UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-K
þ☑ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172020
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-14443
GARTNER, INC.
(Exact name of registrant as specified in its charter)  
Delaware04-3099750
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
P.O. Box 10212
56 Top Gallant Road
Stamford, CT06902-7700
Connecticut06902-7700
(Address of principal executive offices)(Zip Code)
(203) 316-1111
(Registrant’s telephone number, including area code)
Registrant’s telephone number, including area code: (203) 316-1111
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol
Name of each exchange

on which registered
Common Stock, $.0005$0.0005 par value per shareITNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ☑ No o☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o☐ No þ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ☑ No o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ☑ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company, as defined” and “emerging growth company” in Rule 12b-2 of the Exchange Act:  
Act.
Large accelerated filer☑Accelerated filer☐Non-accelerated filer☐
Smaller reporting company☐Emerging growth company☐
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark ifwhether the registrant has elected notfiled a report on and attestation to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)its management’s assessment of the Exchange Act. oeffectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No þ☑
As of June 30, 2017,2020, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $10,832,607,830,approximately $10.5 billion, based on the closing sale price as reported on the New York Stock Exchange.
The numberAs of February 12, 2021, there were 88,721,548 shares outstanding of the registrant’s common stock was 90,833,817 as of January 31, 2018.outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
The definitive Proxy Statement for the Annual Meeting of Stockholders to be held on June 3, 2021 is incorporated by reference into Part III to the extent described therein.













































DocumentParts Into Which Incorporated
Proxy Statement for the Annual Meeting of Stockholders to

be held (Proxy Statement)
Part III


GARTNER, INC.
20172020 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

34
68
1417
1417
1418
1418
1519
1620
1721
3634
3735
3735
3836
3836
3937
3937
3937
3937
3937
4038
4240
4341
4443
4544
4645
4746
4847
4948
50
8187
8287












2

PART I

ITEM 1. BUSINESS.

GENERAL


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 goalsmission-critical priorities today and build the successful organizations of tomorrow. We believe we have anour 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’reWe are a trusted asadvisor and an objective resource and critical partner byfor more than 12,000 organizations14,000 enterprises in more than 100 countries — across all major functions, in every industry and enterprise size.


Gartner delivers its products and services globally through fourthree business segments:segments – Research, Conferences and Consulting, Events, and Talent Assessment & Other:as described below.


Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of thean enterprise through research and other reports, briefings, proprietary tools, access to our analysts,research experts, 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. ("CEB"), which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, sales, legal and finance.
drive organizational performance.


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.

EventsConferences provides business professionals across thean organization the opportunity to learn, share and network. From our flagship CIO event Gartner Symposium/ITxpo,Xpo series, to industry-leading conferences focused on specific business roles and topics, to member-drivenpeer-driven sessions, our eventsofferings enable attendees to experience the best of Gartner insight and advice live.
advice.


Talent Assessment & Other helps organizations assess, engage, manageConsulting combines the power of Gartner market-leading research with custom analysis and improve talent. Thison-the-ground support to help chief information officers and other senior executives driving technology-related strategic initiatives move confidently from insight to action.

The fiscal year of Gartner is accomplishedthe twelve-month period from January 1 through knowledgeDecember 31. All references to 2020, 2019 and skills assessments, training programs, workshops, and survey and questionnaire services.

For more information regarding Gartner and our products and services, visit gartner.com. References2018 herein refer to “the Company,the fiscal year unless otherwise indicated. When used in this Annual Report on Form 10-K, the terms “Gartner,” the “Company,” “we,” “our,” and “us” areor “our” refer to Gartner, Inc. and its consolidated subsidiaries. References to "heritage Gartner" operating results and business measurements refer to Gartner excluding CEB.


MARKET OVERVIEW

We are livingEnterprise leaders face enormous pressure to stay ahead and working in the midst ofgrow profitably amidst constant changes. Whether it is a revolution. Technology increasingly drives organizational strategies rather than just supporting them, and three megaforces - technology-driven industry disruption, the growing pervasiveness of technology across every part of the enterprise, and sustained macroeconomic and political volatility (such as commodity price swings, exchange rate flux, Brexit) - are rapidly changing how businesses and other organizations plan and operate.

To remain viable and competitive,digital transformation, a global health crisis, or large-scale regulatory changes, business leaders must deal with this unprecedented level of disruption and change. No enterprise cantoday are facing significant disruptive changes. We believe that enterprises cannot be operationally effective unless it incorporatesthey incorporate the right strategy, management and technology decisions into every part of itstheir business. This means considering technology from many angles - how itrequirement affects all business levels, functions and roles. Chief Financial Officers, Headsfinancial officers, heads of Human Resources, Chief Marketing Officershuman resources, chief marketing officers, chief information officers, heads of supply chain and other executives and leaders across the enterprise are more reliant on technology than ever. Given this critical need, business enterprises, governments and their agencies, and other organizations turn to Gartner for decision-making guidance and execution support to ensure they maximizeachieve their technology investments and meet their current and future needs.mission-critical priorities.

Our legacy of expertise in IT has given way to a new position: Strategic research and advisory services operating across the entire organization. We believe our best-in-class Gartner content combined with CEB expertise in functional areas has strengthened our value proposition and increased our market opportunity to an all-time high.


OUR SOLUTION

We believe our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions and actions on the issues that matter most. We employ a diversified business model that utilizes and leverages the breadth and depth of our intellectual capital. The foundation of our business model is our ability to create and distribute our proprietary research


content as broadly as possible via published reports, interactive tools, facilitated peer networking briefings,and briefings; our conferences, including the Gartner Symposium/Xpo series; and consulting and advisory services, and our events, including the Gartner Symposium/ITxpo series.services.

We had over 1,900 research analysts as of December 31, 2017 located around the world who create compelling, relevant, independent and objective research and fact-based analysis on virtually every function across the enterprise. Through our robust product portfolio, our global research team provides thought leadership and insights that CIOs and other technology practitioners, HR, sales, legal, and finance executives, and supply chain and marketing professionals need to make the right decisions, every day.

In addition to our research analysts, as of December 31, 2017 we had 669 experienced consultants who combine our objective, independent research with a practical business perspective focused on the IT industry. Finally, our events are the largest of their kind, gathering together highly qualified audiences that include CIOs and other IT and C-suite executives, frontline IT architects and professionals, purchasers and providers of technology and supply chain products and services, business professionals, and other leaders across marketing, finance, legal, sales and HR.


PRODUCTS AND SERVICES


Our diversified business model provides multiple entry points and sources of value for our clients that facilitatelead to increased client spending on our research and advisory services, conferences and consulting services and events.services. A critical part of our long-term strategy is to increase business volume and penetration with our most valuable clients, identifying relationships with the greatest sales potential and expanding those relationships by offering strategically relevant research and advice. We also seek to extend the Gartner brand name to develop new client relationships, augment our sales capacity and expand into new markets around the world. These initiatives have created additional revenue streams through more effective packaging, campaigning and cross-selling of our products and services. In addition, we seek to increase our revenue and operating cash flow through more effective pricing of our products and services. These initiatives have created additional revenue streams through more effective packaging, campaigning and cross-selling of our products and services.

3


Our principal products and services are delivered through our fourthree business segments:segments, as described below.


•RESEARCH. Gartner delivers independent, objective advice to leaders across an enterprise through subscription services that include on-demand access to published research content, data and benchmarks, and direct access to a network of approximately 2,150 research experts located around the enterprise, primarily through a subscription-based digital media service.globe. Gartner research is the fundamental building block for all Gartner products and services. We combine our proprietary research methodologies with extensive industry and academic relationships to create Gartner solutionsproducts and services that address each role.
role across an enterprise. Within the Research segment, Global Technology Sales (“GTS”) sells products and services to users and providers of technology, while Global Business Sales (“GBS”) sells products and services to all other functional leaders, such as human resources, supply chain, marketing, and finance.


Our research agenda is defined by clients’ needs, focusing on the critical issues, opportunities and challenges they face every day. We are in steady contact with over 12,000more than 14,000 distinct organizationsclient enterprises worldwide. We publish tens of thousands of pages of original research annually, and our analysts answer over 380,000research experts had more than 490,000 direct client inquiries every year.interactions in 2020. Our size and scale allowenable us to commit vast resources toward broader and deeper analystresearch coverage and to deliver insight to our clients based on what they need and where they are. The ongoing interaction betweenof our research analysts andexperts with our clients enables us to identify the most pertinent topics to them and develop relevant product and service enhancements to meet the evolving needs of users of our research. Our proprietary research content, presented in the form of reports, briefings, updates and related tools, is delivered directly to the client’s desktop via our website and/or product-specific portals.


Clients normally sign subscription contracts that provide access to our research content and advisory services for individual users over a defined period of time.period. We typically have a minimum contract period of 12twelve months for our research and advisory subscription contracts and, as ofat December 31, 2017, more than half2020, a significant portion of our contracts arewere multi-year.


•CONFERENCES. Gartner conferences are designed for IT and business executives as well as decision makers looking to adapt and evolve their organizations through disruption and uncertainty, navigate risks and prioritize investments. Attendees experience sessions led by Gartner research experts, and the sessions include cutting-edge technology solutions, peer exchange workshops, one-on-one analyst and advisor meetings, consulting diagnostic workshops, keynotes and more. Our conferences also provide attendees with an opportunity to interact with business executives from the world’s leading companies. In addition to role-specific summits and workshop-style seminars, Gartner hosts the Gartner Symposium/Xpo series, including its unique, flagship IT Symposium/Xpo®, which is usually held at nine locations worldwide annually. Prior to the COVID-19 pandemic, Gartner attracted more than 85,000 business and technology professionals to its 70+ destination conferences worldwide in 2019. We also hosted 700+ live meetings each year for peer collaboration and networking, and 240+ exclusive C-level meetings through the Evanta brand. In response to the COVID-19 pandemic, we pivoted to producing virtual conferences with a focus on maximizing the value we deliver for our clients. During the second half of 2020, Gartner successfully held 15 virtual conferences with nearly 39,000 attendees, including eight Symposiums/Xpos. In addition, during 2020 we hosted 400+ virtual peer networking meetings, and through the Evanta brand we hosted 450+ exclusive C-level virtual meetings.

•CONSULTING. Through its experienced consultants, Gartner Consulting deepens relationships with our largest research clients by extending the reach of our research through custom consulting engagements.serves chief information officers and other senior executives who are driving technology-related strategic initiatives to optimize technology investments and drive business impact. Gartner Consulting brings together our uniquecombines the power of Gartner’s market-leading research insight, benchmarking data, problem-solving methodologieswith custom analysis and hands-on experience to improve the return on a client’s IT investment. Our consultants provide fact-based consulting serviceson-the-ground support to help clients useto turn insights and manage IT to optimize business performance.
advice into action and impact.


Consulting solutions capitalize on Gartner assets that are invaluable to IT decision making,information technology (“IT”) decision-making, including: (1) our extensive research, which ensures that our consulting analyses and advice are based on a deep understanding of the IT environment and the business of IT; (2) our market independence, which keeps our consultants focused on our clients'clients’ success; and (3) our market-leading benchmarking capabilities, which provide relevant comparisons and best practices to assess and improve performance. Gartner Consulting provides solutions to CIOs and other IT executives, and to those professionals responsible for IT applications, enterprise architecture, go-to-market strategies, infrastructure and operations, program and portfolio management, and sourcing and vendor relationships. Consulting also provides targeted consulting services to professionals in specific industries. Finally,Additionally, we provide actionable solutions for a range of IT-related priorities, including IT cost optimization, technology modernizationdigital transformation and IT sourcing optimization initiatives.optimization.



EVENTS. Gartner attracts more than 75,000 technology and business professionals and 1,100 industry-leading technology providers to its 75+ conferences worldwide each year. Attendees experience sessions led by Gartner analysts, cutting-edge technology solutions, peer exchange workshops, one-on-one analyst 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 Symposium/ITxpo in eight locations worldwide annually. Since the addition of CEB, we’ve expanded to host 700+ more intimate live events each year plus 220+ exclusive CxO gatherings through the Evanta brand.
TALENT ASSESSMENT & OTHER. Our offerings help organizations plan, recruit, assess, develop, engage and drive performance of their organizational talent against corporate objectives. Our talent assessment and development solutions help companies manage human capital investments. These offerings include cognitive ability assessments, skills and/or knowledge assessments, personality questionnaires, and job/role simulations and are generally implemented as pre-hire or post-hire applications. We also evaluate training programs and develop and offer workshops and technical training that enhance the potential of emerging leaders and their teams. Our proprietary workshops and technical training provide an executive education curriculum supported by e-learning resources for members seeking to enhance skill development for their staff. These tools and services use science and data to develop talent strategies for clients that are linked to business results.

On February 6, 2018, we announced that we had reached a definitive agreement to sell our CEB Talent Assessment business, which is a significant portion of the Talent Assessment & Other segment. Note 2 — Acquisitions and Divestiture and Note 16 — Subsequent Events in the Notes to the Consolidated Financial Statements provide additional information.


COMPETITION


We believe that the principal factors that differentiate us from our competitors are:are as follows:


•Superior research content - We believe that we create the broadest, highest-quality and most relevant research coverage across all major functional roles in thean enterprise. Our independent operating model and research analysis generates
4

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 over 35more than 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 composedcomprised of research veterans and experienced industry executives with long tenure at Gartner.


•Substantial operating leverage in our business model - We have the ability tocan distribute our intellectual property and expertise across multiple platforms, including research publications,and advisory subscription and membership programs, conferences and consulting engagements, conferences and executive programs, to derive incremental revenue and profitability.


•Vast network of analystsresearch experts and consultants - As of December 31, 2017,2020, we had over 1,900approximately 2,150 research analystsexperts and 669730 experienced consultants located around the world. Our analysts collectively speak 59 languages andresearch experts are located in 26more than 30 countries, enabling us to cover allvast aspects of technologybusiness and businesstechnology on a global basis.


Notwithstanding these differentiating factors, we face competition from a significant number of independent providers of information products and services. We compete indirectly with consulting firms and other data and information providers, including electronic and print media companies. These indirect competitors could choose to compete directly with us in the future. In addition, we face competition from free sources of information that are available to our clients through the Internet.internet. Limited barriers to entry exist in the markets in which we do business. As a result, new competitors may emerge and existing competitors may start to provide additional or complementary services. While we believe the breadth and depth of our research positions us well versus our competition, increased competition could result in loss of market share, diminished value in our products and services, reduced pricing, and increased sales and marketing expenditures.


INTELLECTUAL PROPERTY


Our success has resulted in part from proprietary methodologies, software, reusable knowledge capital and other intellectual property rights. We rely on a combination of patent, copyright, trademark, trade secret, confidentiality, non-compete and other contractual provisions to protect our intellectual property rights. We have policies related to confidentiality, ownership, and the


use and protection of Gartner’s intellectual property. We also enter into agreements with our employees and third parties as appropriate that protect our intellectual property, and we enforce these agreements if necessary. We recognize the value of our intellectual property in the marketplace and vigorously identify, create and protect it. Additionally, we actively monitor and enforce contract compliance by
our end users.


EMPLOYEESHUMAN CAPITAL MANAGEMENT

We believe our people are our most valuable asset, enabling our long track record of global growth. From attracting diverse talent through our recruitment process to cultivating that talent with learning and development opportunities and rewards for strong performers to supporting overall wellness with meaningful benefits and engagement, we strive to put our people first. At December 31, 2020, we had a totalapproximately 15,600 employees in over 90 offices globally, and the overwhelming majority of 15,131our employees were full time.

Gartner is committed to providing equal employment opportunities to all applicants and employees without regard to any legally protected status. This commitment is formalized in our global and U.S. equal employment opportunity policies. We continually renew this commitment by seeking to optimize our recruitment and professional development processes, create networking and educational opportunities, celebrate heritage and history, encourage community service and outreach, and create safe spaces for all employees.

Diversity, Equity and Inclusion

We foster an environment of professional development to help our employees reach their full potential. This includes embracing diversity and actively removing barriers to support inclusion, engagement and growth at Gartner. Our Executive Diversity, Equity and Inclusion (DEI) Council, composed of our CEO, Chief Human Resources Officer, CFO, General Counsel, head of Diversity, Equity and Inclusion, head of DEI Research within our Gartner HR research practice, and other selected
5

leaders, drives diversity, equity and inclusion as an imperative at all levels of the organization. In addition, the newly formed DEI Center of Excellence, which reports directly to our Chief Human Resources Officer, is working to codify our strategy and to establish goals against key metrics to drive greater transparency and accountability. Our teams of employees are composed of individuals from different geographies, cultures, religions, ethnicities, races, genders, sexual orientations, abilities and generations working together to solve problems. As of December 31, 2017,2020, approximately 44% of our employees and 30% of our board of directors identified as female, and our employees were represented by more than 80 self-identified nationalities working in 38 different countries around the world.

We also focus on the role of unconscious bias and endeavor to build tools that help make various business processes more inclusive and accommodate a significant increase comparedmore diverse perspective. We emphasize the importance of inclusion to 8,813 at December 31, 2016.leaders and managers and how to foster a sense of belonging within their teams. In 2020, we introduced a new leadership forum called the Leadership Exchange (LeadEx) for all Vice Presidents and above. The increase consistsforum provides sessions for leaders to share experiences, ask questions and gain perspective on effectively leading people within the context of an 18% growthcurrent events and the rapidly changing environment.

The Company supports a number of employee-driven Employee Resource Groups (ERGs) that bring employees together to foster a diverse, inclusive and supportive workplace. Gartner currently has formal ERGs supporting underrepresented racial, ethnic and multicultural backgrounds, women, the LGBTQ+ community, and veterans. Participation in heritage Gartner headcount as we continuedERGs is voluntary and open to all employees. In 2020, our ERGs had more than 4,900 associate memberships, and the groups delivered 100+ programs.

Health, Safety and Compensation

We seek to invest for future growthin meaningful, innovative and inclusive compensation and benefit programs that support physical, financial and emotional well-being of our employees. In addition to salaries, these programs (which vary by country/region) include annual bonuses, stock awards, an employee stock purchase plan, 401(k) matching, healthcare and insurance benefits, tax savings programs, such as health and dependent care flexible spending accounts, health savings account and pretax commuter benefits, generous paid time off, paid parental leave, life and disability insurance, business travel accident insurance, charity matching, employee assistance programs, tuition assistance and on-site services, such as health centers and fitness centers, among others. We believe that our equity grants facilitate retention as well as encourage performance of key personnel.

In response to the COVID-19 pandemic, we implemented significant changes to protect the health and safety of our employees, clients and the additional employees resulting fromcommunities in which we operate. This includes the temporary closure of our acquisitions.

We had 8,486 employees based in the U.S. at December 31, 2017: 1,335 employees were located atoffices (including our headquarters facility in Stamford, Connecticut and nearby; 1,584 employees were located at our Ft. Myers, Florida offices; 1,657 were located in Arlington, Virginia; and 3,910 employees were located elsewherecorporate headquarters) in the United States, United Kingdom, India, and several other impacted locations around the world, as well as the cancellation of in-person conferences. In general, even where offices have reopened, our employees have the option to work remotely and we have implemented additional safety guidelines to protect them. We also provide a number of free mental and behavioral health resources, including access to the Employee Assistance Program for employees and their dependents.

Talent Development and Training

Gartner aims to foster a culture of lifelong learning, getting feedback and evolving. In addition to helping employees unlock their full potential through mechanisms like continuous feedback and performance appraisals, we have dedicated programs designed to develop effective leaders, including our Gartner Manager Program and Tenured Manager Program. We also offer rotational programs and an online learning experience platform for employees called GartnerYou. In 2020, GartnerYou offered close to 35,000 learning resources, with more than 343,000 completions globally. Since our Sales and Research & Advisory teams make up more than 50% of total employees worldwide, we also have formal, dedicated programs to help train and onboard new hires as well as more experienced managers and leaders within Sales and Research & Advisory. In 2020, we had eight dedicated programs for new hires across our sales teams, which were attended by approximately 900 employees. Through these programs, we believe our teams develop role-specific knowledge and skills, increase productivity and improve performance.

We encourage you to review the “Our Associates” section of our Corporate Responsibility Report located on our website at gartner.com, under the “Corporate Responsibilities” link in 56the “About” tab for more detailed information regarding our Human Capital programs and initiatives. Nothing on our website, including our Corporate Responsibility Report or sections thereof, shall be deemed incorporated by reference into this Annual Report,or any other offices. We had 6,645 employees located outside offiling we make with the United States in 106 offices at December 31, 2017: 1,046 employees were located in Egham, the United Kingdom; 883 employees were located in Gurgaon, India; and the remaining 4,716 employees were located in 104 other offices.SEC.


GOVERNMENT CONTRACTS

6

Our employeesU.S. government contracts are subject to the approval of appropriations by the U.S. Congress to fund the agencies contracting for our products and services. Additionally, our contracts at the state and local levels, as well as foreign government contracts, are subject to various governmental authorizations and funding approvals and mechanisms. Certain of these contracts may be subject to collective bargaining agreementsterminated at a companyany time by the government entity without cause or industry level, or works councils, in those foreign countries where this is part of the local labor law or practice. We have experienced no work stoppages and consider our relations with our employees to be favorable.penalty.

FINANCIAL INFORMATION

The Company's financial information by business segment and geographic area for the three-year period ended December 31, 2017 is provided in Note 14 — Segment Information in the Notes to the Consolidated Financial Statements.

AVAILABLE INFORMATION

Our Internetinternet address is www.gartner.comgartner.com and the Investor Relations section of our website is located at www.investor.gartner.cominvestor.gartner.com. We make available free of charge, on or through the Investor Relations section of our website, printable copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). Unless expressly noted, the information on our website or any other website is not incorporated by reference in this Form 10-K and should not be considered part of this Form 10-K or any other filing we make with the SEC.

Also available at www.investor.gartner.cominvestor.gartner.com, under the “Corporate Governance”“Governance” link, are printable and current copies of ourour: (i) CEO &and CFO Code of Ethics, which applies to our Chief Executive Officer, Chief Financial Officer, Controller and other financial managers,managers; (ii) Global Code of Conduct, which applies to all Gartner officers, directors and employees, wherever located,located; (iii) Board Principles and Practices of the Board of Directors of Gartner, Inc., the corporate governance principles that have been adopted by our BoardBoard; and (iv) charters for each of the Board’s standing committees: Audit, Compensation and Governance/Nominating.We will disclose any waiver we grant to an executive officer or director under our Code of Ethics, or certain amendments to the Code of Ethics, on our website at investor.gartner.com, under the “Governance” link.


ITEM 1A. RISK FACTORSFACTORS.


We operate in a highly competitive and rapidly changing environment that involves numerous risks and uncertainties, some of which are beyond our control. In addition, we and our clients are affected by global economic conditions and trends. The following sections discuss many, but not all, of the risksaddress significant factors, events and uncertainties that may affectmake an investment in our future performance, but is not intendedsecurities risky. We urge you to be all-inclusive. Any ofconsider carefully the factors described below and the risks that they present for our operations, as well as the risks addressed in other reports and materials that we file with the SEC and the other information, included or incorporated by reference in this Form 10-K. When the factors, events and contingencies described below or elsewhere in this Form 10-K materialize there could havebe a material adverse impact on ourbusiness, prospects, results of operations, financial condition, and cash flows, and couldtherefore have a negative effect on the trading price of our common stock. Additional risks not currently known to us or that we now deem immaterial mayalso harm us and negatively affect your investment. In addition to the effects of the COVID-19 pandemic and resulting global disruptions on our business and operations discussed in Item 7 of this Form 10-K and in the risk factors below, additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of these risks discussed below.


Risks related to our business

On April 5, 2017, Gartner acquired CEB Inc. ("CEB"). References to "heritage Gartner" operating results and business measurements refer to Gartner excluding CEB. References to CEB referRelated to the operatingCoronavirus (COVID-19) Pandemic

The COVID-19 pandemic is having a material adverse impact on our operations and financial performance, as well as on the operations and financial performance of many of our customers, and the duration and extent to which the COVID-19 pandemic will continue to affect our operations, financial performance, results and business measurements of CEB subsequent to the acquisition.

Our operating results could be negatively impacted by global economicconditions. Our business is impacted by general economic conditionsoperations, achievement of strategic objectives, and/or stock price remains uncertain. The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected, and trends, in the United States and abroad. In its January 2018 Global Economic Prospects report, the World Bank


notes that global growth is expected to continue while substantial downside risks are present, to includeadversely affect, our operations, financial stress, protectionism,performance and geopolitical change. We also believe that terrorist attacks around the world have added additional uncertainty and risks to the economic environment. A downturn in growth could negatively and materially affect future demand for our products and services. It has also adversely affected the operations and financial performance of many of our clients. Additionally, the COVID-19 pandemic has resulted in, and is expected to continue to result in, a substantial curtailment of business activities (including the decrease in demand for a broad variety of products and services both regionally and globally), weakened economic conditions, significant economic uncertainty and volatility in general,the financial markets.

The COVID-19 pandemic has subjected our operations and financial performance to a number of risks that may have a material adverse impact on our operations and financial condition, including, but not limited to those discussed below:

•Cost-saving measures by our clients have adversely affected, and could continue to adversely affect, their ability or willingness to attend our conferences, purchase our products or engage our consultants. Such measures also lengthened payment terms in some of our contracts and negatively impacted retention rates. Such measures could also reduce the duration of some of our subscription contracts and delay purchasing decisions of potential clients.

•We have temporarily closed Gartner offices (including our corporate headquarters) in the United States, United Kingdom, India, and several other impacted locations around the world and implemented significant travel restrictions. Though many
7

of our employees continue to work remotely, these changes impact the normal operation of our business. Although we have plans to reopen most offices in the fall of 2021, reopening is subject to many factors outside of our control. As a result, we cannot predict for certain geographic regions,when or how we will begin to lift the actions put in particular countriesplace as part of our business continuity plans, including work from home protocols and travel restrictions.

•We have cancelled or industry sectors. Such difficulties could includepostponed all in-person conferences through at least August 2021, pivoting to virtual conferences. We held 15 virtual conferences during the abilitysecond half of 2020, and plan on holding approximately 20 virtual conferences from February 2021 through August 2021. These virtual conferences are expected to maintainresult in significantly less revenue and gross contribution, but we believe aid in client retention wallet retention and consulting utilization rates, achieve contract valueengagement. For additional information about how COVID-19 affects our Conferences business, see the Risk Factor titled “The profitability and consulting backlog growth,success of our conferences and attract attendeesother meetings are subject to external factors beyond our control.”

•Our management is focused on mitigating the effects of COVID-19 on our business, which has required and exhibitorswill continue to require, a substantial investment of time and may delay other value-added services.

Additionally, we face challenges from evolving factors related to the COVID-19 pandemic that are not within our events. Such developments could negativelycontrol, remain uncertain and to which we may not effectively respond. For example, our operations span numerous locations around the world, and many local governments and countries have imposed or may impose various restrictions on our employees, partners and customers’ physical movement to limit the spread of COVID-19. These restrictions are constantly changing, and we cannot predict how long and to what extent they will continue. Moreover, COVID-19 has adversely impacted, and may continue to adversely impact, our financial condition, resultssubscription-based business model (which accounts for a significant portion of operations,our revenue) by causing clients to decrease new and cash flows.

We face significant competitionrenewals of subscription-based services and to request to cancel or renegotiate current subscription-based services.The effect of COVID-19 on our failure to compete successfully couldmaterially adversely affectsubscription-based model may not be fully reflected in our results of operations until future periods.

Further, the duration and extent of the impact from the COVID-19 pandemic and its impact on our operations and financial performance depend on future developments that cannot currently be accurately predicted, such as:

•the severity and transmission rate of the virus;
•the extent and effectiveness of containment actions;
•the timing of the development and distribution of effective vaccines and/or treatments and their acceptance by the general public;
•the health and well-being of our workforce;
•the extent and duration of the effect on client spending and the impact of these and other factors on our employees, customers, partners and vendors;
•the impact on our liquidity;
•increased volatility and pricing in the capital markets;
•the effect of the pandemic on the credit-worthiness of our customers;
•global economic conditions and levels of economic growth; and
•the pace of recovery when the COVID-19 pandemic subsides.

The occurrence or continuation of any of the foregoing could have a material adverse effect on our operations or financial performance.

The impact of COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, may also precipitate or exacerbate other risks discussed in Item 1A. Risk Factors in this Annual Report on Form 10-K, any of which could have a material effect on us. This situation is changing rapidly and additional effects may arise that we are not presently aware of or that we currently do not consider to present significant risks to our operations. If we are not able to respond to and manage the impact of such events effectively, our business and financial condition and cash flows. We face direct competition from a significant number of independent providers of information products and services, including information available on the Internet free of charge. We also compete indirectly against consulting firms and other information providers, including electronic and print media companies, some of which may have greater financial, information gathering and marketing resources than we do. These indirect competitors could also choose to compete directly with us in the future. In addition, low barriers to entry exist in the markets in which we do business. As a result, new competitors may emerge and existing competitors may start to provide additional or complementary services. Additionally, technological advances may provide increased competition from a variety of sources.

There can be no assurance that we will be able to successfully compete against currentnegatively impacted.

Strategic and future competitors and our failure to do so could result in loss of market share, diminished value in our products and services, reduced pricing and increased marketing expenditures. Furthermore, we may not be successful if we cannot compete effectively on quality of research and analysis, timely delivery of information, customer service, the ability to offer products to meet changing market needs for information and analysis, or price.Operational Risks


We may not be able to maintain the quality of our existing products and services. We operate in a rapidly evolving market, and our success depends uponon our ability to deliver high quality and timely research and analysis to our clients. Any failure to continue to provide credible and reliable information and advice that is useful to our clients could have a material adverse effect
8

on future business and operating results. Further, if our published data, opinions or viewpoints prove to be wrong, lack independence, or are not substantiated by appropriate research, our reputation maywill suffer and demand for our products and services may decline. In addition, we must continue to improve our methods for delivering our products and services in a cost-effective manner via the Internetinternet and mobile applications. Failure to maintain state of the art electronic delivery capabilities could materially adversely affect our future business and operating results.


We may not be able to enhance and develop our existing products and servicesor introduce the new products and services that are needed to remaincompetitive. The market for our products and services is characterized by rapidly changing needs for information and analysis. The development of new products is a complex and time-consuming process. Nonetheless, to maintain our competitive position, we must continue to anticipate the needs of our client organizations,clients, develop, enhance and improve our existing products, as well as new products and services to address those needs, deliver all products and services in a timely, user-friendly and state of the art manner, and appropriately position and price new products and services relative to the marketplace and our costs of developing them. Any failure to achieve successful client acceptance of new products and services could have a material adverse effect on our business, results of operations and financial position. Additionally, significant delays in new product or service releases or significant problems in creating new products or services could materially adversely affect our business, results of operations and financial position.


As a result of the acquisition of CEB in 2017, a portion of our revenue is now derived from products, services, and tools that relate to human talent assessment, management, and development, which were new products for the Company. Revenue from these activities is concentrated in our Talent Assessment & Other business segment. Revenue from these activities is affected in part by our ability to create new offerings as demand changes, and our ability to support existing offerings. If we fail to successfully manage and grow this new business, our operating results, financial condition, and liquidity could be negatively impacted. Also, economic downturns in certain segments or geographic regions may cause reductions in discretionary spending by our customers, which may adversely affect our ability to maintain or grow the volume of business.

Technology is rapidly evolving, and if we do not continue to develop new product and service offerings in response to these changes, our business could suffer. Disruptive technologies are rapidly changing the environment in which we, our clients, and our competitors operate. We will need to continue to respond to these changes by enhancing our product and service offerings in order to maintain our competitive position. However, we may not be successful in responding to these forces and enhanceenhancing our products on a timely basis, and any enhancements we develop may not adequately address the changing needs of our clients. Our future success will depend upon our ability to develop and introduce in a timely manner new or enhanced existing offerings that address the changing needs of this constantly evolving marketplace. Failure to develop products that meet the needs of our clients in a timely manner could have a material adverse effect on our business, results of operations, and financial position.




Our Research business depends on renewals of subscription-based services and sales of newsubscription-based services for a significant portion of our revenue, and ourfailure to renew at historical rates or generate new sales of such servicescouldwill lead to a decrease in our revenues. A large portion of our success depends on our ability to generate renewals of our subscription-based research products and services and new sales of such products and services, both to new clients and existing clients. These products and services constituted approximately 70%81% and 71%73% of our total revenues from our on-going operations for 20172020 and 2016,2019, respectively. Generating new sales of our subscription-based products and services, both to new and existing clients, is a challenging, costly, and often time consumingtime-consuming process. If we are unable to generate new sales, due to competition or other factors, our revenues will be adversely affected.


Our research subscription contracts are typically for 12-monthstwelve months or longer. Our ability to maintain contract renewals is subject to numerous factors, including the following:


•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.


Additionally, as we continue to adjust our products and service offerings to meet our clients’ continuing needs, we may shift the type and pricing of our products which may impact client renewal rates. While our heritage Research client retention rate was 84%83% and 82% at both December 31, 20172020 and 2016,2019, respectively, there can be no guarantee that we will continue to maintain this rate of client renewals.


Our Consulting business depends on non-recurring engagements and our failure to secure newengagements could lead to a decrease in our revenues. Consulting segment revenues constituted 10% of our total revenues in 2017 and 14% in 2016. Consulting engagements typically are project-based and non-recurring. Our ability to replace consulting engagements is subject to numerous factors, including the following:

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.

Any material decline in our ability to replace consulting engagements could have an adverse impact on our revenues and our financial condition. In addition, revenue from our contract optimization business can fluctuate significantly from period to period and is not predictable.

The profitability and success of our conferences symposia and events could beadversely affected byother meetings are subject to external factors beyond our control. Our EventsConferences business constituted 10%approximately 3% and 11% of total revenues from our on-going operations in 2020 and 2019, respectively. As a result of the COVID-19 pandemic, we cancelled or postponed all in-person conferences in March 2020 through the end of the calendar year, which had a material adverse effect on our 2020 Conferences business. We have also cancelled or postponed all in-person conferences through at least August 2021. We held 15 virtual conferences during the second half of 2020, and plan on holding approximately 20 virtual conferences through August 2021. These virtual conferences are expected to result in significantly less revenue and gross contribution, but we believe aid in client retention and engagement.

9

We expect our Conferences revenues will continue to be negatively impacted until in-person conferences can be held. Moreover, our clients that typically attend these conferences may have pandemic-related travel restrictions in place that could affect attendance once these conferences resume. At this time, we also cannot predict what additional measures will be required to hold in-person conferences safely, such as providing masks, social distancing and increased sanitation. These safety requirements would likely cause us to incur additional costs and may limit the number of participants at our in-person conferences. In addition, perceived or actual spread of coronavirus at one of our total revenuesconferences could cause reputational damage. The safety of our associates and clients remain our top priority so future in-person conferences will be held only if we determine the relevant impacts of COVID-19 have sufficiently receded in 2017the jurisdictions where our conferences are to be held.

We also face risks related to insurance coverage for our cancelled conferences. Our event cancellation insurance provides up to $170 million in coverage for 2020 with the right to reinstate that amount one time if those limits are utilized. The insurer has contested our right to reinstate limits and 11%to include in 2016. reinstated limits conferences cancelled due to COVID-19. We are in litigation with the insurer on these issues. It is unclear when we will receive the proceeds from these insurance claims and if we will have difficulty obtaining future event cancellation insurance at favorable rates, which could affect our financial results.

The market for desirable dates and locations for conferences, symposia and events isour activities has historically been highly competitive. IfOnce we decide to resume in-person conferences, if we cannot secure desirable dates and suitable venues for our conferences symposia and events theirthe profitability couldfor these conferences will suffer, and our financial condition and results of operations may be adversely affected. In addition, because our eventsconferences are scheduled in advance and held at specific locations, the success of these eventsactivities can be affected by circumstances outside of our control in addition to the COVID-19 pandemic, such as the occurrence of or concerns related to labor strikes, transportation shutdowns and travel restrictions, economic slowdowns, reductions in government spending, geopolitical crises, terrorist attacks, war, weather, natural disasters, communicable diseases, and other occurrences impacting the global, regional, or national economies, the occurrence of any of which could negatively impact the success of the event.conference or meeting. We also face the challenge of procuring venues that are sizeable enough at a reasonable cost to accommodate some of our major events.activities.


Our salesConsulting business depends on non-recurring engagements and our failure to governmentssecure newengagements could lead to a decrease in our revenues. Consulting segment revenues constituted approximately 9% of total revenues from our on-going operations in both 2020 and 2019. Consulting engagements typically are project-based and non-recurring. In addition, revenue from our contract optimization business can fluctuate significantly from period to period and is not predictable. Our ability to replace consulting engagements is subject to appropriations and may be terminated. We derive significant revenues from research andnumerous factors, including the following:

•delivering consistent, high-quality consulting contracts withservices to our clients;

•tailoring our consulting services to the United States government and its respective agencies, numerous state and local governments and their respective agencies, and foreign governments and their agencies. At December 31, 2017 and 2016, approximately $435.0 million and $355.0 million, respectively,changing needs of our contracts were attributableclients; and

•our ability to government entities. Our U.S. government contracts are subjectmatch the skills and competencies of our consulting staff to the approval of appropriations by the U.S. Congress to fund the agencies contracting for our services. Additionally, our contracts at the state and local levels, as well as foreign government contracts, are subject to various governmental authorizations and funding approvals and mechanisms. In general, most if not all of these contracts may be terminated at any time by the government entity without cause or penalty (“termination for convenience”). In addition, contracts with U.S. federal, state and local, and foreign governments and their respective agencies are subject to increasingly complex bidding procedures, compliance


requirements and intense competition. Should appropriationsskills required for the governmentsfulfillment of existing or potential consulting engagements.

A material decline in our ability to replace consulting engagements will have an adverse impact on our revenues and agencies that contract with us be curtailed, or should our government contracts be terminated for convenience, we may experience a significant loss of revenues.financial condition.


We may not be able to attract and retain qualified personnel which couldjeopardize our future growth plans, as well as the quality of our products and services.services and our future growth plans. Our success dependsis based on attracting and retaining talented employees and we depend heavily upon the quality of our senior management, research analysts, consultants, sales and other key personnel. The market for highly skilled workers and leaders in our industry is extremely competitive. Maintaining our brand and reputation is important to our ability to recruit and retain employees. We face competition for qualified professionals from, among others, technology companies, market research firms, consulting firms, financial services companies and electronic and print media companies, some of which have a greater ability to attract and compensate these professionals. Additionally, some of the personnel that we attempt to hire are subject to non-compete agreements that could impede our short-term recruitment efforts. AnyOur employee hiring and retention also depend on our ability to build and maintain a diverse and inclusive workplace culture that enables our employees to thrive. We may also be limited in our ability to recruit internationally by restrictive domestic immigration laws, and changes to policies that restrain the flow of technical and professional talent could inhibit our ability to adequately staff our research and development and other efforts. An inability to retain key personnel or to hire and train additional qualified personnel to support the evolving needs of clients or the projected growth in our business, could materially adversely affect the quality of our products and services, as well as future business and operating results.

We may not be able to maintain the equity in our brand name. We believe that our “Gartner” brand, in particular our independence, is critical to our efforts to attract and retain clients and that the importance of brand recognition will increase as competition increases. We may expand our marketing activities to promote and strengthen the Gartner brand and may need to increase our marketing budget, hire additional marketing and public relations personnel, and expend additional sums to protect our brand and otherwise increase expenditures to create and maintain client brand loyalty. If we fail to effectively promote, maintain, and protect the Gartner brand, or incur excessive expenses in doing so, our future business and operating results could be materially adversely impacted.

Our international operations expose us to a variety of operational and other risks whichcould negatively impact our future revenue and growth. We have clients in more than 100 countries and a substantial amount of our revenue is earned outside of the United States. Our operating results are subject to the risks inherent in international business activities, including general political and economic conditions in each country, changes in market demand as a result of tariffs and other trade barriers, challenges in staffing and managing foreign operations, changes in regulatory requirements, compliance with numerous foreign laws and regulations, and the difficulty of enforcing client agreements, collecting accounts receivable and protecting intellectual property rights or against economic espionage in international jurisdictions. Furthermore, we rely on local distributors or sales agents in some international locations. If any of these arrangements are terminated by our agent or us, we may not be able to replace the arrangement on beneficial terms or on a timely basis, or clients of the local distributor or sales agent may not want to continue to do business with us or our new agent.

Our business and operations may be conducted in countries where corruption has historically penetrated the economy. It is our policy to comply, and to require our local partners and those with whom we do business to comply, with all applicable anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and U.K. Bribery Act, and with applicable local laws of the foreign countries in which we operate. Our business and reputation may be adversely affected if we fail to comply with such laws.

We are exposed to volatility in foreign currencyexchange rates from our international operations. For both the years ended December 31, 2017 and 2016, 42% of our revenues were derived from sales outside of the United States. Revenues earned outside the U.S. are typically transacted in local currencies, which may fluctuate significantly against the U.S. dollar. While we may use forward exchange contracts to a limited extent to seek to mitigate foreign currency risk, our revenues and results of operations could be adversely affected by unfavorable foreign currency fluctuations. Additionally, our effective tax rate is increased as the U.S dollar strengthens against foreign currencies, which could impact our operating results.

Natural disasters, terrorist acts, war, and other geopolitical events could disrupt our business. We operate in numerous U.S. and international locations, and we have offices in a number of major cities across the globe. A major weather event, earthquake, flood, drought, volcanic activity, disease, or other catastrophic natural disaster could significantly disrupt our operations. In addition, acts of civil unrest, failure of critical infrastructure, terrorism, armed conflict, war, and abrupt political change, as well as responses by various governments and the international community to such acts, can have a negative effect on our business. Such events could cause delays in initiating or completing sales, impede delivery of our products and services to our clients, disrupt or shut down the Internet or other critical client-facing and business processes, impede the travel of our personnel and clients, dislocate our critical internal functions and personnel, and in general harm our ability to conduct normal business operations, any of which can negatively impact our financial condition and operating results. Such events could also impact the timing and budget decisions of our clients, which could materially adversely affect our business.

Privacy concerns could damage our reputation and deter current and potential clients from using our products and services or attending our events. Concerns relating to global data privacy have the potential todamage our reputation and deter current and prospective clients from using our products and services or attending our events. In the ordinary course of our business and in accordance with applicable laws, we collect personal information (i) from our employees (ii) from the users of our products and services, including event attendees; and (iii) from prospective clients. We collect only basic personal information from our clients


and prospects. While we believe our overall data privacy procedures are adequate, the theft or loss of such data, or concerns about our practices, even if unfounded, with regard to the collection, use, disclosure, or security of this personal information or other data protection related matters could damage our reputation and materially adversely affect our operating results. Any systems failure or compromise of our security that results in the disclosure of our users’ personal data could seriously limit the consumption of our products and services and the attendance at our events, as well as harm our reputation and brand and, therefore, our business.

