a customer contract to determine if a promise is a separate performance obligation. To identify our performance obligations, we consider all of the services promised in a customer contract, regardless of whether they are explicitly stated or implied by customary business practices. If we conclude that a service is separately identifiable and distinct from the other offerings in a contract, we account for such a promise as a separate performance obligation. If a customer contract has more than one performance obligation, then the total contract consideration is allocated among the separate deliverables based on their stand-alone selling prices, which are determined based on the prices at which the Company discretely sells the stand-alone services. If a contract includes a discount or other pricing concession, the transaction price is allocated among the performance obligations on a proportionate basis using the relative stand-alone selling prices of the individual deliverables being transferred to the customer, unless the discount or other pricing concession can be ascribed to specifically identifiable performance obligations. The contracts with our customers delineate the final terms and conditions of the underlying arrangements, including product descriptions, subscription periods, deliverables, quantities and the price of each service purchased. Since the transaction price of almost all of our customer contracts is typically agreed upon upfront and generally does not fluctuate during the duration of the contract, variable consideration is insignificant. The Company may engage in certain financing transactions with customers but these arrangements have been limited in number and not material. Required Disclosures under ASU No. 2014-09 ASU No. 2014-09 requires significantly expanded disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. These additional disclosures are provided below. Disaggregated Revenues We believe that disaggregating the Company’s revenues by primary geographic location and the timing of when revenue is recognized achieves the disclosure objectives in ASU No. 2014-09. Our disaggregated revenue information by reportable segment, including our Other segment, is presented for the years indicated in the tables below (in thousands). Year Ended December 31, 2018
Year Ended December 31, 2017
Year Ended December 31, 2016
The Company’s revenues are generated primarily through direct sales to clients by domestic and international sales forces and a network of independent international sales agents. Most of the Company’s products and services are provided on an integrated worldwide basis and, because of this integrated delivery approach, it is not practical to precisely separate our revenues by geographic location. Accordingly, revenue information presented in the above tables is based on internal allocations, which involve certain management estimates and judgments. Year Ended December 31, 2018
Year Ended December 31, 2017
Year Ended December 31, 2016
Determining a measure of progress for performance obligations that are satisfied over time and when control transfers for performance obligations that are satisfied at a point in time requires us to make judgments that affect the timing of when revenue is recognized. A key factor in this determination is when the customer is able to direct the use of, and can obtain substantially all of the benefits from, the deliverable. For performance obligations recognized in accordance with a time-elapsed output method, the Company’s efforts are expended consistently throughout the contractual period and the Company transfers control evenly by providing stand-ready services. For performance obligations satisfied under our Consulting fixed fee and time and materials engagements, we believe that labor hours are the best measure of depicting the Company’s progress because labor output corresponds directly to the value of the Company’s performance to date as control is transferred. In our Other segment, we selected a method to assess the completion of our performance obligations that best aligned with the specific characteristics of the individual customer contract. We believe that these methods to measure progress provide a reasonable and supportable determination as to when we transfer services to our customers. For customer contracts that are greater than one year in duration, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2018 was approximately $2.7 billion. The Company expects to recognize $1,620.4 million, $874.5 million and $186.5 million of this revenue (most of which pertains to Research) during the year ending December 31, 2019, the year ending December 31, 2020 and thereafter, respectively. The Company applies a practical expedient allowed in ASU No. 2014-09 and, accordingly, it does not disclose such performance obligation information for customer contracts that have original durations of one year or less. Our performance obligations for contracts meeting this ASU No. 2014-09 disclosure exclusion primarily include: (i) stand-ready services under Research subscription contracts; (ii) holding conferences where attendees and exhibitors can participate; and (iii) providing customized Consulting solutions for clients under fixed fee and time and materials engagements. The remaining duration of these performance obligations is generally less than one year, which aligns with the period that the parties have enforceable rights and obligations under the affected contracts. Customer Contract Assets and Liabilities The timing of the recognition of revenues, and the amount and timing of our billings and cash collections, as well as upfront customer payments, result in the recording of both assets and liabilities on our Consolidated Balance Sheets. The payment terms and conditions in our customer contracts vary. In some cases, customers prepay and, in other cases, after we conduct a credit evaluation, payment may be due in arrears. Because the timing of the delivery of our services typically differs from the timing of customer payments, the Company recognizes either a contract asset (we perform either fully or partially under the contract but a contingency remains) or a contract liability (upfront customer payments precede our performance, resulting in deferred revenue). Amounts recorded as contract assets are reclassified to fees receivable when all of the outstanding conditions have been resolved and our right to payment becomes unconditional. Contracts with payments due in arrears are also recognized as fees receivable. As our contractual performance obligations are satisfied over time or at a point in time, the Company correspondingly relieves its contract liabilities and records the associated revenue. The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers, excluding held-for-sale businesses (in thousands):
