UNITED STATES
| þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended December 31, | |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Delaware | 04-3099750 |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
| P.O. Box 10212 | |
| 56 Top Gallant Road | |
| Stamford, CT | 06902-7700 |
| (Address of principal executive offices) | (Zip Code) |
| (203) 316-1111 | |
| (Registrant’s telephone number, | |
| including area code) | |
| Title of each class | Name of each exchange on which registered | |
| Common Stock, $.0005 par value per share | New York Stock Exchange | |
Large accelerated filerþ | Accelerated filero | Non-accelerated filero | Smaller reporting companyo |
| (Do not check if a smaller reporting company) | |||
2014.
| Document | Parts Into Which Incorporated | |
Proxy Statement for the Annual Meeting of Stockholders to be held May | Part III | |
GARTNER, INC.2012
gartner.com. technology insights that CIOs, supply chain professionals, executives and other technology practitioners need to make the right decisions, every day. In addition to our analysts, we have 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. governance principles that have been adopted by our Board and (iv) charters for each of the Board’s standing committees: Audit, Compensation and Governance/Nominating.over 13,30014,099 distinct organizations. We work with clients to research, analyze and interpret the business of IT within the context of their individual roles. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and as of December 31, 2012, we2013, had 5,4685,997 associates, including 1,4051,475 research analysts and consultants, and clients in 85 countries.—– Research, Consulting and Events:•Research provides objective insight on critical and timely technology and supply chain initiatives for CIOs, other IT professionals, supply chain leaders, technology companies and the investment community through reports, briefings, proprietary tools, access to our analysts, peer networking services and membership programs that enable our clients to make better decisions about their IT and supply chain investments.•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 provide IT, supply chain and business professionals the opportunity to attend various symposia, conferences and exhibitions to learn, contribute and network with their peers. From our flagship event Symposium/ITxpo, to summits focused on specific technologies and industries, to experimental workshop-style seminars, our events distill the latest Gartner research into applicable insight and advice.www.gartner.com. today are changing how businesses and organizations work and what they do at an increasingly rapid pace. Today, everyone is living and working in the midst of a technological revolution. Major technological forces -– including social media, mobile, cloud and information – are driving change on a scale not seen before in every organization around the world, from business enterprises of every size, to governments and government agencies, as well as other organizations. This technology revolution is likely to remain vibrant for decades to come.anyevery IT investment decision in an enterprise is subject to increased financial scrutiny, especially in the current challenging economic climate. In addition, today’s IT marketplace is dynamic and complex. Technology providers continually introduce new products with a wide variety of standards and features that are prone to shorter life cycles. Users of technology —– a group that encompasses nearly all organizations —– must keep abreast of new developments in technology to ensure that their IT systems are reliable, efficient, and meet both their current and future needs.-– and how – to successfully use IT and the supply chain to achieve their objectives. We employ a diversified business model that utilizes and leverages the breadth and depth of ourOur 9023503509 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 highly qualified audiences of CIOs, other senior business executives and IT professionals, supply chain leaders, and purchasers and providers of technology and supply chain products and services.•RESEARCH. Gartner delivers independent, objective IT research and insight primarily through a subscription-based, digital media service. Gartner Research is the fundamental building block for all Gartner services and covers all technology-related markets, topics and industries, as well as supply chain topics. We combine our proprietary research methodologies with extensive industry and academic relationships to create Gartner solutions that address each role within an IT organization. Our Research agenda is defined by clients’ needs, focusing on the critical issues, opportunities and challenges they face every day. Our Research analysts are in regular contact with both technology providers and technology users, enabling them to identify the most pertinent topics in the IT marketplace and develop relevant product enhancements to meet the evolving needs of users of our research. They provide in-depth analysis on all aspects of technology, including hardware; software and systems; services; IT management; market data and forecasts; and vertical-industry issues. 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 for individual users over a defined period of time, which is typically one year.•CONSULTING. Gartner Consulting deepens relationships with our Research clients by extending the reach of our research through custom consulting engagements. Gartner Consulting brings together our unique research insight, benchmarking data, problem-solving methodologies and hands-on experience to improve the return on a client’s IT investment. Our consultants provide fact-based consulting services to help clients use and manage IT to optimize business performance.Consulting solutions capitalize on Gartner assets that are invaluable to 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 client’s 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, programs and portfolio management, and sourcing and vendor relationships. Consulting also provides targeted consulting services to professionals in specific industries. Finally, we provide actionable solutions for IT cost optimization, technology modernization and IT sourcing optimization initiatives.•EVENTS. Gartner Symposium/ITxpo events and Gartner Summit events are gatherings of technology’s most senior IT professionals, business strategists and practitioners. Gartner Events offers current, relevant and actionable technology sessions led by Gartner analysts to clients and non-clients. These sessions are augmented with technology showcases, peer exchanges, analyst one-on-one meetings, workshops and keynotes by technology’s top leaders. They also provide attendees with an opportunity to interact with business executives from the world’s leading technology companies.Gartner Events attract high-level IT and business professionals who seek in-depth knowledge about technology products and services. Gartner Symposium/ITxpo events are large, strategic conferences held in various locations throughout the world for CIOs and other senior IT and business professionals. Gartner Summit events focus on specific topics, technologies and industries, providing IT professionals with the insight, solutions and networking opportunities to succeed in their job role. Finally, we offer targeted events for CIOs and IT executives, such as CIO Leadership Forum.