In addition, new data protection laws and regulations, particularly the new European Union General Data Protection Regulation (“GDPR”) (effective in May 2018), pose increasingly complex compliance challenges. We are closely monitoring these legal developments and are working towards timely GDPR compliance. In the meantime, Gartner will continue to maintain and rely upon our comprehensive global data protection compliance program, which includes administrative, technical, and physical controls to safeguard our associates’ and clients' personal data. The interpretation and application of these laws in the United States, the European Union and elsewhere are often uncertain, inconsistent and ever changing. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

Internet and critical internal computer system failures, cyber-attacks, or compromises of our systems or security could damage our reputation and harm our business. A significant portion of our business is conducted over the Internet and we rely heavily on computer systems to conduct our operations. Individuals, groups, and state-sponsored organizations may take steps that pose threats to our operations, our computer systems, our employees, and our customers. They may develop and deploy malicious software to gain access to our networks and attempt to steal confidential information, launch distributed denial of service attacks, or attempt other coordinated disruptions. These threats are constantly evolving and becoming more sophisticated, thereby increasing the difficulty of detecting and successfully defending against them. A cyber-attack, widespread Internet failure or Internet access limitations, or disruption of our critical information technology systems through denial of service, viruses, or other events could cause delays in initiating or completing sales, impede delivery of our products and services to our clients, disrupt other critical client-facing or business processes, or dislocate our critical internal functions. Such events could significantly harm our ability to conduct normal business operations and negatively impact our financial results.

We take steps to secure our management information systems, including our computer systems, intranet, proprietary websites, email and other telecommunications and data networks, and we carefully scrutinize the security of outsourced website and service providers prior to retaining their services. However, the security measures implemented by us or by our outside service providers may not be effective and our systems (and those of our outside service providers) may be vulnerable to theft, loss, damage and interruption from a number of potential sources and events, including unauthorized access or security breaches, cyber-attacks, computer viruses, power loss, or other disruptive events. Our reputation, brand, financial condition and operating results could be materially adversely affected if, as a result of a significant cyber event or other technology-related catastrophe, our operations are disrupted or shutdown; our confidential, proprietary information is stolen or disclosed; we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information; we are required to dedicate significant resources to system repairs or increase cyber security protection; or we otherwise incur significant litigation, regulatory action and scrutiny or other costs as a result of these occurrences.

We may experience outages and disruptions of our online services if we fail tomaintain an adequate operations infrastructure. Our increasing user traffic and complexity of our products and services demand more computing power. We have spent and expect to continue to spend substantial amounts to maintain data centers and equipment, to upgrade our technology and network infrastructure to handle increased traffic on our websites, and to deliver our products and services through emerging channels, such as mobile applications. However, any inefficiencies or operational failures could diminish the quality of our products, services, and user experience, resulting in damage to our reputation and loss of current and potential users, subscribers, and advertisers, potentially harming our financial condition and operating results.

Our outstanding debt obligations could negatively impact our financial condition and future operating results. As of December 31, 2017, the Company had outstanding debt of $2.5 billion under its 2016 term loan and revolving credit facility (the "2016 Credit Agreement") and $800.0 million of Senior Notes Due 2025 ("Senior Notes"). The 2016 Credit Agreement was amended three times during 2017 and it currently provides 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 Company borrowed significant amounts in 2017 under the 2016 Credit Agreement, and issued the Senior Notes, in conjunction with the CEB acquisition. Additional information regarding the 2016 Credit Facility and the Senior Notes is included in Note 5 — Debt in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

The debt service requirements of these credit arrangements could impair our future financial condition and operating results. In addition, the affirmative, negativeeffective succession planning is important to our long-term success, and financial covenants of the 2016 Credit Agreement, as amended, as well as the covenants related to the Senior Notes, could limit our future financial flexibility. A failure to comply with these covenantsensure effective transfer of knowledge and smooth transitions involving key employees could result in acceleration of all amounts outstanding, which could materially impacthinder our financial condition unless accommodations could bestrategic planning and execution.



10

negotiated with our lenders and Noteholders. No assurance can be given that we would be successful in doing so, or that any accommodations that we were able to negotiate would be on terms as favorable as those currently. The outstanding debt may limit the amount of cash or additional credit available to us, which could restrain our ability to expand or enhance products and services, respond to competitive pressures or pursue future business opportunities requiring substantial investments of additional capital.

We may require additional cash resources which may not be available onfavorable terms or at all. We may require additional cash resources due to changed business conditions, implementation of our strategy and stock repurchase program, to repay indebtedness or to pursue future business opportunities requiring substantial investments of additional capital, including acquisitions. If our existing financial resources are insufficient to satisfy our requirements, we may seek additional borrowings or issue debt. Prevailing credit and debt market conditions may negatively affect debt availability and cost, and, as a result, financing may not be available in amounts or on terms acceptable to us, if at all. In addition, the incurrence of additional indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would further restrict our operations.

If we are unable to enforce and protect our intellectual property rights, ourcompetitive position may be harmed. We rely on a combination of copyright, trademark, trade secret, patent, confidentiality, non-compete and other contractual provisions to protect our intellectual property rights. Despite our efforts to protect our intellectual property rights, unauthorized third parties may obtain and use technology or other information that we regard as proprietary. Our intellectual property rights may not survive a legal challenge to their validity or provide significant protection for us. The laws of certain countries, particularly in emerging markets, do not protect our proprietary rights to the same extent as the laws of the United States. Accordingly, we may not be able to protect our intellectual property against unauthorized third-party copying or use, which could adversely affect our competitive position. Additionally, there can be no assurance that another party will not assert that we have infringed its intellectual property rights.


Our employees are subject to restrictive covenant agreements (which include restrictions on employees'employees’ ability to compete and solicit customers and employees) and assignment of invention agreements, to the extent permitted under applicable law. When the period expires relating to thetheir particular restriction,restrictions, former employees may compete against us. If a former employee violates the provisions of his/herthe restrictive covenant agreement, we seek to enforce the restrictions but there is no assurance that we will be successful in our efforts.


Privacy concerns could damage our reputation and deter current and potential clients from using our products and services or attending our conferences. Concerns relating to global data privacy have the potential todamage our reputation and deter current and prospective clients from using our products and services or attending our conferences. In the ordinary course of our business and in accordance with applicable laws, we collect personal information (i) from our employees, (ii) from the users of our products and services, including conference attendees, and (iii) from prospective clients. We collect only basic personal information from our clients and prospects. While we believe our overall data privacy procedures are adequate, the theft or loss of such data, or concerns about our practices, even if unfounded, with regard to the collection, use, disclosure, or security of this personal information or other data protection related matters could damage our reputation and materially adversely affect our operating results. Any systems failure or compromise of our security that results in the disclosure of our users’ personal data could seriously limit the consumption of our products and services and the attendance at our conferences, as well as harm our reputation and brand and, therefore, our business.

We are exposed to risks related to cybersecurity. A significant portion of our business is conducted over the internet and we rely on the secure processing, storage and transmission of confidential, sensitive, proprietary and other types of information relating to our business operations and confidential and sensitive information about its customers and employees in our computer systems and networks, and in those of our third-party vendors. Individuals, groups, and state-sponsored organizations may take steps that pose threats to our operations, our computer systems, our employees, and our customers. The cybersecurity risks we face range from cyber attacks common to most industries, such as the development and deployment of malicious software to gain access to our networks and attempt to steal confidential information, launch distributed denial of service attacks, or attempt other coordinated disruptions, to more advanced threats that target us because of our prominence in the global research and advisory field.

Like many multinational corporations, we, and some third parties upon which we rely, have experienced cyber attacks on our computer systems and networks in the past and may experience them in the future, likely with more frequency and sophistication, and involving a broader range of devices and modes of attack, all of which will increase the difficulty of detecting and successfully defending against them. To date, none have resulted in any material adverse impact to our business, operations, products, services or customers. We have implemented various security controls to both meet our security compliance obligations, while also defending against constantly evolving security threats. Our security controls help to secure our information systems, including our computer systems, intranet, proprietary websites, email and other telecommunications and data networks, and we scrutinize the security of outsourced website and service providers prior to retaining their services. However, the security measures implemented by us or by our outside service providers may not be effective and our systems (and those of our outside service providers) are vulnerable to theft, loss, damage and interruption from a number of potential sources and events, including unauthorized access or security breaches, cyber attacks, computer viruses, power loss, or other disruptive events. As a result of the COVID-19 pandemic and shelter-in-place orders, most of our employees in affected areas are working remotely, which magnifies the importance of the integrity of our remote access security measures. Additionally, the security compliance landscape continues to evolve, requiring us to stay apprised of changes in cybersecurity laws, regulations, and security requirements required by our clients, such as the European Union General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), the Brazilian General Data Protection Law (LGPD), the Chinese Cybersecurity and draft Data Security laws, International Organization for Standardization (ISO), and National Institute of Standards and Technology (NIST). Recent well-publicized security breaches at other companies have led to enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber attacks, and may in the future result in heightened cybersecurity requirements, including additional regulatory expectations for oversight of vendors and service providers.
11


A cyber attack, widespread internet failure or internet access limitations, or disruption of our critical information technology systems through denial of service, viruses, or other events could cause delays in initiating or completing sales, impede delivery of our products and services to our clients, disrupt other critical client-facing or business processes or dislocate our critical internal functions. Additionally, any material breaches of cybersecurity or other technology-related catastrophe, or media reports of perceived security vulnerabilities to our systems or those of our third parties, even if no breach has been attempted or occurred, could cause us to experience reputational harm, loss of customers and revenue, fines, regulatory actions and scrutiny, sanctions or other statutory penalties, litigation, liability for failure to safeguard our customers’ information, or financial losses that are either not insured against or not fully covered through any insurance maintained by us.

Any of the foregoing may have a material adverse effect on our business, operating results and financial condition.

We may experience outages and disruptions of our online services if we fail tomaintain an adequate operations infrastructure. Our increasing user traffic and complexity of our products and services demand more computing power. We have spent and expect to continue to spend substantial amounts for access to data centers and equipment and to move more of our workload into cloud services, to upgrade our technology and network infrastructure to handle increased traffic on our websites, and to deliver our products and services through emerging channels, such as mobile applications. However, any inefficiencies or operational failures could diminish the quality of our products, services, and user experience, resulting in damage to our reputation and loss of current and potential users, subscribers, and advertisers, potentially harming our financial condition and operating results.

We have grown, and may continue to grow, through acquisitions and strategicinvestments, which could involve substantial risks. We have made and may continue to make acquisitions of, or significant investments in, businesses that offer complementary products and services or otherwise support our growth objectives. The risks involved in each acquisition or investment include the possibility of paying more than the value we derive from the acquisition, dilution of the interests of our current stockholders should we issue stock in the acquisition, decreased working capital, increased indebtedness, the assumption of undisclosed liabilities and unknown and unforeseen risks, the ability to retain key personnel of the acquired company, the inability to integrate the business of the acquired company, increase revenue or fully realize anticipated synergies, the time to train the sales force to market and sell the products of the acquired business, the potential disruption of our ongoing business and the distraction of management from our day to day business. The realization of any of these risks could adversely affect our business. Additionally, we face competition in identifying acquisition targets and consummating acquisitions.


Our business has increased significantly with the CEB acquisition. Our success depends, in part, upon our ability to continue to integrate its operations as well as manage the overall expanded business, which poses substantial challenges for management, including challenges related to the management and monitoring of new operations, new products, and associated increased cost and complexity. A failure to realize the expected benefits from the acquisition or successfully manage the expanded operation could adversely and materially affect our future business and operating results.

We face risks related to leased office space. With the CEB acquisition we We assumed a significant amount of additional leased office space, in particular in Arlington, Virginia, which formerly served as CEB's headquarters location, and where the majority of its staff is currently located. Gartner is continuingin connection with a plan originally approved by CEB before the acquisition to relocate and consolidate its office spaceof CEB Inc. in 2017. In Arlington, we have consolidated all our businesses into a new, nearbysingle building and sublease the entirety of the existing space. The consolidation into the new building is expected to be completed in the first half of 2018 with the first set of moves already completed in December 2017. We have also made significant progress in subleasing the existing space and we expect to subleasesublet substantially all of the remainingexcess space during 2018.in our other properties. Through our real estate consolidations and other related activities, we have tried to secure quality sub-tenants with appropriate sub-lease terms. However, if we are unable to sublease the remaining existing space at acceptable rents or at all, or if subtenants default on their sublease obligationobligations with us or otherwise terminate thetheir subleases with us, we may experience a loss of planned sublease rental income, which could result in a material charge which could adversely affectagainst our operating results. Additionally, the long-term impact of COVID-19 on leased office space availability and rental costs of leased office space is not yet known.


We are also inTo accommodate our growth going forward, we have moved to a global hoteling option to better manage our footprint and operating expenses, and will secure new space when the process of adding new leased space.opportunities and need arise. If the new spaces are not completed on schedule, or if the landlord defaults on its commitments and obligations pursuant to the new leases, we may incur additional expenses. In addition, unanticipated difficulties in initiating operations in thisa new space, including construction delays, IT system interruptions, or other infrastructure


support problems, could result in a delay in moving into the new space, resulting in a loss of employee and operational productivity and a loss of revenue and/or additional expenses, which could also have an adverse, material impact on our operating results.


Our sales to governments are subject to appropriations and some may be terminated early. We derive significant revenues from research and consulting contracts with the United States government and its respective agencies, numerous state and local governments and their respective agencies, and foreign governments and their agencies. At December 31, 2020 and 2019, approximately $689 million and $639 million, respectively, of our outstanding revenue contracts were attributable to government entities. Our U.S. government contracts are subject to the approval of appropriations by the U.S. Congress to fund the agencies contracting for our services. Additionally, our contracts at the state and local levels, as well as foreign government contracts, are subject to various governmental authorizations and funding approvals and mechanisms. Certain of these contracts may be terminated at any time by the government entity without cause or penalty (“termination for convenience”). In addition, contracts with U.S. federal, state and local, and foreign governments and their respective agencies are subject to increasingly complex bidding procedures and compliance requirements, as well as intense competition. While terminations by governments
12

have not been significant historically, should appropriations for the various governments and agencies that contract with us be curtailed, or should our government contracts be terminated for convenience, we may experience a significant loss of revenues.

We may not be able to maintain the equity in our brand name. We believe that our “Gartner” brand, in particular our independence, is critical to our efforts to attract and retain clients and top talent, and that the importance of brand recognition will increase as competition increases. We may also discover that our brand, though recognized, is not perceived to be relevant by new market segments we have targeted. We may expand our marketing activities to promote and strengthen the Gartner brand and may need to increase our marketing budget, hire additional marketing and public relations personnel, and expend additional sums to protect our brand and otherwise increase expenditures to create and maintain client brand loyalty. If we fail to effectively promote, maintain, and protect the Gartner brand, or incur excessive expenses in doing so, our future business and operating results could be materially adversely impacted.

Our outstanding debt obligations could negatively impact our financial condition and future operating results. As of December 31, 2020, the Company had outstanding debt of $400 million under its 2020 term loan and revolving credit facility (the “2020 Credit Agreement”), $800 million of Senior Notes due 2028 (the “2028 Notes”) and $800 million of Senior Notes due 2030 (the “2030 Notes”). Additional information regarding the 2020 Credit Agreement, the 2028 Notes and the 2030 Notes is included in Note 6 — Debt in the Notes to Consolidated Financial Statements.

The debt service requirements of these borrowings could impair our future financial condition and operating results. In addition, the affirmative, negative and financial covenants of the 2020 Credit Agreement, as well as the covenants related to the Senior Notes, could limit our future financial flexibility. A failure to comply with these covenants could result in acceleration of all amounts outstanding, which could materially impact our financial condition unless accommodations could be negotiated with our lenders and noteholders. No assurance can be given that we would be successful in doing so, or that any accommodations that we were able to negotiate would be on terms as favorable as those currently in place. The outstanding debt may limit the amount of cash or additional credit available to us, which could restrain our ability to expand or enhance products and services, respond to competitive pressures or pursue future business opportunities requiring substantial investments of additional capital.

In addition, variable-rate borrowings under our 2020 Credit Agreement typically use LIBOR as a benchmark based on market participant judgments for establishing the rate of interest. LIBOR is the subject of recent national and international regulatory scrutiny, which may result in changes that cause LIBOR to disappear entirely after June 2023 for rates applicable to the 2020 Credit Agreement and our existing derivatives contracts, and December 2021 for any new debt and derivatives contracts that we may enter into. The changes may also cause LIBOR to perform differently than in the past. The Alternative Reference Rates Committee (ARRC), which was convened by the Federal Reserve Board and the New York Fed, has identified the Secured Oversight Financing Rate (SOFR) as the recommended risk-free alternative rate for USD LIBOR. The future consequences of these LIBOR developments on our variable-rate borrowings, including the possible transition to rates based on observable transactions, such as the Secured Overnight Financing Rate (SOFR), cannot be predicted at this time, but could include an increase in the cost of our variable-rate indebtedness and volatility in our earnings.

We may require additional cash resources which may not be available onfavorable terms or at all. We may require additional cash resources due to changed business conditions, implementation of our strategy and stock repurchase program, to repay indebtedness or to pursue future business opportunities requiring substantial investments of additional capital, including acquisitions. If our existing financial resources are insufficient to satisfy our requirements, we may seek additional borrowings or issue debt. Prevailing credit and debt market conditions may negatively affect debt availability and cost, and, as a result, financing may not be available in amounts or on terms acceptable to us, if at all. In addition, the incurrence of additional indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would further restrict our operations.

Natural disasters, pandemics, terrorist acts, war, actions by governments, and other geopolitical activities could disrupt our operations. We operate in numerous U.S. and international locations, and we have offices in a number of major cities across the globe. The occurrence of, or concerns related to, a major weather event, earthquake, flood, drought, volcanic activity, disease or pandemic, or other natural disaster could significantly disrupt our operations. In addition, acts of civil unrest, failure of critical infrastructure, terrorism, armed conflict, war, and abrupt political change, as well as responses by various governments and the international community to such acts, can have a negative effect on our business. Such events could cause delays in initiating or completing sales, impede delivery of our products and services to our clients, disrupt or shut down the internet or other critical client-facing and business processes, impede the travel of our personnel and clients, dislocate our critical internal functions and personnel, and in general harm our ability to conduct normal business operations, any of which can negatively impact our financial condition and operating results. Such events could also impact the timing and budget decisions of our clients, which could materially adversely affect our business.
13


Macroeconomic and Industry Risks

We are subject to risks from operating globally. We have clients in more than 100 countries and a substantial amount of our revenue is earned outside of the United States. Our operating results are subject to all of the risks typically inherent in international business activities, including general political and economic conditions in each country, challenges in staffing and managing foreign operations, changes in regulatory requirements, compliance with numerous and complex foreign laws and regulations, currency restrictions and fluctuations, the difficulty of enforcing client agreements, collecting accounts receivable and protecting intellectual property rights including against economic espionage in international jurisdictions. Further, we rely on local distributors or sales agents in some international locations. If any of these arrangements are terminated by our agent or us, we may not be able to replace the arrangement on beneficial terms or on a timely basis, or clients of the local distributor or sales agent may not want to continue to do business with us or our new agent.

Additionally, tariffs, trade barriers and restrictions, and other acts by governments to protect domestic markets or to retaliate against the trade tariffs and restrictions of other nations could negatively affect our business operations. In addition, the withdrawal of nations from existing common markets or trading blocs, such as the exit of the United Kingdom (UK) from the European Union (the EU), commonly referred to as Brexit, could be disruptive and negatively impact our business and the business of our clients. We continue to monitor Brexit and its potential impacts on our results of operations and financial condition. In connection with Brexit, on December 24, 2020, the EU and the United Kingdom reached an agreement on a new trade arrangement that became effective on January 1, 2021. Once the new rules are formalized, there could be near or long-term negative impacts on our UK business. If this agreement and the new rules, once formalized, lead to legal uncertainty and potentially divergent national laws and regulations in the United Kingdom and EU, then we, as well as our clients who have significant operations in the United Kingdom, may incur additional costs and expenses as we adapt to the new trade agreements. For example, we may face additional administrative procedures when purchasing tangible goods and equipment from the EU. Additionally, volatility in foreign currencies and other markets may also arise as the UK and EU work though the new trade arrangements. The impact of any of these effects of Brexit, among others, could materially harm our business and financial results.

Our operating results could be negatively impacted by global economicconditions. Our business is impacted by general economic conditions and trends in the United States and abroad. In its recent report, Global Economics Prospects, January 2021, the World Bank reported that following a collapse in 2020 caused by the COVID-19 pandemic, global economic output is expected to expand 4 percent in 2021 but still remain more than 5 percent below pre-pandemic projections. The report also indicated that global growth is projected to moderate to 3.8 percent in 2022, weighed down by the pandemic’s lasting damage to potential growth. The report noted that the global recovery, which has been dampened in the near term by a resurgence of COVID-19 cases, is expected to strengthen over the forecast horizon as confidence, consumption, and trade gradually improve, supported by ongoing vaccination. A downturn in growth could negatively and materially affect future demand for our products and services in general, in certain geographic regions, in particular countries, or industry sectors. In addition, U.S. federal, state and local government spending limits may reduce demand for our products and services from those governmental agencies as well as organizations that receive funding from those agencies, and could negatively affect macroeconomic conditions in the United States, which could further reduce demand for our products and services. Such difficulties could negatively impact our ability to maintain or improve the various business measurements we utilize (which are defined in this Annual Report), such as contract value and consulting backlog growth, client retention, wallet retention, consulting utilization rates, and the number of attendees and exhibitors at our conferences and other meetings. Failure to achieve acceptable levels of these measurements or improve them will negatively impact our financial condition, results of operations, and cash flows.

We face significant competition and our failure to compete successfully couldmaterially adversely affect our results of operations, financial condition, and cash flows. The markets for our products and services are characterized by intense competition and we face direct competition from a significant number of independent providers of information products and services, including information available on the internet free of charge. We also compete indirectly against consulting firms and other information providers, including electronic and print media companies, some of which have greater financial, information gathering and marketing resources than we do. These indirect competitors could also choose to compete directly with us in the future. In addition, low barriers to entry exist in the markets in which we do business. As a result, new competitors may emerge, and existing competitors may start to provide additional or complementary services. Additionally, technological advances may provide increased competition from a variety of sources.

There can be no assurance that we will be able to successfully compete against current and future competitors and our failure to do so will result in loss of market share, diminished value in our products and services, reduced pricing and increased marketing expenditures. Furthermore, we will not be successful if we cannot compete effectively on quality of research and analysis,
14

timely delivery of information, customer service, the ability to offer products to meet changing market needs for information and analysis, or price.

We are exposed to volatility in foreign currencyexchange rates from our international operations. A significant portion of our revenues are typically derived from sales outside of the United States. Revenues earned outside the United States are typically transacted in local currencies, which may fluctuate significantly against the U.S. dollar. While we use forward exchange contracts to a limited extent to seek to mitigate foreign currency risk, our revenues and results of operations could be adversely affected by unfavorable foreign currency fluctuations.

Legal and Regulatory Risks

Our failure to comply with complex U.S. and foreign laws and regulations could have a material adverse effect on our operations or financial condition. Our business and operations may be conducted in countries where corruption has historically penetrated the economy. It is our policy to comply, and to require our local partners, distributors, agents, and those with whom we do business to comply, with all applicable anti-bribery and anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, regulations established by the Office of Foreign Assets Control (OFAC) and with applicable local laws of the foreign countries in which we operate. There can be no assurance that all of our employees, contractors and agents will comply with the Company’s policies that mandate compliance with these laws. Any determination that we have violated or are responsible for violations of these laws, even if inadvertent, could be costly and disrupt our business, which could have a material adverse effect on our business, results of operations, financial condition, liquidity and cash flows, as well as on our reputation. For example, during the second half of 2018 we cooperated fully with a South African government commission established to review a wide range of issues related to the country’s revenue service, including the procurement and fulfillment of consulting agreements we entered into with the revenue service through a sales agent from late 2014 through early 2017. We fully cooperated with the commission and in parallel, we commenced an internal investigation regarding this matter. We voluntarily disclosed the matter to the SEC and Department of Justice (DOJ) in November 2018 and are cooperating fully with their review, including executing tolling agreements. At this time, we do not believe the ultimate outcome of these matters will have a material effect on our financial results, however, an unexpected adverse resolution of these matters could negatively impact our financial condition, results of operations, and liquidity.

In addition, continuously evolving data protection laws and regulations, such as the European Union General Data Protection Regulation (GDPR) and the recent decision in the Schrems II case, the California Consumer Privacy Act (CCPA), the Brazilian General Data Protection Law (LGPD), and the Chinese Cybersecurity and draft Data Security laws pose increasingly complex compliance challenges. We have implemented GDPR, CCPA and LGPD compliance programs. In the meantime, Gartner will continue to maintain and rely upon our comprehensive global data protection compliance program, which includes administrative, technical, and physical controls to safeguard our associates’ and clients’ personal data. The interpretation and application of these laws in the United States, the EU and elsewhere are often uncertain, inconsistent and ever changing. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

We face risks related to litigation. We are, and in the future may be, subject to a variety of legal actions, such as employment, breach of contract, intellectual property-related, and business torts, including claims of unfair trade practices and misappropriation of trade secrets. Given the nature of our business, we are also subject to defamation (including libel and slander), negligence, or other claims relating to the information we publish. Regardless of the merits of any claim and despite vigorous efforts to defend any such claim, claims can affect our reputation, and responding to any such claim could be time consuming, result in costly litigation and require us to enter into settlements, royalty and licensing agreements which may not be offered or available on reasonable terms. If a claim is made against us whichthat we cannot defend or resolve on reasonable terms, our business, brand, and financial results could be materially adversely affected.


We face risks related to taxation. We are a global company and a substantial amount of our earnings is generated outside of the United States and taxed at rates less than the U.S. statutory federal income tax rate. Our effective tax rate, financial position and results of operations could be adversely affected by earnings being higher than anticipated in jurisdictions with higher statutory tax rates and, conversely, lower than anticipated in jurisdictions that have lower statutory tax rates, by changes in the valuation of our deferred tax assets and/or by changes in tax laws or accounting principles and their interpretation by relevant authorities.


At the present time, the United StatesCorporate tax reform, base-erosion efforts and other countriestax transparency continue to be high priorities in many countries. Tax reform legislation is being proposed or enacted in a number of jurisdictions where we do business have either changed or are actively considering changes in their tax, accounting and other related laws. In the United States, recently enacted Tax Reform introduced several new complicated tax laws which could unfavorably impact our future effective tax rate. In 2014, Ireland modified its tax residency rules. While these changes are not effective until 2021 for many companies with Irish resident operations, including Gartner, the new rules could increase our effective tax rate at that future date. Likewise, duringbusiness. During 2015, the Organization for Economic Cooperation and Development (“OECD”)(OECD) released final reports on various actionsaction items associated with its initiative to prevent Base Erosion and Profit Shifting (“BEPS”)(BEPS). NumerousIn 2020, the OECD further proposed a two-pillar approach to global taxation (BEPS 2.0), focusing on global profit allocation and a global minimum tax rate. While consensus has yet to be reached on
15

BEPS 2.0, numerous countries have and continue to propose unilateral tax law changes intended to address BEPS. The future enactment by various governments of these and other proposals could significantly increase our tax obligations in many countries where we do business. These actual, potential, and other changes, both individually and collectively, could materially increase our effective tax rate and negatively impact our financial position, results of operations, and cash flows. In addition, as regulationsWe will continue to monitor and guidance evolve with respect to the U.S. Tax Cuts and Jobs Act of 2017, and as we gather more information and perform additional analysis,reflect the impact of the new law may differ from previous estimates and may materially affect our results of operations andsuch legislative changes in future financial position in the future.statements as appropriate.


In addition, our tax filings for various years are subject to examination by domestic and international taxing authorities and, during the ordinary course of business, we are under audit by various tax authorities. Recent and future actions on the part of the OECD and various governments have increased scrutiny of our tax filings. Although we believe that our tax filings and related accruals are reasonable, the final resolution of tax audits may be materially different from what is reflected in our historical tax provisions and accruals and could have a material adverse effect on our effective tax rate, financial position, results of operations, and cash flows, particularly in major taxing jurisdictions including, but not limited to: the United States, Ireland, India, Canada, United Kingdom, Japan, and France.flows.


As of December 31, 2017,2020, we had approximately $194.0$119.5 million of accumulated undistributed earnings in our non-U.S. subsidiaries. Our cash and cash equivalents are held in numerous locations throughout the world. At December 31, 2017, 97%2020, 56% of our cash and cash equivalents was held overseas, with a substantial portion representing accumulated undistributed earnings of our non-U.S. subsidiaries. Under U.S. GAAP,generally accepted accounting principles in the United States of America, no provision for income taxes that may result from the remittance of accumulated undistributed foreign earnings is required if the Company intends to reinvest such earnings overseas indefinitely. Our current liquidity requirements do not demonstrate a need to repatriate accumulated undistributed foreign earnings to fund our U.S. operations or otherwise satisfy the liquidity needs of our U.S. operations. Accordingly, theThe Company intends to continue to reinvest substantially all of its accumulated undistributed foreign earnings, except in instances in whichwhere the repatriation of those earnings would result in minimal additional tax. As a result, we have not recognized income tax expense on the amounts deemed permanently reinvested. However, with the recently enacted U.S Tax Cuts and Jobs Act of 2017, we envision that the income tax that would be payable if such earnings were repatriated would be minimal.


Our corporate compliance program cannot guarantee that we are in compliance with all applicable laws and regulations. We operate in a number of countries, including emerging markets, and as a result we are required to comply with numerous, and in many cases, changing international and U.S. federal, state and local laws and regulations. As a result,Accordingly, we have a corporate compliance program whichthat includes the creation of appropriate policies defining employee behavior that mandate adherence to laws, employee training, annual affirmations, monitoring and enforcement. However, iffailure of any employee fails to comply with or intentionally disregards, any of these laws, regulations or our policies, could result in a range of liabilities could result for the employee and for


the Company, including, but not limited to, significant penalties and fines, sanctions and/or litigation, and the expenses associated with defending and resolving any of the foregoing, any of which could have a negative impact on our reputation and business.


Risks relatedRelated to our common stockOur Common Stock

Our operating results may fluctuate from period to period and/or the financial guidance we have given may not meet theexpectations of investors, which may cause the price of our common stock to decline. Our quarterly and annual operating results may fluctuate in the future as a result of many factors, including the timing of the execution of research contracts, the extent of completion of consulting engagements, the timing of symposia and other events, the amount of new business generated, the mix of domestic and international business, currency fluctuations, changes in market demand for our products and services, the timing of the development, introduction and marketing of new products and services, competition in our industry, the impact of our acquisitions, and general economic conditions. An inability to generate sufficient earnings and cash flow, and achieve our forecasts, may impact our operating and other activities. The potential fluctuations in our operating results could cause period-to-period comparisons of operating results not to be meaningful and may provide an unreliable indication of future operating results. Furthermore, our operating results may not meet the expectations of investors or the financial guidance we have previously provided. If this occurs, the price of our common stock could decline.
Our stock price may be impacted by factors outside of our control and you maynot be able to resell shares of our common stock at or above the price youpaid. The price of our common stock is subject to significant fluctuations in response to, among other factors, developments in the industries in which we do business, general economic conditions, general market conditions, geo-political events, changes in the nature and composition of our stockholder base, changes in securities analysts’ recommendations regarding our securities and our performance relative to securities analysts’ expectations for any quarterly period, as well as other factors outside of our control including any and all factors that move the securities markets generally. These factors may materially adversely affect the market price of our common stock.
Future sales or issuances of our common stock in the public market could lower our stockprice. Sales of a substantial number of shares of common stock in the public market by our current stockholders, or the threat that substantial sales may occur, could cause the market price of our common stock to decrease significantly or make it difficult for us to raise additional capital by selling stock. The issuance of additional shares of our common stock could also lower the market price of our common stock. Furthermore, we have various equity incentive plans that provide for awards in the form of stock appreciation rights, restricted stock, restricted stock units and other stock-based awards which have the effect of adding shares of common stock into the public market. We have a board-approved share repurchase program and at December 31, 2017, approximately $1.1 billion remained available for share purchases under this program. No assurance can be given that we will continue these share repurchase activities in the future when the program is completed, or in the event that the price of our common stock reaches levels at which repurchases are not accretive.

Future sales of our common stock from grants and awards could lower our stockprice. As of December 31, 2017, the aggregate number of shares of our common stock issuable pursuant to outstanding grants and awards under our equity incentive plans was approximately 2.8 million shares (approximately 1.3 million of which have vested). In addition, at the present time, approximately 5.6 million shares may be issued in connection with future awards under our equity incentive plans. Shares of common stock issued under these plans are freely transferable and have been registered under the Securities Act of 1933, as amended (the “Securities Act”), except for any shares held by affiliates (as that term is defined in Rule 144 under the Securities Act) which are subject to certain limitations. We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock.

Interests of certain of our significant stockholders may conflict with yours. To our knowledge, as of the date hereof, and based upon publicly-available SEC filings, five institutional investors each presently hold over 5% of our common stock. While no stockholder or institutional investor individually holds a majority of our outstanding shares, these significant stockholders may be able, either individually or acting together, to exercise significant influence over matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation, adoption or amendment of equity plans and approval of significant transactions such as mergers, acquisitions, consolidations and sales or purchases of assets. In addition, in the event of a proposed acquisition of the Company by a third party, this concentration of ownership may delay or prevent a change of control in us. Accordingly, the interests of these stockholders may not always coincide with our interests or the interests of other stockholders, or otherwise be in the best interests of us or all stockholders.

Our anti-takeover protections may discourage or prevent a change of control,even if a change in control would be beneficial to our stockholders. Provisions of our restated certificate of incorporation and bylaws and Delaware law may make it difficult for any party to acquire control of us in a transaction not approved by our Board of Directors. These provisions include: (i) the ability of our Board of Directors to issue and determine the terms of preferred stock; (ii) advance notice requirements for inclusion of stockholder proposals at stockholder meetings; and (iii) the anti-takeover provisions of Delaware law. These provisions could


discourage or prevent a change of control or change in management that might provide stockholders with a premium to the market price of their common stock.


ITEM 1B. UNRESOLVED STAFF COMMENTS.

The Company has no unresolved written comments that were received from the SEC staff 180 days or more before the end of our fiscal year relating to our periodic or current reports under the Exchange Act.None.
 
ITEM 2. PROPERTIES.


Our acquisition of CEB in 2017 resulted in a significant increase in the number of properties where we have business operations. As of December 31, 2017,2020, we leased 59approximately 20 domestic and 10670 international active properties.office properties for our ongoing business operations. These offices, which exclude certain properties that we sublease to others, support our executive and administrative activities, research and consulting, sales, systems support, operations, and other functions. We have a significant presenceOur corporate office is based in Stamford, Connecticut; Ft.Connecticut. We also maintain an important presence in: Fort Myers, Florida; Arlington, Virginia; Egham, the United KingdomKingdom; Gurgaon, India; Irving, Texas; and Gurgaon, India.Barcelona, Spain. The Company does not own any real properties.property.


Our Stamford corporate headquarters are located in 213,000 square feetis comprised of leased office space in three buildings located on the same campus. The Company'sOur lease onfor the Stamford headquarters facility expires in 2027 and contains three five-year renewal options at fair value. In 2016Additionally, we leased an additional 21,179 square feet oflease office space in a fourth building adjacent to our Stamford headquarters facility under a five-yearlease designed to be co-terminus with our headquarters lease.

In Ft. Myers we lease 257,795 square feet in two buildings located on the same campus and we also We have anoptions for additional 41,590 square feet of leased space in two separate but nearby buildings that house staff training and other facilities. Our Ft. Myers leases expire in 2030. To accommodate future growth in Ft. Myers we have also signed a lease (20 year lease with a termination option at 15 years) with a new multi-building development just south of our current campus for an additional 242,000 square feet to be delivered in phases in 2018 and 2019. This site also offers us options for further growth as necessary.this fourth building.


In Arlington, which was the heritage CEB corporate headquarters location, we are progressing with a strategy to consolidate multiple heritage CEB and Gartner offices that occupied 439,354 square feet across 4 different locations into 290,215 square feet of space in a single building which is a heritage CEB lease for a 15 year term that expires at the end of 2032. We expect to complete this consolidation by the end of 2018.
16


In Egham, we have consolidated most of our operations into a new 107,540 square foot building that opened in September 2017. The Egham lease has a term of 15 years. We also continue to maintain some operations in an adjacent legacy building. In Gurgaon we have two locations, a 30,000 square foot office and a 48,468 square foot office that was part of the heritage CEB business. To accommodate future growth in Gurgaon and consolidate our operations we have signed an agreement to lease 250,000 square feet in a new development to be delivered in 2019. This development, which is close to our current locations, also offers us potential for further growth as necessary.

In addition to the above locations, we have also announced the creation of a new Center of Excellence to be located in Irving, TX. To support the growth of this site we have signed a lease (15 year lease with termination option at 10 years) for 152,000 square feet that will be occupied in a phased manner from 2018 through 2020.

We expect to continue to invest in our business by adding headcount and, as a result, we may need additional office space in various locations. Should additional space be necessary, we believe that it will be available and aton reasonable terms.


ITEM 3. LEGAL PROCEEDINGS.

We are involved in various legal and administrative proceedings and litigation arising in the ordinary course of business. The outcome of these individual matters is not predictable at this time. However, weWe believe that the ultimate resolutionpotential liability, if any, in excess of these matters, after considering amounts already accrued from all proceedings, claims and insurance coverage,litigation will not have a material adverse effect on our financial position, cash flows or results of operations or cash flowswhen resolved in a future periods.period.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.









17

PART II


ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is listed on the New York Stock Exchange under the symbol "IT"“IT”. As of January 31, 2018,February 12, 2021, there were 1,2631,065 holders of record of our common stock. Our 20182021 Annual Meeting of Stockholders will be held virtually on May 24, 2018 at the Company’s corporate headquarters in Stamford, Connecticut.June 3, 2021. We did not submit any matter to a vote of our stockholders during the fourth quarter of 2017.
The following table sets forth the high and low sale prices for our common stock as reported on The New York Stock Exchange for the periods indicated:  
 2017 2016
 High Low High Low
Quarter ended March 31$112.42
 $90.37
 $89.73
 $77.80
Quarter ended June 30124.92
 107.70
 103.00
 86.17
Quarter ended September 30130.02
 115.86
 100.74
 87.86
Quarter ended December 31$126.22
 $115.01
 $105.45
 $84.54
DIVIDEND POLICY
We currently do not pay cash dividends on our common stock. In addition, our 2016 Credit Agreement contains a negative covenant which may limit our ability to pay dividends.2020.
 
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
 
The equity compensation plan information set forth in Part III, Item 12 of this Annual Report on Form 10-K is hereby incorporated by reference into this Part II, Item 5.

SHARE REPURCHASES

The Company hasIn May 2015, our Board of Directors authorized a $1.2 billion board authorizationshare repurchase program to repurchase the Company'sup to $1.2 billion of our common stock. In February 2021, our Board of Directors authorized incremental share repurchases of up to an additional $300 million under the program.The Company may repurchase its common stock from time-to-time in amounts, and 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 fromby cash on hand and borrowings under the Company’s 2016 Credit Agreement.borrowings. Repurchases may also be made from time-to-time in connection with the settlement of the Company's share-basedCompany’s stock-based compensation awards.

The following table below summarizes the repurchases of our outstanding common stock induring the three months ended December 31, 20172020 pursuant to our $1.2 billion share repurchase authorizationprogram and pursuant to the settlement of share-basedstock-based compensation awards:  awards.

Period 
Total Number of Shares Purchased
(#)
 
Average Price Paid Per Share
($)
  
Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(in billions)
October 5,685 $124.07
   
November 14,987 118.40
   
December 13,275 120.89
   
Total (1) 33,947 $120.32
  $1.1
PeriodTotal Number of Shares Purchased
(#)		Average Price Paid Per Share
($)		Total Number of Shares Purchased Under Announced Programs (#)Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
(in thousands)
October 1, 2020 to October 31, 2020195 $122.10 — $681,062 
November 1, 2020 to November 30, 202039,406 149.28 — 681,062 
December 1, 2020 to December 31, 2020655,288 156.08 650,030 $579,610 
   Total for the quarter (1)694,889 $155.69 650,030 

(1)For the year ended December 31, 2017, the Company repurchased a total of 0.4 million shares, all of which were repurchased pursuant to the settlement of share-based compensation awards. No shares were repurchased under the Company's publicly-announced $1.2 billion share repurchase program.


(1)The repurchased shares during the three months ended December 31, 2020 included purchases for both the settlement of stock-based compensation awards and open market purchases.



18

ITEM 6. SELECTED FINANCIAL DATADATA.