During 2018, the Company recognized $1,287.8 million of revenue that was attributable to deferred revenues that were recorded at December 31, 2017. That amount primarily consisted of (i) Research and Other revenues that were recognized ratably as control of the goods or services passed to the customer and (ii) Conferences revenue pertaining to conferences that occurred during the reporting period. In 2018, the Company recorded no material impairments related to its contract assets. In the normal course of business, the Company does not recognize revenues from performance obligations satisfied in prior periods. Allowance for Losses and the Revenue Reserve As of December 31, 2017, the Company maintained an allowance for losses that included a bad debt allowance and a revenue reserve. Provisions to the Company’s allowance for losses were charged against earnings as either a reduction in revenues or an increase in expense. Effective with the adoption of ASU No. 2014-09 on January 1, 2018, the allowance for losses, which is classified as an offset to the gross amount of fees receivable, and the related charge against earnings (i.e., bad debt expense) is now comprised solely of estimated uncollectible fees receivable due to credit and other associated risks. The revenue reserve previously reported as part of the allowance for losses has been reclassified and is now reported as a liability in accordance with ASU No. 2014-09. The revenue reserve is maintained for amounts deemed to be uncollectible for reasons other than bad debt. When determining the amount of the revenue reserve, the Company uses an expected-value method that is based on current estimates and a portfolio of data from its historical experience. Due to the common characteristics and similar attributes of our customers and contracts, which provide relevant and predictive evidence about our projected future liability, an expected-value method is reasonable and appropriate. However, the determination of the revenue reserve is inherently judgmental and requires the use of certain estimates. Changes in estimates are recorded in the period that they are identified. As of December 31, 2018, the revenue reserve balance was $7.4 million and adjustments to the account in 2018 were not significant. The allowance for losses for bad debts is based on historical loss experience, an assessment of current economic conditions, the aging of outstanding receivables, the financial health of specific clients and probable losses. This evaluation is inherently judgmental and requires the use of estimates. The allowance for losses for bad debts is periodically re-evaluated and adjusted as more information about the ultimate collectability of fees receivable becomes available. Circumstances that could cause such allowance for losses to increase include changes in our clients’ liquidity and credit quality, other factors negatively impacting our clients’ ability to pay their obligations as they come due, and the effectiveness of our collection efforts. Costs of obtaining and fulfilling a customer contract Upon the signing of a customer contract, the Company capitalizes the related commission as a recoverable direct incremental cost of obtaining the underlying contract and records a corresponding commission payable. No other amounts are capitalized as a cost of obtaining or fulfilling a customer contract because no expenditures have been identified that meet the requisite capitalization criteria. For Research, Consulting and Other, we generally use the straight-line method of amortization for deferred commissions over a period that is based on the projected recoverability for such costs, using factors such as the underlying contract period, the timing of when the corresponding revenues will be earned and the anticipated term of the engagement. For Conferences, deferred commissions are expensed during the period when the related conference occurs. Under all circumstances, deferred commissions are amortized over a period that does not exceed one year. During 2018, 2017 and 2016, such amortization expense was $304.8 million, $230.5 million and $180.2 million, respectively, and was included in SG&A expense in the accompanying Consolidated Statements of Operations. The Company recorded no material impairments of its deferred commissions during the three-year period ended December 31, 2018. Accounting standards issued but not yet adopted. The FASB has issued accounting standards that had not yet become effective as of December 31, 2018 and may impact the Company’s consolidated financial statements or related disclosures in future periods. Those standards and their potential impact are discussed below. Accounting standards effective in 2019 Targeted Improvements to Accounting for Hedging Activities — In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging" ("ASU No. 2017-12"). ASU No. 2017-12 is intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition to that main objective, the standard makes certain targeted improvements to simplify the application of hedge accounting guidance in current U.S. GAAP. On January 1, 2019, the Company adopted ASU No. 2017-12. The adoption of ASU No. 2017-12 had no impact on the Company's consolidated financial statements. Leases — In February 2016, the FASB issued ASU No. 2016-02, "Leases," as amended ("ASU No. 2016-02"), which substantively modifies the accounting and disclosure requirements for lease arrangements. U.S. GAAP prior to the issuance of ASU No. 2016-02 provided that lease arrangements meeting certain criteria were not recorded on an entity's balance sheet. ASU No. 2016-02 significantly changed the accounting for leases because a right-of-use ("ROU") model is now used whereby a lessee must record an ROU asset and a lease liability on its balance sheet for most of its leases. Under ASU No. 2016-02, leases are classified as either operating or financing arrangements, with such classification affecting the pattern of expense recognition in an entity's income statement. ASU No. 2016-02 also requires significantly expanded disclosures to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows related to leases. The Company adopted ASU No. 2016-02 on January 1, 2019 using a modified retrospective approach. We elected to use an available practical expedient that is permitted under ASU No. 2016-02 to record the required cumulative effect adjustments to the opening balance sheet in the period of adoption rather than in the earliest comparative period presented. As such, the Company's historical consolidated financial statements will not be restated. Certain other permitted practical expedients were used by the Company upon adoption of the standard, including: (i) combining lease and nonlease components as a single lease component for purposes of the recognition and measurement requirements under ASU No. 2016-02; (ii) not reassessing a lease arrangement to determine if its classification should be changed under ASU No. 2016-02; and (iii) not reassessing initial direct costs for leases that were in existence on January 1, 2019. On adoption effective January 1, 2019, ASU No. 2016-02 will materially impact our consolidated balance sheets in the future because application of the ROU model yields a significant increase in both our assets and liabilities from our lease arrangements (all of which are operating leases) that have not previously been recorded on the Company’s consolidated balance sheets. We currently expect that the adoption of the standard will result in the recognition of operating lease liabilities ranging from $835.0 million to $855.0 million based on the present value of the Company’s remaining minimum lease payments, while the corresponding ROU assets will range from $637.0 million to $657.0 million. The Company’s consolidated statements of operations, stockholders' equity and cash flows will not be materially impacted by the adoption of the standard. The Company will provide the required disclosures under the standard in its Form 10-Q filing for the quarterly period ending March 31, 2019. Accounting standards effective in 2020 Implementation Costs in a Cloud Computing Arrangement — In August 2018, the FASB issued ASU No. 2018-15, "Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract" ("ASU No. 2018-15"). ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Costs that are capitalized under ASU No. 2018-15 will be expensed over the term of the cloud computing arrangement. ASU No. 2018-15 is effective for Gartner on January 1, 2020, with early adoption permitted. ASU No. 2018-15 may be adopted using either a retroactive or prospective method. The adoption of ASU No. 2018-15 is currently not expected to have a material impact on the Company's consolidated financial statements. Defined Benefit Plan Disclosures — In August 2018, the FASB issued ASU No. 2018-14, "Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans" ("ASU No. 2018-14"). ASU No. 2018-14, which is part of the FASB's broader disclosure framework project, modifies and supplements the current U.S. GAAP annual disclosure requirements for employers that sponsor defined benefit pension plans. ASU No. 2018-14 is effective for Gartner for the year ending December 31, 2020, with early adoption permitted. ASU No. 2018-14 must be adopted on a retroactive basis and applied to each comparative period presented in an entity's financial statements. We are evaluating the potential impact of adopting ASU No. 2018-14; however, we do not currently expect it to have a material impact on the Company's consolidated financial statements. Fair Value Measurement Disclosures — In August 2018, the FASB issued ASU No. 2018-13, "Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement" ("ASU No. 2018-13"). ASU No. 2018-13, which is part of the FASB's broader disclosure framework project, modifies and supplements the current U.S. GAAP disclosure requirements pertaining to fair value measurements, with an emphasis on Level 3 disclosures of the valuation hierarchy. ASU No. 2018-13 is effective for Gartner on January 1, 2020, with early adoption permitted. The adoption of ASU No. 2018-13 is currently not expected to have a material impact on the Company's consolidated financial statements. Goodwill Impairment — In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other - Simplifying the Test for Goodwill Impairment" ("ASU No. 2017-04"). ASU No. 2017-04 simplifies the determination of the amount of goodwill to be potentially charged off by eliminating Step 2 of the goodwill impairment test under current U.S. GAAP. ASU No. 2017-04 is effective for Gartner on January 1, 2020. The adoption of ASU No. 2017-04 is currently not expected to have a material impact on the Company's consolidated financial statements. Financial Instrument Credit Losses — In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses" ("ASU No. 2016-13"). ASU No. 2016-13 amends the current financial instrument impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU No. 2016-13 is effective for Gartner on January 1, 2020, with early adoption permitted. We are currently evaluating the potential impact of ASU No. 2016-13 on our consolidated financial statements. The FASB continues to work on a number of other significant accounting standards which, if issued, could materially impact the Company's accounting policies and disclosures in future periods. As these standards have not yet been issued, the effective dates and potential impact are unknown. |
Business and Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment | The Company's total fixed assets, less accumulated depreciation and amortization, consisted of the following (in thousands):
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Schedule of Changes in Intangible Assets Subject to Amortization | Changes in intangible assets subject to amortization during the two-year period ended December 31, 2018 were as follows (in thousands):
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Schedule of Estimated Future Amortization Expense by Year From Amortizable Intangibles | The estimated future amortization expense by year for finite-lived intangible assets is as follows (in thousands):
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Schedule of Changes to The Carrying Amount of Goodwill by Reporting Unit | The following table presents changes to the carrying amount of goodwill by segment, including the Company's Other segment, during the two-year period ended December 31, 2018 (in thousands):
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Schedule of Cash and Cash Equivalents | Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company's Consolidated Balance Sheets and the total cash amounts presented in the accompanying Consolidated Cash Flow Statements (in thousands).
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Schedule of Restricted Cash | Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company's Consolidated Balance Sheets and the total cash amounts presented in the accompanying Consolidated Cash Flow Statements (in thousands).
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Schedule of Disaggregation of Revenue by Reportable Segment | Our disaggregated revenue information by reportable segment, including our Other segment, is presented for the years indicated in the tables below (in thousands). Year Ended December 31, 2018
Year Ended December 31, 2017
Year Ended December 31, 2016
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Schedule of Disaggregation of Revenue | Year Ended December 31, 2018
Year Ended December 31, 2017
Year Ended December 31, 2016
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Schedule for Contract with Customer, Asset and Liability | The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers, excluding held-for-sale businesses (in thousands):
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Acquisitions and Divestiture (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mergers, Acquisitions And Dispositions Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of amounts related to new building | The table below presents a summary of the activity related to our accrual for exit costs at all of our facilities for the years ended December 31, 2018 and 2017 (in thousands). There was no such activity in 2016.
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Schedule of aggregate purchase price for acquisitions | The following table summarizes the aggregate consideration paid for these acquisitions during 2017 (in thousands):
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Summary of the allocation of the purchase price to the fair value of the assets and liabilities assumed | The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisitions of L2 and CEB (in thousands):
The pro forma results have been prepared in accordance with U.S. GAAP and include the following pro forma adjustments: (a) An increase in interest expense and amortization of debt issuance costs related to the financing of the CEB acquisition. Note 5 — Debt provides further information regarding the Company's borrowings related to the CEB acquisition. (b) A change in revenue as a result of the required fair value adjustment to deferred revenue. (c) An adjustment for additional depreciation and amortization expense as a result of the purchase price allocation for finite-lived intangible assets and property, equipment, and leasehold improvements.