•Superior IT research content — We believe that we create the broadest, highest-quality and most relevant research coverage of the IT industry. Our research analysis generates unbiased insight that we believe is timely, thought-provoking and comprehensive, and that is known for its high quality, independence and objectivity.•Our leading brand name — We have provided critical, trusted insight under the Gartner name for over 30 years.•Our global footprint and established customer base — We have a global presence with clients in 85 countries on six continents. For both 2012 and 2011, 46% of our revenues were derived from sales outside of the U.S.•Experienced management team — Our management team is composed of IT research veterans and experienced industry executives.•Substantial operating leverage in our business model — We have the ability to distribute our intellectual property and expertise across multiple platforms, including research publications, consulting engagements, conferences and executive programs, to derive incremental revenues and profitability.•Vast network of analysts and consultants — As of December 31, 2012, we had 1,405 research analysts and consultants located around the world. Our analysts collectively speak 47 languages and are located in 26 countries, enabling us to cover all aspects of IT on a global basis.againstwith consulting firms and other 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. 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. However,While we believe the breadth and depth of our research assets position us well versus our competition. Increased competition, mayincreased competition could result in loss of market share, diminished value in our products and services, reduced pricing, and increased sales and marketing expenditures.property, and weproperty. We also enter into agreements with our employees as appropriate that protect our intellectual property, and we enforce these agreements if necessary.5,4685,997 employees as of December 31, 2012,2013, an increase of 10% compared to the prior year end as we continued to invest for future growth. We have 9761,054 employees located at our headquarters in Stamford, Connecticut and a nearby office in Trumbull, Connecticut; 2,1982,383 employees located elsewhere in the United States; and 2,2942,560 employees located outside of the United States. Our employees may be subject to collective bargaining agreements at a company or industry level 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.5
expenditures to create and maintain client brand loyalty. If we fail to effectively promote and maintain the Gartner brand, or incur excessive expenses in doing so, our future business and operating results could be adversely impacted. operations. each. Our Ft. Myers operations are located in 120,000 square feet of leased office space in one building for which the lease will expire in 2026. Our Egham location has approximately 72,000 square feet of leased office space in two buildings for which the leases expire in 2020 and 2025, respectively. Our other domestic and international locations support our research, consulting, domestic and international sales efforts, and other functions. 2013. on hand and borrowings under the Company’s credit agreement. 2012. 2013. 2013. attendees. point. Gartner’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended. 2014. 2014. 2014. Operations (see Note 8 — Stock-Based Compensation for additional information). amount of impairment, if any, is measured based on the difference between projected discounted future operating cash flows using a discount rate reflecting the Company’s average cost of funds and the carrying value of the asset. The Company did not record any material impairment charges for long-lived and intangible assets during the three year period ended December 31, 2013. information). Fair value disclosures.The Company has a limited number of assets and liabilities that are adjusted to fair value at each balance sheet date. The Company’s fair value disclosures are included in Note 12 — Fair Value Disclosures. 2013. The Company recorded a charge of $0.3 million for capitalized debt issuance costs related to the termination of the previous credit arrangement, which was recorded in Interest expense, net in the Condensed Consolidated Statements of Operations. The Company incurred $3.6 million in debt issuance costs related to the new credit facility, which was capitalized and is being amortized to interest expense over the term of the 2013 Credit Agreement. The 2013. Other liabilities in the Consolidated Balance Sheets. The following table summarizes transactions relating to Common Stock for the three years’ ending December 31, Company’s credit agreement. years Employee Stock Purchase Plan The following table presents the number of common share equivalents that were not included in the computation of diluted EPS in the table above because the effect would have been antidilutive. During periods with net income, these common share equivalents were antidilutive because their exercise price was greater than the average market value of a share of Common Stock during the period. 2017. Also included in the balance of unrecognized tax benefits 2011. The following are the assumptions used in the computation of pension expense for the years ended December 31:Among these conditions areEconomic growth continues to be both weak and uneven in many parts of the world. In addition, problems continue with government deficit spending in the U.S. and other countries, ongoing uncertainty in global trade, difficulties related to the refinancingand high levels of sovereign debt, and currency stability. In addition, there continues to be risks related to one or more Euro-Zone countries discontinuing the use of the Euro as their currency.debt. These conditions could negatively and materially affect future demand for our products and services. Such difficulties could include the ability to maintain client retention, wallet retention and consulting utilization rates, achieve contract value and consulting backlog growth, attract attendees and exhibitors to our events or obtain new clients. Such developments could negatively impact our financial condition, results of operations, and cash flows.financial condition.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, limited barriers to entry exist in the markets in which we do business. As a result, additional 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.70%71% and 69%70% of our revenues for 20122013 and 2011,2012, respectively. Generating new sales of our subscription-based products and services, both to new and existing clients, is often a time consuming process. If we are unable to generate new sales, due to competition or other factors, our revenues will be adversely affected.6months.months, although we do enter into multi-year agreements in certain circumstances. 