The fiscal years presented below are for the respective twelve-month periodperiods from January 1 through December 31. Data for all years was derived or compiled from our audited consolidated financial statements included herein or from submissions of our FormForms 10-K in prior years. The selected consolidated financial data should be read in conjunction with our consolidated financial statements and related notes contained in this Annual Report on Form 10-K.10-K and prior year filings with the Securities and Exchange Commission.
(In thousands, except per share data) 2017 2016 2015 2014 2013(In thousands, except per share data)20202019201820172016
STATEMENT OF OPERATIONS DATA:  
      
  
STATEMENT OF OPERATIONS DATASTATEMENT OF OPERATIONS DATA  
Revenues:  
      
  
Revenues:  
Research $2,471,280
 $1,857,001
 $1,614,904
 $1,479,976
 $1,303,984
Research$3,602,892 $3,374,548 $3,105,764 $2,471,280 $1,857,001 
ConferencesConferences120,140 476,869 410,461 337,903 268,605 
Consulting 327,661
 318,934
 296,317
 313,758
 281,284
Consulting376,371 393,904 353,667 327,661 318,934 
Events 337,903
 268,605
 251,835
 227,707
 198,945
Talent Assessment & Other 174,650
 —
 —
 —
 —
OtherOther— — 105,562 174,650 — 
Total revenues 3,311,494
 2,444,540
 2,163,056
 2,021,441
 1,784,213
Total revenues$4,099,403 $4,245,321 $3,975,454 $3,311,494 $2,444,540 
Operating (loss) income (6,329) 305,141
 287,997
 286,162
 275,492
Operating income (loss)Operating income (loss)$490,150 $370,087 $259,715 $(6,329)$305,141 
Net income $3,279
 193,582
 $175,635
 $183,766
 $182,801
Net income$266,745 $233,290 $122,456 $3,279 $193,582 
          
PER SHARE DATA:  
        
PER SHARE DATAPER SHARE DATA  
Basic income per share $0.04
 $2.34
 $2.09
 $2.06
 $1.97
Basic income per share$2.99 $2.60 $1.35 $0.04 $2.34 
Diluted income per share $0.04
 $2.31
 $2.06
 $2.03
 $1.93
Diluted income per share$2.96 $2.56 $1.33 $0.04 $2.31 
          
Weighted average shares outstanding:  
        
Weighted average shares outstanding:  
Basic 88,466
 82,571
 83,852
 89,337
 93,015
Basic89,315 89,817 90,827 88,466 82,571 
Diluted 89,790
 83,820
 85,056
 90,719
 94,830
Diluted90,017 90,971 92,122 89,790 83,820 
          
OTHER DATA:  
        
OTHER DATAOTHER DATA  
Cash and cash equivalents $538,908
 474,233
 $372,976
 $365,302
 $423,990
Cash and cash equivalents$712,583 $280,836 $156,368 $538,908 $474,233 
Total assets 7,283,173
 2,367,335
 2,168,517
 1,904,351
 1,783,582
Total assets7,315,967 7,151,294 6,201,474 7,283,173 2,367,335 
Long-term debt 2,943,341
 672,500
 790,000
 385,000
 136,250
Long-term debt1,985,531 2,067,796 2,146,514 2,943,341 672,500 
Stockholders’ equity (deficit) 983,465
 60,878
 (132,400) 161,171
 361,316
Stockholders’ equityStockholders’ equity1,090,428 938,593 850,757 983,465 60,878 
Cash provided by operating activities $254,517
 365,632
 $345,561
 $346,779
 $315,654
Cash provided by operating activities$903,278 $565,436 $471,158 $254,517 $365,632 
The following items impactdescribed below impacted the comparabilitypresentation and presentationcomparability of our consolidated data:selected financial data.

•During 2018, the Company divested all of the non-core businesses that comprised its Other segment and moved a small residual product from the Other segment into the Research business and, as a result, no operating activity has been recorded in the Other segment in 2020 or 2019. Note 2 — Acquisitions and Divestitures in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s 2018 divestitures.
In April
•During 2017, the Company acquired CEB.CEB Inc. The operating results of CEB wereInc. have been included in ourthe Company’s operating results beginning onsince the acquisition date. The Company also made other acquisitions in 2017, 2016 and 2015. Seethe years presented in the above table. Note 2 — Acquisitions and DivestitureDivestitures in the Notes to the Consolidated Financial Statements provides additional information regarding the Company’s recent acquisitions.

•During 2020, 2019, 2018 and 2017, the Company recognized $6.3 million, $9.5 million, $107.2 million and $158.5 million, respectively, of acquisition and integration charges related to its acquisitions. Note 2 — Acquisitions and Divestitures in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s recent acquisition and integration charges.

•During 2020 and 2019, the Company recorded a net tax benefit of approximately $28.3 million and $38.1 million, respectively, related to intercompany sales of certain intellectual property, which increased our diluted earnings per share by $0.31 and $0.42 per share for the years ended December 31, 2020 and 2019, respectively. Note 12 — Income Taxes in the Notes to Consolidated Financial Statements provides additional information.information regarding the Company’s income taxes.


In December
19

•During 2017, wethe Company recorded a $59.6 million one-time tax benefit related to the U.S. Tax Cuts and Jobs Act of 2017, which increased our diluted earnings per share by approximately $0.66 per share. See

•On January 1, 2019, the Company adopted Accounting Standards Codification Topic 842, Leases, which resulted in a net increase of $638.7 million in its total assets on that date. The adoption of this new lease standard did not affect the Company’s stockholders’ equity. Note 101 — Income TaxesBusiness and Significant Accounting Policies and Note 7 — Leases provide additional information regarding the Company’s adoption of Accounting Standards Codification Topic 842.

•During 2017, the Company borrowed approximately $2.8 billion and issued approximately 7.4 million shares of its common stock in connection with the Notes for additional information.acquisition of CEB, Inc.


In 2017 we•The Company repurchased 1.2 million, 1.4 million, 2.1 million, 0.4 million of our common shares. We also repurchasedand 0.6 million 6.2 million, 5.9 million,shares of its common stock in 2020, 2019, 2018, 2017 and 3.4 million of our common shares in 2016, 2015, 2014, and 2013, respectively. We used $176.3 million, $199.0 million, $260.8 million, $41.3 million $59.0 million, $509.0 million, $432.0 million, and $181.7$59.0 million in cash for share repurchases in 2020, 2019, 2018, 2017 and 2016, 2015, 2014, and 2013, respectively. See Note 78 — Stockholders’ Equity in the Notes for additional information.

In 2017 we borrowed additional amounts under an amended credit facility as well as the issuance of Senior Notes. Note 5 — Debt in the Notesto Consolidated Financial Statements provides additional information.information regarding the Company’s share repurchase activity.


In 2017 we added the Talent Assessment & Other segment as a result of the CEB acquisition. Note 14 — Segments in the Notes provides additional information. In February 2018 we announced a definitive agreement to sell a significant portion of this segment. Additional information related to the sale is provided in Notes 2 and 16.



ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
The purpose of the followingthis Management’s Discussion and Analysis (“MD&A”) is to facilitate an understanding of significant factors influencing the operating results, financial condition and cash flows of Gartner, Inc. Additionally, the MD&A conveys our expectations of the potential impact of known trends, events or uncertainties that may impact future results. You should read this discussion in conjunction with our consolidated financial statements and related notes included in this Annual Report on Form 10-K. Historical results and percentage relationships are not necessarily indicative of operating results for future periods. References to "Gartner,"“Gartner,” the "Company,“Company,” “we,” “our” and “us” in this MD&A are to Gartner, Inc. and its consolidated subsidiaries.


AcquisitionsThis MD&Aprovides an analysis of CEB Inc.our consolidated financial results, segment results and Other Businesses

On April 5, 2017,cash flows for 2020 and 2019 under the Company completed its acquisitionheadings “Results of CEB Inc. ("CEB"). Note 2 — AcquisitionsOperations,” “Segment Results” and Divestiture“Liquidity and Capital Resources.”For a similar detailed discussion comparing 2019 and 2018, refer to those headings under Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Notes to Consolidated Financial Statements provides additional information regarding the CEB acquisition. Our operating results discussed belowour Annual Report on Form 10-K for the year ended December 31, 2017 include the results of CEB beginning on the acquisition date. References to "heritage Gartner" operating results and business measurements below refer to Gartner excluding CEB. References to "CEB" below refer to the operating results and business measurements of CEB subsequent to the acquisition.2019.

We also acquired other businesses in 2017, 2016 and 2015, which are also described in Note 2 — Acquisitions and Divestiture in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. The operating results of these other acquired businesses were not material to our consolidated or segment results.

Talent Assessment Business - Announcement of a Definitive Agreement to Sell

On February 6, 2018, the Company announced that it had reached a definitive agreement to sell its CEB Talent Assessment business to Exponent Private Equity, a UK-based private equity firm, for $400.0 million. The agreement comes at the end of a previously announced process to evaluate strategic alternatives for CEB Talent Assessment, formerly SHL, which was acquired by Gartner as part of the CEB acquisition. The transaction is expected to close in the first half of 2018 and is subject to customary closing conditions.

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions, projections or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expect,” “should,” “could,” “believe,” “plan,” “anticipate,” “estimate,” “predict,” “potential,” “continue” or other words of similar meaning.

We operate in a very competitive and rapidly changing environment that involves numerous known and unknown risks and uncertainties, some of which are beyond our control. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future quarterly and annual revenues, operating income, results of operations and cash flows, as well as any forward-looking statement, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, among others, the following: uncertainty of the magnitude, duration, geographic reach and impact on the global economy of the COVID-19 pandemic; the current, and uncertain future, impact of the COVID-19 pandemic and governments’ responses to it on our business, growth, reputation, projections, prospects, financial condition, operations, cash flows, and liquidity; the adequacy or effectiveness of steps we take to respond to the crisis, including cost reduction or other mitigation programs; our ability to recover potential claims under our event cancellation insurance; the timing of our Gartner Symposium/Xpo series that normally occurs during the fourth quarter (but was cancelled in 2020 as a result of the COVID-19 pandemic), as well as of our other conferences and meetings; our ability to achieve and effectively manage growth, including our ability to integrate our acquisitions and consummate and integrate future acquisitions; our ability to pay our debt obligations; our ability to maintain and expand our products and services; our ability to expand or retain our customer base; our ability to grow or sustain revenue from individual customers; our ability to attract and retain a professional
20

staff of research analysts and consultants as well as experienced sales personnel upon whom we are dependent; our ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; our ability to carry out our strategic initiatives and manage associated costs; our ability to successfully compete with existing competitors and potential new competitors; our ability to enforce and protect our intellectual property rights; additional risks associated with international operations, including foreign currency fluctuations; the UK’s exit from the European Union and its impact on our results; the impact of restructuring and other charges on our businesses and operations; cybersecurity incidents; general economic conditions; changes in macroeconomic and market conditions and market volatility (including developments and volatility arising from the COVID-19 pandemic), including interest rates and the effect on the credit markets and access to capital; risks associated with the creditworthiness, budget cuts, and shutdown of governments and agencies; the impact of changes in tax policy and heightened scrutiny from various taxing authorities globally; uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; changes to laws and regulations; and other risks and uncertainties. The potential fluctuations in our operating income could cause period-to-period comparisons of operating results not to be meaningful and could provide an unreliable indication of future operating results. A description of the risk factors associated with our business is included under “Risk Factors” in Item 1A. of this Annual Report on Form 10-K, which is incorporated herein by reference.

Forward-looking statements are subject to risks, estimates and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements.statements, and are currently, or in the future could be, amplified by the COVID-19 pandemic. Factors that might cause such a difference include, but are not limited to, those discussedlisted above or described under “Risk Factors” in Part 1, Item 1A Risk Factors included inof this Annual Report on Form 10-K. Readers should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Forward-looking statements in this Annual Report on Form 10-K speak only as of the date hereof, and forward-looking statements in documents attached that are incorporated by reference speak only as of the date of those documents. Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur. Readers should carefully review our risk factors described in this Annual Report on Form 10-K.















BUSINESS OVERVIEW


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 mission-criticalmission–critical priorities today and build the successful organizations of tomorrow.

We believe our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We’reWe are a trusted asadvisor and an objective resource and critical partner byfor more than 12,000 organizations14,000 enterprises in more than 100 countries — across all major functions, in every industry and enterprise size. Gartner is headquartered in Stamford, Connecticut, U.S.A. and, as of December 31, 2017, we had more than 15,000 associates, including 2,650 research analysts and consultants. 

Gartner delivers its products and services globally through fourthree business segments:segments – Research, Conferences and Consulting, Events, and Talent Assessment & Other:as described below.


•Researchprovides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of thean enterprise through research and other reports, briefings, proprietary tools, access to our analysts,research experts, 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, sales, legal and finance.
drive organizational performance.


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.

Events•Conferences provides business professionals across thean organization the opportunity to learn, share and network. From our flagship CIO event Gartner Symposium/ITxpo,Xpo series, to industry-leading conferences focused on specific business roles and topics, to member-drivenpeer-driven sessions, our eventsofferings enable attendees to experience the best of Gartner insight and advice live.advice.

•Consulting combines the power of Gartner market-leading research with custom analysis and on-the-ground support to help chief information officers and other senior executives driving technology-related strategic initiatives move confidently from insight to action.

COVID-19 Impact

The coronavirus disease (“COVID-19”) pandemichas affected nearly every region in the world and has created significant uncertainties and disruption in the global economy. Gartner is closely monitoring the pandemic-related developments, and our highest priority is the health and safety of our associates, clients, vendors, partners, and other stakeholders. We are working closely with our clients to provide best in class COVID-19 related research to assist them in achieving their mission critical priorities.

21


As a result of the COVID-19 pandemic, we have temporarily closed Gartner offices (including our corporate headquarters) in the United States, United Kingdom, India, and several other impacted locations around the world and implemented significant travel restrictions. Although we have plans to reopen most offices in the fall of 2021, reopening is subject to many factors outside of our control. As a result, we cannot predict for certain when or how we will begin to lift the actions put in place as part of our business continuity plans, including work from home protocols and travel restrictions.

We have seen negative impacts to all of our segments with Conferences being the most impacted. On March 25, 2020, we announced the cancellation of all in-person conferences through August 2020. On July 2, 2020, we announced the cancellation of all in-person conferences for the remainder of 2020. We held 15 virtual conferences during the second half of 2020, and plan on holding approximately 20 virtual conferences from February 2021 through August 2021. These virtual conferences are expected to result in significantly less revenue and gross contribution, but we believe aid in client retention and engagement. The safety of our associates and clients remain our top priority so future in-person conferences will be held only if we determine the relevant impacts of COVID-19 have sufficiently receded in the jurisdictions where our conferences are to be held.

As of December 31, 2020, we had approximately $16 million recorded in Prepaid expenses and other current assets on the balance sheet related to cancelled conferences. We expect to recover the majority of these and potential termination costs for future conferences through either force majeure clauses in our vendor contracts, other arrangements with vendors or event cancellation insurance claims. For cancelled conferences, our event cancellation insurance enables us to receive an amount up to the lost contribution margin per conference plus incurred expenses. Our event cancellation insurance provides up to $170 million in coverage for 2020 with the right to reinstate that amount one time if those limits are utilized. The insurer has contested our right to reinstate limits and to include in reinstated limits conferences cancelled due to COVID-19. We are in litigation with the insurer on these issues. The timing of receiving the proceeds from these insurance claims is uncertain so we will not record any insurance claims in excess of expenses incurred until the receipt of the insurance proceeds.

Our Research segment has continued to experience a slowdown as contract value (CV) growth was 4.5% in the fourth quarter of 2020 compared to 10.6%, 7.0% and 5.3% in the first, second and third quarters of 2020, respectively. CV growth slowed late in the first quarter as the global virus response led to lower new business growth and lower retention rates. However, because our revenue and CV have been historically stable and predictable as a result of our subscription-based business model, we only experienced a modest decrease in Research revenue growth in 2020 compared to that in 2019. Slower CV growth in 2020 however will lead to slower research revenue growth in 2021. Nonetheless, we believe that our emphasis on producing business and technology insight into every major business function in the enterprise will continue to drive client engagement and satisfaction with our Research products.

Our Consulting segment was only moderately impacted by the COVID-19 pandemic as many engagements are being performed by associates working remotely. Labor based consulting weakened late in the first quarter due to the pandemic. This weakness continued in the remainder of 2020 due to weaker demand which will likely continue into 2021.

In connection with the cancellation of the majority of 2020 conferences and the weaker demand in our Consulting segment noted above, in the second quarter of 2020, we implemented workforce reductions. We incurred an aggregate of approximately $18 million in costs relating to these workforce reductions during the year ended December 31, 2020. $16 million has been paid during the year ended December 31, 2020, and we expect the majority of the remaining charges to be paid out in the first half of 2021.

In response to the pandemic’s impacts to our business, we implemented cost avoidance initiatives in the first half of 2020 including significant limitations on hiring and third-party spending, reductions to discretionary spending and elimination of non-essential travel and re-prioritization of capital expenditures. We began to restore certain investments in the business during the second half of 2020 and will likely continue these investments in 2021 and future periods.



Talent Assessment & Other helps organizations assess, engage, manage and improve talent. This is accomplished through knowledge and skills assessments, training programs, workshops, and survey and questionnaire services.
22





BUSINESS MEASUREMENTS


We believe that the following business measurements are important performance indicators for our business segments:
BUSINESS SEGMENTBUSINESS MEASUREMENTSMEASUREMENT
Research
Total contractvalue 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 EventsConferences tickets) for which revenue is recognized when the deliverable is utilized. Comparing contract value year-over-year not only measures the short-term growth of our business, but also signals the long-term health of our Research subscription business since it measures revenue that is highly likely to recur over a multi-year period. 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 our current clients, who were also clients onea 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.
ConsultingConferences
Number of destination conferences represents the total number of hosted virtual or in-person conferences completed during the period. Single day, local meetings are excluded.
Number of destination conferences attendees represents the total number of people who attend virtual or in-person 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.
Events
Number of events represents the total number of hosted events completed during the period. Single day, local events are excluded.
Number of attendees represents the total number of people who attend events. Single day, local events are excluded.



23

EXECUTIVE SUMMARY OF OPERATIONS AND FINANCIAL POSITION
We have executed a consistent growth strategy since 2005 to drive revenue and earnings growth. The fundamentals of our strategy include a focus on creating extraordinary research insight, delivering innovative and highly differentiated product offerings, building a strong sales capability, providing world class client service with a focus on client engagement and retention, and continuously improving our operational effectiveness. We also continue to focus on maximizing shareholder value. During 2017, we repurchased 0.4 million shares of our outstanding common stock and we acquired CEB, an industry leader in providing best practice and talent management insights, and L2, Inc. ("L2"), a subscription-based research business that benchmarks the digital performance of brands. Note 2 — Acquisitions and Divestiture in the Notes to Consolidated Financial Statements provides additional information regarding these acquisitions.


We had total revenues of $3.3$4.1 billion in 2017, an increase2020, a decrease of 35% over 20163% compared to 2019 both on both a reported basis and adjusted forexcluding the foreign exchangecurrency impact. On a reported basis, CEB contributed $522.9 million of the increase in total revenues. Net income declinedincreased to $3.3$266.7 million in 20172020 from $193.6$233.3 million in 20162019 and, as a result, diluted earnings per share was $0.04$2.96 in 20172020 compared to $2.31$2.56 in 2016. See Note 10 — Income Taxes in the Notes to Consolidated Financial Statements for information concerning the net favorable impact of $59.6 million on the Company's 2017 income tax provision from the Tax Cuts and Jobs Act of 2017.2019.


Research revenues increased to $2.5$3.6 billion during 2017, or 33%in 2020, an increase of 7% compared to 20162019 both on both a reported basis and adjusted forexcluding the impact of foreign currency exchange. Heritage Gartner revenues increased $304.7 million in 2017 compared to 2016, which represents a 16% increase on a reported basis, with approximately one point of the increase due to L2, which we acquired in the first quarter of 2017. Adjusted for the foreign exchange impact, heritage Gartner revenues also increased by 16% year-over-year. On a reported basis, CEB contributed $309.6 million of the 2017 increase in Research revenues.impact. The Research gross contribution margin declined by two points during 2017, primarily due to the impact of the deferred revenue fairwas 72% and 70% in 2020 and 2019, respectively. Total contract value accounting adjustment resulting from the CEB acquisition. Heritage Gartner client retention and wallet retention both remained strongwas $3.6 billion at 84% and 106%, respectively, as of December 31, 2017.2020, an increase of 4% compared to December 31, 2019 on a foreign currency neutral basis.


ConsultingConferences revenues increaseddecreased to $327.7$120.1 million in 2017, or 3%2020, a decrease of 75% compared to 20162019 both on both a reported basis and adjusted forexcluding the impact of foreign currency exchange.impact. The Conferences gross contribution margin was 48% and 51% in 2020 and 2019, respectively. We held 5 in-person and 15 virtual conferences in 2020, and 72 in-person conferences in 2019.

Consulting revenues decreased to $376.4 million in 2020, a decrease of 4% compared to 2019 on a reported basis and 5% excluding the foreign currency impact. The Consulting gross contribution margin was 29%31% and 30% in 2017 compared to 28% in 2016. Consultant utilization was 64%2020 and 66% in 2017 and 2016,2019, respectively. We had 682 billable consultants at December 31, 2017 compared to 628 at December 31, 2016. Backlog was $95.2$100.3 million at December 31, 2017.2020.

Events revenues increased to $337.9 million in 2017, or 26% compared to 2016 on a reported basis and 25% adjusted for the impact of foreign currency exchange. Heritage Gartner revenues increased $30.7 million in 2017 compared to 2016, an 11% increase on a reported basis and 10% adjusted for the foreign exchange impact. CEB contributed $38.6 million of the revenue increase on a reported basis. The heritage Gartner Events gross contribution margin was 49% and 51% for 2017 and 2016, respectively. In the heritage Gartner business, we held 65 events and 66 events in 2017 and 2016, respectively, while the number of attendees for 2017 increased 17% and exhibitors increased 3% compared to 2016, with average revenue per exhibitor up by 5% while average revenue per attendee was flat. CEB held four events during 2017 with 3,578 attendees.

As a result of the CEB acquisition, we added a new reportable segment in second quarter 2017 called Talent Assessment & Other, which contributed $174.7 million of revenues during 2017.

For a more complete discussion of our results by segment, see Segment Results below.


Cash provided by operating activities was $254.5$903.3 million and $365.6$565.4 million during 20172020 and 2016,2019, respectively. As of December 31, 2017,2020, we had $538.9$712.6 million of cash and cash equivalents which excludes amounts deemed to be held-for-sale, and $558.0 millionapproximately $1.0 billion of available borrowing capacity on our revolving credit facility. For a more complete discussion of our cash flows and financial position, see Liquidity and Capital Resources below.
FLUCTUATIONS IN QUARTERLY RESULTS

Our quarterly and annual revenues, operating income (loss) and cash flows fluctuate as a result of many factors, including: the timing of our Symposium/ITxpo series that normally occurs during the fourth quarter, as well as our other events; the timing and amount of new business generated, including from acquisitions; the mix of domestic and international business; domestic and international economic conditions; changes in market demand for our products and services; changes in foreign currency rates; the timingDuring 2020, we repurchased 1.2 million shares of the development, introduction and marketingCompany’s common stock for an aggregate purchase price of new products and services; competition in the industry; the payment of performance compensation; and other factors that are beyond our control. The potential fluctuations in our operating income (loss) could cause period-to-period comparisons of operating results not to be meaningful and could provide an unreliable indication of future operating results and cash flows.approximately $176.3 million.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements requires the application of appropriate accounting policies and the use of estimates. Our significant accounting policies are described in Note 1 — Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.Statements. Management considers the policies discussed below to be critical to an understanding of our consolidated financial statements because their application requires complex and subjective management judgments and estimates. Specific risks for these critical accounting policies are also described below.


The preparation of our consolidated financial statements requires us to make estimates and assumptions about future events. We develop our estimates using both current and historical experience, as well as other factors, including the general economic environment and actions we may take in the future. We adjust such estimates when facts and circumstances dictate. However, our estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on our best judgment at a point in time and, as such, these estimatesthey may ultimately differ materially from actual results. Ongoing changes in our estimates could be material and would be reflected in the Company’s consolidated financial statements in future periods.

Our critical accounting policies pertainingare described below.

Accounting for leases — On January 1, 2019, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”). We determine if an arrangement contains a lease at the inception of a contract. We consider an arrangement a lease if the arrangement transfers the right to control the years presenteduse of an identified asset for a period of time in exchange for consideration. We have operating leases, but do not have material financing leases. Lease right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make payments arising from the lease agreement. These assets and liabilities are recognized at the commencement of the lease based upon the present value of the future minimum lease payments over the lease term. The lease term reflects the non-cancelable period of the lease together with periods covered by an option to extend or terminate the lease when it is reasonably certain that we will exercise such option. Changes in the consolidated financial statements includedlease term assumption could impact the right-of-use assets and lease liabilities recognized on the balance sheet. As our leases typically do not contain a readily determinable implicit rate, we determine the present value of the lease liability using our incremental borrowing rate at the lease commencement date based on the lease term.
24


Note 1 — Business and Significant Accounting Policies and Note 7 — Leases in this Annual Report on Form 10-K are as follows:the Notes to Consolidated Financial Statements provide additional information regarding the Company’s leases and the adoption of ASC 842.

Revenue recognition — On January 1, 2018, we adopted ASC Topic 606, Revenue is recognized in accordancefrom Contracts with the requirements of U.S. GAAP, as well as SEC Staff Accounting Bulletin No. 104, Revenue RecognitionCustomers. Revenue is only recognized when all required criteria for

Our revenue recognition have been met. Revenue by significant source is accounted for as follows:

•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 materialmaterials engagements. Revenues from fixed fee contracts are recognized on a proportionalas we work to satisfy our performance basis.obligations. Revenues from time and materials engagements are recognized as work is delivered and/or services are provided. Revenues related to contract optimization contractsengagements are contingent in nature and are only recognized upon satisfaction of all conditions related to their payment.

Events revenues are deferred and recognized upon the completion of the related symposium, conference or exhibition.

Talent Assessment & Other revenues arising from knowledge and skill assessment services are recognized depending on the nature of the underlying contract: (i) ratably over the term of the service period; (ii) upon delivery; or (iii) on a proportional performance basis. Revenues from training programs and survey and questionnaire products are primarily recognized upon delivery of the service.


The majority of researchour Research contracts are billable upon signing, absent special terms granted on a limited basis from time to time. All researchResearch contracts are generally non-cancelable and non-refundable, except for government contracts that may have cancellation or fiscal funding clauses. It is our policy to record the amount of thea 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.


The Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers," on January 1, 2018. See Note 1 — Business and Significant Accounting Policies and Note 9 — Revenue and Related Matters in the Notes to Consolidated Financial Statements forprovide additional information regarding our adoption of this accounting standard and its impact on the Company's revenue recognition policies.revenues.

Uncollectible fees receivable — We maintain an allowance for losses that is comprised of a bad debt allowance and a sales reserve. Provisions are charged against earnings, either as a reduction in revenues or an increase to expense. The determination of the allowance for losses 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 estimates. The valuation reserves are periodically re-evaluated and adjusted as more information about the ultimate collectability of fees receivable becomes available. Circumstances that could cause our valuation reserves 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.


The following table presents our total fees receivable and the related allowance for losses (in thousands):
 December 31,
 2017 2016
Total fees receivable$1,189,543
 $650,413
Allowance for losses(12,700) (7,400)
Fees receivable, net$1,176,843
 $643,013

Goodwill and other intangible assets — When we acquire a business, we determine the fair value of the assets acquired and liabilities assumed on the date of acquisition, which may include a significant amount of intangible assets such as customer relationships, software content and other intangible assets,content, as well as resulting goodwill. When determining the fair values of the acquired intangible assets, we consider, among other factors, analyses of historical financial performance and an estimate of the future performance of the acquired business. The fair values of the acquired intangible assets are primarily calculated using an income approach that relies on discounted cash flows. This method starts with a forecast of the expected future net cash flows associated withfor the asset and then adjusts the forecast to present value by applying an appropriatea discount rate that reflects the risk factors associated with the cash flow streams. We consider this approach to be the most appropriate valuation technique because the inherent value of thean acquired intangible assetsasset is theirits ability to generate future income. In a typical acquisition, we engage a third-party valuation expert to assist us with the fair value analyses for acquired intangible assets.


Determining the fair values of acquired intangible assets requires us to exercise significant judgment. We select reasonable estimates and assumptions based on evaluating a number of factors, including, but not limited to, marketplace participants, consumer awareness and brand history. Additionally, there are significant judgments inherent in discounted cash flows such as estimating the amount and timing of projected future cash flows, the selection of appropriate discount rates, hypothetical royalty rates and contributory asset capital charges. Specifically, the selected discount rates used in discounted cash flow analyses are intended to reflect the risk inherent in the projected future cash flows generated by the underlying acquired intangible assets.


Determining an acquired intangible asset'sasset’s useful life also requires significant judgment and is based on evaluating a number of factors, including, but not limited to, 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 evaluates recordedCompany’s goodwill is evaluated in accordance with FASB Accounting Standards Codification ("ASC")ASC Topic 350, which requires goodwill to be assessed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. In addition, an impairment evaluation of our amortizable intangible assets may also be performed if events or circumstances indicate potential impairment. Among the factors that could trigger an impairment review are our current operating results relative tothat do not align with our annual plan or historical performance; changes in our strategic planplans or the use of our assets; restructuring charges or other changes in our business segments; competitive pressures and changes in the general economy or in the markets in which we operate; and a significant decline in our stock price and our market capitalization relative to our net book value.


FASB ASC Topic 350 requires an
25

When performing our annual assessment of the recoverability of recorded goodwill, which can be eitherwe initially perform a qualitative analysis evaluating whether any events or circumstances occurred or exist that provide evidence that it is more likely than not that the fair value of any of our reporting units is less than the related carrying amount. If we do not believe that it is more likely than not that the fair value of any of our reporting units is less than the related carrying amount, then no quantitative orimpairment test is performed. However, if the results of our qualitative in nature, orassessment indicate that it is more likely than not that the fair value of a combinationreporting unit is less than its respective carrying amount, then we perform a two-step quantitative impairment test.

Evaluating the recoverability of the two approaches. Both methods utilize estimates which, in turn, requiregoodwill requires judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the resultingour estimates are subject to uncertainty. If our 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. Among the factors that we consider in aour qualitative assessment are general economic conditions and the competitive environment; actual and projected reporting unit financial performance; forward-looking business measurements; and external market assessments. ATo determine the fair values of our reporting units for a quantitative analysis, requires management to consider each of the factors relevant to a qualitative assessment, as well as the utilization ofwe typically utilize detailed financial projections, towhich include the ratesignificant variables, such as projected rates of revenue growth, profitability and cash flows, as well as assumptions regarding discount rates, the Company'sCompany’s weighted average cost of capital and other data, in order to determine a fair value for our reporting units. We conducteddata.

Our most recent annual impairment test of goodwill was a qualitative assessment of the fair value of all of the Company's reporting unitsanalysis conducted during the quarter ended September 30, 2017. The results of this2020 that indicated no impairment. Subsequent to completing our 2020 annual impairment test, determinedno events or changes in circumstances were noted that the fair values of the Company's reporting units continue to exceed their respective carrying values and as a result, norequired an interim goodwill impairment was indicated. Seetest. Note 1 — Business and Significant Accounting Policies and Note 3 — Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements forprovide additional information regarding the Company’s goodwill and amortizable intangible assets.

Accounting for 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.the Company operates. 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. InWhen 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. Recognized tax positions are measured at the largest amount of benefit with greater than a 50% likelihood of being realized. The Company uses estimates in determining the amount of unrecognized tax benefits associated with uncertain tax positions. Significant judgment is required in evaluating tax law and measuring the benefits likely to be realized. Uncertain tax positions are periodically re-evaluated and adjusted as more information about their ultimate realization becomes available.


Accounting for stock-based compensation — 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. The Company recognizes stock-based compensation expense, which is based on the fair value of the award on the date of grant, over the related service period (seeperiod. Note 810 — Stock-Based Compensation in the Notes to Consolidated Financial Statements forprovides additional information).information regarding stock-based compensation. Determining the appropriate fair value model and calculating the fair value of stock-based compensation awards requires the use of certain complex and subjective assumptions, including the expected life of a stock-based compensation award and the Company’s 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.


Restructuring and other accruals — We may record accrualsA change in any of the terms or conditions of stock-based compensation awards is accounted for severance costs, costs associated with excess facilities that we have leased, contract terminations, asset impairments and other costs as a resultmodification of ongoing actions we undertake to streamline our organization, reposition certain businesses and reduce ongoing costs. Estimatesthe award. Incremental compensation cost is measured as the excess, if any, of costs to be incurred to complete these actions, such as future lease payments, sublease income, the fair value of assets, and severance and related benefits,the modified award over the fair value of the original award immediately before its terms are modified, measured based on assumptionsthe fair value of the awards at the timemodification date. For vested awards, we recognize incremental compensation cost in the actions are initiated. These accruals may need to be adjusted toperiod the extent actual costs differ from such estimates. In addition, these actions may be revised due to changes in business conditions thatmodification occurs. For unvested awards, we did not foreseerecognize any incremental compensation expense at the time such plans were approved. We also record accruals duringmodification date or ratably over the year for our various employee cash incentive programs. Amounts accrued atrequisite remaining service period, as appropriate. If the endfair value of each reporting period are based on our estimates and may require adjustment as the ultimate amount paid for these incentives are sometimes not known with certainty untilmodified award is lower than the endfair value of our fiscal year.

the original award immediately before modification, the minimum compensation cost we recognize is the cost of the original award.


26

RESULTS OF OPERATIONS

Consolidated Results
2017 VERSUS 2016


The table below presents an analysis of selected line items and year-over-year changes in our Consolidated Statements of Operations for the two years ended December 31, 2017indicated (in thousands). The operating results
 Year Ended December 31, 2020Year Ended December 31, 2019Increase (Decrease)Percentage Increase
(Decrease)
Total revenues$4,099,403 $4,245,321 $(145,918)(3)%
Costs and expenses:    
     Cost of services and product development1,345,024 1,550,568 (205,544)(13)
     Selling, general and administrative2,038,963 2,103,424 (64,461)(3)
     Depreciation93,925 82,066 11,859 14 
     Amortization of intangibles125,059 129,713 (4,654)(4)
     Acquisition and integration charges6,282 9,463 (3,181)(34)
Operating income490,150 370,087 120,063 32 
Interest expense, net(113,549)(99,805)13,744 14 
Loss from divested operations— (2,075)2,075 nm
Loss on extinguishment of debt(44,814)— (44,814)nm
Other (expense) income, net(5,654)7,532 (13,186)>(100)
Less: Provision for income taxes59,388 42,449 16,939 40 
Net income$266,745 $233,290 $33,455 14 %
nm = not meaningful

Total revenues for 2020 were $4.1 billion, a decrease of CEB are included beginning on April 5, 2017, the date of the acquisition.
 
Year Ended
December 31,
2017
 
Year Ended
December 31,
2016
 
Income Increase
(Decrease)
$
 
Increase
(Decrease)
%
Total revenues$3,311,494
 $2,444,540
 $866,954
 35 %
Costs and expenses: 
  
  
  
     Cost of services and product development1,320,198
 945,648
 (374,550) (40)
     Selling, general and administrative1,599,004
 1,089,184
 (509,820) (47)
     Depreciation63,897
 37,172
 (26,725) (72)
     Amortization of intangibles176,274
 24,797
 (151,477) >(100)
     Acquisition and integration charges158,450
 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, net3,448
 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)%
TOTAL REVENUES for the year ended December 31, 2017 increased $867.0$145.9 million, to $3.3 billion, an increase of 35%or 3% compared to the year ended December 31, 20162019 both on both a reported basis and adjusted forexcluding the foreign exchangecurrency impact. CEB contributed approximately $522.9 million of the revenue increase.

The tabletables below presents totalpresent (i) revenues by geographic region for(based on where the years indicated (in thousands):  
Geographic Region Year Ended December 31, 2017 Year Ended December 31, 2016 Increase (Decrease) $ Increase (Decrease) % 
U.S. and Canada $2,037,111
 $1,519,748
 $517,363
 34% 
Europe, Middle East and Africa 850,352
 616,721
 233,631
 38
 
Other International 424,031
 308,071
 115,960
 38
 
Totals $3,311,494
 $2,444,540
 $866,954
 35% 

The table below presents oursale is fulfilled) and (ii) revenues by segment for the years indicated (in thousands):.
Primary Geographic MarketYear Ended December 31, 2020Year Ended December 31, 2019Increase (Decrease)Percentage Increase
(Decrease)
United States and Canada$2,637,824 $2,734,490 $(96,666)(4)%
Europe, Middle East and Africa966,273 996,004 (29,731)(3)
Other International495,306 514,827 (19,521)(4)
Total revenues$4,099,403 $4,245,321 $(145,918)(3)%
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% 
Consulting 327,661
 318,934
 8,727
 3
 
Events 337,903
 268,605
 69,298
 26
 
Talent Assessment & Other 174,650
 —
 174,650
 100
 
Totals $3,311,494
 $2,444,540
 $866,954
 35% 


SegmentYear Ended December 31, 2020Year Ended December 31, 2019Increase (Decrease)Percentage Increase
(Decrease)
Research$3,602,892 $3,374,548 $228,344 7 %
Conferences120,140 476,869 (356,729)(75)
Consulting376,371 393,904 (17,533)(4)
Total revenues$4,099,403 $4,245,321 $(145,918)(3)%
Please refer

Refer to the section of this MD&A below entitled “Segment Results” for a discussion of revenues and results by segment.



COST OF SERVICES AND PRODUCT DEVELOPMENTCost of services and product development was $1.3 billion in 2017, an increase2020, a decrease of $374.6$205.5 million compared to 2016,2019, or 40%13% on both a reported basis and excluding the impactforeign currency impact. The decrease in Cost of foreign exchange. Approximately $238.0 million of the increase was attributable to CEB. The $136.6 million increase attributable to heritage Gartnerservices and product development was primarily due to decreased costs related to cancellations of conferences during fiscal year 2020 in response to the COVID-19 pandemic, lower travel and entertainment costs during the year as well as the implementation of various cost avoidance
27

initiatives, which was partially offset by higher payroll and related benefits costs resulting from increased headcount, which increased 20%.costs. Cost of services and product development as a percentagepercent of revenues was 40%33% and 39% for 201737% during 2020 and 2016,2019, respectively.

SELLING, GENERAL AND ADMINISTRATIVESelling, general and administrative (“SG&A”) expense was $1.6$2.0 billion in 2017, an increase2020, a decrease of $509.8$64.5 million compared to 2016,2019, or 47%3% on both a reported basis and excluding the impact of foreign exchange. Approximately $283.8 million of the increase was attributable to CEB. Heritage Gartnercurrency impact. The decrease in SG&A costs for 2017 increased $226.0 million,expense was primarily due to $107.4 million inreduced internal meetings, travel and entertainment costs and corporate expenses, partially offset by higher payroll and related benefits costs, reflectingexpenses. There was a 17% overall headcount increase; $33.8 milliondecrease in higher commissions due to increased sales bookings; and $84.8 million in higher corporate costs and foreign exchange impact. The overall headcount growth includes a 16% increase inthe number of quota-bearing sales associates which increasedin Global Technology Sales and Global Business Sales to 2,8073,089 and 846, respectively, at December 31, 2017 from 2,423 at December 31, 2016.
DEPRECIATION increased $26.7 million during 20172020. On a combined basis, the total number of quota-bearing sales associates decreased by 5% when compared to 2016, due to property, equipmentDecember 31, 2019. SG&A expense as a percent of revenues was 50% during both 2020 and leasehold improvements acquired with CEB and additional heritage Gartner investment.2019.


AMORTIZATION OF INTANGIBLESDepreciation increased $151.5 millionby 14% during 2017 when2020 compared to 20162019. This increase was due to additional amortization from theinvestments, including new leasehold improvements as additional office space went into service, and capitalized software.

Amortization of intangibles recordeddecreased by 4% during 2020 compared to 2019 due to certain intangible assets that became fully amortized in connection with our recent acquisitions.2020 and 2019.


ACQUISITION AND INTEGRATION CHARGES increased $115.9Acquisition and integration charges declined by $3.2 million during 2017 when2020 compared to 2016.2019. This increase reflectsdecrease was the additional charges resulting from our recent acquisitions and primarily consistresult of higher professional fees, severance, stock-based compensation charges and accruals for exit costs for certain office space that the Company does not intend to occupyhaving completed one minor acquisition in Arlington, Virginia.late 2019 and no acquisitions in 2020.

OPERATING (LOSS) INCOMEOperating income was an operating loss of $(6.3)$490.2 million and $370.1 million during 20172020 and 2019, respectively. The increase in operating income was due to reduced Cost of services and product development and SG&A expense, partially offset by lower revenue, primarily in our Conferences segment.

Interest expense, net increased by $13.7 million during 2020 compared to operating income of $305.1 million in 2016. The decline reflects several factors. We had a lower segment contribution margin in our Research business resulting from a CEB deferred revenue fair value adjustment. We also had higher SG&A and acquisition-related costs, including depreciation, amortization of intangibles, and acquisition and integration charges.
INTEREST EXPENSE, NET increased $99.8 million during 2017 when compared to 2016.2019. The increase was primarily due to higher borrowingsweighted average annual effective rates related to the replacement of expired interest rate swaps with interest rate swaps containing higher effective interest rates in late 2019. Additionally, we wrote off $1.8 million of deferred financing fees related to the prepayment of $787.9 million on the Term Loan A facility under the 2016 Credit Agreement during 2017.the year ended December 31, 2020.


OTHER INCOME, NETLoss from divested operations of $2.1 million in 2019 was $3.4 millionprimarily due to adjustments of certain working capital balances related to the Company’s 2018 divestitures. Note 2 — Acquisitions and Divestitures in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s 2018 divestitures.

Loss on extinguishment of debt during 2017, primarily reflectingthe year ended December 31, 2020 was related to the early redemption premium and write-off of deferred financing fees on our redemption of the 2025 Notes on September 28, 2020.

Other (expense) income, net for the years presented herein included the net impact of foreign currency gains and losses from our hedging activities, as well as the salesales of certain state tax credits and the recognition of other tax incentives. Other (expense) income, net was $8.4 million in 2016, which included a gain of $2.5 million from the extinguishment of a portion of an economic development loan from the State of Connecticut, the sale of certain state tax credits and the recognition of other tax incentives, and the net impact of gains and losses from our foreign currency hedging activities.

(BENEFIT) PROVISION FOR INCOME TAXES in 2017 was a benefit of $(131.1) million on a pretax loss of $(127.8) million compared to an expense of $94.8 million on pretax income of $288.4 million in 2016. The effective income tax rate was 102.6% in 2017 compared to 32.9% in 2016. The change in the effective income tax rate was primarily attributable to the favorable impact of U.S. tax reform, the recognition in 2017 of unrealized capital losses on the planned divestiture of the Talent Assessment business, and increases in tax benefits associated with equity compensation.

NET INCOME was $3.3 million and $193.6 million during 2017 and 2016, respectively. The year-over-year change primarily reflects declines in our operating profitability and higher interest expense, partially offset by income tax benefits in 2017, including the impact of the Tax Cuts and Jobs Act of 2017. As a result of substantially lower net income and a 7% increase in the number of weighted average shares outstanding, diluted earnings per share declined to $0.04 in 2017 from $2.31 in 2016.












2016 VERSUS 2015

The table below presents an analysis of selected line items and year-over-year changes in our Consolidated Statements of Operations for the two years ended December 31, 2016 (in thousands).
 
Year Ended
December 31,
2016
 
Year Ended
December 31,
2015
 
Income Increase
(Decrease)
$
 
Increase
(Decrease)
%
Total revenues$2,444,540
 $2,163,056
 $281,484
 13 %
Costs and expenses: 
  
  
  
     Cost of services and product development945,648
 839,076
 (106,572) (13)
     Selling, general and administrative1,089,184
 962,677
 (126,507) (13)
     Depreciation37,172
 33,789
 (3,383) (10)
     Amortization of intangibles24,797
 13,342
 (11,455) (86)
     Acquisition and integration charges42,598
 26,175
 (16,423) (63)
Operating income305,141
 287,997
 17,144
 6
Interest expense, net(25,116) (20,782) (4,334) (21)
Other income, net8,406
 4,996
 3,410
 68
(Benefit) provision for income taxes94,849
 96,576
 1,727
 2
Net income$193,582
 $175,635
 $17,947
 10 %
TOTAL REVENUES for the year ended December 31, 2016 increased $281.52020 also included the release of $10.3 million from Accumulated other comprehensive loss, net related to $2.4 billion, an increase of 13% compared to the year ended December 31, 2015 and 14% adjusted for the impact of foreign currency exchange.