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Schedule of pro forma financial information | Had the Company acquired CEB in prior periods, the impact to the Company's operating results would have been material, and as a result the following pro forma consolidated financial information is presented as if CEB had been acquired by the Company on January 1, 2016 (in thousands, except per share amounts):
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Other Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Other assets consist of the following (in thousands):
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Accounts Payable, Accrued, and Other Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consist of the following (in thousands):
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Schedule of Other Liabilities | Other liabilities consist of the following (in thousands):
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Debt (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table summarizes the Company’s total outstanding borrowings (in thousands):
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Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Lease Payments under Operating Leases | uture minimum annual cash payments under those operating lease agreements as of December 31, 2018 were as follows (in thousands):
(1) Excludes approximately $372.0 million of sublease income. |
Stockholders' Equity (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Transactions Relating to Common Stock | The following table summarizes transactions relating to our Common Stock for the three years ended December 31, 2018:
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Schedule of Accumulated Other Comprehensive (Loss) Income, Net by Components | The following tables disclose information about changes in Accumulated Other Comprehensive Income (Loss) ("AOCI/L") by component and the related amounts reclassified out of AOCI/L to income during the years indicated (net of tax, in thousands) (1): 2018
2017
(1) Amounts in parentheses represent debits (deferred losses). (2) See Note 1 - Business and Significant Accounting Policies for additional information regarding the Company's adoption of ASU No. 2018-02. (3) The reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net of tax effect. See Note 11 – Derivatives and Hedging for information regarding the hedges. (4) The reclassifications related to defined benefit pension plans were primarily recorded in Selling, general and administrative expense, net of tax effect. See Note 13 – Employee Benefits for information regarding the Company’s defined benefit pension plans. (5) The reclassification related to foreign currency translation adjustments in 2018 was recorded in Gain from divested operations. See Note 2 – Acquisitions and Divestitures for information regarding our divestitures in 2018. |
Stock-Based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-based Compensation Expense by Award Type | The Company recognized the following stock-based compensation expense by award type and expense category line item during the years ended December 31 (in millions):
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Schedule of Stock-based Compensation Expense by Expense Category |
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Schedule of Summary of the Changes in SARS, RSUs, and CSEs Outstanding | The following table summarizes the changes in RSUs outstanding during the year ended December 31, 2018:
The following table summarizes changes in SARs outstanding during the year ended December 31, 2018:
n/a = not applicable
The following table summarizes the changes in CSEs outstanding during the year ended December 31, 2018:
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Schedule of Fair Value Assumptions of SARS | The fair value of a SARs award is determined on the date of grant using the Black-Scholes-Merton valuation model with the following weighted average assumptions for the years ended December 31:
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Computation of Earnings Per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of the Basic and Diluted Earnings Per Share Computations | The following table sets forth the calculation of basic and diluted earnings per share for the three years ended December 31 (in thousands, except per share data):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents the number of common share equivalents that were not included in the computation of diluted earnings per share in the above table because the effect would have been anti-dilutive. During periods with net income, these common share equivalents were anti-dilutive because their exercise price was greater than the average market value of a share of Common Stock during the period.
(a) Anti-dilutive common shares for 2018 were minimal. |
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income before Income Taxes | The following is a summary of the components of the Company's income (loss) before income taxes for the years ended December 31 (in thousands):
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Schedule of Components of Income Tax | The expense (benefit) for income taxes on the above income consists of the following components (in thousands):
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Schedule of Deferred Tax Assets and Liabilities | Long-term deferred tax assets and liabilities are comprised of the following (in thousands):
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Schedule of Effective Income Tax Rate Reconciliation | The differences between the U.S. federal statutory income tax rate and the Company’s effective tax rate on income before income taxes for the years ended December 31 follow:
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Schedule of Reconciliation of Beginning and Ending Unrecognized Tax Benefits | The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, for the years ended December 31 (in thousands):
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Derivatives and Hedging (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | The following tables provide information regarding the Company’s outstanding derivatives contracts as of the dates indicated (in thousands, except for number of contracts): December 31, 2018
December 31, 2017
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The following table provides information regarding amounts recognized in the Consolidated Statements of Operations for derivative contracts for the years ended December 31 (in millions):
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Fair Value Disclosures (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured to Fair Value on Recurring Basis | The following table presents the fair value of certain financial assets and liabilities (in thousands):
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Employee Benefits (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Defined Benefit Pension Expense | The following are the components of defined benefit pension plan expense for the years ended December 31 (in thousands):
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Schedule of Assumptions Used in the Computation of Pension Expense | The following are the key assumptions used in the computation of pension expense for the years ended December 31:
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Schedule of Changes in the Projected Benefit Obligation | The following table provides information related to changes in the projected benefit obligation for the years ended December 31 (in thousands):
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Schedule of Funded Status of the Plans and Related Amounts Recorded in Consolidated Balance Sheet | The following table provides information regarding the funded status of the plans and related amounts recorded in the Company’s Consolidated Balance Sheets as of December 31 (in thousands):
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information by Segment | The following tables present information about the Company’s reportable segments for the periods indicated (in thousands):
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Schedule of Reconciliation of Segment Gross Contribution to Net Income | The following table provides a reconciliation of total segment gross contribution to net income for the years ended December 31 (in thousands):
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Schedule of Revenue from External Customers and Long-Lived Assets by Geographical Areas | Disaggregated revenue information by reportable segment for the three years ended December 31, 2018, including our Other segment, is presented in Note 1 – Business and Significant Accounting Policies. Long-lived asset information by geographic location as of December 31 is summarized in the table below (in thousands).