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•delivering products and services of the quality and timeliness necessary to withstand competition. and 82% at December 31, 2011, there can be no guarantee that we will continue to maintain this rate of client renewals.19%18% of our total revenues for 2012in 2013 and 21% for 2011.19% in 2012. 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.event and asevent. Additionally, a significant recovery in the global economy recovers,could make our ability to procure space for our events and efforts to keep associated costs down could become more challenging. 2011, approximately $255.0 million, and $225.0 million, 20122013 will be filled in 2013.2014. 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, andservices. Additionally, our contracts at the state and local levels, as well as foreign government contracts, are subject to various governmentgovernmental authorizations and funding approvals and mechanisms. In general, most if not all of these contracts may be terminated at any time without cause or penalty (“termination for convenience”). Additionally, many stateSimilarly, contracts with domestic and foreign governments and their agencies are subject to increasingly complex bidding procedures and municipalities across the United States are under severe financial strain and are considering significant budget cuts.intense competition. Should appropriations for the governments and agencies that contract with us be curtailed, or should government contracts be terminated for convenience, we may experience a significant loss of segment and consolidated revenues.7areis earned outside of the U.S. 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, differences between U.S. and foreign tax rates and laws, and the difficulty of enforcing client agreements, collecting accounts receivable and protecting intellectual property rights 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.and/orand operating results could be 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 or other costs as a result of these occurrences.8$200.0$150.0 million term loan and a $400.0$600.0 million revolving credit facility (the “2010“2013 Credit Agreement”). The credit arrangement contains an expansion feature by which the term loan and revolving facility may be increased, at our option and under certain conditions, by up to an additional $150.0$250.0 million in the aggregate which may or may not be available to us depending upon prevailing credit market conditions.aggregate. At both December 31, 2012 and 2011,2013, we had a total of $200.0 million outstanding under the 20102013 Credit Agreement.20102013 Credit Agreement could limit our future financial flexibility. Additionally, a failure to comply with these covenants could result in acceleration of all amounts outstanding under the arrangement, which would materially impact our financial condition unless accommodations could be negotiated with our lenders. No assurance can be given that we would be successful in doing so in this current financial climate, or that any accommodations that we were able to negotiate would be on terms as favorable as those presently contained in the credit arrangement. The associated debt service costs of this credit arrangement could impair our future operating results. 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.9taxation.taxation. We operate in numerous domesticjurisdictions around the world. The Company recognizes tax expense based upon the applicable tax rates and foreign taxing jurisdictions. Changes to the tax laws as well asof the levelcountries where income is generated. A substantial amount of our income is generated outside of the U.S. and is taxed at rates significantly less than the U.S. statutory income tax rate of 35%. The U.S. and many other countries in which the Company operates are considering proposals which may significantly change the taxation of income earned outside of the U.S. Our future effective tax rate, financial position and results of operations could be materially adversely affected by changes in law or if more of our income is earned in higher taxing jurisdictions and profitabilityless is earned in each jurisdiction may have an unfavorable impact upon the amount of taxes that we recognize in any given year. lower taxing jurisdictions.tax years are subject to auditexamination by the taxtaxing authorities in jurisdictions where we conduct business, and induring the ordinary course of business, we may beare under audit by one or more tax authorities from time to time. Theseauthorities. Although we believe that our tax filings are reasonable, the final resolution of tax audits may resultbe different from what is reflected in assessments of additional taxes,our historical tax provisions and resolution of these matters involves uncertaintiesaccruals and there are no assurances that the ultimate resolution will not exceed the amounts we have recorded. Additionally, the results of an audit could have a material adverse effect on our financial position and results of operations, or cash flows in the period or periods for which that determination is made.pricesprice of our Common Stock could be 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, changes in the nature and composition of our stockholder base, changes in securities analysts’ recommendations2012,2013, the aggregate number of shares of our Common Stock issuable pursuant to outstanding grants and awards under these plans was approximately 4.83.6 million shares (approximately 1.20.8 million of which have vested). In addition, approximately 6.4 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 without further registration 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). 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.2012,2013, and based upon publicly-available SEC filings, fourfive 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.10•the ability of our Board of Directors to issue and determine the terms of preferred stock;•advance notice requirements for inclusion of stockholder proposals at stockholder meetings; and•the anti-takeover provisions of Delaware law.2927 domestic and 4951 international offices and we have a significant presence in Stamford, Connecticut; Ft. Myers, Florida; and Egham, the United Kingdom. The Company does not own any properties.In 2010, the Company entered into an amended and restatedThe Company's lease agreement foron the Stamford headquarters facility that provides for a term of fifteen years. The amended lease also grants the Companyexpires in 2028 and we have three options to renew the lease at fair market value for five years each, an option to purchase the facility at fair market value, and a $25.0 million tenant improvement allowance provided by the landlord to renovate the three buildings comprising the facility. The renovation work commenced in 2011 and to date the renovation of two buildings has been completed. Renovation on the third building is expected to be completed in March 2013.We evaluate our space needs on a continuous basis as our business changes. While ourforeseeable needs, shouldwe anticipate that trend to continue. 