The table below presents total revenues by geographic region for the years indicated (in thousands):  
Geographic Region Year Ended December 31, 2016 Year Ended December 31, 2015 Increase (Decrease) $ Increase (Decrease) % 
U.S. and Canada $1,519,748
 $1,347,676
 $172,072
 13% 
Europe, Middle East and Africa 616,721
 557,165
 59,556
 11
 
Other International 308,071
 258,215
 49,856
 19
 
Totals $2,444,540
 $2,163,056
 $281,484
 13% 

The table below presentsforecasted interest payments that were no longer probable on our revenues by segment for the years indicated (in thousands):
Segment Year Ended December 31, 2016 Year Ended December 31, 2015 Increase (Decrease) $ Increase (Decrease) % 
Research $1,857,001
 $1,614,904
 $242,097
 15% 
Consulting 318,934
 296,317
 22,617
 8
 
Events 268,605
 251,835
 16,770
 7
 
Totals $2,444,540
 $2,163,056
 $281,484
 13% 

Please refer to the section of this MD&A below entitled “Segment Results” for a discussion of revenues and results by segment.
COST OF SERVICES AND PRODUCT DEVELOPMENT (“COS") increased $106.6 million, or 13%, in 2016 compared to 2015, to $945.6 million compared to $839.1 million in 2015. COS increased 14% in 2016 when compared to 2015 adjusted for the impact of foreign exchange. The year-over-year increase in COS was due to $88.0 million in higher payroll and related benefits costs from additional headcount and merit salary increases, and $28.6 million in higher charges in 2016 for events costs and other program related expenses. Partially offsetting these increased expenses was approximately $10.0 million in foreign exchange impact. Overall COS headcount increased 13%, which was primarily in our Research segment. COS as a percentage of revenues was 39% in both 2016 and 2015.


SELLING, GENERAL AND ADMINISTRATIVE (“SG&A”) expense increased by $126.5 million in 2016, or 13%, to $1,089.2 million compared to $962.7 million in 2015. Excluding the impact of foreign currency exchange, SG&A expense increased 15% year-over-year. The increase was primarily due to $115.0 million in higher payroll and related benefits costs from additional headcount, higher sales commissions, and merit salary increases, and we also had $27.5 million in additional legal, recruiting and training, and workplace costs. Partially offsetting these additional charges was approximately $16.0 million in foreign exchange impact. SG&A headcount increased 13% overall, with the majority of the increase in additional quota-bearing sales associates and related support staff. Quota-bearing sales associates increased 12% year-over-year, to 2,423 at December 31, 2016 from 2,171 at December 31, 2015.
DEPRECIATION increased 10% in 2016 compared to 2015, which reflects our additional investment in fixed assets.

AMORTIZATION OF INTANGIBLES increased to $24.8 million in 2016 from $13.3 million in 2015interest rate swap contracts, due to the additional intangibles resulting fromprepayment of $787.9 million under the Company’s Term Loan A facility and repayment of all amounts outstanding under our acquisitions.

ACQUISITION AND INTEGRATION CHARGES were $42.6 million inrevolving credit facility on our 2016 compared to $26.2 million in 2015. These charges are directly related to our acquisitions and primarily include amounts accrued for payments contingent on the achievement of certain employment conditions, legal, consulting and severance costs.
OPERATING INCOME increased 6% in 2016 compared to 2015, to $305.1 million in 2016 from $288.0 million in 2015. OperatingCredit Agreement. During 2020, Other (expense) income, as a percentage of revenues was 12% in 2016 and 13% in 2015 with the decline due to a number of factors, to include lower gross contribution margins in our Consulting and Events segments and higher charges from acquisitions.
INTEREST EXPENSE, NET increased 21% year-over-year due to higher average borrowings in 2016.
OTHER INCOME, NET was $8.4 million in 2016, whichnet also included a $2.2 million gain on de-designated interest rate swaps. During 2019, Other (expense) income, net also included a pretax gain of $2.5$9.1 million from the extinguishmentCompany’s sale of a portion ofminority equity investment.

The provision for income taxes was $59.4 million and $42.4 million during 2020 and 2019, respectively, with an economic development loan from the State of Connecticut, the sale of certain state tax credits and the recognition of other tax incentives, and the net impact of gains and losses from our foreign currency hedging activities. Other income, net was $5.0 million in 2015, which consisted of a $6.8 million gain from the sale of certain state tax credits, partially offset by a net loss from foreign currency hedging activities.
(BENEFIT) PROVISION FOR INCOME TAXES was $94.8 million in 2016 compared to $96.6 million in 2015 and the effective tax rate was 32.9% in 2016 compared to 35.5% in 2015. The decrease in the 2016 effective income tax rate of 18.2% in 2020 and 15.4% in 2019. The Company completed intercompany sales of certain intellectual property in both 2020 and 2019. As a result, the Company recorded net tax benefits of approximately $28.3 million and $38.1 million during 2020 and 2019, respectively. These benefits represent the value of future tax deductions for amortization of the assets in the acquiring jurisdiction. In July 2020, the Company completed an intercompany contribution of a significant amount of intellectual property. The Company’s intellectual property footprint continues to evolve and may result in tax rate volatility in the future. Note 12 — Income Taxes in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s income taxes.

Net income was primarily attributable to the early adoption of FASB ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting," partially offset by increases in non-deductible expenses relating to acquisitions.

NET INCOME was $193.6$266.7 million in 2016 and $175.6$233.3 million in 2015, an increase of 10%. Diluted earningsduring 2020 and 2019, respectively. Additionally, our diluted net income per share increased 12% year-over-year, to $2.31by $0.40 in 20162020 compared to $2.062019. These year-over-year changes reflect: the increase in 2015 dueour 2020 operating income, partially offset by: (i) the loss on extinguishment of debt; (ii) higher Interest expense, net and Other (expense) income, net; and (iii) a higher effective income tax rate in 2020 compared to higher net income and, to a lesser extent, a decrease in the number of weighted average shares outstanding in 2016.2019.
28





SEGMENT RESULTS

We evaluate reportable segment performance and allocate resources based on gross contribution margin. Gross contribution is defined as operating income (loss),or loss excluding certain Cost of services and product development charges,expenses, SG&A expenses, Depreciation, Amortization of intangibles, and Acquisition and integration charges, and Amortization of intangibles.charges. Gross contribution margin is defined as gross contribution as a percentagepercent of revenues.


On April 5, 2017, Gartner completed its acquisition of CEB. With the CEB acquisition, Gartner began reporting four business segments reflecting theReportable Segments

The Company’s enlarged scale and breadth of advisory services. The Company's reportable segments are as follows:

•Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of thean enterprise through research and other reports, briefings, proprietary tools, access to our analysts,research experts, 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, sales, legal and finance.
drive organizational performance.


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.

Events•Conferences provides business professionals across thean organization the opportunity to learn, share and network. From our flagship CIO event Gartner Symposium/ITxpo,Xpo series, to industry-leading conferences focused on specific business roles and topics, to member-drivenpeer-driven sessions, our eventsofferings enable attendees to experience the best of Gartner insight and advice live.
advice.


Talent Assessment & Other helps organizations assess, engage, manage•Consulting combines the power of Gartner market-leading research with custom analysis and improve talent. This is accomplished through knowledgeon-the-ground support to help chief information officers and skills assessments, training programs, workshops, and survey and questionnaire services.
other senior executives driving technology-related strategic initiatives move confidently from insight to action.

The sections below present the results of these fourthe Company’s three reportable business segments. References to "heritage Gartner" operating results and business measurements below refer to Gartner excluding CEB. References to "CEB" operating results and business measurements below refer to CEB subsequent to the acquisition.


Research
 As Of And For
The Year Ended December 31, 2020		As Of And For
The Year Ended December 31, 2019		Increase
(Decrease)		Percentage
Increase
(Decrease)
Financial Measurements:    
Revenues (1)$3,602,892 $3,374,548 $228,3447 %
Gross contribution (1)$2,597,852 $2,351,720 $246,13210 %
Gross contribution margin72 %70 %2  points— 
Business Measurements:    
Global Technology Sales (2):
Contract value (1), (3)$2,909,000 $2,801,000 $108,0004 %
Client retention83 %82 %1  point— 
Wallet retention98 %104 %(6) points— 
Global Business Sales (2):
Contract value (1), (3)$696,000 $649,000 $47,0007 %
Client retention83 %82 %1  point— 
Wallet retention101 %101 %—— 
 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)
 As Of And For The Year Ended December 31, 2016 As Of And For The Year Ended December 31, 2015 
Increase
(Decrease)
 
Percentage
Increase
(Decrease)
Financial Measurements: 
  
  
  
  
  
  
  
Revenues (1), (2)
$2,471,280 $1,857,001 $614,279
 33% $1,857,001 $1,614,904 $242,097
 15%
Gross contribution (1)
$1,653,014 $1,285,611 $367,403
 29% $1,285,611 $1,117,534 $168,077
 15%
Gross contribution margin67% 69% (2) points
 —
 69% 69% —
 —
Business Measurements: 
  
  
  
  
  
  
  
Heritage Gartner:               
Total contract value (1)$2,213,000 $1,930,000 $283,000
 15% $1,930,000 $1,768,300 $161,700
 9%
Client retention84% 84% —
 —
 84% 84% —
 —
Wallet retention106% 104% 2 points
 —
 104% 105% (1) point
 —
CEB:               
Total contract value (1) (3)$557,000 $549,000 $8,000
 1% $549,000 na —
 —
Wallet retention96% 90% 6 points
 —
 90% na
 —
 —

(1)Dollars in thousands.
(2)In 2017 the Company began reporting the results of its Strategic Advisory Services ("SAS") business in Research whereas previously the SAS business was reported with Consulting. Although the impact of the reclassification was not significant,

(1)Dollars in thousands.

(2)Global Technology Sales includes sales to users and providers of technology. Global Business Sales includes sales to all other functional leaders.
(3)Contract values are on a foreign exchange neutral basis. Contract values as of December 31, 2019 have been calculated using the operating results of the SAS business for 2016 and 2015 were reclassified from Consulting to Research to be comparable with the current year presentation.
(3)The 2016 CEB contract value was calculated using Gartner's methodology as well as 2017 foreign exchange rates.
na - not applicable or not available.same foreign currency rates as 2020.

2017 VERSUS 2016


Research segment revenues increased $614.3by $228.3 million on a reported basis during 20172020 compared to 2016,2019, or 33%7% on both a reported basis and adjusted forexcluding the impact of foreign currency exchange. Heritage Gartner revenues increased $304.7 million in 2017 compared to 2016, which represents a 16% increase on a reported basis, with approximately one point of the increase due to L2, which we acquired in the first quarter of 2017. Adjusted for the foreign exchange impact, heritage Gartner revenues also increased by 16% year-over-year. On a reported basis, CEB contributed $309.6 million of the 2017 increase in Research segment revenues.impact. The gross contribution margin was 72% in 2020 compared to 70% in 2019. The increase in revenues during 2020 was primarily due to the same factors driving the trend in our Research contract value, which are discussed below. The improvement in margin was primarily due to the growth in revenue and a decline in travel and entertainment expenses due to COVID-19 travel restrictions.

29

Total contract value increased to $3.6 billion at December 31, 2020, or 4% compared to December 31, 2019 on a foreign currency neutral basis. Global Technology Sales (“GTS”) contract value increased by 4% at December 31, 2020 when compared to December 31, 2019. The increase in GTS contract value was due to new business from new and existing clients. By industry, GTS contract value growth was led by technology, retail and services. Global Business Sales (“GBS”) contract value increased by 7% year-over-year, also primarily driven by new business from new and existing clients. GBS contract value growth was led by the healthcare and technology industries. The sales, finance and human resources practices all recorded double-digit contract value growth for the year.

GTS client retention was 83% and 82% as of December 31, 2020 and 2019, respectively, while wallet retention was 98% and 104%, respectively. GBS client retention was 83% and 82% as of December 31, 2020 and 2019, respectively, while wallet retention was 101% as of both December 31, 2020 and 2019. The number of GTS client enterprises was flat at December 31, 2020 when compared to December 31, 2019, while GBS client enterprises declined by two points9%.

Conferences
 As Of And For
The Year Ended December 31, 2020		As Of And For
The Year Ended December 31, 2019		Increase
(Decrease)		Percentage
Increase
(Decrease)
Financial Measurements:   
Revenues (1)$120,140 $476,869 $(356,729)(75)%
Gross contribution (1)$57,302 $241,757 $(184,455)(76)%
Gross contribution margin48 %51 %(3) points— 
Business Measurements:    
Number of destination conferences (2)2072(52)(72)%
Number of destination conferences attendees (2)42,27385,750(43,477)(51)%

(1)Dollars in thousands.
(2)Includes both virtual and in-personconferences. Single day, local meetings are excluded.

In response to the COVID-19 pandemic, we cancelled all in-person conferences from March 2020 through at least August 2021, and pivoted to producing virtual conferences with a focus on maximizing the value we deliver to our clients. During 2020, we successfully held 5 in-person conferences prior to the COVID-19 pandemic and 15 virtual conferences during 2017,the second half of the year. We began holding virtual Evanta conferences during the second quarter of 2020. Conferences revenues decreased by $356.7 million during 2020 compared to 2019, or 75% on both a reported basis and excluding the foreign currency impact. The segment gross contribution margin was 48% and 51% in 2020 and 2019, respectively. The lower gross contribution margin during 2020 was primarily due to the impact of the deferred revenue fair value accounting adjustment resulting from the CEB acquisition.COVID-19 noted above.


Heritage Gartner total contract value was $2.2 billion at December 31, 2017, an increase of 15% as reported and 16%Consulting
 As Of And For
The Year Ended December 31, 2020		As Of And For
The Year Ended December 31, 2019		Increase
(Decrease)		Percentage
Increase
(Decrease)
Financial Measurements:    
Revenues (1)$376,371 $393,904 $(17,533)(4)%
Gross contribution (1)$115,744 $118,450 $(2,706)(2)%
Gross contribution margin31 %30 %1  point— 
Business Measurements:    
Backlog (1), (2)$100,300 $115,700 $(15,400)(13)%
Average billable headcount768784(16)(2)%
Consultant utilization61 %62 %(1) point— 
Average annualized revenue per billable headcount (1)$368 $373 $(5)(1)%

30

(1)Dollars in thousands.
(2)Backlog is on a foreign exchangecurrency neutral basis compared to December 31, 2016. Heritage Gartner client retention was 84%basis. Backlog as of both December 31, 2017 and 2016, while wallet retention was 106% and 104% at December 31, 2017 and 2016, respectively. Heritage Gartner total contract value at December 31, 2017 increased by double-digits across all of the Company’s sales regions and client sizes and virtually every industry segment compared to December 31, 2016. We increased the number of our research client enterprises by 7% in 2017. As of December 31, 2017, CEB contract value was $557.0 million and wallet retention was 96%.2019 has been calculated using the same foreign currency rates as 2020.


2016 VERSUS 2015

Research segmentConsulting revenues increased 15% in 2016decreased 4% during 2020 compared to 2015. Excluding2019 on a reported basis and 5% excluding the impact of foreign currency exchange, Researchimpact. The decrease in revenues increased approximately 17%on a reported basis was due to a 6% decrease in 2016.labor-based consulting, partially offset by a 3% increase in contract optimization. Contract optimization revenue may vary significantly and, as such, 2020 revenues may not be indicative of future results. The segment gross contribution margin was 69%31% and 30% in both annual periods.2020 and 2019, respectively. The increase in gross contribution margin remained at 69% in 2016 despite a 14% increase in segment headcount, which was mostly driven by new hires and, to a lesser extent, the additional employees resulting from our acquisitions. The headcount increase reflects our continued investment in this business. Total contract value increased 9% on a reported basis in 2016 to $1.9 billion, and increased 14% year-over-year adjusted for the impact of foreign currency exchange. The growth in contract value was broad-based, with every region and client size and virtually every industry sector growing at double-digit percentage rates. We increased the number of our research client enterprises by 3% in 2016 to 11,122. Both client retention and wallet retention remained strong at 84% and 104%, respectively, as of December 31, 2016.


Consulting

 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)
 As Of And For The Year Ended December 31, 2016 As Of And For The Year Ended December 31, 2015 
Increase
(Decrease)
 
Percentage
Increase
(Decrease)
Financial Measurements: 
  
  
  
  
  
  
  
Revenues (1), (2)$327,661 $318,934 $8,727
 3 % $318,934 $296,317 $22,617
 8 %
Gross contribution (1)$93,643 $89,734 $3,909
 4 % $89,734 $86,486 $3,248
 4 %
Gross contribution margin29% 28% 1 point
 —
 28% 29% (1) point
 —
Business Measurements: 
  
  
  
  
  
  
  
Backlog (1) (3)$95,200 $88,600 $6,600
 7 % $88,600 $100,800 $(12,200) (12)%
Billable headcount669 628 41
 7 % 628 606 22
 4 %
Consultant utilization64% 66% (2) points
 —
 66% 66% —
 —
Average annualized revenue per billable headcount (1)$366
 $383
 $(17) (4)% $383
 $391
 $(8) (2)%
(1)Dollars in thousands.
(2)In 2017 the Company began reporting the results of its SAS business in Research whereas previously the SAS business was reported with Consulting. Although the impact of the reclassification was not significant, the operating results of the SAS business for 2016 and 2015 were reclassified from Consulting to Research to be comparable with the current year presentation.
(3)The heritage Gartner backlog of $88.6 million and $100.8 million at December 31, 2016 and 2015, respectively, have been restated to reflect the reclassification of the SAS business.

2017 VERSUS 2016

Consulting revenues increased 3% during 2017 compared to 2016 on both a reported basis and adjusted for the impact of foreign currency exchange, with revenue improvements in both core consulting and contract optimization. Gross contribution margin was 29% and 28% for 2017 and 2016, respectively. The margin improvement in 20172020 was primarily due to additional contract optimization revenue, which hasbenefits derived from certain cost-reduction initiatives, including a higher contribution margin than our labor-based core consulting, partially offsetdecline in travel and entertainment expenses due to COVID-19 travel restrictions.

Backlog decreased by lower consultant utilization and our investment in additional managing partners. Backlog increased by $6.6$15.4 million, or 7%13%, year-over-year.from December 31, 2019 to December 31, 2020. The $95.2$100.3 million of backlog at December 31, 20172020 represented approximately four months of backlog, which is in line with the Company'sour operational target.


2016 VERSUS 2015

Consulting revenue increased 8% year-over-year to $318.9 million, with the increase mostly in our core consulting practice. Additionally, revenue in our contract optimization practice increased slightly during 2016 compared to 2015. The impact of foreign currency exchange was not significant. The year-over-year gross contribution margin declined by one point due to several factors, including higher payroll costs resulting from higher headcount and severance. Backlog decreased by $12.2 million year-over-year, or 12%, mostly due to a large individual contract booked in 2015. Excluding that contract, backlog decreased approximately 3% year-over-year. The $88.6 million of backlog at December 31, 2016 represented approximately four months of forward backlog, which is in line with the Company's operational target.




Events
 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)
 As Of And For The Year Ended December 31, 2016 As Of And For The Year Ended December 31, 2015 
Increase
(Decrease)
 
Percentage
Increase
(Decrease)
Financial Measurements: 
  
    
  
  
  
  
Revenues (1)$337,903 $268,605 $69,298
 26 % $268,605 $251,835 $16,770
 7%
Gross contribution (1)$163,480 $136,655 $26,825
 20 % $136,655 $130,527 $6,128
 5%
Gross contribution margin48% 51% (3) points
 —
 51% 52% (1) point
 —
Business Measurements: 
  
  
  
  
  
  
  
Heritage Gartner:               
Number of events (2)65
 66
 (1) (2)% 66
 65
 1
 2%
Number of attendees (2)63,823
 54,602
 9,221
 17 % 54,602
 52,595
 2,007
 4%
CEB:               
Number of events (2)4
 na
 —
 —
 na
 na
 —
 —
Number of attendees (2)3,578
 na
 —
 —
 na
 na
 —
 —
(1)Dollars in thousands.
(2)Single day, local events are excluded.
na - not applicable or not available.

2017 VERSUS 2016

Events revenues increased $69.3 million, or 26%, during 2017 compared to 2016 on a reported basis and 25% adjusted for the impact of foreign currency exchange. Heritage Gartner revenues increased $30.7 million in 2017 compared to 2016, an 11% increase on a reported basis and 10% adjusted for the foreign exchange impact, as both attendee and exhibitor increased, with attendee revenue growing at double-digits. We held 65 events in 2017 in the heritage Gartner business, with a 17% increase in the number of attendees and a 3% increase in exhibitors compared to 2016, while the average revenue per exhibitor was up by 5% and average revenue per attendee was flat. CEB contributed $38.6 million of the revenue increase with four events held with 3,578 attendees. The segment gross contribution margin declined 3 points in 2017 compared to 2016, primarily driven by additional investment in headcount and higher program expenses in heritage Gartner, and to a lesser extent, a dilutive effect from the CEB events.

2016 VERSUS 2015
Events revenues increased $16.8 million, or 7%, when comparing 2016 to 2015. Excluding the impact of foreign currency exchange, revenues increased 6% year-over-year. We held 66 events in 2016, consisting of 59 ongoing events and 7 new events, compared to 65 events in 2015. The year-over-year revenue increase was primarily attributable to higher exhibitor revenue at our on-going events, which increased 9%, while attendee revenue increased 2%. The number of attendees in 2016 increased 4% to 54,602. Average revenue per attendee declined slightly while average revenue per exhibitor increased 9%. The gross contribution margin decreased one point year-over-year.



Talent Assessment & Other
 As Of And For The Year Ended December 31, 2017 
Financial Measurements:  
Revenues (1)$174,650
 
Gross contribution (1)$90,249
 
Gross contribution margin52% 
(1)Dollars in thousands.

See Note 2 — Acquisitions and Divestiture and Note 16 — Subsequent Events in the Notes to Consolidated Financial Statements for information concerning the pending disposal of a significant component of this reportable segment.



LIQUIDITY AND CAPITAL RESOURCES


We finance our operations through cash generated from our operating activities and borrowings (Note 5borrowings. Note 6 — Debt in the Notes to the Consolidated Financial Statements provides additional information regarding the Company's 2016 Credit Agreement and otherCompany’s outstanding debt obligations).obligations. At December 31, 2017,2020, we had $538.9$712.6 million of cash and cash equivalents and $558.0 millionapproximately $1.0 billion of available borrowing capacity on the revolving credit facility portion ofunder our 20162020 Credit Agreement. We believe that the Company has adequate liquidity to meet its currently anticipated needs for at least the next twelve months. As a cautionary measure, we elected to include the payment of the transition tax liability related to the Tax Cuts and Jobs Act of 2017. Note 10 — Income Taxessuspend our share repurchase activity in the Notes to the Consolidated Financial Statements provides information related to the Tax Cuts and Jobs Act of 2017.March 2020. We resumed share repurchase activity in December 2020.


We have historically generated significant cash flows from our operating activities. Our operating cash flow has been continuously maintained and enhanced by the leverage characteristics of our subscription-based business model in our Research segment, which is our largest business segment. Revenues in our Research segment increased 33% in 2017 compared to 2016, and historically has constituted 75%a significant portion of our total revenues in both 2017 and 2016.revenues. The majority of our Research customer contracts are paid in advance and, combined with a strong customer retention rate and high incremental margins, has resulted in continuously strong operating cash flow. Our cashCash flow generation has also benefited from our continuingongoing efforts to improve the operating efficiencies of our businesses as well as a focus on the optimal management of our working capital as we increase our sales volume.sales.


As of December 31, 2017, we had approximately $194.0 million of accumulated undistributed earnings in our non-U.S. subsidiaries. Our cash and cash equivalents are held in numerous locations throughout the world. Atworld with 56% held overseas at December 31, 2017, 97% of our cash and cash equivalents was held overseas, with a substantial portion representing accumulated undistributed earnings of our non-U.S. subsidiaries.2020. The Company intends to continue to reinvest substantially all of its accumulated undistributed foreign earnings, except in instances in which thewhere repatriation would result in minimal additional tax. As a result of the recently enacted U.S. Tax Cuts and Jobs Act of 2017, we envisionbelieve that the income tax that would be payableimpact if such earnings were repatriated would be minimal.


The following table below summarizes and explains the significant changes in ourthe Company’s cash and cash equivalentsbalances for the three-years ended December 31, 2017years indicated (in thousands): .
 Year Ended December 31,Increase
(Decrease)
 20202019
Cash provided by operating activities$903,278 $565,436 $337,842 
Cash used in investing activities(83,888)(160,885)76,997 
Cash used in financing activities(416,224)(285,992)(130,232)
Net increase in cash and cash equivalents and restricted cash403,166 118,559 284,607 
Effects of exchange rates28,581 3,614 24,967 
Beginning cash and cash equivalents and restricted cash280,836 158,663 122,173 
Ending cash and cash equivalents$712,583 $280,836 $431,747 
 2017 vs. 2016 2016 vs. 2015
 
Year Ended
December 31,
2017
 
Year Ended
December 31,
2016
 
Increase
(Decrease)
 
Year Ended
December 31,
2016
 
Year Ended
December 31,
2015
 
Increase
(Decrease)
Cash provided by operating activities$254,517
 $365,632
 $(111,115) $365,632
 $345,561
 $20,071
Cash used in investing activities(2,745,574) (84,049) (2,661,525) (84,049) (242,357) 158,308
Cash provided by (used in) financing activities2,539,830
 (174,686) 2,714,516
 (174,686) (67,690) (106,996)
Net increase (decrease) in cash and cash equivalents48,773
 106,897
 (58,124) 106,897
 35,514
 71,383
Effects of exchange rate changes25,902
 (5,640) 31,542
 (5,640) (27,840) 22,200
Beginning cash and cash equivalents474,233
 372,976
 101,257
 372,976
 365,302
 7,674
Ending cash and cash equivalents (1)$548,908
 $474,233
 $74,675
 $474,233
 $372,976
 $101,257

(1) As of December 31, 2017, the Company had $538.9 million of cash and cash equivalents and an additional $10.0 million of cash classified as held-for-sale in its Consolidated Balance Sheet, for an ending cash and cash equivalents balance of $548.9 million.



2017 VERSUS 2016


Operating


Cash provided by operating activities was $254.5$903.3 million and $565.4 million in 2017 compared to $365.6 million in 2016.2020 and 2019, respectively. The declineyear-over-year increase was primarily due to (i) a declinehigher pre-tax income in net2020, (ii) improved collections, (iii) an increase in Accounts payable and accrued and other liabilities due to increased accrued payroll, fringe benefits and customer deposits and (iv) reduced income which was $3.3 million in the 2017 period comparedtax payments, offset by higher interest payments due to $193.6 million in the 2016 period; (ii) unfavorable changes in working capital in 2017 compared to 2016; and (iii) substantially higher cash payments for bonuses, commissions, interest on our borrowings, and acquisition and integration costs in the 2017 period compared to 2016.timing.


Investing

31


Cash used in investing activities was $2.7 billion$83.9 million and $160.9 million in 2017 compared2020 and 2019, respectively. The decrease from 2019 to $84.02020 was the result of reduced capital spending in response to the COVID-19 pandemic.

Financing

Cash used in financing activities was $416.2 million and $286.0 million in 2020 and 2019, respectively. During 2020, we repaid a net $148.0 million on our revolving credit facility under the 2016 Credit Agreement, paid a net $58.5 million in debt principal repayments, borrowed $5.0 million on our revolving credit facility under the 2020 Credit Agreement and used $176.3 million of cash usedfor share repurchases. Additionally, we paid $25.8 million in 2016. Cash useddeferred financing fees related to our financing activities and $30.8 million in 2017 was substantially higher primarily dueearly redemption premium payments related to the acquisitionsrepayment of CEB and L2 in April 2017 and March 2017, respectively.our 2025 Notes. Note 26 — Acquisitions and DivestitureDebt in the Notes to the Consolidated Financial Statements provides additional information regarding the Company's acquisitions. We also made additional investment in capital expenditures in 2017, with $110.8 million invested in 2017 compared to $49.9 million in 2016.

Financing

Cash provided byCompany’s financing activities was $2.5 billion in 2017 compared to cash used of $174.7 million in 2016.2020. During the 2017 period,2019, the Company borrowed $5.0 million, repaid a total of approximately $3.0 billion and paid: (i) $404.4net $7.0 million on our revolving credit facility under the 2016 Credit Agreement, paid a net $102.6 million in debt principal repayments including $300.0 million for the senior unsecured 364-day Bridge Credit Facility; (ii) $51.2 million for deferred financing fees on borrowings; and (iii) $41.3used $199.0 million for share repurchases. During the 2016 period, the Company used $59.0 million in cash for share repurchases and $125.0 million for debt.


2016 VERSUS 2015

Operating

Operating cash flow increased by $20.1 million, or 6%, in 2016 compared to 2015. The 2016 increase was primarily due to higher net income and the adoption of ASU No. 2016-09. Partially offsetting these increases were higher cash payments for acquisition and integration costs, bonus and commissions, and interest on our borrowings.

Investing

We used $84.0 million of cash in our investing activities in 2016 compared to $242.4 million of cash used in 2015. Cash used in 2015 was substantially higher due to additional expenditures for acquisitions.

Financing

Cash used was $174.7 million in 2016, which consisted of $59.0 million paid for share repurchases and $125.0 million for payments and fees on debt, which was partially offset by $9.3 million in cash realized from employee share-related activities. In the 2015 period the Company used $67.7 million in cash in its financing activities, with $509.0 million in cash used for share repurchases, while net borrowings on debt and employee share-related activities provided cash of $441.3 million.




OBLIGATIONS AND COMMITMENTS

Debt


As of December 31, 2017,2020, the Company had $3.3$2.0 billion of principal amount of debt outstanding. Note 56 — Debt in the Notes to the Consolidated Financial Statements provides additional information regarding the Company'sCompany’s outstanding debt obligations.


Off-Balance Sheet Arrangements


Through December 31, 2017, we have2020, the Company has not entered into any material off-balance sheet arrangements or transactions with unconsolidated entities or other persons.


Contractual Cash Commitments

The Company has certain commitments that contractually require future cash payments. The table below summarizes the Company'sCompany’s future contractual cash commitments as of December 31, 20172020 (in thousands):.
Commitment DescriptionDue 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)$109,753 $244,849 $504,002 $1,863,749 $2,722,353 
Operating leases (2)149,032 272,638 240,866 569,316 1,231,852 
Deferred compensation arrangements (3)8,129 14,884 8,808 62,717 94,538 
Other (4)32,891 48,306 18,455 30,621 130,273 
Totals$299,805 $580,677 $772,131 $2,526,403 $4,179,016 

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) $469,392
 $492,579
 $1,691,395
 $1,396,750
 $4,050,116
Operating leases (2) 129,570
 235,155
 203,596
 727,405
 1,295,726
Deferred compensation arrangements (3) 27,821
 13,968
 9,296
 46,798
 97,883
Tax Cuts and Job Act - transition tax (4) 3,066
 6,132
 6,132
 23,010
 38,340
Other (5) 18,980
 37,083
 17,987
 32,706
 106,756
Totals $648,829
 $784,917
 $1,928,406
 $2,226,669
 $5,588,821
 
(1)Principal repayments of the Company's debt obligations are classified in the table based on the contractual repayment dates. However, the Due In Less Than 1 Year category includes a $255.0 million revolver principal payment the Company made in January 2018 which was not contractually due until 2022 (Due In 4-5 Years). Interest payments due were based on the effective interest rates as of December 31, 2017. Note 5 — Debt in the Notes to the 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 2018 and 2032. See Note 1 — Business and Significant Accounting Policies in the Notes to the Consolidated Financial Statements for additional information on the Company's leases. The total commitment excludes approximately $284.0 million of estimated income from the subleasing of certain facilities.
(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 the Consolidated Financial Statements for additional information regarding the arrangement.
(4)The amount due represents the Company's provisional estimate of the one-time transition tax liability under the Tax Cut and Jobs Act of 2017. The Company currently expects to pay the transition tax over approximately eight years.
(5)The Other category includes (i) contractual commitments for software, building maintenance, telecom, and other services; and (ii) projected cash contributions to the Company's defined benefit pension plans. See Note 13 — Employee Benefits in the Notes to the Consolidated Financial Statements for additional information regarding the Company's defined benefit pension plans.

(1)Principal repayments of the Company’s debt obligations were classified in the above table based on the contractual repayment dates. Interest payments were based on the effective interest rates as of December 31, 2020, including the effects of the Company’s interest rate swap contracts. Note 6 — Debt in the Notes to Consolidated Financial Statements provides information regarding the Company’s debt obligations and interest rate swap contracts.
(2)The Company leases various facilities, automobiles, computer equipment and other assets under non-cancelable operating lease agreements expiring between 2021 and 2038. The total commitment excludes approximately $325.4 million of estimated future cash receipts from the Company’s subleasing arrangements. Note 1 — Business and Significant Accounting Policies and Note 7 — Leases in the Notes to Consolidated Financial Statements provide additional information regarding 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 because the Company cannot determine when the amounts will be paid. Note 15 — Employee Benefits in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s supplemental deferred compensation arrangements.
(4)Other includes: (i) contractual commitments (a) for software, telecom and other services and (b) to secure sites for our Conferences business; (ii) amounts due for share repurchase transactions that occurred in late December 2020 but were
32

settled in cash in January 2021; and (iii) projected cash contributions to the Company’s defined benefit pension plans. Note 15 — Employee Benefits in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s defined benefit pension plans.

In addition to the contractual cash commitments included in the above table, above, the Company has other payables and liabilities that may be legally enforceable but are not considered contractual commitments. Information regarding the Company'sCompany’s payables and liabilities is included in Note 45 — Accounts Payable and Accrued and Other Liabilities in the Notes to the Consolidated Financial Statements.






QUARTERLY FINANCIAL DATA
 
The following tables below present our quarterly operating results for the two-year period ended December 31:31, 2020.
2020
(In thousands, except per share data)FirstSecondThirdFourth
Revenues$1,018,891 $973,135 $994,618 $1,112,759 
Operating income124,718 99,651 87,650 178,131 
Net income (1), (2)75,097 55,077 16,964 119,607 
Net income per share (1), (2), (3):   
Basic$0.84 $0.62 $0.19 $1.34 
Diluted$0.83 $0.61 $0.19 $1.33 
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) (1) 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

2019
(In thousands, except per share data)FirstSecondThirdFourth
Revenues$970,444 $1,070,882 $1,000,502 $1,203,493 
Operating income48,799 116,002 69,147 136,139 
Net income (2)20,795 103,406 41,388 67,701 
Net income per share (2), (3): 
Basic$0.23 $1.15 $0.46 $0.76 
Diluted$0.23 $1.13 $0.46 $0.75 
 
2016        
(In thousands, except per share data) First Second Third Fourth
Revenues $557,266
 $609,998
 $574,059
 $703,217
Operating income 64,429
 83,299
 48,726
 108,687
Net income 44,987
 51,626
 30,484
 66,485
Net income per share (2)  
  
    
Basic $0.55
 $0.63
 $0.37
 $0.80
Diluted $0.54
 $0.62
 $0.36
 $0.79
(1)In December 2017 the Company recorded a $59.6 million one-time tax benefit related to the 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 the Consolidated Financial Statements for additional information regarding the impact of the Tax Cuts and Jobs Act of 2017.
(2)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.

(1)In conjunction with the issuance of the 2030 Notes, the Company redeemed all of the 2025 Notes on September 28, 2020 for cash, and the Company recorded $30.8 million of charges for the early redemption premium and $14.0 million of charges for the write-off of deferred financing costs related to the 2025 Notes and the 2016 Credit Agreement, which were recorded in Loss on extinguishment of debt on the Consolidated Statements of Operations.
(2)During 2020 and 2019, the Company recorded a net tax benefit of approximately $28.3 million and $38.1 million, respectively, related to intercompany sales of certain intellectual property, which increased our basic and diluted net income per share by approximately $0.31 and $0.42 per share for the second quarter of 2020 a and 2019, respectively. Note 12 — Income Taxes in the Notes to Consolidated Financial Statements provides additional information regarding the tax impact of our intercompany sale of certain intellectual property.
(3)The aggregate of the four quarters’ basic and diluted net income per share may not equal the reported full calendar year amounts due to the effects of share repurchases, dilutive equity compensation and rounding.

RECENTLY ISSUED ACCOUNTING STANDARDS

The FASB has issued accounting standards that havehad not yet become effective as of December 31, 2020 and that may impact the Company’s consolidated financial statements or relatedits disclosures in future periods. Note 1 — Business and Significant Accounting Policies in the Notes to the Consolidated Financial Statements herein provides information regarding thesethose accounting standards.



33

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


INTEREST RATE RISK
 
AtAs of December 31, 2017,2020, the Company had $3.3$2.0 billion in total debt principal outstanding. Note 6 — Debt in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt. debt obligations.

Approximately $2.5$0.4 billion of the Company'sCompany’s total debt outstanding as of December 31, 20172020 was based on a floating base rate of interest, which potentially exposes the Company to increases in interest rates. However, we partially reduce our overall exposure to changes in interest ratesrate increases through our interest rate swap contracts, which effectively convertsconvert the floating base interest raterates on a portionall of theseour variable rate borrowings to fixed rates. Thus we are exposed to base interest rate risk on floating rate borrowings only in excess of any amounts that are not hedged. At December 31, 2017, we had unhedged interest rate risk on approximately $1.1 billion of borrowings. As an indication of our potential exposure to changes in interest rates, a hypothetical 25 basis point increase or decrease in interest rates could change our annual pre-tax interest expense by approximately $2.8 million.


FOREIGN CURRENCY RISK
 
For both years ended December 31, 2017 and 2016, 42%A significant portion of our revenues wereare typically derived from sales outside of the United States. Among the major foreign currencies in which we conduct business are the Euro, the British Pound, the Japanese Yen, the Australian dollar and the Canadian dollar. The reporting currency of our consolidated financial statementsConsolidated Financial Statements is the U.S. dollar. As the values


of the foreign currencies in which we operate fluctuate over time relative to the U.SU.S. dollar, the Company is exposed to both foreign currency translation and transaction risk.


Translation risk arises as our foreign currency assets and liabilities are translated into U.S. dollars sincebecause the functional currencies of our foreign operations are generally denominated in the local currency. Adjustments resulting from the translation of these assets and liabilities are deferred and recorded as a component of stockholders’ equity (deficit).equity. A measure of the potential impact of foreign currency translation can be determined through a sensitivity analysis of our cash and cash equivalents. At December 31, 2017,2020, we had $538.9$712.6 million of cash and cash equivalents, (excluding cash held-for-sale), with a substantial portion denominated in foreign currencies. If the exchange rates of the foreign currencies we hold all changed in comparison to the U.S. dollar by 10%, the amount of cash and cash equivalents we would have reported on December 31, 2017 would2020 could have increased or decreased by approximately $28.0$54 million. The translation of our foreign currency revenues and expenses historically has not had a material impact on our consolidated earnings sincebecause movements in and among the major currencies in which we operate tend to impact our revenues and expenses fairly equally. However, our earnings could be impacted during periods of significant exchange rate volatility, or when some or all of the major currencies in which we operate move in the same direction against the U.SU.S. dollar.
 
Transaction risk arises when our foreign subsidiarieswe enter into transactionsa transaction that areis denominated in a currency that may differ from the local functional currency. As these transactions are translated into the local functional currency, a gain or loss may result, which is recorded in current period earnings. We typically enter into foreign currency forward exchange contracts to mitigate the effects of some of this foreign currency transaction risk. Our outstanding foreign currency forward exchange contracts as of December 31, 20172020 had an immaterial net unrealized loss.

CREDIT RISK
 
Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of short-term, highly liquid investments classified as cash equivalents, accountsfees receivable, interest rate swap contracts and foreign currency forward exchange contracts. The majority of the Company’s cash and cash equivalents, interest rate swap contracts and its foreign currency forward exchange contracts are with large investment grade commercial banks. AccountsFees receivable balances deemed to be collectible from customers have limited concentration of credit risk due to our diverse customer base and geographic dispersion.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
Our consolidated financial statements for 2017, 2016,2020, 2019 and 2015,2018, together with the reports of KPMG LLP, our independent registered public accounting firm, are included herein in this Annual Report on Form 10-K.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE.

None.




34

ITEM 9A. CONTROLS AND PROCEDURESPROCEDURES.

DISCLOSURE CONTROLS AND PROCEDURES

Management conducted an evaluation, as of December 31, 2017,2020, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a- 15(e)13a-15(e) and 15d- 15(e)15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), under the supervision and with the participation of our chief executive officer and chief financial officer. Based upon that evaluation, our chief executive officer and chief financial officer have concluded that ourthe Company’s disclosure controls and procedures are effective in alerting them in a timely manner to material Company information required to be disclosed by us in reports filed or submitted under the Exchange Act.


MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Gartner management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Gartner’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017.2020. In making this assessment, management used the criteria set forth in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management’s assessment was reviewed with the Audit Committee of the Board of Directors.

Based on its assessment of internal control over financial reporting, management has concluded that, as of December 31, 2017,2020, Gartner’s internal control over financial reporting was effective. The effectiveness of management’s internal control over financial reporting as of December 31, 20172020 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included in this Annual Report on Form 10-K in Part IV, Item 15.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company acquired two businesses in 2017, L2 and CEB. We are currentlyThere have been no changes in the process of integrating these businesses, evaluating their internal controls, and implementing the Company's internal control structure over these operations. Due to the timing of these acquisitions, we have excluded them from the scope of our Sarbanes-Oxley Section 404 report on internal control over financial reporting for our fiscal year ending December 31, 2017. This exclusion is in accordance with the general guidance issued by the Staff of the Securities and Exchange Commission that an assessment of a recent business acquisition may be omitted from management's report on internal control over financial reporting in the first year of consolidation. We expect to complete the implementation of our internal control structure over these acquisitions in 2018.

Other than the changes noted above, there has been no change in ourCompany’s internal control over financial reporting during the quarter ended December 31, 2017,2020 that hashave materially affected, or isare reasonably likely to materially affect, ourthe Company’s internal control over financial reporting.


ITEM 9B. OTHER INFORMATIONINFORMATION.

Not applicable.

35


PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE GOVERNANCE.