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Valuation and Qualifying Accounts (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Valuation Allowance | The following table summarizes activity in the Company’s allowance for losses for the years ended December 31 (in thousands):
(1) The allowance for losses at December 31, 2017 included $6.2 million that was attributable to the Company's revenue reserve. As a result of the Company's adoption of ASU No. 2014-09 on January 1, 2018, the revenue reserve balance is now included in Accounts payable and accrued liabilities on the Company's Consolidated Balance Sheet. Note 1 — Business and Significant Accounting Policies provides additional information regarding the Company's adoption of ASU No. 2014-09. |
Business and Significant Accounting Policies - Estimated Future Amortization Expense by Year from Purchased Intangibles (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2019 | $ 129,394 | |
2020 | 122,756 | |
2021 | 102,338 | |
2022 | 92,801 | |
2023 and thereafter | 595,276 | |
Finite-lived intangible assets, net | $ 1,042,565 | $ 1,292,022 |
Business and Significant Accounting Policies - Schedule of Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 156,368 | $ 538,908 | $ 474,233 | $ 372,976 |
Restricted cash classified in: | ||||
Prepaid expenses and other current assets | 2,295 | 15,148 | 25,121 | 13,505 |
Other assets | 0 | 3,002 | 0 | 25,626 |
Cash and cash equivalents | 0 | 10,000 | 0 | 0 |
Cash and cash equivalents and restricted cash | $ 158,663 | $ 567,058 | $ 499,354 | $ 412,107 |
Business and Significant Accounting Policies - Impact of Adoption of ASU 2014-09 (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Fees receivable | $ (1,255,118) | $ (1,176,843) | |
Prepaid expenses and other current assets | 165,237 | 124,632 | |
Allowance for doubtful accounts | (7,700) | (12,700) | |
Accounts payable and accrued liabilities | $ 710,113 | $ 666,821 | |
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Fees receivable | $ 26,700 | ||
Prepaid expenses and other current assets | 26,700 | ||
Allowance for doubtful accounts | 6,200 | ||
Accounts payable and accrued liabilities | $ 6,200 |
Business and Significant Accounting Policies - Schedule of Contract with Customer, Asset and Liability (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Assets: | |||
Fees receivable, gross | $ 1,262,818 | $ 1,162,871 | |
Contract assets | 26,119 | 26,672 | |
Contract liabilities: | |||
Deferred revenues (current liability) | 1,745,244 | 1,630,198 | |
Non-current deferred revenues | 21,194 | 16,205 | |
Total contract liabilities | 1,766,438 | 1,646,403 | |
Revenue recognized previously attributable to deferred revenues | 1,287,800 | ||
Revenue reserve balance | $ 7,400 | ||
Amortization of deferred sales commissions, amortization period | 1 year | ||
Amortization of deferred sales commissions | $ 304,800 | $ 230,500 | $ 180,200 |
Acquisitions and Divestiture - Summary of Exited Space Liability (Details) - CEB - USD ($) $ in Thousands |
12 Months Ended | 21 Months Ended | |
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
|
Liability Related to Exited Space [Roll Forward] | |||
Beginning liability balance | $ 12,961 | $ 0 | |
Charges and adjustments | 69,790 | 13,087 | $ 82,900 |
Payments | (26,087) | (126) | (26,200) |
Ending liability balance | 56,664 | $ 12,961 | $ 56,664 |
Sublease income | $ 2,515 |
Acquisitions and Divestiture - Summary of Consideration Transferred (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Apr. 05, 2017 |
Mar. 09, 2017 |
Sep. 30, 2017 |
Dec. 31, 2017 |
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CEB and L2 Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Cash paid at close | $ 2,821,903 | |||
Additional cash paid | 12,465 | |||
Fair value of Gartner equity | 818,660 | |||
Total aggregate consideration | $ 3,653,028 | |||
CEB | ||||
Business Acquisition [Line Items] | ||||
Cash paid at close | $ 2,687,704 | $ 12,500 | ||
Additional cash paid | 12,465 | |||
Fair value of Gartner equity | 818,660 | |||
Total aggregate consideration | $ 3,518,829 | |||
L2, Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash paid at close | $ 134,199 | |||
Additional cash paid | 0 | |||
Fair value of Gartner equity | 0 | |||
Total aggregate consideration | $ 134,199 |
Acquisitions and Divestiture - Proforma (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Business Acquisition, Pro Forma Information [Abstract] | |||
Pro forma diluted income (loss) per share (in dollars per share) | $ 1.66 | $ (2.68) | |
CEB | |||
Business Acquisition, Pro Forma Information [Abstract] | |||
Pro forma total revenue | $ 3,726,470 | $ 3,183,070 | |
Pro forma net income (loss) | $ 150,167 | $ (241,423) | |
Pro forma basic income (loss) per share (in dollars per share) | $ 1.66 | $ (2.68) |
Other Assets - Composition of Other Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Benefit plan-related assets | $ 75,653 | $ 97,525 |
Non-current deferred tax assets | 34,494 | 31,067 |
Other | 46,222 | 65,150 |
Total other assets | $ 156,369 | $ 193,742 |
Accounts Payable, Accrued, and Other Liabilities - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 37,508 | $ 49,000 |
Payroll and employee benefits payable | 143,803 | 120,278 |
Severance and retention bonus payable | 28,292 | 44,685 |
Bonus payable | 170,719 | 162,710 |
Commissions payable | 126,844 | 108,969 |
Taxes payable | 19,725 | 46,758 |
Other accrued liabilities | 183,222 | 134,421 |
Total accounts payable and accrued liabilities | $ 710,113 | $ 666,821 |
Accounts Payable, Accrued, and Other Liabilities - Other Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Non-current deferred revenue | $ 21,194 | $ 16,205 |
Long-term taxes payable | 66,304 | 66,386 |