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 at reasonable terms.112013,2014, there were 2,1841,799 holders of record of our Common Stock. Our 20132014 Annual Meeting of Stockholders will be held on May 30, 201329, 2014 at the Company’s corporate headquarters in Stamford, Connecticut. We did not submit any matter to a vote of our stockholders during the fourth quarter of 2012. 2012 2011 High Low High Low Quarter ended March 31 $ 43.19 $ 34.39 $ 41.68 $ 33.11 Quarter ended June 30 44.97 39.50 43.39 35.79 Quarter ended September 30 51.45 42.49 41.87 31.98 Quarter ended December 31 48.65 42.81 41.09 32.24 2013 2012 High Low High Low Quarter ended March 31 $ 54.52 $ 46.52 $ 43.19 $ 34.39 Quarter ended June 30 59.09 53.01 44.97 39.50 Quarter ended September 30 63.00 55.75 51.45 42.49 Quarter ended December 31 $ 71.49 $ 57.19 $ 48.65 $ 42.81 20102013 Credit Agreement contains a negative covenant which may limit our ability to pay dividends.The Company has aprogram, ofauthorization, which $210.2 million remained available for repurchases as of December 31, 2012. Repurchaseswas substantially utilized. The Company may be maderepurchase its common stock from time-to-time through open market purchases, private transactions, tender offers or other transactions. The amounttime to time in amounts and timing of repurchases will beat prices 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 also be made from time-to-time in connection with the settlement of the Company’s shared-based compensation awards. Repurchasesthrough open market purchases, private transactions or other transactions and will be funded from cash flow from operations or borrowings.provides detail related tosummarizes the repurchases of our Common Stock in the three months ended December 31, 20122013 pursuant to our prior $500.0 million share repurchase programauthorization and pursuant to the settlement of share-based compensation awards:Period Total Number of Shares Purchased
(#) Average Price Paid Per Share
($) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(#) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
($000’s) October 205 $ 46.41 205 November 475,282 46.03 475,282 December 2,658 45.63 2,658 Total (1) 478,145 $ 46.02 478,145 $ 210,200 Period October 210 $ 58.95 November 147,325 63.80 December 426,073 70.49 Total (1) 573,608 $ 68.77 $ 800,000 (1) For the year ended December 31, 2012,2013, the Company repurchased 2,738,238a total of 3,432,854 shares for a total cost of $111.3 million.$196.7 million , of which $181.7 million was paid in 2013 and $15.0 million was paid in early January 2014.12(2) Amount available as of February 4, 2014. (In thousands, except per share data) 2012 2011 2010 2009 2008 STATEMENT OF OPERATIONS DATA: Revenues: Research $ 1,137,147 $ 1,012,062 $ 865,000 $ 752,505 $ 781,581 Consulting 304,893 308,047 302,117 286,847 347,404 Events 173,768 148,479 121,337 100,448 150,080 Total revenues 1,615,808 1,468,588 1,288,454 1,139,800 1,279,065 Operating income 245,707 214,062 149,265 134,477 164,368 Income from continuing operations 165,903 136,902 96,285 82,964 97,148 Income from discontinued operations — — — — 6,723 Net income $ 165,903 $ 136,902 $ 96,285 $ 82,964 $ 103,871 PER SHARE DATA: Basic: Income from continuing operations $ 1.78 $ 1.43 $ 1.01 $ 0.88 $ 1.02 Income from discontinued operations — — — — 0.07 Income per share $ 1.78 $ 1.43 $ 1.01 $ 0.88 $ 1.09 Diluted: Income from continuing operations $ 1.73 $ 1.39 $ 0.96 $ 0.85 $ 0.98 Income from discontinued operations — — — — 0.07 Income per share $ 1.73 $ 1.39 $ 0.96 $ 0.85 $ 1.05 Weighted average shares outstanding Basic 93,444 96,019 95,747 94,658 95,246 Diluted 95,842 98,846 99,834 97,549 99,028 OTHER DATA: Cash and cash equivalents $ 299,852 $ 142,739 $ 120,181 $ 116,574 $ 140,929 Total assets 1,621,277 1,379,872 1,285,658 1,215,279 1,093,065 Long-term debt 115,000 150,000 180,000 124,000 238,500 Stockholders’ equity (deficit) 306,673 181,784 187,056 112,535 (21,316 ) Cash flow from operations 279,814 255,566 205,499 161,937 184,350 (In thousands, except per share data) 2013 2012 2011 2010 2009 STATEMENT OF OPERATIONS DATA: Revenues: Research $ 1,271,011 $ 1,137,147 $ 1,012,062 $ 865,000 $ 752,505 Consulting 314,257 304,893 308,047 302,117 286,847 Events 198,945 173,768 148,479 121,337 100,448 Total revenues 1,784,213 1,615,808 1,468,588 1,288,454 1,139,800 Operating income 275,492 245,707 214,062 149,265 134,477 Net income $ 182,801 $ 165,903 $ 136,902 $ 96,285 $ 82,964 PER SHARE DATA: Basic income per share $ 1.97 $ 1.78 $ 1.43 $ 1.01 $ 0.88 Diluted income per share $ 1.93 $ 1.73 $ 1.39 $ 0.96 $ 0.85 Weighted average shares outstanding: Basic 93,015 93,444 96,019 95,747 94,658 Diluted 94,830 95,842 98,846 99,834 97,549 OTHER DATA: Cash and cash equivalents $ 423,990 $ 299,852 $ 142,739 $ 120,181 $ 116,574 Total assets 1,783,582 1,621,277 1,379,872 1,285,658 1,215,279 Long-term debt 136,250 115,000 150,000 180,000 124,000 Stockholders’ equity 361,316 306,673 181,784 187,056 112,535 Cash provided by operating activities $ 315,654 $ 279,814 $ 255,566 $ 205,499 $ 161,937 ·In 2012 we acquired Ideas International, Inc. and recognized $2.4 million in pre-tax acquisition and integration charges (see Note 2 — Acquisitions in the Notes to the Consolidated Financial Statements). In addition, in 2009 we acquired AMR Research, Inc. and Burton Group, Inc., and in 2010 and 2009 we recognized $7.9 million and $2.9 million in pre-tax acquisition charges. The results of these businesses, which were not material, were included beginning on their respective acquisition dates.·In 2012 we repurchased 2.7 million of our common shares under our share repurchase program at a total cost of $111.3 million. We also repurchased 5.9 million, 3.9 million, 0.3 million, and 9.7 million of our common shares in 2011, 2010, 2009, and 2008, respectively (see Note 7 — Stockholders’ Equity in the Notes to the Consolidated Financial Statements).·In 2010 we refinanced our debt (see Note 5 — Debt in the Notes to the Consolidated Financial Statements). In conjunction with the refinancing, we recorded $3.7 million in incremental pre-tax charges in that year related to the termination of the previous credit arrangement.·In 2008 we sold our Vision Events business, which had been part of our Events segment. Accordingly, the results of operations of this business and the related gain on sale were reported as a discontinued operation.13In 2012 we acquired Ideas International Limited (“Ideas International”), a publicly-owned Australian corporation (see Note 2 — Acquisition in the Notes to the Consolidated Financial Statements for additional information). Ideas International’s business operations have been integrated into the Company’s Research segment, and its operating results and business measurements are included in the Company’s consolidated and segment results beginning on the date of acquisition. The impact of the acquisition was not material.