The information required to be furnished pursuant to this item will be set forth under the captions “The Board of Directors,” “Proposal One: Election of Directors,” “Executive Officers,” “Corporate Governance,” “Section“Delinquent Section 16(a) Beneficial Ownership Reporting Compliance”Reports” (if necessary) and “Miscellaneous“Proxy and Voting Information — Available Information” in the Company’s Proxy Statement to be filed with the SEC no later than April 30, 2018.2021. If the Proxy Statement is not filed with the SEC by April 30, 2018,2021, such information will be included in an amendment to this Annual Report filed by April 30, 2018.2021. See also Item 1. Business — Available Information.


ITEM 11. EXECUTIVE COMPENSATION.


The information required to be furnished pursuant to this item is incorporated by reference from the information set forth under the caption “Executive Compensation”captions “Compensation Discussion & Analysis,” “Compensation Tables and Narrative Disclosures,” “The Board of Directors - Compensation of Directors,” “The Board of Directors - Director Compensation Table,” “Corporate Governance - Risk Oversight - Risk Assessment of Compensation Policies and Practices,” and “Corporate Governance - Compensation Committee” in the Company’s Proxy Statement to be filed with the SEC no later than April 30, 2018.2021. If the Proxy Statement is not filed with the SEC by April 30, 2018,2021, such information will be included in an amendment to this Annual Report filed by April 30, 2018. 2021.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.


The information required to be furnished pursuant to this item will be set forth under the captioncaptions “Compensation Tables and Narrative Disclosures — Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management” in the Company’s Proxy Statement to be filed with the SEC by April 30, 2018.2021. If the Proxy Statement is not filed with the SEC by April 30, 2018,2021, such information will be included in an amendment to this Annual Report filed by April 30, 2018. 2021.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.


The information required to be furnished pursuant to this item will be set forth under the captions “Transactions With Related Persons” and “Corporate Governance — Director Independence” in the Company’s Proxy Statement to be filed with the SEC by April 30, 2018.2021. If the Proxy Statement is not filed with the SEC by April 30, 2018,2021, such information will be included in an amendment to this Annual Report filed by April 30, 2018. 2021.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.


The information required to be furnished pursuant to this item will be set forth under the caption “Principal Accountant Fees and Services”“Proposal Three: Ratification of Appointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement to be filed with the SEC no later than April 30, 2018.2021. If the Proxy Statement is not filed with the SEC by April 30, 2018,2021, such information will be included in an amendment to this Annual Report filed by April 30, 2018.2021.



36






PART IV
 
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
(a) 1. and 2. Consolidated Financial Statements and Schedules
 
The reports of our independent registered public accounting firm and consolidated financial statements listed in the Index to Consolidated Financial Statements herein are filed as part of this report.
 
All financial statement schedules not listed in the Index have been omitted because the information required is not applicable or is shown in the consolidated financial statements or notes thereto.
 
3. Exhibits
EXHIBIT NUMBERDESCRIPTION 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 asBy-laws of Gartner, Inc. (as amended through February 2, 2012.January 30, 2020).
Form of Certificate for Common Stock as of June 2, 2005.
Indenture (including form of Notes), dated as of June 22, 2020, among Gartner, Inc., the guarantors named therein and U.S. Bank National Association, as a trustee, relating to the $800,000,000 aggregate principal amount of 4.500% Senior Notes due 2028.
Indenture (including form of Notes), dated as of September 28, 2020, among Gartner, Inc., the guarantors named therein and U.S. Bank National Association, as a trustee, relating to the $800,000,000 aggregate principal amount of 3.750% Senior Notes due 2030.
Amended and Restated Credit Agreement, dated as of June 17, 2016,September 28, 2020, among the Company, the several lenders from time to time parties thereto, and JPMorgan Chase Bank, N.A. as administrative agent.
4.3(4)
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.
4.4(1)
Commitment Letter among the Company, JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA, dated January 5, 2017.
4.5(5)
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.

4.6(6)
Second Amendment, dated as of March 20, 2017, among the Company, each other Loan Party party thereto,Gartner, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

Incremental Amendment,Amended and Restated Guarantee and Collateral Agreement, dated as of April 5, 2017,September 28, 2020, among the Company,Gartner, Inc. each other Loan Party party thereto, the Lenderssubsidiary guarantor party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

364-Day Bridge Credit Agreement, dated asDescription 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.

Gartner, Inc.’s Common Stock.
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.

10.1(9)
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 -TermLong-Term Incentive Plan, as amended and restated effective June 4, 2009.
Gartner, Inc. Long-Term Incentive Plan, as amended and restated effective August 1, 2017.January 31, 2019.
Second Amended and Restated Employment Agreement between Eugene A. Hall and the Company dated as of March 19, 2016.February 14, 2019.
Company Deferred Compensation Plan, effective January 1, 2009.
Form of 2017 Restrictive Stock Unit Agreement for executive officers.
Form of 2018 Stock Appreciation Right Agreement for executive officers.


Form of 20172018 Performance Stock Unit Agreement for executive officers.
Form of 20172019 Stock Appreciation Right Agreement for executive officers.
Form of 2019 Performance Stock Unit Agreement for executive officers.
Form of 2020 Stock Appreciation Right Agreement for executive officers.
37

Form of 2020 Performance Stock Unit Agreement for executive officers.
Form of 2021 Stock Appreciation Right Agreement for executive officers.
Form of 2021 Performance Stock Unit Agreement for executive officers.
Form of Restricted Stock Unit Agreement for Certain Officers.

non-employee directors.
Separation Agreement and Release of Claims, dated October 12, 2017, between the Company and Per Anders Waern.

Enhanced Executive Rewards Policy.
Subsidiaries of Registrant.
Consent of Independent Registered Public Accounting Firm.
Power of Attorney (see Signature Page).
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.
101.INS*XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*XBRL Taxonomy Extension Schema Document.
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document.
104*Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101).
 
*Filed with this document.
+
+Management compensation plan or arrangement.
(1)
(1)Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 5, 2017.
(2)
(2)Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 6, 2005.
(3)
(3)Incorporated by reference from the Company’s Current Report on Form 8-K filed on February 7,2012.5, 2020.
(4)Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 23, 2020.
(4)(5)Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 28, 2020.
(6)Incorporated by reference from the Company’s Annual Report on Form 10-K filed on February 19, 2020.
(7)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 formForm 10-Q filed on August 9, 2010.
(8)
(10)Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) filed on April 18, 2011.
(9)
(11)Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) filed on April 21, 2009
(10)
(12)Incorporated by reference from the Company’s Current Report on form 8-K filed on August 2, 2017.
(13)Incorporated by reference from the Company’s QuarterlyAnnual Report on Form 10-Q10-K filed on May 5, 2016.February 22, 2019.
(11)
(14)Incorporated by reference from the Company’s Annual Report on Form 10-K filed on February 20, 2009.
(12)
(15)Incorporated by reference from the Company’s Current Report on Form 8-K dated February 7, 2017.
(16)Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on November 2, 2017.2017
(13)Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2018.
(14)Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on August 1, 2018.



38



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
GARTNER, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
 
4341
4443
4544
4645
4746
4847
4948
50
 
All financial statement schedules have been omitted because the information required is not applicable or is shown in the consolidated financial statementsConsolidated Financial Statements or notes thereto.




39

Report of Independent Registered Public Accounting Firm


To the stockholdersStockholders and boardBoard of directorsDirectors
Gartner, Inc.:

Opinion on the ConsolidatedFinancial Statements

We have audited the accompanying consolidated balance sheets of Gartner, Inc. and subsidiaries (the Company) as of December 31, 20172020 and 2016,2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity, (deficit), and cash flows for each of the years in the three‑year period ended December 31, 2017,2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20172020 and 2016,2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2017,2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017,2020, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission”,Commission, and our report dated February 22, 201824, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of unrecognized tax benefits

As discussed in Notes 1 and 12 to the consolidated financial statements, the Company has recorded gross unrecognized tax benefits of $127.1 million as of December 31, 2020. As discussed in Note 1 to the consolidated financial statements, the Company recognizes the tax benefit from an uncertain tax position when it believes such positions are more likely than not of being sustained if challenged. Recognized tax positions are measured at the largest amount of benefit with greater than a 50 percent likelihood of being realized. The Company uses estimates and assumptions in determining the amount of unrecognized tax benefits.
40


We identified the assessment of unrecognized tax benefits related to transfer pricing and certain other intercompany transactions as a critical audit matter. Complex auditor judgment was required in evaluating the Company’s interpretation of tax law and its estimate of the ultimate resolution of its tax positions.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s unrecognized tax benefits process, including transfer pricing and certain other intercompany transactions. We involved tax and transfer pricing professionals with specialized skills and knowledge, who assisted in assessing unrecognized tax benefits by:

•evaluating the Company’s interpretation of tax laws and income tax consequences of intercompany transactions, including internal restructurings and intra-entity transfers of assets
•assessing transfer pricing practices for compliance with relevant tax laws and regulations
•analyzing the Company’s tax positions and determination of unrecognized tax benefits, including the associated effect in other jurisdictions
•inspecting settlements with applicable taxing authorities.

In addition, we evaluated the Company’s ability to estimate its unrecognized tax benefits by comparing historical unrecognized tax benefits to actual results upon conclusion of examinations by applicable taxing authorities.

/s/ KPMG LLP
 
We have served as the Company’s auditor since 1996.


New York, New York
February 22, 201824, 2021




41

Report of Independent Registered Public Accounting Firm


To the stockholdersStockholders and boardBoard of directorsDirectors
Gartner, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Gartner, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2017,2020, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2020, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20172020 and 2016,2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity, (deficit), and cash flows for each of the years in the three-year period ended December 31, 2017,2020, and the related notes (collectively, the consolidated financial statements), and our report dated February 22, 201824, 2021 expressed an unqualified opinion on those consolidated financial statements.
The Company acquired L2, Inc. on March 9, 2017 and CEB, Inc. on April 5, 2017. Management excluded these businesses from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. L2, Inc. and CEB, Inc. represented approximately 12% and 16% of the Company’s total consolidated assets and total consolidated revenues, respectively, as of and for the year ended December 31, 2017. Our audit of internal control over financial reporting of Gartner, Inc. and subsidiaries also excluded an evaluation of the internal control over financial reporting of L2, Inc. and CEB, Inc.
Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP
 
New York, New York
February 22, 2018

24, 2021

42

GARTNER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
 
December 31, December 31,
2017 2016 20202019
ASSETS 
  
ASSETS  
Current assets: 
  
Current assets:  
Cash and cash equivalents$538,908
 $474,233
Cash and cash equivalents$712,583 $280,836 
Fees receivable, net of allowances of $12,700 and $7,400 respectively1,176,843
 643,013
Fees receivable, net of allowances of $10,000 and $8,000, respectivelyFees receivable, net of allowances of $10,000 and $8,000, respectively1,241,508 1,326,012 
Deferred commissions205,260
 141,410
Deferred commissions259,755 265,867 
Prepaid expenses and other current assets124,632
 84,540
Prepaid expenses and other current assets109,212 146,026 
Assets held-for-sale542,965
 —
Total current assets2,588,608
 1,343,196
Total current assets2,323,058 2,018,741 
Property, equipment and leasehold improvements, net221,507
 121,606
Property, equipment and leasehold improvements, net336,765 344,579 
Operating lease right-of-use assetsOperating lease right-of-use assets647,283 702,916 
Goodwill2,987,294
 738,453
Goodwill2,945,547 2,937,726 
Intangible assets, net1,292,022
 76,801
Intangible assets, net806,998 925,087 
Other assets193,742
 87,279
Other assets256,316 222,245 
Total Assets$7,283,173
 $2,367,335
Total Assets$7,315,967 $7,151,294 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
  
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities: 
  
Current liabilities:  
Accounts payable and accrued liabilities$666,821
 $440,771
Accounts payable and accrued liabilities$952,431 $788,796 
Deferred revenues1,630,198
 989,478
Deferred revenues1,974,548 1,928,020 
Current portion of long-term debt379,721
 30,000
Current portion of long-term debt20,515 139,718 
Liabilities held-for-sale145,845
 —
Total current liabilities2,822,585
 1,460,249
Total current liabilities2,947,494 2,856,534 
Long-term debt, net of deferred financing fees2,899,124
 664,391
Long-term debt, net of deferred financing fees1,958,286 2,043,888 
Operating lease liabilitiesOperating lease liabilities780,166 832,533 
Other liabilities577,999
 181,817
Other liabilities539,593 479,746 
Total Liabilities6,299,708
 2,306,457
Total Liabilities6,225,539 6,212,701 
Stockholders’ Equity: 
  
Stockholders’ Equity:  
Preferred stock: 
  
Preferred stock:  
$.01 par value, authorized 5,000,000 shares; none issued or outstanding—
 —
$0.01 par value, authorized 5,000,000 shares; NaN issued or outstanding$0.01 par value, authorized 5,000,000 shares; NaN issued or outstanding0 0 
Common stock: 
  
Common stock:  
$.0005 par value, authorized 250,000,000 shares for both periods; 163,602,067 shares issued at December 31, 2017 and 156,234,415 shares issued at December 31, 201682
 78
$0.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods$0.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods82 82 
Additional paid-in capital1,761,383
 863,127
Additional paid-in capital1,968,930 1,899,273 
Accumulated other comprehensive income (loss), net1,508
 (49,683)
Accumulated other comprehensive loss, netAccumulated other comprehensive loss, net(99,228)(77,938)
Accumulated earnings1,647,284
 1,644,005
Accumulated earnings2,255,467 1,988,722 
Treasury stock, at cost, 72,779,205 and 73,583,172 common shares, respectively(2,426,792) (2,396,649)
Treasury stock, at cost, 74,759,985 and 74,444,288 common shares, respectivelyTreasury stock, at cost, 74,759,985 and 74,444,288 common shares, respectively(3,034,823)(2,871,546)
Total Stockholders’ Equity983,465
 60,878
Total Stockholders’ Equity1,090,428 938,593 
Total Liabilities and Stockholders’ Equity$7,283,173
 $2,367,335
Total Liabilities and Stockholders’ Equity$7,315,967 $7,151,294 
 
See Notes to Consolidated Financial Statements.




43

GARTNER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Year Ended December 31, Year Ended December 31,
2017 2016 2015 202020192018
Revenues: 
  
  
Revenues:   
Research$2,471,280
 $1,857,001
 $1,614,904
Research$3,602,892 $3,374,548 $3,105,764 
ConferencesConferences120,140 476,869 410,461 
Consulting327,661
 318,934
 296,317
Consulting376,371 393,904 353,667 
Events337,903
 268,605
 251,835
Talent Assessment & Other174,650
 —
 —
OtherOther0 0 105,562 
Total revenues3,311,494
 2,444,540
 2,163,056
Total revenues4,099,403 4,245,321 3,975,454 
Costs and expenses: 
  
  
Costs and expenses:   
Cost of services and product development1,320,198
 945,648
 839,076
Cost of services and product development1,345,024 1,550,568 1,468,800 
Selling, general and administrative1,599,004
 1,089,184
 962,677
Selling, general and administrative2,038,963 2,103,424 1,884,141 
Depreciation63,897
 37,172
 33,789
Depreciation93,925 82,066 68,592 
Amortization of intangibles176,274
 24,797
 13,342
Amortization of intangibles125,059 129,713 187,009 
Acquisition and integration charges158,450
 42,598
 26,175
Acquisition and integration charges6,282 9,463 107,197 
Total costs and expenses3,317,823
 2,139,399
 1,875,059
Total costs and expenses3,609,253 3,875,234 3,715,739 
Operating (loss) income(6,329) 305,141
 287,997
Operating incomeOperating income490,150 370,087 259,715 
Interest income3,011
 2,449
 1,766
Interest income2,087 3,026 2,566 
Interest expense(127,947) (27,565) (22,548)Interest expense(115,636)(102,831)(126,774)
Other income, net3,448
 8,406
 4,996
(Loss) income before income taxes(127,817) 288,431
 272,211
(Benefit) provision for income taxes(131,096) 94,849
 96,576
(Loss) gain from divested operations(Loss) gain from divested operations0 (2,075)45,447 
Loss on extinguishment of debtLoss on extinguishment of debt(44,814)0 0 
Other (expense) income, netOther (expense) income, net(5,654)7,532 167 
Income before income taxesIncome before income taxes326,133 275,739 181,121 
Provision for income taxesProvision for income taxes59,388 42,449 58,665 
Net income$3,279
 $193,582
 $175,635
Net income$266,745 $233,290 $122,456 
     
Net income per share: 
  
  
Net income per share:   
Basic$0.04
 $2.34
 $2.09
Basic$2.99 $2.60 $1.35 
Diluted$0.04
 $2.31
 $2.06
Diluted$2.96 $2.56 $1.33 
Weighted average shares outstanding: 
  
  
Weighted average shares outstanding:   
Basic88,466
 82,571
 83,852
Basic89,315 89,817 90,827 
Diluted89,790
 83,820
 85,056
Diluted90,017 90,971 92,122 
 
See Notes to Consolidated Financial Statements.




44

GARTNER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)

 Year Ended December 31,
 2017 2016 2015
Net income$3,279
 $193,582
 $175,635
Other comprehensive income (loss), net of tax 
  
  
Foreign currency translation adjustments47,363
 (5,986) (23,089)
Interest rate hedges - net change in deferred gain or loss3,892
 1,670
 (1,339)
Pension plans - net change in deferred actuarial loss(64) (965) 1,196
Other comprehensive income (loss), net of tax51,191
 (5,281) (23,232)
Comprehensive income$54,470
 $188,301
 $152,403
 Year Ended December 31,
 202020192018
Net income$266,745 $233,290 $122,456 
Other comprehensive (loss) income, net of tax:   
Foreign currency translation adjustments10,375 4,169 (31,245)
Interest rate swaps - net change in deferred gain or loss(30,940)(39,394)(10,844)
Pension plans - net change in deferred actuarial gain or loss(725)(2,846)123 
Other comprehensive (loss) income, net of tax(21,290)(38,071)(41,966)
Comprehensive income$245,455 $195,219 $80,490 
 
See Notes to Consolidated Financial Statements.




45

GARTNER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(IN THOUSANDS)
 
Common
Stock		Additional
Paid-In
Capital		Accumulated
Other
Comprehensive
(Loss) Income, Net		Accumulated
Earnings		Treasury
Stock		Total
Stockholders’
Equity
Common
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income (Loss), Net
 
Accumulated
Earnings
 
Treasury
Stock
 
Total
Stockholders’
Equity (Deficit)
Balance at December 31, 2014$78
 $764,433
 $(21,170) $1,275,049
 $(1,857,219) $161,171
Net income—
 —
 —
 175,635
 —
 175,635
Other comprehensive loss—
 —
 (23,232) —
 —
 (23,232)
Issuances under stock plans—
 (5,964) —
 —
 13,495
 7,531
Stock compensation tax benefits—
 13,928
 —
 —
 —
 13,928
Common share repurchases—
 —
 —
 —
 (513,582) (513,582)
Stock compensation expense—
 46,149
 —
 —
 —
 46,149
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)
Balance at December 31, 2017Balance at December 31, 2017$82 $1,761,383 $1,508 $1,647,284 $(2,426,792)$983,465 
Adoption of ASU No. 2018-02Adoption of ASU No. 2018-02— — 591 (591)— 0 
Adoption of ASU No. 2016-16Adoption of ASU No. 2016-16— — — (13,717)— (13,717)
Net income—
 —
 —
 193,582
 —
 193,582
Net income— — — 122,456 — 122,456 
Other comprehensive loss—
 —
 (5,281) —
 —
 (5,281)Other comprehensive loss— — (41,966)— — (41,966)
Issuances under stock plans—
 (2,080) —
 —
 12,419
 10,339
Issuances under stock plans— (3,845)— — 14,026 10,181 
Common share repurchases—
 —
 —
 —
 (51,762) (51,762)Common share repurchases— — — — (275,834)(275,834)
Stock compensation expense—
 46,661
 —
 —
 —
 46,661
Balance at December 31, 2016$78
 $863,127
 $(49,683) $1,644,005
 $(2,396,649) $60,878
Stock-based compensation expenseStock-based compensation expense— 66,172 — — — 66,172 
Balance at December 31, 2018Balance at December 31, 201882 1,823,710 (39,867)1,755,432 (2,688,600)850,757 
Net income—
 —
 —
 3,279
 —
 3,279
Net income— — — 233,290 — 233,290 
Other comprehensive income—
 —
 51,191
 —
 —
 51,191
Issuances under stock plans and for acquisition4
 819,313
 —
 —
 11,129
 830,446
Other comprehensive lossOther comprehensive loss— — (38,071)— — (38,071)
Issuances under stock plansIssuances under stock plans— 6,555 — — 11,094 17,649 
Common share repurchases—
 —
 —
 —
 (41,272) (41,272)Common share repurchases— — — — (194,040)(194,040)
Stock 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
Stock-based compensation expenseStock-based compensation expense— 69,008 — — — 69,008 
Balance at December 31, 2019Balance at December 31, 201982 1,899,273 (77,938)1,988,722 (2,871,546)938,593 
Net incomeNet income— — — 266,745 — 266,745 
Other comprehensive lossOther comprehensive loss— — (21,290)— — (21,290)
Issuances under stock plansIssuances under stock plans— 7,117 — — 11,026 18,143 
Common share repurchasesCommon share repurchases— — — — (174,303)(174,303)
Stock-based compensation expenseStock-based compensation expense— 62,540 — — — 62,540 
Balance at December 31, 2020Balance at December 31, 2020$82 $1,968,930 $(99,228)$2,255,467 $(3,034,823)$1,090,428 
 
See Notes to Consolidated Financial Statements.




46

GARTNER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
 Year Ended December 31,
 202020192018
Operating activities:   
Net income$266,745 $233,290 $122,456 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization218,984 211,779 255,601 
Stock-based compensation expense62,540 69,008 66,172 
Deferred taxes(53,190)(55,787)1,524 
Loss (gain) from divested operations0 2,075 (45,447)
Loss on extinguishment of debt44,814 0 0 
Gain on sale of an equity security0 (9,120)0 
Reduction in the carrying amount of operating lease right-of-use assets81,851 86,466 0 
Amortization and write-off of deferred financing fees8,424 6,497 13,815 
  Amortization of deferred swap losses from de-designation10,320 0 0 
  Gain on de-designated swaps(2,157)0 0 
Changes in assets and liabilities, net of acquisitions and divestitures:
Fees receivable, net99,409 (66,729)(115,003)
Deferred commissions8,656 (30,315)(31,247)
Prepaid expenses and other current assets37,895 18,985 (50,551)
Other assets(8,950)(27,303)11,456 
Deferred revenues15,998 181,203 187,147 
Accounts payable and accrued and other liabilities111,939 (54,613)55,235 
Cash provided by operating activities903,278 565,436 471,158 
Investing activities:   
Additions to property, equipment and leasehold improvements(83,888)(149,016)(126,873)
Acquisitions - cash paid (net of cash acquired)0 (25,989)(15,855)
Divestitures - cash received (net of cash transferred)0 0 526,779 
Proceeds from the sale of an equity security0 14,120 0 
Cash (used in) provided by investing activities(83,888)(160,885)384,051 
Financing activities:   
Proceeds from employee stock purchase plan18,085 17,629 14,689 
Proceeds from borrowings2,000,000 5,000 0 
Early redemption premium payment(30,752)0 0 
Payments for deferred financing fees(25,786)0 0 
Proceeds from revolving credit facility332,000 309,000 248,000 
Payments on revolving credit facility(475,000)(316,000)(688,000)
Payments on borrowings(2,058,469)(102,579)(570,972)
Purchases of treasury stock(176,302)(199,042)(260,832)
Cash used in financing activities(416,224)(285,992)(1,257,115)
Net increase (decrease) in cash and cash equivalents and restricted cash403,166 118,559 (401,906)
Effects of exchange rates on cash and cash equivalents and restricted cash28,581 3,614 (6,489)
Cash and cash equivalents and restricted cash, beginning of year280,836 158,663 567,058 
Cash and cash equivalents and restricted cash, end of year$712,583 $280,836 $158,663 
Supplemental disclosures of cash flow information:   
47

 Year Ended December 31,
 2017 2016 2015
Operating activities: 
  
  
Net income$3,279
 $193,582
 $175,635
Adjustments to reconcile net income to net cash provided by operating activities: 
  
  
Depreciation and amortization240,171
 61,969
 47,131
Stock-based compensation expense78,943
 46,661
 46,149
Excess tax benefits from stock-based compensation exercises—
 —
 (13,860)
Deferred taxes(217,414) (2,648) 344
Gain on extinguishment of debt—
 (2,500) —
Amortization and write-off of deferred financing fees15,062
 3,082
 1,512
Changes in assets and liabilities, net of acquisitions: 
  
  
Fees receivable, net(368,516) (68,661) (44,476)
Deferred commissions(61,393) (18,673) (13,236)
Prepaid expenses and other current assets13,251
 (21,604) (13,268)
Other assets(18,529) 20,005
 (14,733)
Deferred revenues382,852
 97,979
 91,840
Accounts payable, accrued, and other liabilities186,811
 56,440
 82,523
Cash provided by operating activities254,517
 365,632
 345,561
Investing activities: 
  
  
Additions to property, equipment and leasehold improvements(110,765) (49,863) (46,128)
Acquisitions - cash paid (net of cash acquired)(2,634,809) (34,186) (196,229)
Cash used in investing activities(2,745,574) (84,049) (242,357)
Financing activities: 
  
  
Proceeds from employee stock purchase plan11,711
 9,250
 7,499
Proceeds from borrowings3,025,000
 715,000
 440,000
Payments for deferred financing fees(51,171) (4,975) —
Payments on borrowings(404,438) (835,000) (20,000)
Purchases of treasury stock(41,272) (58,961) (509,049)
Excess tax benefits from stock-based compensation exercises—
 —
 13,860
Cash provided by (used in) financing activities2,539,830
 (174,686) (67,690)
Net increase in cash and cash equivalents48,773
 106,897
 35,514
Effects of exchange rates on cash and cash equivalents25,902
 (5,640) (27,840)
Cash and cash equivalents, beginning of period474,233
 372,976
 365,302
Cash and cash equivalents, end of period$548,908
 $474,233
 $372,976
      
Supplemental disclosures of cash flow information: 
  
  
Cash paid during the period for: 
  
  
Interest$98,500
 $23,400
 $21,200
Income taxes, net of refunds received$76,100
 $86,300
 $83,500
Cash paid during the year for:   
Interest$112,249 $102,298 $117,500 
Income taxes, net of refunds received$33,921 $119,156 $95,800 



See Notes to Consolidated Financial Statements.




48

GARTNER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 — BUSINESS AND SIGNIFICANT ACCOUNTING POLICIESBusiness 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 mission-critical priorities today and build the successful organizations of tomorrow. We believe we have anour 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’reWe are a trusted asadvisor and an objective resource and critical partner byfor more than 12,000 organizations14,000 enterprises in more than 100 countries — across all major functions, in every industry and enterprise size. To learn more about how we help decision makers fuel

Segments. Gartner delivers its products and services globally through 3 business segments: Research, Conferences and Consulting. Note 9 — Revenue and Related Matters and Note 16 — Segment Information describe the futureproducts and services offered by each of our segments and provide additional financial information for those segments.

During 2018, the Company divested all of the non-core businesses that comprised its Other segment and moved a small residual product from the Other segment into the Research business visit gartner.com.and, as a result, no operating activity has been recorded in the Other segment in 2019 or 2020. Note 2 — Acquisitions and Divestitures provides additional information regarding the Company’s 2018 divestitures.


Basis of presentation. The accompanying consolidated financial statementsConsolidated 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 2017, 20162020, 2019 and 20152018 herein refer to the fiscal year unless otherwise indicated.

Gartner delivers its principal products and services globally through four business segments: Research, Consulting, Events and Talent Assessment & Other. The Company acquired two businesses during 2017, L2, Inc. ("L2") and CEB Inc. ("CEB"). Note 2 — Acquisitions and Divestiture provides additional information regarding these acquisitions. When used in these notes, the terms “Gartner,” the “Company,” “we,” “us,”“us” or “our” refer to Gartner, Inc. and its consolidated subsidiaries.


Principles of consolidation. The accompanying consolidated financial statementsConsolidated 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 statementsConsolidated 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 statementsConsolidated 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 statementsConsolidated Financial Statements in future periods.


Business Acquisitions. The Company completed acquisitionsIn December 2019, a novel coronavirus disease (“COVID-19”) was reported in eachWuhan, China and on March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Any future asset impairment charges, increase in allowance for doubtful accounts, or restructuring charges could be more likely if the negative effects of the three years ended December 31, 2017COVID-19 pandemic continue and detailed information relatedwill be dependent on the severity and duration of this crisis. To date, the Company has not observed any material impairments of its assets or a significant change in the fair value of assets due to these acquisitions is included in Note 2 — Acquisitions and Divestiture. the COVID-19 pandemic.

Business acquisitions. The Company accounts for business acquisitions in accordance with the acquisition method of accounting as prescribed by FASB ASC Topic No. 805, Business Combinations.Combinations. The acquisition method of accounting requires the Company to record the net assets acquired and liabilities acquiredassumed based on their estimated fair values as of the acquisition date, with anycertain exceptions. Any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to beis recorded toas goodwill. Under the acquisition method, the operating results of acquired
49

companies are included in the Company's consolidated financial statementsCompany’s Consolidated Financial Statements beginning on the date of acquisition. The Company completed business acquisitions in 2019. Note 2 — Acquisitions and Divestitures provides additional information regarding those business acquisitions.

The determination of the fair values of intangible and other assets acquired in acquisitionsan acquisition requires management judgment and the consideration of a number of factors, significant among themincluding the historical financial performance of the acquired businesses and their projected future performance, and estimates surrounding customer turnover, as well as assumptions regarding the level of competition and the costcosts necessary to reproduce certain assets. Establishing the useful lives of the intangiblesintangible assets also requires management judgment and the evaluation of a number of factors, among them projected cash flowsincluding the expected use of an asset, historical client retention rates, consumer awareness and the likelihood of competition.trade name history, as well as any contractual provisions that could limit or extend an asset’s useful life.


The Company classifies chargesCharges that are directly-relateddirectly related to itsthe Company’s acquisitions in the lineare expensed as incurred and classified as Acquisition and integration charges in the Consolidated Statements of Operations. The Company recorded $158.5 million, $42.6 millionNote 2 — Acquisitions and $26.2 million of such charges in 2017, 2016Divestitures provides additional information regarding the Company’s Acquisition and 2015, respectively. Included in these directly-related and incremental charges are legal, consulting, retention,integration charges.



severance, and accruals for cash payments subject to the continuing employment of certain key employees of the acquired companies.

Revenue Recognition. Revenue is recognized in accordance with U.S. GAAP and SEC Staff Accounting Bulletin No. 104, Revenue Recognition (“SAB 104”). Revenues are only recognized once all required criteria for recognition have been met. 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.

recognition.On January 1, 2018, the Company adopted FASB Accounting Standards Update ("ASU") No. 2014-09, "ASC Topic 606, Revenue from Contracts with Customers" ("ASU No. 2014-09") which requires changes in revenue recognition policies as well as enhanced disclosures. The adoption of ASU No. 2014-09 did not have a material impact on the Company’s consolidated financial statements. Additional information regarding the Company's adoption of ASU No. 2014-09 is provided below in the section titled Accounting standards issued but not yet adopted.

The Company’s revenuesrevenue by significant source areis accounted for as follows:

Research
•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 as earned when the leads are provided to vendors.


The Company typically enters into subscription contracts for research products for twelve-month periods or longer. The majority of research contracts•Conferences revenues are billabledeferred and recognized upon signing, absent special terms granted on a limited basis from time to time. Research contracts are 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 amountcompletion of the contract that is billable as a fee receivable at the time the contract is signed with a corresponding amount as deferred revenue, since the contract represents a legally enforceable claim.related conference or meeting.

Consulting
•Consulting revenues primarily derived from custom consulting and measurement services, are principally generated from fixed fee orand time and materials engagements. Revenues from fixed fee engagementscontracts are recognized on a proportionalas the Company works to satisfy our performance basis, while revenuesobligations. Revenues from time and materialmaterials engagements are recognized as work is delivered and/or services are provided. Revenues related to contract optimization engagements are contingent in nature and are only recognized upon satisfaction of all conditions related to their payment. Unbilled fees receivable associated with consulting engagements were $66.2 million at December 31, 2017 and $45.7 million at December 31, 2016.


Events
Events revenues are deferred and recognized upon the completionThe majority of the related symposium, conferenceCompany’s Research contracts are billable upon signing, absent special terms granted on a limited basis from time to time. Research contracts are generally non-cancelable and non-refundable, except for government contracts that may have cancellation or exhibition. In addition,fiscal funding clauses. It is the Company’s 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.

Note 9 — Revenue and Related Matters provides additional information regarding the Company’s business and revenues.

Allowance for losses. On January 1, 2020 , the Company defers certain costs directly relatedadopted ASU No. 2016-13, Financial Instruments—Credit Losses. Prior to events and expenses these costs in the period during which the related symposium, conference or exhibition occurs. The Company's policy is to defer only those costs, primarily prepaid site and production services costs, which are incremental and are directly attributable to a specific event. Other costs of organizing and producing our events, primarily Company personnel and non-event specific expenses, are expensed in the period incurred. At the end of each fiscal quarter,January 1, 2020, the Company assesses on an event-by-event basis whether the expected direct costs of producing a scheduled event will exceed the expected revenues. If such costs are expected to exceed revenues, the Company records the expected loss in the period determined.

Talent Assessment & Other

Talent Assessment & Other revenues arising from knowledge and skill assessment services are recognized depending on the nature of the underlying contract: (i) ratably over the term of the service period; (ii) upon delivery; or (iii) on a proportional performance basis. Revenues from training programs and survey and questionnaire products are primarily recognized upon delivery of the service.

Allowance for losses. The Company maintains an allowance for losses which is composed of a bad debt allowance and a sales reserve. Provisions are charged against earnings, either as a reduction in revenues or an increase to expense. The determination


of the allowance for losses on bad debts in accordance with then-existing U.S. GAAP under FASB ASC Topic 310, Receivables. Information regarding the Company’s accounting for credit losses, including our adoption of the new accounting standard, is based on historical loss experience, an assessmentprovided below under the heading “Adoption of current economic conditions, the aging of outstanding receivables, the financial health of specific clients, and probable losses.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, facility costs and charges against earnings related to uncollectible accounts.bad debt expense.

Commission expense. The Company records deferred commissions upon the signing ofa customer contractscontract and amortizes the deferred amount as commission expense over a period that aligns with the period intransfer to the customer of the services to which the related revenues are earned. Commission expense is included in SG&A incommissions relate. Note 9 — Revenue and Related Matters provides additional information regarding deferred commissions and the Consolidated Statementsamortization of Operations.such costs.

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 2017, 2016 and 2015, the CompanyForfeitures are recognized $78.9 million, $46.7 million and $46.1 million, respectively, of stock-based compensation expense.

Effective January 1, 2016, the Company adopted FASB ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU No. 2016-09"). ASU No. 2016-09 mandated certain changes in accounting for stock-based compensation, including a requirement that excess tax benefits or deficiencies resulting from stock-based compensation awards be recognized in income tax expense or benefit subsequent to the date of adopting the new accounting standard. Previously, an entity’s excess tax benefits or deficiencies were recorded in additional paid-in capital. ASU No. 2016-09 also requires that excess tax benefits related to stock-based compensation awards be reported as an operating activity in an entity’s statement of cash flows. Previously, excess tax benefits were reported as financing activities. As permitted by ASU No. 2016-09, the Company elected to apply these changes prospectively, commencing on January 1, 2016. The provisions of ASU No. 2016-09 had no impact on our financial results for periods prior to 2016. If the Company had applied ASU No. 2016-09 to 2015: (i) income tax expense would have declined by $13.9 million; (ii) basic and diluted income per share would have increased by $0.17 and $0.16, respectively; and (iii) cash provided by operating activities would have increased by $13.9 million.

ASU No. 2016-09 also 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 optionally elected to change its accounting policy and account for forfeitures as they occur. ASU No. 2016-09 requires thisA change in accounting policy to be applied using a cumulative effect adjustment to accumulated earnings asany of the beginningterms or conditions of stock-based
50

compensation awards is accounted for as a modification of the period in whichaward. Incremental compensation cost is measured as the rule is adopted. Accordingly,excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the fair value of the awards at the modification date. For vested awards, the Company recognizes incremental compensation cost in the period the modificationoccurs. For unvested awards, the Company recognizes any incremental compensation expense at the modificationdate or ratably over the requisite remaining service period, as appropriate. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost the Company recognizes is the cost of the original award. Note 10 — Stock-Based Compensation provides additional information regarding the Company’s stock-based compensation activity.

Other (expense) income, net. During 2019, the Company sold a minority equity investment for $14.1 million in cash and recognized a pretax gain of $9.1 million that was recorded a $0.3 million decrease to its opening accumulated earnings effective January 1, 2016.in Other (expense) income, net in the Consolidated Statements of Operations.

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 withinin our consolidated balance sheets. InWhen assessing the realizability of deferred tax assets, management considerswe consider if it is more likely than not that some or all of the deferred tax assets will not be realized. WeIn making this assessment, we consider the availability of loss carryforwards, projected reversalreversals of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning strategies in making this assessment.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. Recognized tax positions are measured at the largest amount of benefit with greater than a 50% likelihood of being realized. The Company uses estimates in determining the amount of unrecognized tax benefits associated with uncertain tax positions. Significant judgment is required in evaluating tax law and measuring the benefits likely to be realized. Uncertain tax positions are periodically re-evaluated and adjusted as more information about their ultimate realization becomes available. Note 12 — Income Taxes provides additional information regarding the Company’s income taxes.

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”). 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 2020, 2019 or 2018.

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, a seller’s tax effects and a buyer’s deferred taxes on asset transfers are immediately recognized upon a 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, 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. Additionally, in accordance with the new requirements of ASU No. 2016-16, the Company recorded income tax benefits of approximately (i) $28.3 million and $38.1 million in 2020 and 2019, respectively, from intercompany sales of certain intellectual property and (ii) $6.8 million in 2018 related to intra-entity transfers upon the merger of certain foreign subsidiaries. In the future, there could be a material impact from ASU No. 2016-16, depending on the nature, size and tax consequences of intra-entity transfers, if any.

Cash and cash equivalents. Includesequivalents and restricted cash. Cash and cash equivalents includes cash and all highly liquid investments with original maturities of three months or less, which are considered to be cash equivalents. The carrying value of cash equivalents approximates fair value due to theirthe short-term maturity.maturity of such instruments. Investments with maturities of more than three months are classified as marketable securities. Interest earned is classifiedrecorded in Interest income in the Consolidated Statements of Operations. As of December 31, 2017, the Company had $538.9 million of

U.S. GAAP 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 additional $10.0 millionentity’s statement of cash flows. Below is a table presenting the beginning-of-period and end-of-period cash amounts from the
51

Company’s Consolidated Balance Sheets and the total cash amounts presented in the Consolidated Statements of Cash Flows (in thousands).
December 31,
2020201920182017
Cash and cash equivalents$712,583 $280,836 $156,368 $538,908 
Restricted cash classified in (1), (2):
Prepaid expenses and other current assets0 0 2,295 15,148 
Other assets0 0 0 3,002 
Cash classified as held-for-sale (3)0 0 0 10,000 
Cash and cash equivalents and restricted cash per the Consolidated Statements of Cash Flows$712,583 $280,836 $158,663 $567,058 

(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 stock or 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 in its Consolidated Balance Sheet,asset for a total cash balance of $548.9 million,the CEB Talent Assessment business, which was reporteddivested in 2018. Note 2 — Acquisitions and Divestitures provides additional information regarding the Company’s 2018 divestitures.

Leases. On January 1, 2019, the Company adopted ASC 842, Leases using a modified retrospective approach. ASC 842 significantly changed the accounting for leases because a right-of-use model is now used whereby a lessee must record a right-of-use asset and a related lease liability on its balance sheet for most of its leases. Under ASC 842, leases are classified as either operating or finance arrangements, with such classification affecting the endingpattern of expense recognition in an entity’s income statement. For operating leases, ASC 842 requires recognition in an entity’s income statement of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis.

Prior to January 1, 2019, the Company recognized lease expense in accordance with then-existing U.S. GAAP under FASB ASC Topic 840, Leases (“ASC Topic 840”). Although there were significant changes to the Company’s leasing policies and procedures effective January 1, 2019 with the adoption of ASC 842, the lease expense recognition patterns under ASC Topic 842 in 2020 and 2019 and ASC Topic 840 in 2018 were substantively the same. As required by the new lease standard, the Company’s disclosures regardingits leasing activities have been significantly expanded to enable users of our Consolidated Financial Statements to assess the amount, timing and uncertainty of cash balance inflows related to leases. Information regarding our adoption of ASC 842 and its impact on the Company’s Consolidated Statement of Cash Flows.Financial Statements and related disclosures is provided at Note 7 — Leases.

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. The cost of these operating leases, including any contractual rent increases, rent concessions, and landlord incentives, are recognized ratably over the life of the related lease agreement. Lease expense was $87.9 million, $38.0 million, and $33.8 million in 2017, 2016 and 2015, respectively.


Equipment, leasehold improvements and other fixed assets owned by the Company are recorded at cost less accumulated depreciation. Except fordepreciation and amortization. Fixed assets, other than leasehold improvements, these fixed assets are depreciated using the straight-line method over the estimated useful liveslife of the assets.underlying asset. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful liveslife of the improvement or the remaining term of the related lease. The Company had total depreciationDepreciation and amortization expense of $63.9for fixed assets was $93.9 million, $37.2$82.1 million and $33.8$68.6 million in 2017, 20162020, 2019 and 2015,2018, respectively. The Company's total fixed assets, less accumulated depreciationProperty, equipment and amortization, consisted ofleasehold improvements, net are presented in the followingtable below (in thousands):.
 Useful LifeDecember 31,
Category(Years)20202019
Computer equipment and software2-7$277,973 $256,451 
Furniture and equipment3-8114,622 104,370 
Leasehold improvements2-15283,773 275,114 
Total cost 676,368 635,935 
Less — accumulated depreciation and amortization (339,603)(291,356)
Property, equipment and leasehold improvements, net $336,765 $344,579 
52

  Useful Life December 31,
Category (Years) 2017 2016
Computer equipment and software 2-7 $189,015
 $166,385
Furniture and equipment 3-8 67,288
 43,137
Leasehold improvements 2-15 175,716
 96,603
    $432,019
 $306,125
Less — accumulated depreciation and amortization   (210,512) (184,519)
Property, equipment, and leasehold improvements, net   $221,507
 $121,606

The Company incurs costs to develop internal useinternal-use software used in our operations, and certainits operations. Certain of thesethose costs meetingthat meet the criteria outlined in FASB ASC Topic No. 350,Intangibles - Goodwill and Other are capitalized and amortized over future periods. Net capitalized internal-use software development costs for internal use software was $26.9were $58.2 million and $16.6$55.7 million at December 31, 20172020 and 2016,2019, respectively, which isand are included in the Computer equipment and software categoryin the table above. Amortization ofexpense for capitalized internalinternal-use software development costs, which is classified inincluded with Depreciation in the Consolidated Statements of Operations, totaled $9.9$28.9 million, $8.8$20.0 million and $8.2 million during 2017, 2016 and 2015 respectively.