Benefit plan-related liabilities | 96,033 | 118,868 |
Lease-related matters | 165,374 | 115,840 |
Non-current deferred tax liabilities | 214,687 | 206,338 |
Other | 50,081 | 54,362 |
Total other liabilities | $ 613,673 | $ 577,999 |
Debt - Bridge Facility and Senior Notes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Apr. 05, 2017 |
Mar. 30, 2017 |
Dec. 31, 2017 |
|
Senior notes | |||
Debt Instrument [Line Items] | |||
Proceeds from issuance of debt | $ 800.0 | ||
CEB | |||
Debt Instrument [Line Items] | |||
Proceeds from issuance of debt | $ 2,800.0 | ||
CEB | Senior notes | |||
Debt Instrument [Line Items] | |||
Proceeds from issuance of debt | $ 800.0 | ||
Debt instrument, fixed interest rate | 5.125% | ||
Issue price, percent | 100.00% | ||
Redeemable percentage of principal amount | 40.00% | ||
CEB | Senior notes | Redemption period one | |||
Debt Instrument [Line Items] | |||
Redemption price percentage | 105.125% | ||
CEB | Senior notes | Redemption period two | |||
Debt Instrument [Line Items] | |||
Redemption price percentage | 100.00% | ||
CEB | Senior notes | Redemption period three | |||
Debt Instrument [Line Items] | |||
Redemption price percentage | 101.00% | ||
Bridge Loan | CEB | |||
Debt Instrument [Line Items] | |||
Debt instrument term | 364 days | 364 days | |
Proceeds from issuance of debt | $ 300.0 | ||
Repayments of short-term debt | $ 300.0 |
Debt - Borrowings (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 2,312,092 | $ 3,323,062 |
Less: deferred financing fees | (30,405) | (44,217) |
Net balance sheet carrying amount | 2,281,687 | 3,278,845 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 155,000 | 595,000 |
Term loan | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 1,355,062 | 1,429,312 |
Term B facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 0 | 496,250 |
Senior notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 800,000 | 800,000 |
Connecticut Economic Development Program | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 2,030 | $ 2,500 |
Debt - Interest Rate Swaps (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017
USD ($)
outstanding_contract
|
Dec. 31, 2018
USD ($)
derivative_instrument
outstanding_contract
|
Dec. 31, 2016
USD ($)
|
|
Derivative [Line Items] | |||
Number of Contracts | outstanding_contract | 142 | 142 | |
Contract notional amount | $ 2,086,764 | $ 3,027,375 | |
Interest rate swap | |||
Derivative [Line Items] | |||
Number of Contracts | derivative_instrument | 5 | ||
Contract notional amount | $ 1,400,000 | ||
Derivative, term of contract | 30 days | ||
Interest rate derivative hedge, asset (liability), net | $ 10,700 | $ (3,400) | |
Forward starting interest rate swap | |||
Derivative [Line Items] | |||
Number of Contracts | derivative_instrument | 2 | ||
Contract notional amount | $ 700,000 | ||
Minimum | Interest rate swap | |||
Derivative [Line Items] | |||
Derivative, fixed interest rate | 1.53% | ||
Maximum | Interest rate swap | |||
Derivative [Line Items] | |||
Derivative, fixed interest rate | 2.13% |
Commitments and Contingencies - Future Minimum Annual Cash Payments Under Non-Cancelable Operating Lease Agreements (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 130,991 |
2020 | 121,802 |
2021 | 118,945 |
2022 | 111,117 |
2023 | 106,113 |
Thereafter | 689,360 |
Total minimum lease payments | 1,278,328 |
Sublease income | $ 372,000 |
Stockholders' Equity - Additional Information (Details) $ / shares in Units, shares in Millions |
12 Months Ended | |||
---|---|---|---|---|
Apr. 05, 2017
$ / shares
shares
|
Dec. 31, 2018
USD ($)
vote
$ / shares
|
Dec. 31, 2017
USD ($)
$ / shares
|
Dec. 31, 2016
USD ($)
|
|
Class of Stock [Line Items] | ||||
Common stock par value (in Dollars per share) | $ / shares | $ 0.0005 | $ 0.0005 | ||
Common stock, number of votes per share | vote | 1 | |||
Payments for purchases of treasury stock | $ 260,832,000 | $ 41,272,000 | $ 58,961,000 | |
Share repurchase program, authorized amount | 1,200,000,000 | |||
Stock repurchase program, remaining authorized repurchase amount | $ 900,000,000 | |||
CEB | ||||
Class of Stock [Line Items] | ||||
Business acquisition, shares issued as consideration | shares | 7.4 | |||
Business acquisition, consideration transferred, per share value (in dollars per share) | $ / shares | $ 109.65 |
Stockholders' Equity - Summary of Transactions Relating to Common Stock (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Common Stock | |||
Common Stock Outstanding Roll Forward [Roll Forward] | |||
Beginning Balance | 163,602,067 | 156,234,415 | 156,234,415 |
Issuances under stock plans | 0 | 0 | 0 |
Issued in connection with the acquisition of CEB | 7,367,652 | ||
Purchases for treasury | 0 | 0 | 0 |
Ending Balance | 163,602,067 | 163,602,067 | 156,234,415 |
Treasury Stock | |||
Common Stock Outstanding Roll Forward [Roll Forward] | |||
Beginning Balance | 72,779,205 | 73,583,172 | 73,896,245 |
Issuances under stock plans | (933,246) | (1,186,150) | (923,696) |
Issued in connection with the acquisition of CEB | 0 | ||
Purchases for treasury | 2,054,018 | 382,183 | 610,623 |
Ending Balance | 73,899,977 | 72,779,205 | 73,583,172 |
Stock-Based Compensation - Stock-Based Compensation Expense By Award Type (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 66.2 | $ 78.9 | $ 46.7 |
Stock appreciation rights | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 6.3 | 5.6 | 5.6 |
Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 59.2 | 72.6 | 40.4 |
Common stock equivalents | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 0.7 | $ 0.7 | $ 0.7 |
Stock-Based Compensation - Stock-Based Compensation Expense Recognized In Consolidated Statements Of Operations (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | $ 66.2 | $ 78.9 | $ 46.7 |