•Research provides objective insight on critical and timely technology and supply chain initiatives for CIOs, other IT professionals, supply chain leaders, technology companies and the investment community through reports, briefings, proprietary tools, access to our analysts, peer networking services, and membership programs that enable our clients to make better decisions about their IT and supply chain investments.•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 provide IT, supply chain, and business professionals the opportunity to attend various symposia, conferences and exhibitions to learn, contribute and network with their peers. From our flagship event Symposium/ITxpo, to Summits focused on specific technologies and industries, to experimental workshop-style Seminars, our events distill the latest Gartner research into applicable insight and advice.BUSINESS SEGMENT BUSINESS MEASUREMENTS Research 14 Consulting Events $1,615.8$1,784.2 million in 2012,2013, an increase of 10% over 20112012 while diluted earnings per share increased by $.34$.20 per share, to $1.73.$1.93. Excluding the impact of foreign currency, 20122013 total revenues increased 12%11% over 2011.$1,137.1$1,271.0 million in 2012,2013, and the contribution margin increased 1 point, to 68%69%. At December 31, 2012,2013, Research contract value was $1,262.9$1,423.2 million, an increase of 14%13% over December 31, 20112012 and 12% adjusted for the impact of foreign exchange. Client retention was 83%82% and wallet retention was 99%98% at December 31, 2012.2012 decreased 1%2013 increased 3% compared to 2011,2012, while the gross contribution margin was 36%34%. Consultant utilization was 67%64% for 20122013 compared to 65%67% in 2011,2012, and we had 503509 billable consultants at December 31, 20122013 compared to 481503 at year-end 2011.2012. Backlog increased 2%3% year-over-year, to $102.7$106.1 million at December 31, 2012.17%14% year-over-year, to $173.8$198.9 million, while the segment contribution margin was 46%. We held 6264 events in 20122013 compared to 6062 in 2011,2012, with an increasea slight decline in overall attendancethe number of 8%, to 46,307.9%13% in 20122013 compared to 2011,2012, to $279.8$315.7 million. We continued to focus on maximizing shareholder value in 2012,2013, and we repurchased 2.73.4 million of our outstanding common shares outstanding during the year. We ended 20122013 with almost $300.0$424.0 million in cash and cash equivalents. In addition to ourequivalents, which is a record year-end cash balance,balance. We refinanced our debt in 2013 to take advantage of favorable market conditions, and as of year-end 20122013 we also had almost $347.0over $541.0 million of borrowing capacity on our $400.0 million revolving credit facility. We believe that we have adequate liquidity to meet our currently anticipated needs.The Company’s 2010 Credit Agreement expires in December 2015. The Company is currently exploring refinancing options to take advantage of favorable market conditions.15 December 31, 2012 2011 Total fees receivable $ 470,368 $ 428,293 Allowance for losses (6,400 ) (7,260 ) Fees receivable, net $ 463,968 $ 421,033 16 December 31, 2013 2012 Total fees receivable $ 497,923 $ 470,368 Allowance for losses (7,000 ) (6,400 ) Fees receivable, net $ 490,923 $ 463,968 2012,2013, we completed the required annual goodwill impairment test utilizing a qualitative approach. Based on this assessment, the Company believes the fair values of the Company’s reporting units continue to substantially exceed their respective carrying amounts. See Note 1 — Business and Significant Accounting Policies in the Notes to the Consolidated Financial Statements for additional discussion.As we prepare our consolidated financial statements, weWe estimate our income taxes in each of the jurisdictions where we operate. This process involves estimating our current tax expense 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 within our consolidated balance sheets. We record a valuation allowance to reduce our deferred tax assets when future realization is in question. We consider the availability of loss carryforwards, existing deferred tax liabilities, future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. In the event we determine that we are able to realize our deferred tax assets in the future in excess of the net recorded amount, an adjustment is made to reduce the valuation allowance and increase income in the period such determination is made. Likewise, if we determine that we will not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the valuation allowance is charged against income in the period such determination is made.17tables summarizetable presents the changes in selected line items in our Consolidated Statements of OperationOperations for the two years ended December 31, 2013 (dollars in thousands): Total revenues $ 1,784,213 $ 1,615,808 $ 168,405 10 % Costs and expenses: Cost of services & product development 713,484 659,067 (54,417 ) (8 ) Selling, general and administrative 760,458 678,843 (81,615 ) (12 ) Depreciation 28,996 25,369 (3,627 ) (14 ) Amortization of intangibles 5,446 4,402 (1,044 ) (24 ) Acquisition & integration charges 337 2,420 2,083 86 Operating income 275,492 245,707 29,785 12 Interest expense, net (8,837 ) (8,859 ) 22 — Other expense, net (216 ) (1,252 ) 1,036 83 Provision for income taxes (83,638 ) (69,693 ) (13,945 ) (20 ) Net income $ 182,801 $ 165,903 $ 16,898 10 % Geographic Region December 31, 2013 December 31, 2012 Increase (Decrease) $ Increase (Decrease) % U.S. and Canada $ 1,049,734 $ 947,075 $ 102,659 11 % Europe, Middle East, Africa 508,755 458,675 50,080 11 Other International 225,724 210,058 15,666 7 Totals $ 1,784,213 $ 1,615,808 $ 168,405 10 % Segment December 31, 2013 December 31, 2012 Increase (Decrease) $ Increase (Decrease) % Research $ 1,271,011 $ 1,137,147 $ 133,864 12 % Consulting 314,257 304,893 9,364 3 Events 198,945 173,768 25,177 14 Totals $ 1,784,213 $ 1,615,808 $ 168,405 10 % Twelve Months
Ended
December 31,
2012 Twelve Months
Ended
December 31,
2011 Increase
(Decrease)
$ Increase
(Decrease)
% Total revenues $ 1,615,808 $ 1,468,588 $ 147,220 10 % Costs and expenses: Cost of services & product development 659,067 608,755 (50,312 ) (8 )% Selling, general and administrative 678,843 613,707 (65,136 ) (11 )% Depreciation 25,369 25,539 170 1 % Amortization of intangibles 4,402 6,525 2,123 33 % Acquisition & integration charges 2,420 — (2,420 ) (100 )% Operating income 245,707 214,062 31,645 15 % Interest expense, net (8,859 ) (9,967 ) 1,108 11 % Other expense, net (1,252 ) (1,911 ) 659 34 % Provision for income taxes (69,693 ) (65,282 ) (4,411 ) (7 )% Net income $ 165,903 $ 136,902 $ 29,001 21 % Twelve Months Ended
December 31,
2011 Twelve Months Ended
December 31,
2010 Increase (Decrease)