Finite-lived intangible assets. The Company has finite-lived intangible assets which are amortized against earnings using the straight-line method over their expected useful lives. Changes in intangible assets subject to amortization during the two-year period ended December 31, 2017 were as follows (in thousands):
December 31, 2017 Customer
Relationships		 Software Content Other Total
Gross cost, December 31, 2016 $63,369
 $16,025
 $3,728
 $33,645
 $116,767
Additions due to acquisitions (1) 1,253,312
 180,787
 141,707
 24,384
 1,600,190
Intangibles fully amortized —
 —
 (4,227) —
 (4,227)
Reclassified as held-for-sale (2) (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 1,200,316
 123,424
 104,313
 54,929
 1,482,982
Accumulated amortization (3) (92,983) (26,344) (47,475) (24,158) (190,960)
Balance, December 31, 2017 $1,107,333
 $97,080
 $56,838
 $30,771
 $1,292,022

December 31, 2016 Customer
Relationships		 Software Content Other Total
Gross cost, December 31, 2015 $62,860
 $16,219
 $5,450
 $33,474
 $118,003
Additions due to acquisitions 3,677
 —
 1,948
 302
 5,927
Intangibles fully amortized —
 (125) (162) —
 (287)
Foreign currency translation impact (3,168) (69) (3,508) (131) (6,876)
Gross cost 63,369
 16,025
 3,728
 33,645
 116,767
Accumulated amortization (3) (16,744) (8,904) (2,033) (12,285) (39,966)
Balance, December 31, 2016 $46,625
 $7,121
 $1,695
 $21,360
 $76,801
(1)The additions were primarily due to the Company's acquisitions of CEB and L2 during April 2017 and March 2017, respectively. See Note 2 — Acquisitions and Divestiture for additional information.


(2)Represents amounts reclassified (net) as held-for-sale assets related to the CEB Talent Assessment business. See Note 2 — Acquisitions and Divestiture for additional information.
(3)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.

Amortization expense related to finite-lived intangible assets was $176.3 million, $24.8 million and $13.3$13.2 million in 2017, 20162020, 2019 and 2015,2018, respectively. The estimated future amortization expense by year from finite-lived intangibles is as follows (in thousands):

2018$190,442
2019134,530
2020128,133
2021107,715
2022 and thereafter731,202
 $1,292,022
Goodwill. Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair valuevalues 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.


TheWhen performing our annual assessment of the recoverability of recorded goodwill, can be based on eitherwe initially perform a qualitative analysis evaluating whether any events or circumstances occurred or exist that provide evidence that it is more likely than not that the fair value of any of our reporting units is less than the related carrying amount. If we do not believe that it is more likely than not that the fair value of any of our reporting units is less than the related carrying amount, then no quantitative impairment test is performed. However, if the results of our qualitative assessment orindicate that it is more likely than not that the fair value of a combinationreporting unit is less than its respective carrying amount, then we perform a two-step quantitative impairment test. Evaluating the recoverability of the two approaches. Both methods utilize estimates which, in turn, requiregoodwill requires judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the resultingour 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

Our most recent annual impairment test of goodwill was a qualitative analysis conducted during the third quarter of 2017, whichended September 30, 2020 that indicated no impairment. Subsequent to completing our 2020 annual impairment test, no events or changes in circumstances were noted that required an interim goodwill impairment test. Note 3 — Goodwill and Intangible Assets provides additional information regarding the Company’s goodwill.

Finite-lived intangible assets. The Company has finite-lived intangible assets that are amortized using the straight-line method over the expected useful life of recorded goodwill, the Company utilizedunderlying asset. Note 3 — Goodwill and Intangible Assets provides additional information regarding the qualitative approach in assessing the fair values of its reporting units relative to their respective carrying values.Company’s finite-lived intangible assets.


The following table presents changes to the carrying amount of goodwill by segment during the two-year period ended December 31, 2017 (in thousands):
 Research Consulting Events Talent Assessment & Other
 Total
Balance, December 31, 2015 (1)$575,292
 $98,412
 $41,655
 $—
 $715,359
Additions due to acquisitions28,465
 —
 5,843
 —
 34,308
Foreign currency translation impact(8,307) (1,932) (975) —
 (11,214)
Balance, December 31, 2016$595,450
 $96,480
 $46,523
 $—
 $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) 1,318
 483
 20,530
 4,044
Balance, December 31, 2017$2,619,677
 $97,798
 $187,920
 $81,899
 $2,987,294
(1)The Company does not have any accumulated goodwill impairment losses.
(2)The 2017 goodwill additions are due to the acquisitions of CEB and L2 during April 2017 and March 2017, respectively. See Note 2—Acquisitions and Divestiture for additional information.
(3)Represents amounts reclassified as held-for-sale assets related to the CEB Talent Assessment business. See Note 2 — Acquisitions and Divestiture for additional information.

Impairment of long-lived assets. The Company'sCompany’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 respectivean asset or an asset group 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 and asset groups by determining whether thetheir carrying valuevalues can be recovered through undiscounted future operating cash flows. If events or circumstances indicate that the carrying valuevalues might not be recoverable based on undiscounted future operating cash flows, an


impairment loss wouldmay 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.asset or asset group. The Company did not record any impairment charges for long-lived assets or asset groups during the three yearthree-year period ended December 31, 2017.2020.

Pension obligations. The Company has defined-benefitdefined benefit pension plans inat several of its international locations (see Note 13 — Employee Benefits).locations. Benefits earned and paid under thesethose plans are generally based on years of service and level of employee compensation. The Company accounts forCompany’s defined benefit pension plans are accounted for in accordance with the requirements of FASB ASC Topic No. 715.Topics 715 and 960. The Company determines the periodic pension expense and related liabilities for theseits defined benefit pension plans through actuarial assumptions and valuations. The Company recognized approximately $3.5 millionservice cost component of pension expense in eachis recorded as SG&A expense and all other components of the years ended 2017, 2016, and 2015. The Company classifies pension expense in SG&Aare recorded as Other (expense) income, net in the Consolidated Statements of Operations. Note 15 — Employee Benefitsprovides additional information regarding the Company’s defined benefit pension plans.
 
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 inrecorded as Interest expense in the Consolidated Statements of Operations. The Company amended its credit facility during 2017 and borrowed additional amounts related to its acquisitions. The Company had $3.3 billion of principal amount of debt outstanding at December 31, 2017 compared to $702.5 million at December 31, 2016. Note 56 — Debt provides additional information regarding the Company's debt.Company’s debt arrangements.

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
53

currency translation adjustments, a component of Accumulated other comprehensive (loss) income, (loss), net within the Stockholders’ Equity section ofon 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 inas part of Other (expense) income, net withinin the Consolidated Statements of Operations. The Company had net currency transaction lossesgains (losses) of $(5.5)$12.5 million, $(0.4)$(1.1) million and $(2.6)$9.2 million in 2017, 2016,2020, 2019 and 2015,2018, respectively. The Company enters into foreign currency forward exchange contracts to mitigate the effects of adverse fluctuations in foreign currency exchange rates on thesecertain transactions. TheseThose contracts generally have a short durationdurations and are recorded at fair value with both realized and unrealized gains and losses recorded in Other (expense) income, net. The net gain (loss)loss from theseforeign currency forward exchange contracts was $0.8$14.1 million, $(0.3)$2.5 million and $(0.1)$10.4 million in 2017, 2016,2020, 2019 and 2015,2018, respectively. Note 13 — Derivatives and Hedging provides additional information regarding the Company’s foreign currency forward exchange contracts.

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 required fair value disclosures are included inprovided at Note 1214 — 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 1315 — Employee Benefits) is maintained with a large international insurance company that was rated investment grade as of December 31, 20172020 and 2016.2019.

Stock repurchase programs. The Company records the cost to repurchase shares of its own common shares tostock as treasury stock. During 2017, 2016 and 2015, the Company used $41.3 million, $59.0 million, and $509.0 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. Note 8 — Stockholders’ Equity provides additional information regarding the Company’s common stock repurchase activity.


Adoption of new accounting standards. The Company did not adopt any significant newadopted the accounting standards described below during 2017.2020.








Accounting standards issued but not yet adopted. The FASB has issued accounting standards that have not yet become effective and that may impact the Company’s consolidated financial statements or related disclosuresImplementation Costs in future periods. These standards and their potential impact are discussed below:

Accounting standards effective in 2018

Stock Compensation Award Modificationsa Cloud Computing Arrangement — In May 2017,August 2018, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation - Scope of Modification2018-15, Customer’s Accounting" (" for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU No. 2017-09"2018-15”). ASU No. 2017-09 provides guidance about which changes2018-15 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 the termsdevelop or conditions of a share-based payment award require an entity to apply modification accounting.obtain internal-use software. Costs that are capitalized under ASU No. 2017-09 was effective for2018-15 will be expensed over the term of the cloud computing arrangement. Gartner adopted ASU No. 2018-15 on January 1, 2018. We have concluded that the adoption of ASU No. 2017-09 will not have2020 on a material impact on the Company's consolidated financial statements.

Retirement Benefits Cost Presentation — In March 2017, the FASB issued 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, and provides additional guidance on the presentation of net benefit cost in the income statement and clarifies the components eligible for capitalization. ASU No. 2017-07 was effective for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2017-07 will not have a material impact on the Company's consolidated financial statements.

Partial Sales of Non-financial Assets — In February 2017, the FASB issued 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 recently established guidance on non-financial asset de-recognition as well as the accounting for partial sales of non-financial assets. It conforms the de-recognition guidance on non-financial assets with the model for revenue transactions. ASU No. 2017-05 was effective for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2017-05 will not have a material impact on the Company's consolidated financial statements.

Definition of a Business — In January 2017, the FASB issued ASU No. 2017-01, "Clarifying the Definition of a Business" ("ASU No. 2017-01"), which was effective for Gartner on January 1, 2018. ASU No. 2017-01 changes the U.S. GAAP definition of a business which can impact the accounting for asset purchases, acquisitions, goodwill impairment, and other assessments. We have concluded that the adoption of ASU No. 2017-01 will not have a material impact on the Company's consolidated financial statements.

Presentation of Restricted Cash — In November 2016, the FASB issued 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 shown on the statement of cash flows. If different, a reconciliation of the cash balances reported in the cash flow statement and the balance sheet would need to be provided along with explanatory information. ASU No. 2016-18 was effective for Gartner on January 1, 2018.prospective basis. The adoption of ASU No. 2016-18 will require the Company to disclose restricted cash and, as a result, will change the presentation of its consolidated statements of cash flows.

Income Taxes — In October 2016, the FASB issued 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 and was effective for Gartner on January 1, 2018. Current U.S. GAAP requires deferral of the income tax implications of an intercompany sale of assets until the assets are sold to a third party or recovered through use. Under the new rule, the seller’s tax effects and the buyer’s deferred taxes on post-adoption asset transfers will be immediately recognized upon the sale. On the date of adoption of ASU No. 2016-16 any taxes attributable to pre-2018 intra-entity transfers that were previously deferred will be accelerated and recorded to accumulated earnings as permitted by the transition rules. ASU 2016-16 could have a material impact on our consolidated financial statements in the future depending on the nature, size, and tax consequences of future intra-entity transfers, if any.

Statement of Cash Flows — In August 2016, the FASB issued 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. ASU No. 2016-15 was effective for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2016-15 will not have a material impact on the Company's consolidated financial statements.

Financial Instruments Recognition and Measurement — In January 2016, the FASB issued 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 will be measured at fair value with changes in fair value recognized in net income. ASU No. 2016-01 was effective for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2016-01 will not have a material impact on the Company's consolidated financial statements.



Revenue Recognition — In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU No. 2014-09"). ASU No. 2014-09 and related amendments require changes in revenue recognition policies as well as enhanced disclosures. ASU No. 2014-09 is intended to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses in 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. ASU No. 2014-09 also requires significantly expanded disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. An entity may adopt ASU No. 2014-09 using either a full retrospective approach for each prior reporting period presented or a modified retrospective approach (the cumulative effect method). The Company adopted ASU No. 2014-09 on January 1, 2018 using the cumulative effect method of adoption. The adoption of ASU No. 2014-092018-15 did not have a material impact on the Company’s consolidated financial statements. The adoption of the standard does require the Company to reclassify certain immaterial amounts in the Company’s consolidated balance sheet as well as provide the enhanced disclosures required by the standard, both of which will be provided in the Company's Form 10-Q filing for the quarterly period ending March 31, 2018.Consolidated Financial Statements.


Accounting standards effective in 2019

Targeted Improvements to Accounting for Hedging Activities - Fair Value Measurement Disclosures — In August 2017,2018, the FASB issued ASU No. 2017-12, "Derivatives and Hedging ("2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2017-12"2018-13”). ASU No. 2017-122018-13, which is intended to improve the financial reporting of hedging relationships to better portray 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 applicationpart of the hedge accounting guidance in currentFASB’s broader disclosure framework project, modified and supplemented the previous U.S. GAAP.GAAP disclosure requirements pertaining to fair value measurements, with an emphasis on Level 3 disclosures of the valuation hierarchy. Gartner adopted ASU No. 2017-12 is effective for Gartner2018-13 on January 1, 2019. We are currently evaluating the impact2020. The adoption of ASU No. 2017-122018-13 did not have a material impact on the Company's consolidated financial statements.Company’s Consolidated Financial Statements.


Distinguishing Liabilities from Equity — In July 2017, the FASB issued ASU No. 2017-11, "Earnings Per Share, Distinguishing Liabilities from Equity, and Derivatives and Hedging" ("ASU No. 2017-11"). ASU No. 2017-11 is intended to simplify the accounting for financial instruments with characteristics of liabilities and equity. Among the issues addressed are: (i) determining whether an instrument (or embedded feature) is indexed to an entity’s own stock; (ii) distinguishing liabilities from equity for mandatorily redeemable financial instruments of certain nonpublic entities; and (iii) identifying mandatorily redeemable non-controlling interests. ASU No. 2017-11 is effective for Gartner on January 1, 2019. We are currently evaluating the potential impact of ASU No. 2017-11 on the Company's consolidated financial statements.

Leases — In February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU No. 2016-02") which will require significant changes in the accounting and disclosure for lease arrangements. Currently under U.S. GAAP, lease arrangements that meet certain criteria are considered operating leases and are not recorded on the balance sheet. All of the Company's existing lease arrangements are accounted for as operating leases and are thus not recorded on the Company's balance sheet. ASU No. 2016-02 will significantly change the accounting for leases since a right-of-use ("ROU") model must be used in which the lessee must record a ROU asset and a lease liability on the balance sheet for leases with terms longer than 12 months. Leases will be classified as either finance or operating arrangements, with classification affecting the pattern of expense recognition in the income statement. ASU No. 2016-02 also requires expanded disclosures about leasing arrangements. ASU No. 2016-02 will be effective for Gartner on January 1, 2019. We are currently evaluating the potential impact of ASU No. 2016-02 on our consolidated financial statements.

Accounting standards effective in 2020

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"2017-04”). ASU No. 2017-04 simplifiessimplified the determination of the amount of goodwill to be potentially charged off by eliminating Step 2 of the current goodwill impairment test.test under previous U.S. GAAP. Gartner adopted ASU No. 2017-04 is effective for Gartner on January 1, 2020. We have concluded that theThe adoption of ASU No. 2017-04 willdid not have a material impact on the Company's consolidated financial statements.Company’s Consolidated Financial Statements.


Financial Instrument Credit Losses—In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses" ("Losses (“ASU No. 2016-13"2016-13”). ASU No. 2016-13 amendsamended the currentprevious 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. Gartner adopted ASU No. 2016-13 is effective for Gartner on January 1, 2020 with earlyno cumulative effect adjustment to the Company’s opening retained earnings. The Company applied the expected credit loss model to its fees receivable balance on January 1, 2020 using a historical loss rate method. The Company’s trade receivables are collected fairly quickly and its credit losses have historically been low. The adoption permitted. Weof ASU No. 2016-13 did not have a material impact on the Company’s Consolidated Financial Statements.
54


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, modified and supplemented the previous U.S. GAAP annual disclosure requirements for employers that sponsor defined benefit pension plans. Gartner adopted ASU No. 2018-14 on December 31, 2020 on a retroactive basis and applied to each comparative period presented in the Company’s Consolidated Financial Statements. The adoption of ASU No. 2018-14 did not have a material impact on the Company’s Consolidated Financial Statements.

Accounting standards issued but not yet adopted. The FASB has issued accounting standards that had not yet become effective as of December 31, 2020 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 standard effective immediately upon voluntary election by Gartner

Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). ASU No. 2020-04 provides that an entity can elect not to apply certain required modification accounting in U.S. GAAP to contracts where all changes to the critical terms relate to reference rate reform (e.g., the expected discontinuance of LIBOR and the transition to an alternative reference interest rate, etc.). In addition, the rule provides optional expedients and exceptions that enable entities to continue to apply hedge accounting for hedging relationships where one or more of the critical terms change due to reference rate reform. The rule became effective for all entities as of March 12, 2020 and will generally no longer be available to apply after December 31, 2022. The Company is currently evaluating the potential impact of ASU No. 2016-132020-04 on our consolidated financial statements.

The FASB also continues to work on a number of other significant accounting standards which if issued could materially impactits Consolidated Financial Statements, including the Company's accounting policies and disclosures in future periods. However, since these standards have not yet been issued, the effective dates andrule’s potential impact are unknown.on any debt modifications or other contractual changes in the future that may result from reference rate reform.


Accounting standard effective in 2021



Simplifying the Accounting for Income Taxes — In December 2019, the FASB issued ASU No. 2019-12, Income Taxes—Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU No. 2019-12 provides new guidance to simplify the accounting for income taxes in certain areas, changes the accounting for select income tax transactions and makes minor ASC improvements. Gartner adopted ASU No. 2019-12 on January 1, 2021. The Company has concluded that ASU No. 2019-12 will not have a material impact on its Consolidated Financial Statements upon adoption.


Note 2 — ACQUISITIONS AND DIVESTITUREAcquisitions and Divestitures


Acquisitions


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 completed the following business acquisitions:

For the year endedYear Ended December 31, 2017:2019

CEB


On April 5, 2017,October 1, 2019, the Company acquired 100% of the outstanding capital stockmembership interests 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,TOPO Research LLC (“TOPO”), a privately-held firmcompany based in New YorkRedwood City, with 150 employees,California, for an aggregate purchase price of $134.2$25.0 million. L2TOPO is a subscription-based research and advisory business. The acquisition of TOPO expanded our market presence, product offerings and other business that benchmarksopportunities.

For cash flow reporting purposes, the digital performanceCompany paid $23.7 million in cash for TOPO after considering the cash acquired with the business and certain other purchase price adjustments at closing. In addition to the purchase price, the Company may also be required to pay up to $6.5 million in cash in the future based on the continuing employment of brands.certain key employees. Such amount is recognized as compensation expense over two years and reported in Acquisition and integration charges in the Consolidated Statements of Operations.

Total Consideration Transferred


The following table below summarizes the aggregate consideration paid for these acquisitions (in thousands):
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 (5)$3,518,829
 $134,199
 $3,653,028

(1)Includes the total consideration transferred for 100% of the outstanding capital stock of the acquired businesses.
(2)The cash paid at close represents the gross contractual amount paid. The Company paid the additional $12.5 million in cash in third quarter 2017. Net of cash acquired from these businesses and for cash flow reporting purposes, the Company paid a total of $2.63 billion in cash.
(3)The Company borrowed a total of approximately $2.8 billion in conjunction with the CEB acquisition (see Note 7 — Debt for additional information).
(4)Consists of the fair value of (i) Gartner common stock issued (see Note 7 — Stockholders' Equity for additional information) and (ii) stock-based compensation replacement awards.
(5)The Company may also be required to pay up to an additional $20.8 million in cash for L2 which is contingent on the achievement of certain employment conditions by several key employees. This amount is being recognized as compensation expense over approximately three years.




Preliminary Allocation of Purchase Price
The following table summarizes the preliminary allocation of the aggregate purchase price tofor the TOPO acquisition based on the fair value of the assets acquired and liabilities assumed for the acquisitions of L2 and CEB (in thousands):.
55
 
CEB (3)
 
L2 (4)
 Total
Assets:     
Cash$194,706
 $4,852
 $199,558
Fees receivable175,440
 8,277
 183,717
Prepaid expenses and other current assets53,610
 1,167
 54,777
Property, equipment and leasehold improvements51,399
 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 assets66,818
 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 liabilities568,427
 1,669
 570,096
Total liabilities$957,033
 $17,919
 $974,952
Net assets acquired$3,518,829
 $134,199
 $3,653,028

(1)Assets: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. The Company recorded certain measurement period adjustments to the CEB preliminary purchase price allocation during 2017, primarily related to tenant improvement incentives and tax liabilities. These adjustments resulted in a net increase to recorded goodwill of approximately $32.0 million. As of December 31, 2017, the allocation of the purchase price for the L2 and CEB acquisitions are preliminary with respect to certain tax matters and contingencies. The Company will resolve these remaining matters and complete the allocation of the purchase price by the end of the accounting measurement period for the respective acquisition. 
(2)CashAll of the acquired$1,281 
Fees receivable1,402 
Prepaid expenses and other assets166 
Goodwill (1)19,293 
Finite-lived intangible assets are finite-lived. The determination of the fair value of the finite-lived intangible(2)5,250 
Total 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 intangibleacquired27,392 
Total liabilities assumed (primarily deferred revenues)2,417 
Net 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.acquired$24,975 

(3)The Company's financial statements include the operating results of CEB beginning on April 5, 2017, the date of acquisition. CEB's operating results and the related goodwill are being reported as part of the Company's Research, Events, and Talent Assessment & Other segments. 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)


The pro forma results have been prepared in accordance with U.S. GAAP and include(1)We believe that the following pro forma adjustments:

(a) An increase in interest expense and amortization of debt issuance costs related torecorded goodwill is supported by the financinganticipated synergies resulting from the acquisition. All of the CEB acquisition. Note 5 — Debt provides further information regarding the Company's borrowings relatedrecorded goodwill is expected to the CEB acquisition;be deductible for tax purposes.
(b) A change in revenue as a result of the required fair value adjustment to deferred revenue; and


(c) An adjustment for additional depreciation and amortization expense as a result of the preliminary purchase price allocation for(2)The acquired finite-lived intangible assets and property, equipment, and leasehold improvements.
(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 a result pro forma financial information for L2 for prior periods has not been presented. L2's operating results and the related goodwill are being reported as part of the Company's Research segment.
The Company recognized $158.5 million of acquisition and integration charges in 2017 compared to $42.6 million in 2016. The additional charges during 2017 primarily consisted of higher professional fees, severance, stock-based compensation charges,customer relationships and accruals for exit costs for certain office space thatcontent, which are being amortized over 6 years and 1.5 years, respectively. To determine the Company does not intend to occupy in Arlington, Virginia that was related to the CEB acquisition. The following table presents a summaryfair values of the activity related to this space for the year ended December 31, 2017 (in thousands):acquired intangible assets, we primarily relied on income valuation methodologies, in particular, discounted cash flow models.

Liability balance at December 31, 2016$—
Charges and adjustments13,087
Payments(126)
Liability balance at December 31, 2017$12,961

For the year ended December 31, 2016:

On November 9, 2016, the Company acquired 100%The operating results 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 theTOPO 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 being reported as part of the Company'sCompany’s Research and EventsConferences segments. TheThe operating results of TOPO have been included in the Company’s Consolidated Financial Statements since the date of acquisition; however, such operating results were not material to the Company’s consolidated operating results and segment results. Had the Company acquired TOPO in prior periods, the impact on the Company’s operating results would not have been material and, as a result, pro forma financial information for prior periods has not been presented herein.

During 2019, the Company also recorded an additional $1.9paid $2.3 million of additional goodwill in 2016 related torestricted cash for deferred consideration from a prior year2017 acquisition.


For the year endedYear Ended December 31, 2015:2018


Although the Company did not complete any business acquisitions during 2018, it paid $15.9 million of restricted cash during that year for deferred consideration from a 2017 acquisition.

Acquisition and Integration Charges

The Company acquired 100%recognized $6.3 million, $9.5 million and $107.2 million of Acquisition and integration charges during 2020, 2019 and 2018, respectively. Acquisition and integration charges reflect additional costs and expenses resulting from our acquisitions and include, among other items, professional fees, severance and stock-based compensation charges. During 2018, the charges included $58.3 million of exit costs for certain acquisition-related office space in Arlington, Virginia that the Company did not occupy.

Divestitures

During 2018, the Company completed the divestitures of all 3 of the outstanding sharesnon-core businesses comprising its Other segment, all of Nubera eBusiness S.L., and Capterra, Inc., during 2015. Each ofwhich were acquired in the CEB acquisition from 2017. Revenue from those divested operations was approximately $97.3 million 2018, while the gross contribution was $60.5 million. The Company used the cash proceeds from these businesses assist clients with selectingdivestitures to pay down debt.

Additional information regarding the Other segment divestitures is provided below.

CEB Challenger training business software. The aggregate purchase price was $206.9 in cash. Net of cash acquired with the businesses and for cash flow reporting purposes

On August 31, 2018, the Company paid $196.2sold its CEB Challenger training business for $119.1 million and realized approximately $116.0 million in cash.cash, which was net of working capital adjustments and certain closing costs. The Company recorded $79.6a pretax gain on the sale of approximately $8.3 million.

CEB Workforce Survey and Analytics business
56


On May 1, 2018, the Company sold its CEB Workforce Survey and Analytics business for $28.0 million and $138.1 million of amortizable intangible assets and goodwill, respectively, and $10.8realized approximately $26.4 million in liabilitiescash, which was net of certain closing costs. The Company recorded a pretax gain on a net basis for these acquisitions. The operating results and the related goodwill are reported as partsale of the Company's Research segment.approximately $8.8 million.


Planned divestiture of the CEB Talent Assessment business


On February 6,April 3, 2018, the Company announced that it had reached a definitive agreement to sellsold its CEB Talent Assessment business for $403.0 million and realized approximately $400.0 million.$375.8 million in cash from the sale, which was net of cash transferred with the business and certain closing costs. The agreement wasCompany recorded a pretax gain of approximately $15.5 million on the resultsale.

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 originally acquired in the CEB transaction. These amounts include the sale of a previously announced processsmall Research segment product called Metrics That Matter on October 31, 2018.

Note 3 — Goodwill and Intangible Assets

Goodwill. The table below presents changes to evaluate strategic alternatives for the business. The purchase price is subject to typical adjustments for, among other things,carrying amount of goodwill by segment during the working capital of the business. The transaction is expected to close in the first half of 2018 and is subject to customary closing conditions and certain approvals.

The CEB Talent Assessment business was acquired by Gartner as part of the CEB acquisition in 2017 and is a significant portion of the Talent Assessment & Other segment. During thetwo-year period from the CEB acquisition date toended December 31, 2017,2020 (in thousands).
 ResearchConferencesConsultingTotal
Balance at December 31, 2018$2,638,418 $187,654 $97,064 $2,923,136 
Additions due to an acquisition (1)17,557 1,736 0 19,293 
Foreign currency translation impact(4,915)251 (39)(4,703)
Balance at December 31, 20192,651,060 189,641 97,025 2,937,726 
Foreign currency translation impact13,672 (5,550)(301)7,821 
Balance at December 31, 2020$2,664,732 $184,091 $96,724 $2,945,547 

(1)The 2019 additions are due to the CEB Talent Assessment business contributed approximately $126.1 millionacquisition of revenueTOPO. See Note 2 — Acquisitions and incurred a pre-tax loss of approximately $19.3 million. Effective with its designation as held-for-sale on October 4, 2017, we discontinued recording depreciation andDivestitures for additional information.



amortization on the property, equipment and leasehold improvements andFinite-lived intangible assets. Changes in finite-lived intangible assets of this business as required underduring the accounting rules. The Company also separately classified the related assets and liabilities of this business as held-for-sale in itstwo-year period ended December 31, 2017 Consolidated Balance Sheet.2020 are presented in the tables below (in thousands).

December 31, 2020Customer
Relationships		SoftwareContentOtherTotal
Gross cost at December 31, 2019$1,145,109 $111,033 $14,140 $30,838 $1,301,120 
Intangible assets fully amortized(2,394)(787)(9,929)(20,152)(33,262)
Foreign currency translation impact11,495 351 (246)(72)11,528 
Gross cost1,154,210 110,597 3,965 10,614 1,279,386 
Accumulated amortization (2)(381,776)(83,320)(3,595)(3,697)(472,388)
Balance at December 31, 2020$772,434 $27,277 $370 $6,917 $806,998 

57

December 31, 2019Customer
Relationships		SoftwareContentOtherTotal
Gross cost at December 31, 2018$1,131,656 $110,701 $98,842 $51,662 $1,392,861 
Additions due to an acquisition (1)3,600 01,200 450 5,250 
Intangible assets fully amortized0 0 (85,900)(21,358)(107,258)
Foreign currency translation impact9,853 332 (2)84 10,267 
Gross cost1,145,109 111,033 14,140 30,838 1,301,120 
Accumulated amortization (2)(283,369)(61,564)(11,225)(19,875)(376,033)
Balance at December 31, 2019$861,740 $49,469 $2,915 $10,963 $925,087 

(1)The 2019 additions are due to the acquisition of TOPO. See Note 2 — Acquisitions and Divestitures for additional information.
(2)Finite-lived intangible assets are amortized using the straight-line method over the following periods: Customer relationships—3 to 13 years; Software—2 to 7 years; Content—2 to 3 years; and Other —2 to 11 years.

Amortization expense related to finite-lived intangible assets was $125.1 million, $129.7 million and $187.0 million in 2020, 2019 and 2018, respectively. The estimated future amortization expense by year for finite-lived intangible assets is presented in the table below (in thousands).
2021$105,940 
202296,065 
202396,050 
202490,718 
202582,049 
2026 and thereafter336,176 
 $806,998 

Note 4 — Other Assets
The principal components of the held-for-saleCompany’s other assets and liabilities at December 31, 2017 for this business are summarized in the table below (in thousands):.
 December 31,
 20202019
Benefit plan-related assets$98,536 $84,600 
Non-current deferred tax assets103,559 79,618 
Other54,221 58,027 
Total other assets$256,316 $222,245 

Note 5 — Accounts Payable and Accrued and Other Liabilities
Cash and cash equivalents$10,000
Fees receivable, net50,928
Goodwill212,994
Intangible assets, net250,472
Other assets, including property, equipment and leasehold improvements, net

18,571
Total assets held-for-sale$542,965
  
Accounts payable and accrued liabilities$32,388
Deferred revenues61,450
Deferred tax liabilities47,404
Other liabilities4,603
Total liabilities held-for-sale$145,845


The sale of the business has been structured as a sale of the shares of the affected subsidiaries with the corresponding deferred taxes being transferred to the buyer upon consummation of the sale. As such, the Company made an accounting policy election to classify the deferred taxes associated with the individual assets and liabilities that are part of the transaction as held-for-sale.

3 — OTHER ASSETS
Other assets consist of the following (in thousands): 
 December 31,
 2017 2016
Benefit plan-related assets$97,525
 $45,958
Non-current deferred tax assets31,067
 27,275
Other65,150
 14,046
Total other assets$193,742
 $87,279

4 — ACCOUNTS PAYABLE, ACCRUED, AND OTHER LIABILITIES
Company’s Accounts payable and accrued liabilities consistare summarized in the table below (in thousands).
58

 December 31,
 20202019
Accounts payable$38,588 $32,995 
Payroll and employee benefits payable189,557 165,449 
Severance and retention bonus payable26,476 24,281 
Bonus payable224,763 192,100 
Commissions payable130,306 142,499 
Income tax payable29,550 7,878 
VAT payable58,496 31,438 
Current portion of operating lease liabilities83,995 76,516 
Current portion of interest rate swap contracts at fair value (1)34,886 0 
Other accrued liabilities135,814 115,640 
Total accounts payable and accrued liabilities$952,431 $788,796 

(1)See Note 14 — Fair Value Disclosures for the determination of the followingfair values of these instruments.

The Company’s Other liabilities are summarized in the table below (in thousands):.
 December 31,
 20202019
Non-current deferred revenues$26,754 $24,409 
Long-term taxes payable86,751 63,565 
Benefit plan-related liabilities128,199 108,615 
Non-current deferred tax liabilities173,233 189,814 
Other, including long-term portion of fair value of interest rate swap contracts124,656 93,343 
Total other liabilities$539,593 $479,746 


 December 31,
 2017 2016
Accounts payable$49,000
 $41,009
Payroll and employee benefits payable120,278
 87,821
Severance and retention bonus payable44,685
 22,425
Bonus payable162,710
 105,549
Commissions payable108,969
 68,273
Taxes payable46,758
 20,378
Other accrued liabilities134,421
 95,316
Total accounts payable and accrued liabilities$666,821
 $440,771
Note 6 — Debt
 





Other liabilities consist ofThe Company’s total outstanding borrowings are summarized in the followingtable below (in thousands):.
December 31,
Description20202019
2020 Credit Agreement - Term loan facility (1)$395,000 $0 
2020 Credit Agreement - Revolving credit facility (1), (2)5,000 0 
2016 Credit Agreement - Term Loan A facility0 1,252,969 
2016 Credit Agreement - Revolving credit facility0 148,000 
2025 Notes0 800,000 
2028 Notes (3)800,000 0 
2030 Notes (4)800,000 0 
Other (5)6,046 6,545 
Principal amount outstanding (6)2,006,046 2,207,514 
Less: deferred financing fees (7)(27,245)(23,908)
Net balance sheet carrying amount$1,978,801 $2,183,606 
 December 31,
 2017 2016
Non-current deferred revenue$16,205
 $11,289
Long-term taxes payable66,386
 19,737
Benefit plan-related liabilities118,868
 67,747
Lease-related matters115,840
 38,042
Non-current deferred tax liabilities

206,338
 22,520
Other54,362
 22,482
Total other liabilities$577,999
 $181,817


5 — DEBT
2016 Credit Agreement

(1)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. As of December 31, 2017, the 2016 Credit Agreement provides 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 minimumcontractual annualized 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 covenantsrate as of December 31, 2017.

The Company borrowed a total of approximately $2.8 billion for2020 on the CEB acquisition. The Company borrowed $1.675 billion under the 20162020 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 its 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 $300.0 million 364-day Bridge Credit Facility discussed below, were used to fund the CEB acquisition and related costs. As discussed below, the funds borrowed under the 364-day Bridge Credit Facility were completely repaid during 2017.

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 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 with its lenders 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 will be 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 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 Incremental 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 was 1.56%, which consisted of a floating Eurodollar base rate of 0.1875% plus a margin of
59

1.375%. However, the Company has interest rate swap contracts that effectively convert the floating Eurodollar base rates on outstanding amounts to a fixed base rate.
(2)The Company had approximately $1.0 billion of available borrowing capacity on the 2020 Credit Agreement revolver (not including the expansion feature) as of December 31, 2020.
(3)Consists of 800.0 million principal amount of 2028 Notes outstanding. The 2028 Notes bear interest at a fixed rate equal to, at the Company's option, either:

(i) the greatest of: (x) the Administrative Agent’s prime rate; (y) the average rate on Federal Reserve Board of New York rate plus 1/2 of 1%;4.50% 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.



The Term loan B facility contains representations and warranties, affirmative and negative covenants and events of default that are the same as the Term loan A facility and revolving credit facility, except that a breach of financial maintenance covenants will not result in an event of default under the Term loan B facility unless the lenders under the revolving credit facility and Term loan A facility have accelerated the revolving loans and Term loan A loans and terminated their commitments thereunder. Additionally, the Term loan B facility includes mandatory prepayment requirements related to asset sales (subject to reinvestment), debt incurrence (other than permitted debt) and excess cash flow, subject to certain limitations described therein. The Term loan B facility will mature on April 5, 2024 and amounts outstanding thereunder willJuly 1, 2028.
(4)Consists of 800.0 million principal amount of 2030 Notes outstanding. The 2030 Notes bear interest at a fixed rate per annum equalof 3.75% and mature on October 1, 2030.
(5)Consists of 2 State of Connecticut economic development loans. One of the loans originated in 2012, has a 10-year maturity and the outstanding balance of $1.0 million as of December 31, 2020 bears interest at a fixed rate of 3.00%. The second loan, originated in 2019, has a 10-year maturity and bears interest at a fixed rate of 1.75%. Both of these loans may be repaid at any time by the Company without penalty.
(6)The weighted average annual effective rate on the Company’s outstanding debt for 2020, including the effects of its interest rate swaps discussed below, was 4.75%.
(7)Deferred financing fees are being amortized to atInterest expense, net over the optionterm of Gartner, (i) adjusted LIBOR plus 2.00% or (ii) an alternate base rate plus 1.00%.the related debt obligation.

364-day Bridge Credit Facility2030 Notes


On April 5, 2017, in conjunction with the acquisition of CEB, 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, in conjunction with the acquisition of CEB,September 28, 2020, the Company issued $800.0$800 million aggregate principal amount of 5.125%3.75% Senior Notes due 20252030 (the “Senior“2030 Notes”). The proceeds of the Senior2030 Notes were also usedissued pursuant to fund a portionan indenture, dated as of September 28, 2020 (the “2030 Note Indenture”), among the purchase price associatedCompany, the guarantors party thereto and U.S. Bank National Association, as trustee. The 2030 Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers (as defined in the Securities Act of 1933, as amended (the “Securities Act”)) pursuant to Rule 144A under the Securities Act and outside the United States only to non-U.S. persons in accordance with Regulation S under the CEB acquisition.Securities Act.


The Senior2030 Notes were issued at an issue price of 100.00%100.0% and bear interest at a fixed rate of 5.125%3.75% per annum. Interest on the Senior2030 Notes is payable on April 1 and October 1 of each year.year, beginning on April 1, 2021. The Senior2030 Notes will mature on AprilOctober 1, 2025. 2030. The net proceeds of the 2030 Notes, together with cash on hand, were used to redeem the Company’s existing 5.125% senior notes due 2025 and pay related fees and expenses.

The Company may redeem some or all of the Senior2030 Notes at any time on or after AprilOctober 1, 20202025 for cash at the redemption prices set forth in the 2030 Note Indenture, plus accrued and unpaid interest to, but not including,excluding, the redemption date. Prior to AprilOctober 1, 2020,2025, the Company may redeem up to 40.0%40% of the aggregate principal amount of the Senior2030 Notes with the proceeds of certain equity offerings at a redemption price of 105.125%103.75% plus accrued and unpaid interest to, but not including,excluding, the redemption date. In addition, the Company may redeem some or all of the Senior2030 Notes prior to AprilOctober 1, 2020,2025, at a redemption price of 100%100.0% of the principal amount of the Senior2030 Notes plus accrued and unpaid interest to, but not including,excluding, the redemption date, plus a “make-whole” premium. If the Company experiences specific kinds of change of control and a ratings decline, it will be required to offer to purchaserepurchase the Senior2030 Notes at a price equal to 101%101.0% of the principal amount thereof plus accrued and unpaid interest.interest to, but excluding, the repurchase date.


The Senior2030 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. The 2030 Notes are jointly and severally guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries that have outstanding indebtedness or guarantee other specified indebtedness.



The 2030 Note Indenture contains covenants that limit, among other things, the Company’s ability and the ability of some of the Company’s subsidiaries to:



•create liens; and

•merge or consolidate with other entities.


Outstanding Borrowings -These covenants are subject to a number of exceptions and qualifications. The 2030 Note Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, and interest on all the then outstanding 2030 Notes issued under the 2030 Note Indenture to be due and payable.

2028 Notes
60


On June 22, 2020, the Company issued $800 million aggregate principal amount of 4.50% Senior Notes due 2028 (the “2028 Notes”). The 2028 Notes were issued pursuant to an indenture, dated as of June 22, 2020 (the “2028 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee. The 2028 Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers (as defined in the Securities Act) pursuant to Rule 144A under the Securities Act and outside the United States only to non-U.S. persons in accordance with Regulation S under the Securities Act.

The 2028 Notes were issued at an issue price of 100.0% and bear interest at a rate of 4.50% per annum. Interest on the 2028 Notes is payable on January 1 and July 1 of each year, beginning on January 1, 2021. The Notes will mature on July 1, 2028.

The Company may redeem some or all of the 2028 Notes at any time on or after July 1, 2023 for cash at the redemption prices set forth in the 2028 Note Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to July 1, 2023, the Company may redeem up to 40% of the aggregate principal amount of the 2028 Notes with the proceeds of certain equity offerings at a redemption price of 104.5% plus accrued and unpaid interest to, but excluding, the redemption date. In addition, the Company may redeem some or all of the 2028 Notes prior to July 1, 2023, at a redemption price of 100.0% of the principal amount of the 2028 Notes plus accrued and unpaid interest to, but excluding, the redemption date, plus a “make-whole” premium. If the Company experiences specific kinds of change of control and a ratings decline, it will be required to offer to repurchase the 2028 Notes at a price equal to 101.0% of the principal amount thereof plus accrued and unpaid interest to, but excluding, the repurchase date.

The 2028 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. The 2028 Notes are jointly and severally guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries that have outstanding indebtedness or guarantee other specified indebtedness.

The 2028 Note Indenture contains covenants that limit, among other things, the Company’s ability and the ability of some of the Company’s subsidiaries to:

•create liens; and
•merge or consolidate with other entities.

These covenants are subject to a number of exceptions and qualifications. The 2028 Note Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, and interest on all the then outstanding 2028 Notes issued under the 2028 Note Indenture to be due and payable.

2020 Credit Agreement

On September 28, 2020, the Company entered into an agreement among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent,” and such agreement, the “2020 Credit Agreement”), which amended and restated the Company’s existing credit facility, dated as of June 17, 2016 (as amended, supplemented or otherwise modified from time to time, the “2016 Credit Agreement”).

The 2020 Credit Agreement provides for a $400 million senior secured five-year term loan facility and a $1.0 billion senior secured five-year revolving facility. The term and revolving facilities may be increased, at the Company’s option and under certain conditions, by up to an additional $1.0 billion in the aggregate plus additional amounts subject to the satisfaction of certain conditions, including a maximum secured leverage ratio. The term loan will be repaid in consecutive quarterly installments commencing December 31, 20172020, plus a final payment due on September 28, 2025, and may be prepaid at any time without penalty or premium (other than applicable breakage costs) at the option of the Company. The revolving credit facility may be used for loans, and up to $75.0 million may be used for letters of credit. The revolving loans may be borrowed, repaid and re-borrowed until September 28, 2025, at which time all amounts borrowed must be repaid.