Cost of services and product development | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | 28.1 | 25.8 | 21.9 |
Selling, general and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | 36.2 | 35.5 | 24.8 |
Acquisition and integration charges | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | $ 1.9 | $ 17.6 | $ 0.0 |
Stock-Based Compensation - Weighted-Average Assumptions Used To Determine Fair Value Of SARs Grants On Date Of Grant Using Black-Scholes-Merton Valuation Model (Details) - Stock appreciation rights |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected stock price volatility | 21.00% | 22.00% | 22.00% |
Risk-free interest rate | 2.50% | 1.80% | 1.10% |
Expected life in years | 4 years 6 months 8 days | 4 years 6 months 11 days | 4 years 4 months 21 days |
Stock-Based Compensation - Summary Of Changes In RSUs Outstanding (Details) - Restricted stock units shares in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Restricted Stock Units (RSUs) | |
Outstanding, Beginning Balance (in shares) | shares | 1.5 |
Granted (in shares) | shares | 0.7 |
Vested and released (in shares) | shares | (0.7) |
Forfeited (in shares) | shares | (0.1) |
Outstanding, Ending Balance (in shares) | shares | 1.4 |
Per Share Weighted Average Grant Date Fair Value | |
Outstanding, Beginning Balance (in Dollars per share) | $ / shares | $ 91.47 |
Granted (in Dollars per share) | $ / shares | 112.96 |
Vested and released (in Dollars per share) | $ / shares | 88.69 |
Forfeited (in Dollars per share) | $ / shares | 104.95 |
Outstanding, Ending Balance (in Dollars per share) | $ / shares | $ 101.75 |
Stock-Based Compensation - Summary Of Changes In CSEs Outstanding (Details) - CSEs |
12 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Common Stock Equivalents (CSEs) | |
Outstanding, Beginning Balance (in shares) | shares | 110,013 |
Granted (in shares) | shares | 5,550 |
Converted to shares of Common Stock upon grant (in shares) | shares | (5,783) |
Outstanding, Ending Balance (in shares) | shares | 109,780 |
Per Share Weighted Average Grant Date Fair Value | |
Outstanding, Beginning Balance (in Dollars per share) | $ / shares | $ 23.19 |
Granted (in Dollars per share) | $ / shares | 131.49 |
Converted to shares of Common Stock upon grant (in Dollars per share) | $ / shares | 93.45 |
Outstanding, Ending Balance (in Dollars per share) | $ / shares | $ 24.96 |
Computation of Earnings Per Share - Calculations Of Basic And Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Numerator: | |||
Net income used for calculating basic and diluted earnings per common share | $ 122,456 | $ 3,279 | $ 193,582 |
Denominator: | |||
Weighted average common shares used in the calculation of basic earnings per share | 90,827 | 88,466 | 82,571 |
Common share equivalents associated with stock-based compensation plans | 1,295 | 1,324 | 1,249 |
Shares used in the calculation of diluted earnings per share | 92,122 | 89,790 | 83,820 |
Earnings per share: | |||
Basic (in dollars per share) | $ 1.35 | $ 0.04 | $ 2.34 |
Diluted (in dollars per share) | $ 1.33 | $ 0.04 | $ 2.31 |
Computation of Earnings Per Share - Additional Information (Details) - $ / shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Class of Stock [Line Items] | |||
Tax act, income tax benefit (in dollars per share) | $ 0.66 | ||
Common Stock Equivalents (CSEs) | |||
Class of Stock [Line Items] | |||
Stock repurchased during period (in shares) | 2.1 | 0.4 | 0.6 |
Computation of Earnings Per Share - Common Share Equivalents Not Included in the Computation of Diluted EPS (Details) - $ / shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share [Abstract] | |||
Anti-dilutive common share equivalents as of December 31 (in shares) | 0.0 | 0.3 | 0.2 |
Average market price per share of Common Stock during the year (in dollars per share) | $ 135.60 | $ 116.09 | $ 92.58 |
Income Taxes - Summary of Components of Income Before Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract] | |||
U.S. | $ 34,159 | $ (135,757) | $ 182,178 |
Non-U.S. | 146,962 | 7,940 | 106,253 |
Income (loss) before income taxes | $ 181,121 | $ (127,817) | $ 288,431 |
Income Taxes - Current and Long-Term Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Accrued liabilities | $ 96,292 | $ 80,557 |
Loss and credit carryforwards | 14,830 | 59,502 |
Assets relating to equity compensation | 19,653 | 24,874 |
Other assets | 14,092 | 30,236 |
Gross deferred tax assets | 144,867 | 195,169 |
Property, equipment, and leasehold improvements | (3,421) | (962) |
Intangible assets | (214,580) | (372,542) |
Prepaid expenses | (41,926) | (35,126) |
Other liabilities | (61,068) | (6,584) |
Gross deferred tax liabilities | (320,995) | (415,214) |
Valuation allowance | (4,066) | (3,192) |
Net deferred tax liabilities | $ (180,194) | $ (223,237) |
Income Taxes - Differences Between U.S. Federal Statutory Income Tax Rate and Effective Tax Rate on Income Before Income Taxes (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Statutory tax rate | 21.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit | 0.00% | 3.60% | 2.30% |
Effect of non-U.S. operations | (10.60%) | 5.90% | (6.10%) |
Change in the reserve for tax contingencies | 15.70% | (2.80%) | 3.20% |
Law changes | (1.30%) | 41.80% | 0.00% |
Stock-based compensation expense | (5.30%) | 11.00% | (3.80%) |
Nondeductible acquisition costs | 0.90% | (7.90%) | 2.60% |
Nondeductible meals and entertainment costs | 2.70% | (3.50%) | 1.10% |
Gains/Losses on divested operations and held-for-sale assets | 12.20% | 13.10% | 0.00% |
Limitation on executive compensation | 2.70% | (0.10%) | 0.00% |
Foreign-derived intangible income | (2.00%) | 0.00% | 0.00% |
Change in the valuation allowance | 0.50% | 3.00% | (0.20%) |
Goodwill | (3.80%) | (0.00%) | (0.00%) |