$ Increase
(Decrease)
% Total revenues $ 1,468,588 $ 1,288,454 $ 180,134 14 % Costs and expenses: Cost of services & product development 608,755 552,238 (56,517 ) (10 )% Selling, general and administrative 613,707 543,174 (70,533 ) (13 )% Depreciation 25,539 25,349 (190 ) (1 )% Amortization of intangibles 6,525 10,525 4,000 38 % Acquisition & integration charges — 7,903 7,903 100 % Operating income 214,062 149,265 64,797 43 % Interest expense, net (9,967 ) (15,616 ) 5,649 36 % Other (expense) income, net (1,911 ) 436 (2,347 ) >(100 )% Provision for income taxes (65,282 ) (37,800 ) (27,482 ) (73 )% Net income $ 136,902 $ 96,285 $ 40,617 42 % Total revenues $ 1,615,808 $ 1,468,588 $ 147,220 10 % Costs and expenses: Cost of services & product development 659,067 608,755 (50,312 ) (8 ) Selling, general and administrative 678,843 613,707 (65,136 ) (11 ) Depreciation 25,369 25,539 170 1 Amortization of intangibles 4,402 6,525 2,123 33 Acquisition & integration charges 2,420 — (2,420 ) (100 ) Operating income 245,707 214,062 31,645 15 Interest expense, net (8,859 ) (9,967 ) 1,108 11 Other expense, net (1,252 ) (1,911 ) 659 34 Provision for income taxes (69,693 ) (65,282 ) (4,411 ) (7 ) Net income $ 165,903 $ 136,902 $ 29,001 21 % 2012 VERSUS 2011Revenues from sales to United States and Canadian clients increased 10%, to $947.1 million in 2012 from $861.5 million in 2011.Revenues from sales to clients in Europe, the Middle East and Africa increased to $458.6 million in 2012 from $437.2 million in 2011, a 5% increase.Revenues from sales to clients in our Other International region increased to $210.1 million in 2012 from $169.9 million in 2011, a 24% increase.18Geographic Region Twelve Months Ended December 31, 2012 Twelve Months Ended December 31, 2011 Increase (Decrease) $ Increase (Decrease) % U.S. and Canada $ 947,075 $ 861,481 $ 85,594 10 % Europe, Middle East, Africa 458,675 437,194 21,481 5 Other International 210,058 169,913 40,145 24 Totals $ 1,615,808 $ 1,468,588 $ 147,220 10 % Research revenues increased 12% in 2012, to $1,137.1 million compared to $1,012.1 million in 2011, and comprised 70% and 69% of our total revenues in 2012 and 2011, respectively.Consulting revenues decreased 1% in 2012, to $304.9 million compared to $308.0 million in 2011, and comprised 19% and 21% of our total revenues in 2012 and 2011, respectively.Segment Twelve Months Ended December 31, 2012 Twelve Months Ended December 31, 2011 Increase (Decrease) $ Increase (Decrease) % Research $ 1,137,147 $ 1,012,062 $ 125,085 12 % Consulting 304,893 308,047 (3,154 ) (1 ) Events 173,768 148,479 25,289 17 Totals $ 1,615,808 1,468,588 $ 147,220 10 % Events revenues increased 17% in 2012, to $173.8 million compared to $148.5 million in 2011, and comprised 11% of total revenues in 2012 and 10% in 2011.Internal Revenue Service (“IRS”)IRS audit of its 2007 federal income tax return. The resolution of the audit did not have a material adverse effect on the consolidated financial position, cash flows, or results of operations of the Company.In 2011 the IRS commenced an audit of the Company’s federal income tax returns for the 2008 and 2009 tax years. The IRS has proposed adjustments for both 2008 and 2009 and the Company expects to settle the audit in early 2013. Although the audit has not been fully resolved, the Company believes that the ultimate disposition will not have a material adverse effect on its consolidated financial position, cash flows, or results of operations.19The American Taxpayer Relief Act of 2012 (the “Tax Act”) was enacted in January of 2013 and contains beneficial tax provisions for the Company which apply retroactively to 2012. However, since the Tax Act was passed in 2013, approximately $1.5 million of tax benefits relating to its retroactive application will be recorded by the Company in the first quarter of 2013.2011 VERSUS 2010TOTAL REVENUES for the twelve months ended December 31, 2011 increased $180.1 million, or 14%, compared to the twelve months ended December 31, 2010. Total revenues increased 11% excluding the impact of foreign currency. Revenues increased across all of our geographic regions and in all three of our business segments on a reported basis.An overview of our results by geographic region follows:Revenues from sales to United States and Canadian clients increased 12%, to $861.5 million in 2011 from $765.8 million in 2010.Revenues from sales to clients in Europe, the Middle East and Africa increased to $437.2 million in 2011 from $380.8 million in 2010, a 15% increase.Revenues from sales to clients in our Other International region increased 20%, to $169.9 million in 2011 from $141.9 million in 2010.An overview of our results by segment follows:Research revenues increased 17% in 2011, to $1,012.1 million compared to $865.0 million in 2010, and comprised 69% and 67% of our total revenues in 2011 and 2010, respectively.Consulting revenues increased 2% in 2011, to $308.0 million compared to $302.1 million in 2010, and comprised approximately 21% and 23% of our total revenues in 2011 and 2010, respectively.Events revenues increased 22% in 2011, to $148.5 million compared to $121.3 million in 2010, and comprised approximately 10% of total revenues in both 2011 and 2010.Please refer to the section of this MD&A below entitled “Segment Results” for a further discussion of revenues and results by segment.COST OF SERVICES AND PRODUCT DEVELOPMENT (“COS”) expense increased 10% in 2011, or $56.5 million, to $608.8 million compared to $552.2 million in 2010. Approximately half of the increase was due to higher payroll and related benefits costs resulting from our investment in additional headcount and merit salary increases. The rest of the increase was primarily due to the negative impact of foreign currency translation, as well as incremental expenses and additional investment in the Events business. COS as a percentage of revenues improved by 2 points year-over-year, primarily driven by higher research revenues and the operating leverage inherent in our Research business.SELLING, GENERAL AND ADMINISTRATIVE (“SG&A”) expense increased by $70.5 million in 2011, or 13%, to $613.7 million from $543.2 million in 2010. The increase was primarily due to higher payroll and to a lesser extent, the negative impact of foreign currency translation. Excluding the unfavorable impact of foreign exchange, SG&A expense increased 11% year-over-year. The higher payroll costs resulted from additional investment in headcount, as well as higher sales commissions and merit salary increases. The increased headcount was primarily due to our investment in additional quota-bearing sales associates, which increased 21% compared to December 31, 2010.DEPRECIATION expense increased slightly year-over-year. Capital spending increased to $42.0 million in 2011 from $21.7 million in 2010. The $42.0 million of capital expenditures in 2011 included $9.5 million of expenditures related to the renovation of our Stamford headquarters facility, of which $9.0 million was reimbursed by our landlord in 2011.AMORTIZATION