On September 28, 2020, the Company drew down $400 million in term loans. The initial drawdown was used to refinance the outstanding amounts under the 2016 Credit Agreement. Additional amounts drawn down under the 2020 Credit Agreement will be used for general corporate purposes, including the funding of acquisitions, payment of capital expenditures and the repurchase of shares.
61


The following table summarizesCompany’s obligations under the 2020 Credit Agreement are guaranteed, on a secured basis, by certain existing and future direct and indirect U.S. subsidiaries (the “Subsidiary Guarantors”), pursuant to the Amended and Restated Guarantee and Collateral Agreement, dated September 28, 2020 (the “2020 Guarantee and Collateral Agreement”), which was entered into by the Company and the Subsidiary Guarantors in favor of the Administrative Agent and amended and restated the Guarantee and Collateral Agreement, dated as of June 17, 2016 (as amended, supplemented or otherwise modified from time to time) in its entirety. Pursuant to the 2020 Guarantee and Collateral Agreement, the Company’s totalobligations under the 2020 Credit Agreement and the guarantees of the Subsidiary Guarantors are secured by first priority security interests in substantially all of the assets of the Company and the Subsidiary Guarantors, including pledges of all stock and other equity interests in direct subsidiaries owned by the Company and the Subsidiary Guarantors (but only up to 66% of the voting stock of each direct foreign subsidiary or foreign subsidiary holding company owned by the Company or any Subsidiary Guarantor). The security and pledges are subject to certain exceptions.

Loans under the 2020 Credit Agreement bear interest at a rate equal to, at the Company’s option, either (i) the greatest of: (x) the Wall Street Journal prime rate; (y) the average rate on Federal Reserve Board of New York rate plus 1/2 of 1%; and (z) and the adjusted LIBO rate (adjusted for statutory reserves) for a one-month interest period plus 1%, in each case plus a margin equal to between 0.125% and 1.25% depending on the Company’s consolidated leverage ratio as of the end of the four consecutive fiscal quarters most recently ended, or (ii) the adjusted LIBO rate (adjusted for statutory reserves) plus a margin equal to between 1.125% and 2.25%, depending on the Company’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended. The commitment fee payable on the unused portion of the revolving credit facility is equal to between 0.175% and 0.40% based on utilization of the revolving credit facility. The Company has also agreed to pay customary letter of credit fees.

The 2020 Credit Agreement contains certain customary restrictive loan covenants, including, among others, a financial covenant requiring a maximum leverage ratio, and covenants limiting the Company’s ability to incur indebtedness, grant liens, make acquisitions, be acquired, dispose of assets, pay dividends, repurchase stock, make capital expenditures, make investments and enter into certain transactions with affiliates.

The 2020 Credit Agreement contains customary events of default that include, among others, non-payment of principal, interest or fees, material inaccuracy of representations and warranties, violation of covenants, cross defaults to certain other indebtedness, bankruptcy and insolvency events, ERISA defaults, material judgments, and events constituting a change of control. The occurrence of an event of default will increase the applicable rate of interest by 2.0%, allow the lenders to terminate their obligations to lend under the 2020 Credit Agreement and could result in the acceleration of the Company’s obligations under the credit facilities and an obligation of any or all of the guarantors to pay the full amount of the Company’s obligations under the credit facilities.

2016 Credit Agreement

Prior to September 28, 2020, the Company had a credit facility that provided for a $1.5 billion Term Loan A facility (the “Term Loan A facility”) and a $1.2 billion revolving credit facility. On June 30, 2020, the Company used proceeds from the 2028 Notes offering to prepay $787.9 million outstanding borrowings (in thousands):under the Term Loan A facility. The remaining amounts outstanding under the 2016 Credit Agreement were repaid when the Company entered into the 2020 Credit Agreement on September 28, 2020.

  Balance
December 31,		 Balance
December 31,
Description: 2017 2016
2016 Credit Agreement - Term loan A facility (1) $1,429,312
 $585,000
2016 Credit Agreement - Term loan B facility (1) 496,250
 —
2016 Credit Agreement - Revolving credit facility (1), (2) 595,000
 115,000
Senior notes (3) 800,000
 —
Other (4) 2,500
 2,500
Principal amount outstanding (5), (6) 3,323,062
 $702,500
  Less: deferred financing fees (7) (44,217) (8,109)
Net balance sheet carrying amount $3,278,845
 $694,391
2025 Notes

Prior to September 28, 2020, the Company had $800.0 million aggregate principal amount of 5.125% Senior Notes due 2025 (the “2025 Notes”). The 2025 Notes were issued at an issue price of 100.0% and bore interest at a fixed rate of 5.125% per annum.
(1)The contractual annualized interest rate as of December 31, 2017 on the Term loan A and B facilities was 3.57%, which consisted of a floating Eurodollar base rate of 1.57% plus a margin of 2.00%. The contractual annualized interest rate on the revolving credit facility was 4.07%, which consisted of a floating eurodollar base rate of 1.57% plus a margin of 2.50%. However, the Company has interest rate swap contracts which effectively convert the floating eurodollar base rates on a portion of the amounts outstanding to a fixed base rate.
(2)The Company had $558.0 million of available borrowing capacity on the revolver (not including the expansion feature) as of December 31, 2017.
(3)Consists of an $800.0 million principal amount of Senior Notes outstanding. The Senior Notes pay a fixed rate of 5.125% and have an eight year maturity.
(4)Consists of a $2.5 million State of Connecticut economic development loan with a 3.0% fixed rate of interest. The loan was originated in 2012 and has a 10 year maturity. Principal payments are deferred for the first five years and the loan may be repaid at any point by the Company without penalty.
(5)The average annual interest rate on the Company's outstanding debt as of December 31, 2017 was 3.91%, including the effect of its interest rate swaps discussed below.
(6)The contractual due dates by year on the debt outstanding as of December 31, 2017 are as follows: $80.0 million in 2018; $107.6 million in 2019; $144.7 million in 2020; $42.6 million in 2021; $1.68 billion in 2022; and approximately $1.27 billion thereafter. In January 2018 the Company repaid $255.0 million of outstandings on the revolver which were not contractually due until 2022.
(7)The deferred financing fees are being amortized to Interest expense, net over the term of the respective debt obligation. 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.


In conjunction with the issuance of the 2030 Notes, the Company redeemed all of the 2025 Notes on September 28, 2020 for cash, and the Company recorded $30.8 million of charges for the early redemption premium and $14.0 million of charges for the write-off of deferred financing costs related to the 2025 Notes and the 2016 Credit Agreement, which are recorded in Loss on extinguishment of debt on the Consolidated Statements of Operations.

Interest Rate Swaps

As of December 31, 2017,2020, the Company had 4 fixed-for-floating interest rate swap contracts. The swaps havecontracts with a total notional value of $1.4 billion andthat mature in 2022. Thethrough 2025. Prior to June 30, 2020, the Company designatesdesignated the swaps as accounting hedges of the
62

forecasted interest payments on $1.4 billion of the Company’s variable rateits variable-rate borrowings. The Company pays base fixed rates on these swaps ranging from 1.54%2.13% to 2.13%3.04% and in return receives a floating eurodollarEurodollar base rate on $1.4 billion of 30-day notional borrowings.


ThePrior to the repayment of all amounts outstanding under the 2016 Credit Agreement revolving credit facility and the prepayment of $787.9 million under the Term Loan A facility on June 30, 2020, the Company accountsaccounted for theits interest rate swapsswap contracts as cash flow hedges in accordance with FASB ASC Topic 815. SinceBecause the swaps hedgehedged forecasted interest payments, changes in the fair valuevalues of the swaps arewere recorded in accumulatedAccumulated other comprehensive income (loss), a component of stockholders’ equity, as long as the swaps continuecontinued to be highly effective hedges of the designated interest rate risk. Any ineffective portion of a change in the fair value of the hedges isa hedge was recorded in earnings. AllUpon the prepayment of $787.9 million under the swaps were highly effective hedgesCompany’s Term Loan A facility and repayment of all amounts outstanding under the 2016 Credit Agreement revolving credit facility, the Company determined that it was probable that forecasted interest payments on $200.0 million of variable rate debt would not occur. Additionally, as the variable rate debt under the Term Loan A facility was replaced by $800.0 million of fixed rate debt under the 2028 Notes, the Company de-designated all of its interest rate swaps. As a result, the Company accelerated the release of $10.3 million from Accumulated other comprehensive loss, net related to the forecasted interest payments that were no longer probable. The loss was recorded in Other income (expense), net on the Consolidated Statement of Operations for the year ended December 31, 2020. The remaining $104.0 million as of December 31, 2017.2020 is classified within Accumulated other comprehensive loss, net and will be amortized into Interest expense, net over the terms of the hedged forecasted interest payments. Subsequent changes to fair value of the interest rate swaps are recorded in Other income (expense), net. The interest rate swaps had a positivenegative unrealized fair valuevalues (liabilities) of $3.4$109.2 million at December 31, 2017 and a negative fair value of $2.3$64.8 million as of December 31, 2016. These amounts2020 and December 31, 2019, respectively, of which $78.1 million and $47.2 million were deferred and classifiedrecorded in accumulatedAccumulated other comprehensive income (loss),loss, net of tax effect.







6 — 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 2018 and 2032. The future minimum annual cash payments under these operating lease agreementseffect, as of December 31, 2017 was as follows (in thousands):  2020 and December 31, 2019, respectively. See Note 11 — Fair Value Disclosures for the determination of the fair values of Company’s interest rate swaps.

Year ended December 31, 
2018$129,570
2019121,543
2020113,612
2021106,371
202297,225
Thereafter727,405
Total minimum lease payments (1)$1,295,726
Note 7 — Leases

(1) Excludes approximately $284.0 million of sublease income.

Legal Matters.The Company’s leasing activities are primarily for facilities under cancelable and non-cancelable lease agreements expiring during 2021 and through 2038. These facilities support our executive and administrative activities, research and consulting, sales, systems support, operations, and other functions. The Company is involved in legal proceedingsalso has leases for office equipment and litigation arising inother assets, which are not significant. Certain of the ordinary courseCompany’s lease agreements include (i) renewal options to extend the lease term for up to ten years and/or (ii) options to terminate the agreement within one year. Additionally, certain of business. We believe that the potential liability, if any, in excessCompany’s lease agreements provide standard recurring escalations 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 resolvedlease payments for, among other things, increases in a future period.lessor’s maintenance costs and taxes. Under some lease agreements, the Company may be entitled to allowances, free rent, lessor-financed tenant improvements and other incentives. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Indemnifications.The Company has various agreementssubleases certain office space that may obligate usit does not intend to indemnifyoccupy. Such sublease arrangements expire during 2021 and through 2032 and primarily relate to facilities in Arlington, Virginia. Certain of the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arisingCompany’s sublease agreements: (i) include renewal and termination options; (ii) provide for customary escalations of lease payments in the normal course of businessbusiness; and (iii) grant the subtenant certain allowances, free rent, Gartner-financed tenant improvements and other incentives.

Lease Accounting under whichASC 842

Under ASC 842, a lease is a contract or an agreement, or a part of another arrangement, between two or more parties that, at its inception, creates enforceable rights and obligations that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

Right-of-use assets represent a right to use an underlying asset for the lease term and the related lease liability represents an obligation to make lease payments pursuant to the contractual terms of the lease agreement. Right-of-use assets and lease liabilities are initially recognized on the lease commencement date based on the present value of the lease payments over the lease term. For all of our facilities leases, we customarily agreeaccount for both lease components and nonlease components (e.g., common area maintenance charges, etc.) as a single lease component when determining the present value of our lease payments. Variable lease payments that are not dependent on an index or a rate are excluded from the determination of our right-of-use assets and lease liabilities and such payments are recognized as expense in the period when the related obligation is incurred.

The Company’s lease agreements do not provide implicit interest rates. Instead, the Company uses an incremental borrowing rate determined on the lease commencement date to holdcalculate 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 amountpresent value of future payments under these indemnification agreements duelease payments. The incremental borrowing rate is calculated for each individual lease and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis (in the currency that the lease is denominated) over a similar term an amount equal to the conditional naturelease
63

payments in a similar economic environment. Right-of-use assets also include any initial direct costs incurred by the Company and lease payments made to a lessor on or before the related lease commencement date, less any lease incentives received directly from the lessor.

Certain of the Company’s obligationsfacility lease agreements include options to extend or terminate the lease. When it is reasonably certain that the Company will exercise a renewal or termination option, the present value of the lease payments for the affected lease is adjusted accordingly. Leases with a term of twelve months or less are accounted for in the same manner as long-term lease arrangements, including any related disclosures. Lease expense for operating leases is generally recognized on a straight-line basis over the lease term, unless the related right-of-use asset was previously impaired.
All of our existing sublease arrangements have been classified as operating leases with sublease income recognized on a straight-line basis over the term of the sublease arrangement. To measure the Company’s periodic sublease income, we elected to use a practical expedient under ASC 842 to aggregate nonlease components with the related lease components when (i) the timing and pattern of transfer for the nonlease components and the unique factsrelated lease components are the same and (ii) the lease components, if accounted for separately, would be classified as an operating lease. This practical expedient applies to all of each particular agreement. Historically, payments madeour existing sublease arrangements.
When our projected lease cost for the term of a sublease exceeds our anticipated sublease income for that same period, we treat that circumstance as an indicator that the carrying amount of the related right-of-use asset may not be fully recoverable. In those situations, we perform an impairment analysis and, if indicated, we record a charge against earnings to reduce the right-of-use asset to the amount deemed to be recoverable in the future.
On the Consolidated Balance Sheet as of December 31, 2020 and 2019, right-of-use assets are classified and reported in Operating lease right-of-use assets, and the related lease liabilities are included in Accounts payable and accrued liabilities (current) and Operating lease liabilities (long-term). On the Consolidated Statement of Cash Flows for 2020 and 2019, the reduction in the carrying amount of right-of-use assets is presented separately and the change in operating lease liabilities is included under Accounts payable and accrued and other liabilities in the reconciliation of net income to cash provided by us under these agreements haveoperating activities.
All of the Company’s leasing and subleasing activity for 2020 and 2019 was recognized in Selling, general and administrative expense in the Consolidated Statements of Operations. The table below presents the Company’s net lease cost and certain other information related to our leasing activities as of and for the years ended December 31, 2020 and 2019 (dollars in thousands).
Year Ended December 31,
Description20202019
  Operating lease cost (1)$140,829 $144,727 
  Variable lease cost (2)17,463 16,404 
  Sublease income(38,925)(38,901)
  Total lease cost, net (3)$119,367 $122,230 
  Cash paid for amounts included in the measurement of operating lease liabilities$137,790 $135,799 
  Cash receipts from sublease arrangements$38,565 $34,441 
  Right-of-use assets obtained in exchange for new operating lease liabilities$27,258 $136,997 
As of December 31,20202019
  Weighted average remaining lease term for operating leases (in years)9.610.2
  Weighted average discount rate for operating leases6.6 %6.7 %

(1)Included in operating lease cost was $42.2 million and $43.2 million of costs for subleasing activities during 2020 and 2019, respectively.
(2)These amounts are primarily variable lease and nonlease costs that were not been material. fixed at the lease commencement date or are dependent on something other than an index or a rate.
(3)The Company did not capitalize any operating lease costs during 2020 or 2019.

As of December 31, 2017,2020, the (i) maturities of operating lease liabilities under non-cancelable arrangements and (ii) estimated future sublease cash receipts from non-cancelable arrangements were as follows (in thousands):
64

OperatingSublease
LeaseCash
Period ending December 31,PaymentsReceipts
2021$138,403 $44,446 
2022133,854 47,965 
2023130,627 48,909 
2024120,092 40,629 
2025115,279 40,989 
Thereafter549,496 102,510 
Total future minimum operating lease payments and estimated sublease cash receipts (1)1,187,751 $325,448 
Imputed interest(323,590)
Total operating lease liabilities per the Consolidated Balance Sheet$864,161 

(1)Approximately 80% of the operating lease payments pertain to properties in the United States.

The table below indicates where the discounted operating lease payments from the above table are classified in the Consolidated Balance Sheet (in thousands).
December 31,
Description20202019
Accounts payable and accrued liabilities$83,995 $76,516 
Operating lease liabilities780,166 832,533 
Total operating lease liabilities per the Consolidated Balance Sheet$864,161 $909,049 

As of December 31, 2020, the Company didhad additional operating leases for facilities that have not haveyet commenced. These operating leases, which aggregated $29.1 million of undiscounted lease payments, are scheduled to commence during 2021 with lease terms of up to thirteen years.

Lease Disclosures Under ASC Topic 840

The Company’s operating lease expense under ASC Topic 840 for its facilities, office equipment and other assets was $93.5 million in 2018. The cost of such operating leases, including any material payment obligations under any such indemnification agreements.contractual rent increases, rent concessions and landlord incentives, was recognized ratably over the life of the related lease agreement.






7Note 8 — STOCKHOLDERS’ EQUITYStockholders’ Equity
 
Common stock. Holders of Gartner’s Common Stock,common stock, par value $.0005$0.0005 per share, (“Common Stock”) are entitled to one1 vote per share on all matters to be voted by stockholders. The Company does not currently pay cash dividends on its Common Stock.common stock. Also, our 20162020 Credit Agreement contains a negative covenant whichthat may limit our ability to pay dividends. The following table below summarizes transactions relating to our Common Stockthe Company’s common stock for the three years ended December 31, 2017:  2020.
65

 
Issued
Shares
 
Treasury
Stock
Shares
Balance at December 31, 2014156,234,415
 68,713,890
Issuances under stock plans—
 (1,003,746)
Purchases for treasury (1)—
 6,186,101
Balance at December 31, 2015156,234,415
 73,896,245
Issuances under stock plans—
 (923,696)
Purchases for treasury (1)—
 610,623
Balance at December 31, 2016156,234,415
 73,583,172
Issued in connection with the acquisition of CEB7,367,652
 —
Issuances under stock plans—
 (1,186,150)
Purchases for treasury (1)—
 382,183
Balance at December 31, 2017163,602,067
 72,779,205
 Issued
Shares		Treasury
Stock
Shares
Balance at December 31, 2017163,602,067 72,779,205 
Issuances under stock plans0 (933,246)
Purchases for treasury (1), (2)0 2,054,018 
Balance at December 31, 2018163,602,067 73,899,977 
Issuances under stock plans0 (825,115)
Purchases for treasury (1), (2)0 1,369,426 
Balance at December 31, 2019163,602,067 74,444,288 
Issuances under stock plans0 (820,065)
Purchases for treasury (1), (2)0 1,135,762 
Balance at December 31, 2020163,602,067 74,759,985 

(1)The Company used a total of $41.3 million, $59.0 million, and $509.0 million in cash for share repurchases in 2017, 2016, and 2015, respectively.

(1)The Company used a total of $176.3 million, $199.0 million and $260.8 million in cash for share repurchases during 2020, 2019 and 2018, respectively.
Share Issuance Related to the Acquisition(2)The number 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 partrepurchased in all periods presented above included those that were settled in January of the consideration for the CEB acquisition. Note 2 — Acquisitions and Divestiture 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.following year due to timing.


Share repurchase authorization. The Company hasIn 2015, the Company’s Board of Directors authorized a share repurchase program to repurchase up to $1.2 billion board approved authorization to repurchase the Company'sof its common stock, of which $1.1$0.6 billion remained available as of December 31, 2017.2020. The Company may repurchase its common stock from time to timetime-to-time in amounts, and 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 fromby cash on hand and borrowings underborrowings. See Note 19 — Subsequent Events for a discussion regarding an increase in the Company’s credit arrangement.share repurchase authorization.


66

Accumulated Other Comprehensive Income (Loss), Net. net (“AOCI/L”)

The following tables disclosebelow provide information about the changes in Accumulated Other Comprehensive Income (Loss) ("AOCL/I"), a component of equity,AOCI/L by component and the related amounts reclassified out of AOCL/IAOCI/L to income during the years indicated (net of tax, in thousands) (1):.


2017Year Ended December 31, 2020
 Interest Rate SwapsDefined Benefit Pension PlansForeign Currency Translation AdjustmentsTotal
Balance - December 31, 2019$(47,164)$(8,584)$(22,190)$(77,938)
Other comprehensive income (loss) activity during the year:
   Change in AOCI/L before reclassifications to income(56,862)(1,057)10,375 (47,544)
   Reclassifications from AOCI/L to income (2), (3)25,922 332 0 26,254 
Other comprehensive income (loss) for the year(30,940)(725)10,375 (21,290)
Balance - December 31, 2020$(78,104)$(9,309)$(11,815)$(99,228)
 Interest Rate Swaps Defined Benefit Pension Plans Foreign Currency Translation Adjustments Total
Balance - December 31, 2016$(1,409) $(5,797) $(42,477) $(49,683)
Changes during the period:       
Change in AOCL/I before reclassifications to income(1,492) —
 47,363
 45,871
Reclassifications from AOCL/I to income during the period (2), (3)5,384
 (64) —
 5,320
Other comprehensive income (loss) for the period3,892
 (64) 47,363
 51,191
Balance - December 31, 2017$2,483
 $(5,861) $4,886
 $1,508


Year Ended December 31, 2019

 Interest Rate SwapsDefined Benefit Pension PlansForeign Currency Translation AdjustmentsTotal
Balance - December 31, 2018$(7,770)$(5,738)$(26,359)$(39,867)
Other comprehensive income (loss) activity during the year:
   Change in AOCI/L before reclassifications to income(36,949)(3,011)4,169 (35,791)
   Reclassifications from AOCI/L to income (2), (3)(2,445)165 0 (2,280)
Other comprehensive income (loss) for the year(39,394)(2,846)4,169 (38,071)
Balance - December 31, 2019$(47,164)$(8,584)$(22,190)$(77,938)

2016
 Interest Rate Swaps Defined Benefit Pension Plans Foreign Currency Translation Adjustments Total
Balance - December 31, 2015$(3,079) $(4,832) $(36,491) $(44,402)
Changes during the period:       
Change in AOCL/I before reclassifications to income(2,902) (1,113) (5,986) (10,001)
Reclassifications from AOCL/I to income during the period (2), (3)4,572
 148
 —
 4,720
Other comprehensive income (loss) for the period1,670
 (965) (5,986) (5,281)
Balance - December 31, 2016$(1,409) $(5,797) $(42,477) $(49,683)

(1) Amounts in parentheses represent debits (deferred losses).
(2) The$24.9 million and $(3.4) million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the year ended December 31, 2020 and 2019, respectively. $10.3 million of tax effect.the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Other (expense) income, net for the year ended December 31, 2020. See Note 11 –6 — Debt and Note 13 — Derivatives and Hedging for information regarding the cash flow hedges.
(3) The reclassifications related to defined benefit pension plans were primarily recorded in Selling, general and administrative expense, net of tax effect. See Note 13 –15 — Employee Benefits for information regarding the Company’s defined benefit pension plans.

8 — STOCK-BASED COMPENSATIONThe estimated net amount of the existing losses on the Company’s interest rate swaps that are reported in Accumulated other comprehensive loss, net at December 31, 2020 that is expected to be reclassified into earnings within the next 12 months is $29.1 million.
 
Note 9 — Revenue and Related Matters

Our Business and Revenues

Gartner delivers its products and services globally through 3 business segments: Research, Conferences and Consulting. Our revenues from those business segments are discussed below.

Research

67

Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of an enterprise through reports, briefings, proprietary tools, access to our research experts, peer networking services and membership programs that enable our clients to drive organizational performance.

Research revenues are mainly derived from subscription contracts for research products, representing approximately 92% 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 80% to 85% 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 have not historically resulted in 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 provides business professionals across an organization the opportunity to learn, share and network. From our Gartner Symposium/Xpo series, to industry-leading conferences focused on specific business roles and topics, to peer-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice.

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 conference activities, primarily Company personnel and non-conference specific expenses, are expensed in the period incurred.

Consulting 

Consulting combines the power of Gartner market-leading research with custom analysis and on-the-ground support to help chief information officers and other senior executives driving technology-related strategic initiatives move confidently from insight to action.
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.
68


Disaggregated Revenue

Our disaggregated revenue by reportable segment is presented in the tables below for the years indicated (in thousands).

By Primary Geographic Market(1), (2)

Year Ended December 31, 2020
Primary Geographic MarketResearchConferencesConsultingTotal
United States and Canada$2,339,482 $75,024 $223,318 $2,637,824 
Europe, Middle East and Africa826,752 28,108 111,413 966,273 
Other International436,658 17,008 41,640 495,306 
Total revenues$3,602,892 $120,140 $376,371 $4,099,403 

Year Ended December 31, 2019
Primary Geographic MarketResearchConferencesConsultingTotal
United States and Canada$2,199,008 $295,857 $239,625 $2,734,490 
Europe, Middle East and Africa751,267 122,591 122,146 996,004 
Other International424,273 58,421 32,133 514,827 
Total revenues$3,374,548 $476,869 $393,904 $4,245,321 

Year Ended December 31, 2018
Primary Geographic MarketResearchConferencesConsultingOtherTotal
United States and Canada$1,994,016 $256,219 $205,874 $58,843 $2,514,952 
Europe, Middle East and Africa737,129 105,909 119,258 38,194 1,000,490 
Other International374,619 48,333 28,535 8,525 460,012 
Total revenues$3,105,764 $410,461 $353,667 $105,562 $3,975,454 

(1)Revenue is reported based on where the sale is fulfilled.
(2)During 2018, the Company divested all of the non-core businesses that comprised its Other segment and moved a small residual product from the Other segment into the Research business and, as a result, no operating activity has been recorded in the Other segment in 2019 or 2020. Note 2 — Acquisitions and Divestitures provides additional information regarding the Company’s 2018 divestitures.

The Company’s revenue is 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 revenue by geographic location. Accordingly, revenue information presented in the above tables is based on internal allocations, which involve certain management estimates and judgments.

By Timing of Revenue Recognition (1)

Year Ended December 31, 2020
Timing of Revenue RecognitionResearchConferencesConsultingTotal
Transferred over time (2)$3,313,111 $0 $296,546 $3,609,657 
Transferred at a point in time (3)289,781 120,140 79,825 489,746 
Total revenues$3,602,892 $120,140 $376,371 $4,099,403 

69

Year Ended December 31, 2019
Timing of Revenue RecognitionResearchConferencesConsultingTotal
Transferred over time (2)$3,083,936 $0 $316,042 $3,399,978 
Transferred at a point in time (3)290,612 476,869 77,862 845,343 
Total revenues$3,374,548 $476,869 $393,904 $4,245,321 

Year Ended December 31, 2018
Timing of Revenue RecognitionResearchConferencesConsultingOtherTotal
Transferred over time (2)$2,851,176 $0 $294,397 $86,667 $3,232,240 
Transferred at a point in time (3)254,588 410,461 59,270 18,895 743,214 
Total revenues$3,105,764 $410,461 $353,667 $105,562 $3,975,454 

(1)During 2018, the Company divested all of the non-core businesses that comprised its Other segment and moved a small residual product from the Other segment into the Research business and, as a result, no operating activity has been recorded in the Other segment in 2019 or 2020. Note 2 — Acquisitions and Divestitures provides additional information regarding the Company’s 2018 divestitures.
(2)Research revenues were recognized in connection with performance obligations that were satisfied over time using a time-elapsed output method to measure progress. Consulting revenues were recognized over time using labor hours as an input measurement basis. During 2018, Other revenues 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.
(3)The revenues in this category were recognized in connection with performance obligations that were satisfied at the point in time that the contractual deliverables were provided to the customer.

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 can 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 are (i) reasonable and supportable and (ii) provide a faithful depiction of when we transfer products and 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, 2020 was approximately $2.7 billion. The Company expects to recognize $1,605.6 million, $881.0 million and $179.5 million of this revenue (most of which pertains to Research) during the year ending December 31, 2021, the year ending December 31, 2022 and thereafter, respectively. The Company applies a practical expedient allowed in ASC 606 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 ASC 606 disclosure exclusion primarily include: (i) stand-ready services under Research subscription contracts; (ii) holding conferences and meetings 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 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
70

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, 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 (in thousands).
December 31,
20202019
Assets:
Fees receivable, gross (1)$1,251,508 $1,334,012 
Contract assets recorded in Prepaid expenses and other current assets (2)$14,440 $21,350 
Contract liabilities:
Deferred revenues (current liability) (3)$1,974,548 $1,928,020 
Non-current deferred revenues recorded in Other liabilities (3)26,754 24,409 
Total contract liabilities$2,001,302 $1,952,429 

(1)Fees receivable represent an 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.
(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).

The Company recognized revenue of $1,494.0 million, $1,436.9 million and $1,287.8 million during 2020, 2019 and 2018 respectively, which was attributable to deferred revenues that were recorded at the beginning of each such year. Those amounts primarily consisted of (i) Research revenues and, in 2018, Other revenues that were recognized ratably as control of the goods or services passed to the customer and (ii) Conferences revenue pertaining to conferences and meetings that occurred during the reporting periods. During 2020, 2019 and 2018, the Company did not record any material impairments related to its contract assets. The Company does not typically recognize revenue from performance obligations satisfied in prior periods.

Revenue Reserve

The Company maintains a revenue reserve for amounts deemed to be uncollectible for reasons other than bad debt. The revenue reserve is classified as part of Accounts payable and accrued liabilities on the Consolidated Balance Sheet. Provisions to the revenue reserve are recorded as adjustments to revenue.

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, 2020 and 2019, the revenue reserve balance was $10.0 million and $7.8 million, respectively, and adjustments to the account in both 2020 and 2019 were not significant.

Costs of Obtaining and Fulfilling a Customer Contract

When the Company concludes that a liability should be recognized for the costs of obtaining a customer contract and determines how such liability should be measured, certain commissions are capitalized as a recoverable direct incremental cost of obtaining the underlying contract. 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 and Consulting, we amortize deferred commissions on a systematic basis that aligns with the transfer to our customers of the services to which the commissions relate. For Conferences, deferred commissions are expensed during the period when the related conference or meeting occurs.
71


During 2020, 2019 and 2018, deferred commission amortization expense was $440.5 million, $369.5 million and $304.8 million, respectively, and was included in Selling, general and administrative expense in the Consolidated Statements of Operations. The Company classifies Deferred commissions as a current asset on the Consolidated Balance Sheets at both December 31, 2020 and 2019 because those costs were, or will be, amortized over the twelve months following the respective balance sheet dates. The Company did not record any material impairments of its deferred commissions during the three-year period ended December 31, 2020.

Note 10 — 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. AtAs of December 31, 2017,2020, the Company had 5.74.4 million shares of its common stock, par value $.0005$0.0005 per share, (the "Common Stock"“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 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.Plan (the “Plan”). 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 complex and 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.year.


Stock-Based Compensation Expense

The Company recognizedtables below summarize the followingCompany’s stock-based compensation expense by award type and expense category line item during the years ended December 31 (in millions):.
Award type202020192018
Stock appreciation rights$7.8 $6.7 $6.3 
Restricted stock units54.1 61.6 59.2 
Common stock equivalents0.7 0.7 0.7 
Total (1)$62.6 $69.0 $66.2 
Award type 2017 2016 2015
Stock appreciation rights $5.6
 $5.6
 $5.7
Restricted stock units 72.6
 40.4
 39.8
Common stock equivalents 0.7
 0.7
 0.6
Total (1) $78.9
 $46.7
 $46.1


Expense category line item202020192018
Cost of services and product development$29.7 $29.1 $28.1 
Selling, general and administrative32.9 39.4 36.2 
Acquisition and integration charges (2)0 0.5 1.9 
Total (1)$62.6 $69.0 $66.2 


Expense category line item 2017 2016 2015
Cost of services and product development $25.8
 $21.9
 $20.6
Selling, general and administrative 35.5
 24.8
 25.5
Acquisition and integration charges (2) 17.6
 —
 —
Total (1) $78.9
 $46.7
 $46.1

(1)Includes charges of $22.9 million, $19.4 million and $20.1 million during 2017, 2016 and 2015, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis.
(2)These charges are primarily the result of the acceleration of the vesting of certain restricted stock units related to the CEB acquisition.
(1)Includes charges of $17.9 million, $21.5 million and $19.4 million during 2020, 2019 and 2018, 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 from 2017 and (ii) restricted stock units granted in connection with the CEB integration process.

As of December 31, 2017,2020, the Company had $79.9$84.6 million of total unrecognized stock-based compensation cost, which is expected to be expensed over the remaining weighted average service period of approximately 2.4 years.


Stock-Based Compensation Awards

72

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"(“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. TheUpon 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 below summarizes changes in SARs outstanding during the year ended December 31, 2017:  2020.
 Units of 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, 20191.2 $104.05 $23.18 4.21
Granted0.2 154.31 34.92 6.10
Forfeited(0.1)110.85 26.17 n/a
Exercised(0.3)78.63 16.89 n/a
Outstanding at December 31, 2020 (1) (2)1.0 $123.59 $27.76 4.37
Vested and exercisable at December 31, 2020 (2)0.5 $104.97 $23.30 3.38
 
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, 20161.3
 $66.22
 $15.77
 4.40 years
Granted0.3
 99.07
 22.02
 6.10 years
Forfeited(0.1) 85.28
 10.49
 n/a
Exercised(0.3) 52.72
 14.85
 n/a
Outstanding at December 31, 2017 (1) (2)1.2
 $76.73
 $17.35
 4.28 years
Vested and exercisable at December 31, 2017 (2)0.5
 $65.67
 $15.69
 3.22 years

n/a = not applicable
(1)As of December 31, 2017, 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, 2017, the total SARs outstanding had an intrinsic value of $55.0 million. On such date, SARs vested and exercisable had an intrinsic value of $30.2 million.

(1)As of December 31, 2020, 0.5 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, 2020, the total SARs outstanding had an intrinsic value of $38.4 million. On such date, SARs vested and exercisable had an intrinsic value of $25.0 million.


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:
 202020192018
Expected dividend yield (1)0 %0 %0 %
Expected stock price volatility (2)23 %21 %21 %
Risk-free interest rate (3)1.5 %2.5 %2.5 %
Expected life in years (4)4.684.594.52
 2017 2016 2015
Expected dividend yield (1)—% —% —%
Expected stock price volatility (2)22% 22% 24%
Risk-free interest rate (3)1.8% 1.1% 1.5%
Expected life in years (4)4.53
 4.39
 4.41

(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).

(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.
73

(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

Restricted stock units ("RSUs"(“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 an 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 below summarizes the changes in RSUs outstanding during the year ended December 31, 2017:  2020.
 Units of RSUs
(in millions)		Per Share
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 20191.3 $118.89 
Granted (1)0.5 152.17 
Vested and released(0.5)111.62 
Forfeited(0.1)132.31 
Outstanding at December 31, 2020 (2) (3)1.2 $136.09 
 
Restricted
Stock Units
("RSUs")
(in millions)
 
Per Share
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 20161.3
 $73.19
Granted (1) (2)1.1
 105.55
Vested and released(0.8) 79.60
Forfeited(0.1) 91.03
Outstanding at December 31, 2017 (3) (4)1.5
 $91.47

(1)The 1.1
(1)The 0.5 million of RSUs granted during 2020 consisted of 0.2 million of performance-based RSUs awarded to executives and 0.3 million of service-based RSUs awarded to non-executive employees and non-management board members. The performance-based awards include RSUs granted during 2017 consisted of 0.2 million of performance-based RSUs awarded to executives and 0.9 million of service-based RSUs awarded to executives, non-executive employees and non-management board members. The 0.2 million of performance-based RSUs represents the target amount of the grant for the year, which is tied to the increase
in heritagefinal adjustments of 2019 grants and approximately 0.1 million of RSUs representing the target amount of the grant for 2020 that is tied to an increase in Gartner’s total contract value for 2017. Total contract value for this determination represents the value attributable to all of heritage Gartner’s subscription-related revenue contracts.such year. The final number of performance-based RSUs awardedfor 2020 that holders could rangereceive ranged from 0% to 200% of the target amount. The actual increase in heritage Gartner’s contract value for 2017 as measured on December 31, 2017 yielded approximately 186% of the target amount. The incremental awardsamount based on the actual achievementextent to which the corresponding performance goals have been achieved and subject to certain other conditions. Any adjustments in the number of performance-based RSUs under the 20172020 grant will be issuedmade in 2018.
(2)Includes 0.6 million of RSUs awarded to employees that joined Gartner as a result of the CEB acquisition.
(3)The Company expects that substantially all of the RSUs outstanding will vest in future periods.
(4)As of December 31, 2017, the weighted average remaining contractual term of the RSUs outstanding was approximately 1.2 years.

2021. See Note 19 — Subsequent Events regarding a PSU discretionary award.

(2)The Company expects that substantially all of the RSUs outstanding will vest in future periods.

(3)As of December 31, 2020, the weighted average remaining contractual term of the RSUs outstanding was approximately 1.1 years.




Common Stock Equivalents


Common stock equivalents ("CSEs"(“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 below summarizes the changes in CSEs outstanding during the year ended December 31, 2017:  2020.
74

Units of CSEsPer Share
Weighted Average
Grant Date
Fair Value
Common Stock
Equivalents
("CSEs")
 
Per Share
Weighted Average
Grant Date
Fair Value
Outstanding at December 31, 2016107,338
 $20.74
Outstanding at December 31, 2019Outstanding at December 31, 2019111,341 $26.99 
Granted5,852
 120.28
Granted5,781 120.01 
Converted to shares of Common Stock upon grant(3,177) 119.10
Converted to shares of Common Stock upon grant(3,582)119.71 
Outstanding at December 31, 2017110,013
 $23.19
Outstanding at December 31, 2020Outstanding at December 31, 2020113,540 $28.80 


Employee Stock Purchase Plan
The Company has an employee stock purchase plan (the “ESP Plan”) under whichwherein 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, 2017,2020, the Company had 0.80.4 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 $11.7$18.1 million, $9.3$17.6 million and $7.5$14.7 million in cash from employee share purchases under the ESP Plan during 2017, 20162020, 2019 and 2015,2018, respectively.


9Note 11 — 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 forduring the period. Diluted EPS reflects the potential dilution of securities that could share in earnings. When the impact of common sharestock equivalents is anti-dilutive, they are excluded from the calculation.

The following table below sets forth the reconciliationcalculation of the basic and diluted earningsincome per share computations for the years ended December 31 (in thousands, except per share amounts):data).
 202020192018
Numerator:   
Net income used for calculating basic and diluted income per common share$266,745 $233,290 $122,456 
Denominator:   
Weighted average common shares used in the calculation of basic income per share89,315 89,817 90,827 
Common stock equivalents associated with stock-based compensation plans702 1,154 1,295 
Shares used in the calculation of diluted income per share90,017 90,971 92,122 
Income per share (1):
   
Basic$2.99 $2.60 $1.35 
Diluted$2.96 $2.56 $1.33 
 2017 2016 2015
Numerator:     
Net income used for calculating basic and diluted earnings per common share$3,279
 $193,582
 $175,635
Denominator: (1)
 
  
  
Weighted average number of common shares used in the calculation of basic earnings per share88,466
 82,571
 83,852
Common share equivalents associated with stock-based compensation plans1,324
 1,249
 1,204
Shares used in the calculation of diluted earnings per share89,790
 83,820
 85,056
Earnings per share: (2)
 
  
  
Basic$0.04
 $2.34
 $2.09
Diluted$0.04
 $2.31
 $2.06

(1)The Company repurchased 0.4 million, 0.6 million and 6.2 million shares of its Common Stock in 2017, 2016 and 2015, respectively.
(2)Both basic and diluted earnings per share for 2017 include a one-time benefit of approximately $0.66 per share related to the Tax Cuts and Jobs Act of 2017. Note 10 — Income Taxes provides information related to the Tax Cuts and Jobs Act of 2017.



(1)Both basic and diluted income per share for 2020 and 2019 included a tax benefit of approximately $0.31 and $0.42 per share, respectively, related to intercompany sales of certain intellectual property.
The following table below presents the number of common sharestock equivalents that were not included in the computationcomputations of diluted EPSincome per share in the above table above because the effect would have been anti-dilutive. During periodsyears with net income, thesethe common sharestock equivalents were anti-dilutive because their exercise price wasprices were greater than the average market valueprice of a share of Common Stock during the period.such year.
Year Ended December 31,
 202020192018
Anti-dilutive common stock equivalents (in millions) (a)0.5 0.2 0 
Average market price per share of Common Stock during the year$130.95 $148.38 $135.60 

(a) The number of anti-dilutive common stock equivalents for 2018 were minimal.

75
 2017 2016 2015
Anti-dilutive common share equivalents as of December 31 (in millions):0.3
 0.2
 0.3
Average market price per share of Common Stock during the year$116.09
 $92.58
 $86.02


Note 12 — Income Taxes




10 — INCOME TAXES
The followingBelow is a summary of the components of the Company's (loss)Company’s income before income taxes for the years ended December 31 (in thousands):  .
2017 2016 2015 202020192018
U.S.$(135,757) $182,178
 $165,848
U.S.$111,880 $115,543 $34,159 
Non-U.S.7,940
 106,253
 106,363
Non-U.S.214,253 160,196 146,962 
(Loss) income before income taxes$(127,817) $288,431
 $272,211
Income before income taxesIncome before income taxes$326,133 $275,739 $181,121 
 
The components of the expense (benefit) for income taxes on the above income consists ofare summarized in the following componentstable below (in thousands):.