Other items, net | (0.30%) | 3.50% | (1.20%) |
Effective tax rate | 32.40% | 102.60% | 32.90% |
Income Taxes - Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits, Excluding Interest and Penalties (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning balance | $ 60,269 | $ 37,099 |
Additions based on tax positions related to the current year | 27,371 | 10,883 |
Additions for tax positions of prior years | 14,691 | 24,299 |
Reductions for tax positions of prior years | (3,939) | (10,613) |
Reductions for expiration of statutes | (6,293) | (1,368) |
Settlements | (472) | (1,769) |
Decrease in foreign currency exchange rates | (1,278) | |
Increase in foreign currency exchange rates | 1,738 | |
Ending balance | $ 90,349 | $ 60,269 |
Derivatives and Hedging - Derivative Gains And Losses That Have Been Recognized In Condensed Consolidated Statements Of Operations (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative instruments, gain (loss) recognized in income, net | $ 8.5 | $ 7.1 | $ 7.9 |
Interest (income) expense, net | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative instruments, gain (loss) recognized in income, net | (1.9) | 7.9 | 7.6 |
Other expense (income), net | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative instruments, gain (loss) recognized in income, net | $ 10.4 | $ (0.8) | $ 0.3 |
Fair Value Disclosures - Assets And Liabilities Measured At Fair Value On Recurring Basis (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets: | ||
Total Assets | $ 67,964 | $ 93,590 |
Level 1 | ||
Assets: | ||
Total Assets | 8,956 | 29,108 |
Level 1 | Plan Assets | ||
Assets: | ||
Total Assets | 8,956 | 29,108 |
Level 2 | ||
Assets: | ||
Total Assets | 59,008 | 64,482 |
Liabilities: | ||
Total Liabilities | 858,671 | 929,065 |
Level 2 | Foreign currency forward contracts | ||
Assets: | ||
Total Assets | 1,318 | 2,053 |
Liabilities: | ||
Total Liabilities | 3,260 | 1,605 |
Level 2 | Interest rate swap contracts | ||
Assets: | ||
Total Assets | 0 | 3,412 |
Liabilities: | ||
Total Liabilities | 10,681 | 0 |
Level 2 | Plan Assets | ||
Assets: | ||
Total Assets | 57,690 | 59,017 |
Level 2 | Plan Liabilities | ||
Liabilities: | ||
Total Liabilities | 68,570 | 89,900 |
Level 2 | Debt | Senior notes | ||
Liabilities: | ||
Total Liabilities | $ 776,160 | $ 837,560 |
Fair Value Disclosures - Additional Information (Details) - USD ($) $ in Millions |
Mar. 30, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Money market funds at carrying value | $ 9.0 | $ 29.1 | |
Cash surrender value of life insurance | $ 57.7 | $ 59.0 | |
Senior notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Proceeds from issuance of debt | $ 800.0 |
Employee Benefits - Components of Net Periodic Pension Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Service cost | $ 3,145 | $ 2,820 | $ 2,780 |
Interest cost | 840 | 765 | 850 |
Expected return on plan assets | (475) | (360) | (375) |
Recognition of actuarial loss | 340 | 350 | 200 |
Total defined benefit pension expense | $ 3,850 | $ 3,575 | $ 3,455 |
Employee Benefits - Assumptions Used in Computation of Net Periodic Pension Expense (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |||
Weighted-average discount rate | 1.81% | 1.78% | 1.78% |
Average compensation increase | 2.58% | 2.66% | 2.67% |
Employee Benefits - Information Related to Changes in Projected Benefit Obligation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Projected benefit obligation at beginning of year | $ 45,450 | $ 38,400 | $ 35,870 |
Service cost | 3,145 | 2,820 | 2,780 |
Interest cost | 840 | 765 | 850 |
Actuarial loss (gain) due to assumption changes and plan experience | (430) | 690 | 1,480 |
Additions and contractual termination benefits | (950) | (860) | 0 |
Benefits paid | (1,400) | (920) | (1,640) |
Foreign currency impact | (1,765) | 4,555 | (940) |
Projected benefit obligation at end of year | $ 44,890 | $ 45,450 | $ 38,400 |
Employee Benefits - Benefit Plans and Related Amounts Recorded in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ||||
Projected benefit obligation | $ 44,890 | $ 45,450 | $ 38,400 | $ 35,870 |
Pension plan assets at fair value | (19,460) | (18,475) | (14,465) | |
Funded status – shortfall | 25,430 | 26,975 | 23,935 | |
Amounts recorded in the Consolidated Balance Sheets for the plans: | ||||
Other liabilities — accrued pension obligation | 25,430 | 26,975 | 23,935 | |
Stockholders’ equity — deferred actuarial loss | $ (5,738) | $ (5,861) | $ (5,797) |
Segment Information - Additional Information (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
segment
| |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 3 |
Maximum | |
Segment Reporting Information [Line Items] | |
Percent of target bonus charges allocated to segments | 100.00% |
Segment Information - Summarized Information by Geographic Location (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Long-lived assets: | |||
Long-lived assets | $ 424,034 | $ 415,249 | $ 210,877 |
United States and Canada | |||
Long-lived assets: | |||
Long-lived assets | 305,928 | 288,735 | 143,921 |
Europe, Middle East and Africa | |||
Long-lived assets: | |||
Long-lived assets | 67,306 | 84,840 | 42,326 |
Other International | |||
Long-lived assets: | |||
Long-lived assets | $ 50,800 | $ 41,674 | $ 24,630 |
Valuation and Qualifying Accounts - Summarized Activity in Allowances (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 12,700 | $ 7,400 | $ 6,900 |
Additions Charged to Expense | 12,500 | 16,600 | 4,750 |
Additions Charged Against Revenues | 0 | 5,500 | 4,850 |
Deductions from Reserve | (11,300) | (16,800) | (9,100) |
Reclassification to Accounts Payable and Accrued Liabilities | (6,200) | ||
Balance at End of Year | $ 7,700 | $ 12,700 | $ 7,400 |
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