OF INTANGIBLES decreased 38% year-over-year due to certain intangibles becoming fully amortized in 2010.ACQUISITION AND INTEGRATION CHARGES was zero in 2011 and $7.9 million in 2010. These charges related to the acquisitions of AMR Research and Burton Group in December 2009 and included legal, consulting, severance, and other costs.20OPERATING INCOME increased $64.8 million year-over-year, or 43%, to $214.1 million in 2011 from $149.3 million in 2010. Operating income as a percentage of revenues improved by 3 points year-over-year, to 15% in 2011 compared to 12% in 2010, primarily due to a significantly higher segment contribution from the Research business and to a lesser extent, lower intangible amortization and acquisition and integration charges.INTEREST EXPENSE, NET was $10.0 million in 2011 compared to $15.6 million in 2010, a 36% decline. The $15.6 million of interest expense in 2010 included $3.7 million of incremental expense related to the refinancing of our debt (See Note 5 — Debt in the Notes to the Consolidated Financial Statements). Excluding the $3.7 million incremental charge, Interest expense, net declined approximately 15% year-over-year, primarily due to a lower average amount of debt outstanding, which declined to $220.0 million in 2011 from $326.0 million in 2010.OTHER (EXPENSE) INCOME, NET was $(1.9) million in 2011, which primarily consisted of net foreign currency exchange losses, and $0.4 million in 2010, which consisted of a $2.4 million gain from an insurance recovery related to a prior period loss, offset by net foreign currency exchange losses.PROVISION FOR INCOME TAXES was $65.3 million in 2011 compared to $37.8 million in 2010 and the effective tax rate was 32.3% for 2011 compared to 28.2% for 2010. The lower effective tax rate in 2010 was primarily attributable to the release of valuation allowances relating to certain net operating losses.NET INCOME was $136.9 million in 2011 and $96.3 million in 2010, an increase of $40.6 million, or 42%, primarily due to a substantially higher operating income, which was partially offset by higher income tax charges. Basic earnings per share increased 42% year-over-year while diluted earnings per share increased 45% due to the higher net income.segments:Research 2012 vs. 2011 2011 vs. 2010 As Of And
For The
Twelve Months
Ended
December 31,
2012 As Of And
For the
Twelve Months
Ended
December 31,
2011 Increase
(Decrease) Percentage
Increase
(Decrease) As Of And
For The
Twelve Months
Ended
December 31,
2011 As Of And
For the
Twelve Months
Ended
December 31,
2010 Increase
(Decrease) Percentage
Increase
(Decrease) Financial Measurements: Revenues (1) $ 1,137,147 $ 1,012,062 $ 125,085 12 % $ 1,012,062 $ 865,000 $ 147,062 17 % Gross contribution (1) $ 774,342 $ 682,136 $ 92,206 14 % $ 682,136 $ 564,527 $ 117,609 21 % Gross contribution margin 68 % 67 % 1 point — 67 % 65 % 2 points — Business Measurements: Contract value (1) $ 1,262,865 $ 1,115,801 $ 147,064 13 % $ 1,115,801 $ 977,710 $ 138,091 14 % Client retention 83 % 82 % 1 point — 82 % 83 % (1) point — Wallet retention 99 % 99 % — — 99 % 98 % 1 point — 2012 2012 2011 Financial Measurements: Revenues (1) $ 1,271,011 $ 1,137,147 $ 133,864 12 % $ 1,137,147 $ 1,012,062 $ 125,085 12 % Gross contribution (1) $ 879,384 $ 774,342 $ 105,042 14 % $ 774,342 $ 682,136 $ 92,206 14 % Gross contribution margin 69 % 68 % 1 point — 68 % 67 % 1 point — Business Measurements: Contract value (1) $ 1,423,179 $ 1,262,865 $ 160,314 13 % $ 1,262,865 $ 1,115,801 $ 147,064 13 % Client retention 82 % 83 % (1) point — 83 % 82 % 1 point — Wallet retention 98 % 99 % (1) point — 99 % 99 % — — (1) Dollars in thousands. point, driven by higher revenues and the operating leverage in this business. Contribution margin improved in spite of a 10% increase in segment headcount as we continue to invest for future growth.group. The number of research client organizations we serve increased by 7% in 2012, to 13,305, and has increased 27% since 2009. We attribute the increase in contract value and the number of client organizations we serve to our extraordinary research content, our continuing focus on sales effectiveness, and the expansion in the number of our quota-bearing sales associates.segment. Both client retention and wallet retention remained strong during 2012 at 83% and 99%, respectively. 2012 2012 2011 Financial Measurements: Revenues (1) $ 314,257 $ 304,893 $ 9,364 3 % $ 304,893 $ 308,047 $ (3,154 ) (1 )% Gross contribution (1) $ 107,565 $ 109,253 $ (1,688 ) (2 )% $ 109,253 $ 114,838 $ (5,585 ) (5 )% Gross contribution margin 34 % 36 % (2) points — 36 % 37 % (1) point — Business Measurements: Backlog (1) $ 106,130 $ 102,718 $ 3,412 3 % $ 102,718 $ 100,564 $ 2,154 2 % Billable headcount 509 503 6 1 % 503 481 22 5 % Consultant utilization 64 % 67 % (3) points — 67 % 65 % 2 points — Average annualized revenue per billable headcount (1) $ 409 $ 430 $ (21 ) (5 )% $ 430 $ 424 $ 6 1 % 21 2011 VERSUS 2010Research segment revenues increased 17% in 2011 compared to 2010 and reached the one billion dollar level for the first time. Excluding the favorable effect of foreign currency translation, Research segment revenues increased 14%. The segment gross contribution margin increased by 2 points, to 67%, as higher segment revenues and the operating leverage in this business resulted in a higher segment contribution. Research contract value increased 14% in 2011, to $1,115.8 million. Foreign currency translation had an immaterial impact year-over-year on contract value. We had double-digit contract value growth in most of our Research product lines, client sizes, and industry groups. Client retention and wallet retention remained strong at 82% and 99%, respectively.Consulting 2012 vs. 2011 2011 vs. 2010 As Of And
For The
Twelve Months
Ended
December 31,
2012 As Of And
For the
Twelve Months
Ended
December 31,
2011 Increase
(Decrease) Percentage
Increase
(Decrease) As Of And
For The
Twelve Months
Ended
December 31,
2011 As Of And
For the
Twelve Months
Ended
December 31,
2010 Increase
(Decrease) Percentage
Increase