2017 2016 2015 202020192018
Current tax expense: 
  
  
Current tax expense:   
U.S. federal$48,339
 $58,616
 $48,801
U.S. federal$14,480 $30,208 $2,817 
State and local434
 11,292
 10,300
State and local16,360 11,630 6,969 
Foreign38,602
 27,536
 23,225
Foreign62,993 53,105 45,042 
Total current87,375
 97,444
 82,326
Total current93,833 94,943 54,828 
Deferred tax (benefit) expense: 
  
  
Deferred tax (benefit) expense:   
U.S. federal(176,046) (61) (884)U.S. federal(7,206)(16,389)12,462 
State and local(14,363) (349) (702)State and local(13,121)(6,897)1,258 
Foreign(25,898) (1,626) 1,550
Foreign(22,673)(48,186)(13,795)
Total deferred(216,307) (2,036) (36)Total deferred(43,000)(71,472)(75)
Total current and deferred(128,932) 95,408
 82,290
Total current and deferred50,833 23,471 54,753 
Benefit (expense) relating to interest rate swaps used to increase (decrease) equity(2,477) (1,113) 893
Benefit relating to interest rate swaps used to increase equityBenefit relating to interest rate swaps used to increase equity8,257 17,666 3,840 
Benefit from stock transactions with employees used to increase equity46
 52
 13,960
Benefit from stock transactions with employees used to increase equity56 54 58 
Benefit (expense) relating to defined-benefit pension adjustments used to increase (decrease) equity267
 502
 (567)
Total tax (benefit) expense$(131,096) $94,849
 $96,576
Benefit relating to defined-benefit pension adjustments used to increase equityBenefit relating to defined-benefit pension adjustments used to increase equity242 1,258 14 
Total tax expenseTotal tax expense$59,388 $42,449 $58,665 
 
Long-termThe components of long-term deferred tax assets and liabilities(liabilities) are comprised ofsummarized in the followingtable below (in thousands):.
 December 31,
 20202019
Accrued liabilities$81,302 $67,577 
Operating leases51,450 54,860 
Loss and credit carryforwards23,852 14,372 
Assets relating to equity compensation14,981 16,842 
Other assets16,290 20,364 
Gross deferred tax assets187,875 174,015 
Property, equipment and leasehold improvements(9,852)(15,137)
Intangible assets(172,723)(212,498)
Prepaid expenses(46,105)(49,221)
Other liabilities(13,152)(5,799)
    Gross deferred tax liabilities(241,832)(282,655)
Valuation allowance(15,717)(1,556)
Net deferred tax liabilities$(69,674)$(110,196)
 December 31,
 2017 2016
Accrued liabilities$80,557
 $62,439
Loss and credit carryforwards59,502
 7,766
Assets relating to equity compensation24,874
 25,569
Other assets30,236
 6,652
Gross deferred tax assets195,169
 102,426
Property, equipment, and leasehold improvements(962) (11,796)
Intangible assets(372,542) (43,548)
Prepaid expenses(35,126) (32,971)
Other liabilities(6,584) (7,925)
    Gross deferred tax liabilities(415,214) (96,240)
Valuation allowance(3,192) (1,431)
Net deferred tax (liabilities) assets$(223,237) $4,755




76


Net deferred tax assets and net deferred tax liabilities were $30.5$103.6 million and $253.7$173.2 million as of December 31, 2017,2020, respectively, and $27.3$79.6 million and $22.5$189.8 million as of December 31, 2016,2019, respectively. These amounts are primarily 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, 2017.2020.
 
The valuation allowances of $3.2$15.7 million and $1.6 million as of December 31, 20172020 and $1.4 million as of 2016,2019, respectively, primarily relaterelated to net operating losses whichloss and credit carryovers that are not likely to be realized.

As of December 31, 2017,2020, the Company had state and local tax net operating loss carryforwards of $91.5$8.0 million, of which $0.9$0.1 million expireexpires within one to five years and $19.9 million expire within six to fifteen years and $70.7$7.9 million expireexpires within sixteen to twenty years. The Company also had state tax credits of $2.0$6.0 million, a majority of which will expire in five to six years. As of December 31, 2017,2020, the Company had non-U.S. net operating loss carryforwards of $16.0$14.9 million, of which $0.5$0.1 million expireexpires over the next 20 years and $15.5$14.8 million can be carried forward indefinitely. In addition, the Company also had foreign tax credit carryforwards of $59.0$11.9 million, all of which will expire at the end of 2027.between 2028 and 2030. These amounts have been reduced for associated unrecognized tax benefits, consistent with FASB ASU No. 2013-11.2013-11, “Income Taxes—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.”


As of December 31, 2017,The items comprising the Company recorded deferred tax assets for federal and state unrealized capital losses of $62.9 million resulting from held-for-sale accounting for the CEB Talent Assessment business.

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:  are summarized in the table below.
 202020192018
Statutory tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit1.7 1.5 0 
Effect of non-U.S. operations(1.8)2.7 (10.7)
Intercompany sale of intellectual property(8.7)(13.8)0 
Change in the reserve for tax contingencies6.4 4.7 15.7 
Law changes1.8 0 (1.3)
Stock-based compensation expense(2.8)(3.9)(5.3)
Nondeductible meals and entertainment costs0.3 1.7 2.7 
Gains/Losses on divested operations and held-for-sale assets0 0 12.2 
Limitation on executive compensation1.3 2.4 2.7 
Global intangible low-taxed income, net of foreign tax credits1.4 1.9 0.1 
Foreign-derived intangible income(0.8)(1.0)(2.0)
Goodwill0 0 (3.8)
Other items, net(1.6)(1.8)1.1 
Effective tax rate18.2 %15.4 %32.4 %
 2017 2016 2015
Statutory tax rate35.0 % 35.0 % 35.0 %
State income taxes, net of federal benefit3.6
 2.4
 3.5
Effect of non-U.S. operations5.9
 (6.1) (6.9)
Record (release) reserve for tax contingencies(2.8) 3.2
 1.7
Law changes41.8
 —
 (0.2)
Excess tax benefits from stock based compensation11.0
 (3.8) —
Nondeductible acquisition costs(7.9) 2.6
 0.8
Nondeductible meals and entertainment costs(3.5) 1.1
 1.1
Capital loss13.1
 —
 —
Record (release) valuation allowance3.0
 (0.2) 0.5
Other items, net3.4
 (1.3) —
Effective tax rate102.6 % 32.9 % 35.5 %


The Tax CutsCompany completed intercompany sales of certain intellectual property in both 2020 and Jobs Act (“2019. As a result, the Act”) was enacted on December 22, 2017. Among other things,Company recorded net tax benefits of approximately $28.3 million and $38.1 million during 2020 and 2019, respectively. These benefits represent the Act reducesvalue of future tax deductions for amortization of the U.S. federal corporationassets in the acquiring jurisdiction. In July 2020, the Company completed an intercompany contribution of a significant amount of intellectual property. The Company’s intellectual property footprint continues to evolve and may result in 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. volatility in the future.

As of December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Act because all of the necessary information is not currently available, prepared or analyzed. As such, the amount we have recorded are provisional estimates2020 and as permitted by SEC per Staff Accounting Bulletin No. 118, we will continue to assess the enactment of the Act and may record additional provisional amount or adjustments to provisional amounts during fiscal year 2018. We expect to complete the accounting for these impacts of tax reform by the fourth quarter of 2018 as we complete our analysis and receive additional guidance from the Internal Revenue Service pertaining to 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% and recorded a provisional amount which reduced our income tax expense by $123.2 million. However, we are still finalizing purchase accounting for the acquisition of CEB, analyzing certain aspects of the Act and refining our deferred tax calculations, which could affect the measurement of these balances or give rise to new deferred tax amounts.

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 US income taxes. We recorded a $63.6 million provisional amount for this one-time transition tax liability, resulting in an increase in income tax expense of $63.6 million. We have not yet completed our calculation of the tax on ADFI given pending


regulatory guidance and the need to obtain, prepare and analyze various information relevant to calculation including, but not limited to, our post-1986 E&P, foreign taxes and amounts held in cash or other specified assets on various measurement dates.

As disclosed in Note 1 - Business and Significant Accounting Policies,2019, the Company adopted FASB ASU No. 2016-09 in 2016. The effect of the adoption reduced the provision for income taxes by $12.9 million and $10.0 million for the years ended December 31, 2017 and 2016, respectively.

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 associated with this decision. 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, 2017 and December 31, 2016, the Company had gross unrecognized tax benefits of $60.3$127.1 million and $37.1$102.8 million, respectively. The increase is primarily attributabledue to pre-acquisition unrecognized tax benefits of CEB for positions taken with respect to intercompany transactions and state income tax positions.transactions. The gross unrecognized tax benefits as ofat December 31, 20172020 related primarily to transfer pricing on intercompany transactions, calculations of taxable earnings and profits and related foreign tax credits, the exclusion of stock-based compensation expense from the Company’s cost sharing agreement, utilization of certain tax attributes, state income tax positions,and the ability to realize certain refund claims, and intercompany transactions.claims. It is reasonably possible that gross unrecognized tax benefits will be decreaseddecrease by $6.3approximately $9.2 million within the next 12twelve months due to the anticipated closure of audits and the expiration of certain statutes of limitation.
 
Included in the balance of gross unrecognized tax benefits at December 31, 20172020 are potential benefits of $57.1$118.5 million that, if recognized, would reduce theour effective tax rate on income from continuing operations. Also included in the balance of gross
77

unrecognized tax benefits as ofat December 31, 20172020 are potential benefits of $3.2$8.6 million that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.
 
The followingtable below is a reconciliation of the beginning and ending amountamounts of gross unrecognized tax benefits, excluding interest and penalties, for the years ended December 31 (in thousands):.
 20202019
Beginning balance$102,770 $90,349 
Additions based on tax positions related to the current year20,177 32,072 
Additions for tax positions of prior years14,085 8,564 
Reductions for tax positions of prior years(2,301)(16,942)
Reductions for expiration of statutes(8,191)(7,481)
Settlements(390)(3,867)
Change in foreign currency exchange rates930 75 
Ending balance$127,080 $102,770 
 2017 2016
Beginning balance$37,099
 $25,911
Additions based on tax positions related to the current year10,883
 7,086
Additions for tax positions of prior years24,299
 6,443
Reductions for tax positions of prior years(10,613) (496)
Reductions for expiration of statutes(1,368) (1,006)
Settlements(1,769) (544)
Change in foreign currency exchange rates1,738
 (295)
Ending balance$60,269
 $37,099


The Company accrues interest and penalties related to gross unrecognized tax benefits in its income tax provision. As of December 31, 20172020 and 2016,2019, the Company had $6.4$10.2 million and $4.3$8.3 million, respectively, of accrued interest and penalties related to gross unrecognized tax benefits. These amounts are in addition to the gross unrecognized tax benefits disclosed above. The total amount of interest and penalties recognized in the income tax provision for both the years ended December 31, 2017during 2020 and December 31, 20162019 was $0.9 million.$2.0 million and $1.7 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 20142017 and forward, and India for 20032004 and forward. For other major taxing jurisdictions, including the U.S. states, the United Kingdom, Canada, Japan, France and Ireland, the Company'sCompany’s statutes vary and are open as far back as 2012.2011.


Under U.S. GAAP, rules, 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. While our current plans do not demonstrate a need to repatriate accumulated undistributed foreign earnings to fund our U.S. operations or otherwise satisfy the liquidity needs of our U.S. operations, the Company has not asserted its intention to indefinitely reinvest certain accumulated undistributed foreign earnings of CEB. As a result of tax planning, approximately $12.0 million of deferred tax liability previously recorded in purchase


accounting for the estimated tax that could result from the remittance of these earnings was reversed in the current quarter and related goodwill reduced. The Company continues to assert its intention to reinvest all other accumulated undistributed foreign earnings in ourits non-U.S. operations, except in instances in whichwhere 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 thesethose earnings. The accumulated undistributed earnings of non-U.S. subsidiaries were approximately $194.0$119.5 million as of December 31, 2017.2020. As a result of the ACT,U.S. Tax Cuts and Jobs Act of 2017, the income tax that would be payable if such earnings were not indefinitely invested is estimated at this time to be minimal.


11Note 13 — DERIVATIVES AND HEDGINGDerivatives 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 ratevariable-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 No. 815, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value. The following tables below provide information regarding the Company’s outstanding derivativesderivative contracts as of the dates indicated (in thousands, except for number of outstanding contracts):.

December 31, 2017
2020
Derivative Contract Type 
Number of
Outstanding
Contracts
 

Notional
Amounts
 
Fair Value
Asset
(Liability) (3)
 
Balance Sheet
Line Item
 

Unrealized
Gain Recorded in OCI
Derivative Contract TypeNumber of
Contracts
Notional
Amounts		Fair Value
Asset
(Liability), Net (3)		Balance Sheet
Line Item
Unrealized
Loss Recorded in AOCI/L
Interest rate swaps (1) 5
 $1,400,000
 $3,412
 Other assets $2,483
Interest rate swaps (1)4 $1,400,000 $(74,289)Other liabilities$(78,104)
(34,886)Accrued liabilities
Foreign currency forwards (2) 137
 686,764
 448
 Other current assets —
Foreign currency forwards (2)163 430,063 (1,514)Accrued liabilities0 
Total 142
 $2,086,764
 $3,860
   $2,483
Total167 $1,830,063 $(110,689) $(78,104)

December 31, 20162019
78

Derivative Contract Type 
Number of
Outstanding
Contracts
 

Notional
Amounts
 
Fair Value
Asset
(Liability) (3)
 
Balance Sheet
Line Item
 

Unrealized
Loss Recored in OCI

Derivative Contract TypeNumber of
Contracts
Notional
Amounts		Fair Value
Asset
(Liability), Net (3)		Balance Sheet
Line Item
Unrealized
Loss Recorded in AOCI/L
Interest rate swaps (1) 3
 $700,000
 $(2,349) Other liabilities $(1,409)Interest rate swaps (1)4 $1,400,000 $(64,831)Other liabilities$(47,164)
Foreign currency forwards (2) 84
 86,946
 (320) Accrued liabilities —
Foreign currency forwards (2)176 604,858 59 Other current assets0 
Total 87
 $786,946
 $(2,669)   $(1,409)Total180 $2,004,858 $(64,772) $(47,164)

(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 AOCL/I, net of tax effect (see Note 5 — Debt for additional information).
(2)The Company has foreign exchange transaction risk since it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income, net since the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding contracts at December 31, 2017 matured by the end of January 2018.
(3)See Note 12 — Fair Value Disclosures for the determination of the fair value of these instruments.

(1)Prior to June 30, 2020, the interest rate swaps were designated and accounted for as cash flow hedges of the forecasted interest payments on borrowings. As a result, changes in the fair values of the swaps were deferred and recorded in AOCI/L, net of tax effect. Upon the prepayment of $787.9 million under the Company’s Term Loan A facility and repayment of
all amounts outstanding under the 2016 Credit Agreement revolving credit facility, the Company determined that it was probable that forecasted interest payments on $200.0 million of variable rate debt would not occur. Additionally, as the variable rate debt under the Term Loan A facility was replaced by $800.0 million of fixed rate debt under the 2028 Notes, the Company de-designated all of its interest rate swaps. Note 6 — Debt provides additional information regarding the Company’s interest rate swap contracts.
(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 (expense) 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, 2020 matured before January 31, 2021.
(3)See Note 14 — Fair Value Disclosures for the determination of the fair values of these instruments.
At December 31, 2017,2020, 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 below provides information regarding amounts recognized in the Consolidated Statements of Operations for derivative contracts for the years ended December 31 (in millions):  thousands).
Amount Recorded In202020192018
Interest expense (income), net (1)$24,880 $(3,361)$(1,920)
Other expense, net (2)22,300 2,488 10,365 
Total expense (income), net$47,180 $(873)$8,445 
Amount recorded in: 2017 2016 2015
Interest expense (1) $7.9
 $7.6
 $8.5
Other (gain) loss, net (2) (0.8) 0.3
 0.1
Total expense $7.1
 $7.9
 $8.6



(1)Consists of interest expense from interest rate swap contracts.
(2)Consists of net realized and unrealized gains and losses on foreign currency forward contracts.

12 — FAIR VALUE DISCLOSURES
 
(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, gains and losses on de-designated interest rate swaps and $10.3 million of expense during the year ended December 31, 2020 on interest rate swap contracts due to forecasted interest payments no longer being probable as a result of the repayment of all amounts outstanding under the 2016 Credit Agreement revolving credit facility and the prepayment of $787.9 million under the Term Loan A facility and on June 30, 2020. Other expense, net also included a $2.2 million gain on de-designated interest rate swaps during the year ended December 31, 2020, related to fair value adjustments subsequent to de-designation.
.
Note 14 — Fair Value Disclosures

The Company’s financial instruments include cash equivalents, fees receivable from customers, accounts payable and accrualsaccrued liabilities, all of which are normally short-term in nature. The Company believes that the carrying amounts of these financial instruments reasonably approximate their fair valuevalues due to their short-term nature. The Company’s financial instruments also include its outstanding variable-rate borrowings under the 20162020 Credit Agreement. The Company believes that the carrying amountamounts of its variable-rate borrowings reasonably approximatesapproximate their fair valuevalues because the raterates of interest on those borrowings reflectsreflect current market rates of interest for similar instruments with comparable maturities.


79

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 uponon the transparency of inputs used in the valuation of assets and liabilities. Classification within the valuation hierarchy is based uponon 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 fair valuevaluation hierarchy.




The following table below presents the fair value of certain financial assets and liabilities that are recorded at fair value and measured on a recurring basis in the Company's Consolidated Balance Sheets (in thousands):.
December 31,
Description20202019
Assets:  
Values based on Level 1 inputs:
Deferred compensation plan assets (1)$2,589 $2,277 
Total Level 1 inputs2,589 2,277 
Values based on Level 2 inputs:
Deferred compensation plan assets (1)85,932 73,419 
Foreign currency forward contracts (2)885 1,558 
Total Level 2 inputs86,817 74,977 
Total Assets$89,406 $77,254 
Liabilities:  
Values based on Level 2 inputs:
Deferred compensation plan liabilities (1)$94,538 $79,556 
Foreign currency forward contracts (2)2,399 1,499 
Interest rate swap contracts (3)109,175 64,831 
Total Level 2 inputs206,112 145,886 
Total Liabilities$206,112 $145,886 
  Fair Value Fair Value
Description: December 31,
2017		 December 31,
2016
Assets:  
  
Values based on Level 1 inputs:    
Deferred compensation plan assets (1) $29,108
 $10,252
Total Level 1 inputs 29,108
 10,252
Values based on Level 2 inputs:    
Deferred compensation plan assets (1) 59,017
 27,847
Foreign currency forward contracts (2) 2,053
 165
Interest rate swap contracts (3)

 3,412
 —
Total Level 2 inputs 64,482
 28,012
Total Assets $93,590
 $38,264
Liabilities:  
  
Values based on Level 2 inputs:    
Deferred compensation plan liabilities (1) $89,900
 $43,075
Foreign currency forward contracts (2) 1,605
 485
Interest rate swap contracts (3) —
 2,349
Senior Notes due 2025 (4) 837,560
 —
Total Level 2 inputs $929,065
 $45,909
Total Liabilities $929,065
 $45,909

(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 and 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 these assets had a fair value of $29.1 million and $10.3 million as of December 31, 2017 and 2016, respectively. The carrying amount of the life insurance contracts equals their cash surrender value. Cash surrender value represents the estimated amount that the Company would receive upon termination of the contract, which approximates fair value. The Company considers the life insurance contracts to be valued based on a Level 2 input, and these assets had a fair value of $59.0 million and $27.8 million at December 31, 2017 and 2016, 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 the foreign currency forward contracts is based on observable foreign currency exchange rates in active markets, which the Company considers a Level 2 input.
(3)The Company has interest rate swap contracts which hedge the risk of variability from interest payments on its borrowings (see Note 5 — Debt). The fair value of the swaps is based on mark-to-market valuations prepared by a third-party broker. The valuations are based on observable interest rates from recently executed market transactions and other observable market data, which the Company considers Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker through the use of an electronic quotation service.
(4)As discussed in Note 5 — Debt, the Company issued $800.0 million of principal amount fixed-rate Senior Notes due 2025 on March 30, 2017. The estimated fair value of the notes
(1)The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees (see Note 15 — 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 values of these assets to be based on Level 1 inputs, and such assets had fair values of $2.6 million and $2.3 million as of December 31, 2020 and 2019, 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 $85.9 million and $73.4 million at December 31, 2020 and 2019, 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 13 — Derivatives and Hedging). Valuation of these contracts is based on observable foreign currency exchange rates in active markets, which the Company considers to be a Level 2 input.
80

(3)The Company has interest rate swap contracts that hedge the risk of variability from interest payments on its borrowings (see Note 6 — Debt). The fair values of interest rate swaps are 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 to be Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker by using an electronic quotation service.

The table below presents the carrying amounts and fair values of financial instruments that are not recorded at fair value in the Company’s Consolidated Balance Sheets (in thousands). The estimated fair value of the financial instruments was derived from quoted market prices provided by an independent dealer, which the Company considers to be a Level 2 input.
13 — EMPLOYEE BENEFITS
 
Carrying AmountFair Value
December 31,December 31,
Description2020201920202019
2025 Senior Notes$0 $784,997 $0 $835,384 
2028 Senior Notes790,783 0 846,296 0 
2030 Senior Notes790,690 0 843,800 0 
Total$1,581,473 $784,997 $1,690,096 $835,384 

Note 15 — Employee Benefits

Defined contribution plan.plans. The Company has savings and investment plans (the “401k“401(k) Plans”) covering substantially all U.S. employees. Company contributions are based uponon the level of employee contributions, up to a maximum of 4% of an employee’s eligible salary, subject to an annual maximum. For 2017,2020, the maximum Company match was $7,200. As a result of the impact of COVID-19, the Company temporarily suspended the Company match on April 1, 2020. The Company reinstituted the match on January 1, 2021, retroactive to April 1, 2020. Amounts expensed in connection with the 401k401(k) Plans totaled $29.8$43.9 million, $22.9$44.1 million and $20.0$36.7 million in 2017, 20162020, 2019 and 2015,2018, respectively.


Deferred compensation plan.plans. The Company has supplemental deferred compensation plans for the benefit of certain highly compensated officers, managers and other key employees. The plans'plans’ investment assets are recorded at fair value in Other assets on the Consolidated Balance Sheets at fair value.Sheets. The value of thesethose assets was $88.1$88.5 million and $38.1$75.7 million at December 31, 20172020 and 2016,2019, respectively (see Note 1214 — Fair Value Disclosures for fair value information). The correspondingrelated deferred compensation liability,plan liabilities, which was $89.9were $94.5 million and $43.1$79.6 million at December 31, 20172020 and 2016,2019, respectively, isare carried at fair value and isare adjusted with a corresponding charge or credit to compensation expense to reflect the fair value of the amount owed to the employees and is classifiedemployees. Deferred compensation plan liabilities are recorded in Other liabilities on the Consolidated Balance Sheets. Compensation expense recognized for all of the Company’s deferred compensation plans was $0.4$1.9 million, $0.1$0.6 million and $0.5$1.7 million in 2017, 20162020, 2019 and 2015,2018, respectively.

Defined benefit pension plans. The Company has defined benefit pension plans inat several of its international locations. Benefits earned and paid under thesethose plans are generally based on years of service and level of employee compensation. The Company'sCompany’s vested benefit obligation is the actuarial present value of the vested benefits to which an employee is entitled based on the employee’s expected date of separation or retirement. The Company’s defined benefit pension plans are accounted for in accordance with FASB ASC Topics No. 715 and 960. The following aretable below presents the components of the Company’s defined benefit pension plan expense for the years ended December 31 (in thousands):  . The components of pension expense, other than service cost, are recorded in Other (expense) income, net in the Consolidated Statements of Operations.
 202020192018
Service cost$4,421 $3,659 $3,145 
Interest cost718 851 840 
Expected return on plan assets(493)(517)(475)
Recognition of actuarial loss474 237 340 
Total defined benefit pension plan expense$5,120 $4,230 $3,850 
 2017 2016 2015
Service cost$2,820
 $2,780
 $2,620
Interest cost765
 850
 790
Expected return on plan assets(360) (375) (345)
Recognition of actuarial loss350
 200
 300
Recognition of termination benefits—
 —
 85
Total defined benefit pension plan expense (1)$3,575
 $3,455
 $3,450

(1)Pension expense is classified in SG&A in the Consolidated Statements of Operations.

The following aretable below presents the key assumptions used in the computation of pension expense for the years ended December 31:31.
81

2017 2016 2015 202020192018
Weighted average discount rate (1)1.78% 1.78% 2.19%Weighted average discount rate (1)1.28 %1.81 %1.78 %
Expected return on plan assetsExpected return on plan assets2.04 %2.54 %2.45 %
Average compensation increase2.66% 2.67% 2.66%Average compensation increase2.58 %2.58 %2.66 %
Cash balance interest credit rateCash balance interest credit rate1.20 %1.90 %1.90 %

(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.

(1)Discount rates are typically determined by using 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.

The following table below provides information related toregarding changes in the projected benefit obligation of the Company’s defined benefit pension plans for the years ended December 31 (in thousands):  .
 202020192018
Projected benefit obligation at beginning of year$52,503 $44,890 $45,450 
Service cost4,421 3,659 3,145 
Interest cost718 851 840 
Actuarial loss (gain) due to assumption changes and plan experience (1)1,516 4,524 (430)
Contractual termination benefits0 0 (950)
Benefits payments (2)(1,438)(830)(1,400)
Foreign currency impact4,577 (591)(1,765)
Projected benefit obligation at end of year (3)$62,297 $52,503 $44,890 
 2017 2016 2015
Projected benefit obligation at beginning of year$38,400
 $35,870
 $38,115
Service cost2,820
 2,780
 2,620
Interest cost765
 850
 790
Actuarial loss (gain) due to assumption changes and plan experience690
 1,480
 (1,190)
Additions and contractual termination benefits(860) —
 85
Benefits paid (1)(920) (1,640) (775)
Foreign currency impact4,555
 (940) (3,775)
Projected benefit obligation at end of year (2)$45,450
 $38,400
 $35,870

The table below presents the key assumptions used in determining the projected benefit obligations at December 31.
 202020192018
Weighted average discount rate (4)0.94 %1.28 %1.81 %
Average compensation increase2.58 %2.58 %2.58 %
Cash balance interest credit rate0.80 %1.20 %1.90 %

(1)The Company projects the following benefit payments will be made in future years to plan participants: $1.3 million in 2018; $2.2 million in 2019; $1.5 million in 2020, $1.5 million in 2021, $1.6 million in 2022; and $10.5 million in total in the five years thereafter.
(2)Measured as of December 31.


(1)The actuarial losses in 2020 and 2019 were primarily due to a reduction in our weighted average discount rate assumption.

(2)The Company projects benefit payments will be made in future years directly to plan participants as follows: $1.8 million in 2021; $1.8 million in 2022; $2.3 million in 2023; $2.3 million in 2024; $2.5 million in 2025; and $15.1 million in total in the five years thereafter.

(3)Measured as of December 31.

(4)Discount rates are typically determined by using 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.


The following table providestables below provide information regarding the funded status of the Company’s defined benefit pension plans and the related amounts recorded in the Company’s Consolidated Balance Sheets as of December 31 (in thousands):  .
Funded status of the plans202020192018
Projected benefit obligation$62,297 $52,503 $44,890 
Pension plan assets at fair value (1)(28,636)(23,444)(19,460)
Funded status – shortfall (2)$33,661 $29,059 $25,430 
Accumulated benefit obligation$58,963 $49,485 $42,611 

Amounts recorded in the Consolidated Balance Sheets for the plans
Other liabilities – accrued pension obligation (2)$33,661 $29,059 $25,430 
Stockholders’ equity – deferred actuarial loss (3)$(9,309)$(8,584)$(5,738)
82

Funded status of the plans:2017 2016 2015
Projected benefit obligation$45,450
 $38,400
 $35,870
Pension plan assets at fair value (1)(18,475) (14,465) (13,190)
Funded status – shortfall (2)$26,975
 $23,935
 $22,680
Amounts recorded in the Consolidated Balance Sheets for the plans:     
Other liabilities — accrued pension obligation (2)$26,975
 $23,935
 $22,680
Stockholders’ equity — deferred actuarial loss (3)$(5,861) $(5,797) $(4,832)

(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 No. 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 2.22%, 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, 2017, the Company contributed $2.4 million to these plans, and benefits paid to participants were $1.8 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, 2017 is recorded in AOCL/I and will be reclassified out of AOCL/I and recognized as pension expense over approximately 13 years, subject to certain limitations set forth in FASB ASC Topic No. 715. The impact of this amortization on pension expense in 2018 is projected to result in approximately $0.3 million of additional expense. The amortization of deferred actuarial losses from AOCL/I to pension expense in each of the three years ended December 31, 2017 was immaterial.

(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 1.19%, which it believes is reasonable based on the composition of the assets and both current and projected market conditions. Additional information regarding pension plan asset activity is provided below.
(2)Funded status – shortfall represents the amount of the projected benefit obligation that the Company has not funded with a third-party trustee. These liabilities of the Company are recorded in Other liabilities on the Consolidated Balance Sheets. The level of future contributions by the Company will vary and is dependent on a number of factors including investment returns, interest rate fluctuations, plan demographics, funding regulations and the results of the final actuarial valuation.
(3)The deferred actuarial loss as of December 31, 2020 is recorded in AOCI/L and will be reclassified out of AOCI/L and recognized as pension expense over approximately 14 years, subject to certain limitations set forth in FASB ASC Topic 715. The amortization of deferred actuarial losses from AOCI/L to pension expense in each of the years ended December 31, 2020, 2019 and 2018 was immaterial.

The table below provides a rollforward of the Company’s defined benefit pension plans assets for the years ended December 31 (in thousands).
202020192018
Pension plan assets at the beginning of the year$23,444 $19,460 $18,475 
Company contributions3,924 4,405 4,478 
Benefit payments(1,438)(830)(1,400)
Actual return on plan assets684 714 (164)
Contractual termination benefits0 0 (950)
Foreign currency impact2,022 (305)(979)
Pension plan assets at the end of the year$28,636 $23,444 $19,460 

The Company also maintainshas a reinsurance asset arrangement with a large international insurance company whose purposethat is intended to provide funding forfund benefit payments for one of theits plans. The reinsurance asset is not a pension plan asset but is an asset of the Company. At December 31, 20172020 and 2016,2019, the reinsurance asset was recorded at its cash surrender value of $9.1$10.0 million and $7.8$8.9 million, respectively, and is classifiedrecorded in Other assets on the Company's Consolidated Balance Sheets. The Company believes thethat cash surrender value approximates fair value and is equivalent to a Level 2 input under the FASB’s fair value frameworkhierarchy in FASB ASC Topic No. 820.


14Note 16 — SEGMENT INFORMATIONSegment Information

As a result of the CEB acquisition on April 5, 2017, the Company began reporting its results across four business segments reflecting its enlarged scale and breadth of advisory services aligned to the mission-critical priorities of virtually all functional business leaders across every industry and size of enterprise worldwide.


Our products and services are delivered through four3 segments – Research, Conferences and Consulting, Events and Talent Assessment & Other, as follows:described below.
 
•Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of thean enterprise through research and other reports, briefings, proprietary tools, access to our analysts,research experts, 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, sales, legal and finance.
drive organizational performance.


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.

Events•Conferences provides business professionals across thean organization the opportunity to learn, share and network. From our flagship CIO event Gartner Symposium/ITxpo,Xpo series, to industry-leading conferences focused on specific business roles and topics, to member-drivenpeer-driven sessions, our eventsofferings enable attendees to experience the best of Gartner insight and advice live.
advice.



•Consulting combines the power of Gartner market-leading research with custom analysis and on-the-ground support to help chief information officers and other senior executives driving technology-related strategic initiatives move confidently from insight to action.

Talent Assessment & Other helps organizations assess, engage, manage and improve talent. This is accomplished through knowledge and skills assessments, training programs, workshops, and survey and questionnaire services.


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
83

same as those used by the Company. There are no intersegment revenues. The Company does not identify or allocate tangible assets, including capital expenditures, by reportable segment. Accordingly, tangible 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 inregarding the allocation of resources.

The Company earns revenue from clients in many countries. Other than the United States, there is no individual country in whichwhere 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 revenuethe Company’s consolidated revenues and the loss of a single client, in management’s opinion, would not have a material adverse effect on revenues.


The following tables below present operating information about the Company’s reportable segments for the periods indicatedyears ended December 31 (in thousands):.
 ResearchConferencesConsultingConsolidated
2020   
Revenues$3,602,892 $120,140 $376,371 $4,099,403 
Gross contribution2,597,852 57,302 115,744 2,770,898 
Corporate and other expenses   (2,280,748)
Operating income   $490,150 
2019
Revenues$3,374,548 $476,869 $393,904 $4,245,321 
Gross contribution$2,351,720 $241,757 $118,450 $2,711,927 
Corporate and other expenses$(2,341,840)
Operating income$370,087 
 Research Consulting Events Talent Assessment & Other Consolidated
2017 (1)
 
  
  
    
Revenues$2,471,280
 $327,661
 $337,903
 174,650
 $3,311,494
Gross contribution1,653,014
 93,643
 163,480
 90,249
 2,000,386
Corporate and other expenses 
  
  
   (2,006,715)
Operating (loss) 
  
  
   $(6,329)
          
 Research Consulting Events Talent Assessment & Other Consolidated
2016 (1)
 
  
  
    
Revenues$1,857,001
 $318,934
 $268,605
 —
 $2,444,540
Gross contribution1,285,611
 89,734
 136,655
 —
 1,512,000
Corporate and other expenses 
  
  
   (1,206,859)
Operating income 
  
  
   $305,141
          
 Research Consulting Events Talent Assessment & Other Consolidated
2015 (1)
 
  
  
    
Revenues$1,614,904
 $296,317
 $251,835
 —
 $2,163,056
Gross contribution1,117,534
 86,486
 130,527
 —
 1,334,547
Corporate and other expenses 
  
  
   (1,046,550)
Operating income 
  
  
   $287,997

 ResearchConferencesConsultingOther (1)Consolidated
2018    
Revenues$3,105,764 $410,461 $353,667 $105,562 $3,975,454 
Gross contribution2,144,097 207,260 102,541 65,075 2,518,973 
Corporate and other expenses   (2,259,258)
Operating income   $259,715 

(1)    In 2017During 2018, the Company began reporting the results of its Strategic Advisory Services ("SAS") business in Research whereas previously the SAS business was reported with Consulting. Although the impactdivested all of the reclassification was not significant,non-core businesses that comprised its Other segment and moved a small residual product from the Other segment into the Research business and, as a result, no operating results ofactivity has been recorded in the SAS business for 2016Other segment in 2019 or 2020. Note 2 — Acquisitions and 2015 were reclassified from Consulting to Research to be comparable withDivestitures provides additional information regarding the current year presentation.



Company’s 2018 divestitures.
The following table below provides a reconciliation of total segment gross contribution to net income for the years ended December 31 (in thousands):.
84

 2017 2016 2015202020192018
Total segment gross contribution $2,000,386
 $1,512,000
 $1,334,547
Total segment gross contribution$2,770,898 $2,711,927 $2,518,973 
Costs and expenses:      Costs and expenses:
Cost of services and product development - unallocated (1) 9,090
 13,108
 10,567
Cost of services and product development - unallocated (1)16,519 17,174 12,319 
Selling, general and administrative 1,599,004
 1,089,184
 962,677
Selling, general and administrative2,038,963 2,103,424 1,884,141 
Depreciation and amortization 240,171
 61,969
 47,131
Depreciation and amortization218,984 211,779 255,601 
Acquisition and integration charges 158,450
 42,598
 26,175
Acquisition and integration charges6,282 9,463 107,197 
Operating (loss) income (6,329) 305,141
 287,997
Operating incomeOperating income490,150 370,087 259,715 
Interest expense and other, net 121,488
 16,710
 15,786
Interest expense and other, net(119,203)(92,273)(124,041)
(Benefit) provision for income taxes (131,096) 94,849
 96,576
(Loss) gain from divested operations(Loss) gain from divested operations0 (2,075)45,447 
Loss on extinguishment of debtLoss on extinguishment of debt(44,814)0 0 
Less: Provision for income taxesLess: Provision for income taxes59,388 42,449 58,665 
Net income $3,279
 $193,582
 $175,635
Net income$266,745 $233,290 $122,456 

(1)

(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.

The Company’s revenuespolicy is to allocate bonuses to segments at 100% of a segment employee’s target bonus. Amounts above or below 100% are generated primarily through direct sales to clientsabsorbed by domesticcorporate.

Disaggregated revenue information by reportable segment for the three years ended December 31, 2020 is presented in Note 9 — Revenue 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, it is not practical to precisely separate our revenues by geographic location. Accordingly, the separation set forth in the table below is based upon internal allocations, which involve certain management estimates and judgments. Revenues in the table are reported based on where the sale is fulfilled; “Other International” revenues are those attributable to all areas located outside of the United States and Canada, as well as Europe, Middle East and Africa.
SummarizedRelated Matters. Long-lived asset information by geographic location as of and for the years ended December 31 followsis summarized in the table below (in thousands):  .
 20202019
Long-lived assets (1):  
United States and Canada$820,973 $867,974 
Europe, Middle East and Africa265,782 242,729 
Other International153,609 159,037 
Total long-lived assets$1,240,364 $1,269,740 
 2017 2016 2015
Revenues: 
  
  
United States and Canada$2,037,111
 $1,519,748
 $1,347,676
Europe, Middle East and Africa850,352
 616,721
 557,165
Other International424,031
 308,071
 258,215
Total revenues$3,311,494
 $2,444,540
 $2,163,056
      
Long-lived assets: (1) 
  
  
United States and Canada$288,735
 $143,921
 $163,933
Europe, Middle East and Africa84,840
 42,326
 31,130
Other International41,674
 24,630
 16,050
Total long-lived assets$415,249
 $210,877
 $211,113

(1)Excludes goodwill, intangible, and held-for-sale assets.



(1)Excludes goodwill and intangible assets for all dates.


15Note 17 — VALUATION AND QUALIFYING ACCOUNTSContingencies
Legal Matters. The Company is involved in legal proceedings and litigation arising in the ordinary course of business. We record a provision for pending litigation in our consolidated financial statements when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. 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 matters such 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, 2020, the Company did not have any material payment obligations under any such indemnification agreements.

Note 18 — Valuation and Qualifying Accounts
85

The Company maintains an allowance for losses whichthat is composedcomprised 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 a reduction in revenues.

The following table below summarizes the activity in the Company’s allowance for losses for the years ended December 31 (in thousands):  .
 Balance at
Beginning
of Year		Additions
Charged to
Expense		Deductions
from the
Reserve		Reclassification to Accounts Payable and Accrued Liabilities (1)Balance
at End
of Year
2020$8,000 $16,000 $(14,000)$0 $10,000 
2019$7,700 $14,000 $(13,700)$0 $8,000 
2018$12,700 $12,500 $(11,300)$(6,200)$7,700 

(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 ASC 606 on January 1, 2018, the revenue reserve balance is now included in Accounts payable and accrued liabilities on the Consolidated Balance Sheets. Note 9 — Revenue and Related Matters provides additional information regarding the Company’s adoption of ASC 606.

Note 19 — Subsequent Events
 
Balance at
Beginning
of Year
 
Additions
Charged to
Expense
 
Additions
Charged
Against
Revenues
 
Deductions
from
Reserve
 
Balance
at End
of Year
2017:         
Allowance for doubtful accounts and returns and allowances$7,400
 $16,600
 $5,500
 $(16,800) $12,700
2016: 
  
  
  
  
Allowance for doubtful accounts and returns and allowances$6,900
 $4,750
 $4,850
 $(9,100) $7,400
2015: 
  
  
  
  
Allowance for doubtful accounts and returns and allowances$6,700
 $3,480
 $5,420
 $(8,700) $6,900


Share Repurchase Authorization
16 — SUBSEQUENT EVENTS


On February 6, 2018,4, 2021, the Company announced that it had reached a definitive agreementCompany’s Board of Directors authorized incremental share repurchases of up to sell its CEB Talent Assessment businessan additional $300 million of Gartner’s common stock. This authorization is in addition to Exponent Private Equity, a UK-based private equity firm, for $400.0 million. The CEB Talent Assessment business is a significant portionthe previously authorized repurchases of the Company's Talent Assessment & Other segment. The agreement comes atup to $1.2 billion, which as of the end of a previously announced processJanuary 2021 had approximately $568 million remaining.

PSU Discretionary Award

On February 5, 2020, prior to evaluate strategic alternatives for CEB Talent Assessment, formerly SHL, which was acquired by Gartner as partthe COVID-19 related shutdown in the U.S.,the Compensation Committee (“Committee”) of the CEB acquisitionBoard of Directors of the Company established performance measures for the performance-based RSUs awarded to the Company’s executive officers in 2017. The transaction is expected2020 under the Gartner, Inc. Long-Term Incentive Plan (the “Plan”). Based on preliminary corporate performance results for the 2020 performance measures, the 2020 performance-based RSUs would have been earned at 50% of target. However, on February 3, 2021, the Committee determined to closeuse its discretion under the Plan to approve a payout at 95% of target. In deciding to exercise this discretion to adjust the performance-based RSU payout, the Committee considered the Company’s strong overall performance in 2020 despite the first halfsignificant negative impact of 2018 and is subject to customary closing conditions. Note 2 — Acquisitions and Divestiture provides additional information.the COVID-19 pandemic.


ITEM 16. FORM 10-K SUMMARYSUMMARY.


None.






86


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this Report on Form 10-K to be signed on its behalf by the undersigned, duly authorized, in Stamford, Connecticut, on February 22, 2018.  
24, 2021.
Gartner, Inc.
Date:February 22, 201824, 2021By:/s/ Eugene A. Hall
Eugene A. Hall
Chief Executive Officer
 
POWER OF ATTORNEY
 
Each person whose signature appears below appoints Eugene A. Hall and Craig W. Safian and each of them, acting individually, as his or her attorney-in-fact, each with full power of substitution, for him or her in all capacities, to sign all amendments to this Report on Form 10-K, and to file the same, with appropriate exhibits and other related documents, with the Securities and Exchange Commission. Each of the undersigned ratifies and confirms his or her signatures as they may be signed by his or her attorney-in-fact to any amendments to this Report. Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
NameTitleDate
NameTitleDate
/s/ Eugene A. HallDirector and Chief Executive OfficerFebruary 22, 201824, 2021
Eugene A. Hall(Principal Executive Officer)
/s/ Craig W. SafianExecutive Vice President and Chief Financial OfficerFebruary 22, 201824, 2021
Craig W. Safian(Principal Financial and Accounting Officer)
/s/ Michael J. BingleDirectorFebruary 22, 2018
Michael J. Bingle
/s/ Peter E. BissonDirectorFebruary 22, 201824, 2021
Peter E. Bisson
/s/ Richard J. BresslerDirectorFebruary 22, 201824, 2021
Richard J. Bressler
/s/ Raul E. CesanDirectorFebruary 22, 201824, 2021
Raul E. Cesan
/s/ Karen E. DykstraDirectorFebruary 22, 201824, 2021
Karen E. Dykstra
/s/ Anne Sutherland FuchsDirectorFebruary 22, 201824, 2021
Anne Sutherland Fuchs
/s/ William O. GrabeDirectorFebruary 22, 201824, 2021
William O. Grabe
/s/ Stephen G. PagliucaDirectorFebruary 22, 201824, 2021
Stephen G. Pagliuca
/s/ Eileen M. SerraDirectorFebruary 22, 201824, 2021
Eileen M. Serra
/s/ James C. SmithDirectorFebruary 22, 201824, 2021
James C. Smith



82
87