(Decrease) Financial Measurements: Revenues (1) $ 304,893 $ 308,047 $ (3,154 ) (1 )% $ 308,047 $ 302,117 $ 5,930 2 % Gross contribution (1) $ 109,253 $ 114,838 $ (5,585 ) (5 )% $ 114,838 $ 121,885 $ (7,047 ) (6 )% Gross contribution margin 36 % 37 % (1) point — 37 % 40 % (3) points — Business Measurements: Backlog (1) $ 102,718 $ 100,564 $ 2,154 2 % $ 100,564 $ 100,839 $ (275 ) — Billable headcount 503 481 22 5 % 481 473 8 2 % Consultant utilization 67 % 65 % 2 points — 65 % 68 % (3) points — Average annualized revenue per billable headcount (1) $ 430 $ 424 $ 6 1 % $ 424 $ 424 $ — — (1) Dollars in thousands. Contract optimization revenues, which can fluctuate from period to period, currently represent about 10% of total Consulting segment revenues and have been declining over time as a percentage of overall segment revenue. The decrease in contract optimization revenue was substantially offset by higher core consulting revenues, which increased 5% year-over-year, driven by additional demand and increased headcount. Strategic advisory (“SAS”)SAS revenues were flat year-over-year, in accordance with our segment plan.year-over-year. Excluding the unfavorable impact of foreign currency translation, revenues increased 1% year-over-year. The gross contribution margin declined by 1 point due to the lower revenues in our contract optimization business, which has a higher contribution margin than core consulting or SAS. Backlog increased 2% year-over-year, to $102.7 million at December 31, 2012.2011 VERSUS 2010Consulting revenues increased 2% year-over-year primarily due to higher revenues in core consulting. Excludingfavorable impactfinancial results and business measurements of foreign currency translation, revenues were down slightly. The gross contribution margin declined by 3 points, due to lower utilization in core consultingour Events segment as of and higher payroll and benefit costs resulting from merit salary increases andfor the full year impact in 2011 from the additional headcount we added in the fourth quarter of 2010. Backlog was down slightly year-over-year, to $100.6 million attwelve months ended December 31, 2011.Events 2012 vs. 2011 2011 vs. 2010 As Of And
For The
Twelve Months
Ended
December 31,
2012 As Of And
For the
Twelve Months
Ended
December 31,
2011 Increase
(Decrease) Percentage
Increase
(Decrease) As Of And
For The
Twelve Months
Ended
December 31,
2011 As Of And
For the
Twelve Months
Ended
December 31,
2010 Increase
(Decrease) Percentage
Increase
(Decrease) Financial Measurements: Revenues (1) $ 173,768 $ 148,479 $ 25,289 17 % $ 148,479 $ 121,337 $ 27,142 22 % Gross contribution (1) $ 80,119 $ 66,265 $ 13,854 21 % $ 66,265 $ 55,884 $ 10,381 19 % Gross contribution margin 46 % 45 % 1 point — 45 % 46 % (1) point — Business Measurements: Number of events 62 60 2 3 % 60 56 4 7 % Number of attendees 46,307 42,748 3,559 8 % 42,748 37,219 5,529 15 % 2012 2012 2011 Financial Measurements: Revenues (1) $ 198,945 $ 173,768 $ 25,177 14 % $ 173,768 $ 148,479 $ 25,289 17 % Gross contribution (1) $ 91,216 $ 80,119 $ 11,097 14 % $ 80,119 $ 66,265 $ 13,854 21 % Gross contribution margin 46 % 46 % — — 46 % 45 % 1 point — Business Measurements: Number of events 64 62 2 3 % 62 60 2 3 % Number of attendees 44,986 46,307 (1,321 ) (3 )% 46,307 42,748 3,559 8 % (1) Dollars in thousands. 22
2013 VERSUS 20122011 VERSUS 2010Events revenues increased 22% year-over-year, or $27.1 million. Excluding the favorable impact of foreign currency translation, revenues increased 21%. We held 60 events in 2011, which consisted of 53 ongoing events and 7 new event launches, compared to 56 events in 2010. We discontinued 3 events in 2011 that had been held in prior years. The additional revenue we earned in 2011 was attributable to significantly higher revenue at our ongoing events, with double-digit increases in the number of attendees and exhibitors. Average revenue per attendee rose 2% and average revenue per exhibitor increased 5%. For full year 2011, gross contribution margin decreased 1 point, primarily due to incremental expenses and additional investment in the business to strengthen the portfolio and provide a foundation for future growth.2012,2013, we had operating cash flow of $279.8$315.7 million, which was the highest in the Company’s history and represented an increase of 9%13% over 2011.2012. Our operating cash flow has been continuously enhanced by the leverage characteristics of our subscription-based business model as well as our focus on operational efficiencies. Revenues in our Research segment, which increased 12% in 20122013 compared to 2011,2012, constituted 70%71% and 69%70% of our total revenues in 20122013 and 2011,2012, respectively. Our Research contracts generally renew annually and typically are paid in advance, and combined with a strong customer retention rate and high incremental margins, has generally resulted in strong growth in operating cash flow each year. Our cash flow generation has also been enhanced bybenefited from our continuing efforts to improve the operating efficiencies of our businesses as well as a focus on the effectiveoptimal management of our working capital as we increase our sales volume.$300.0$424.0 million of cash and cash equivalents at year-end 2012,2013, which was the highest cash balance in the Company’s history,history. We refinanced our debt in 2013 to take advantage of favorable market conditions and $347.0we had $541.1 million of available borrowing capacity under our revolving credit facility at year-end 2012.2013. We believe that our strong operating cash flow, as well as our existing cash balances and our available borrowing capacity, provide us with adequate liquidity to meet our currently anticipated needs.The Company’s 2010 Credit Agreement expires in December 2015. The Company is currently exploring refinancing options to take advantage of favorable market conditions.2012, approximately $167.02013, $247.0 million of our cash and cash equivalents was held outside the U.S. Approximately half of the amount of cash and cash equivalents held overseas represents unremitted earnings of our non-U.S subsidiaries. Under U.S. accounting rules, no provision for U.S. federal and localincome taxes that may result from the remittance of such earnings is required for these unremitted overseas earnings if the Company intends to reinvest such funds overseas. Our current plans do not demonstrate a need to repatriate these undistributed earnings to fund our U.S. operations or otherwise satisfy the liquidity needs of our U.S operations, and as a result weoperations. We intend to reinvest these earnings in our non-U.S. operations, except in instances in which the repatriation of these earnings would result in minimal additional tax. As a result, no provision for U.S. federal and statethe Company has not recognized additional income taxes has been recorded fortax expense that may result from the remittance of these unremitted earnings. However, should our liquidity needs change or we decide to repatriate some or all of these unremitted earnings, we may be required to accrue for U.S.additional taxes aswhich could have a material effect on our consolidated financial position, cash flows, and result and these charges could be material and would be recorded in future periods.
of operations.2320122013 (in thousands): 2012 vs. 2011 2011 vs. 2010 Twelve Months
Ended
December 31,
2012 Twelve Months
Ended
December 31,
2011 Increase
(Decrease) Twelve Months
Ended
December 31,
2011 Twelve Months
Ended
December 31,
2010 Increase
(Decrease) Cash provided by operating activities $ 279,813 $ 255,566 $ 24,247 $ 255,566 $ 205,499 $ 50,067 Cash used for investing activities (54,673 ) (41,954 ) (12,719 ) (41,954 ) (33,845 ) (8,109 ) Cash used in financing activities (72,570 ) (186,559 ) 113,989 (186,559 ) (171,556 ) (15,003 ) Net increase 152,570 27,053 125,517 27,053 98 26,955 Effects of exchange rates 4,543 (4,495 ) 9,038 (4,495 ) 3,509 (8,004 ) Beginning cash and cash equivalents 142,739 120,181 22,558 120,181 116,574 3,607 Ending cash and cash equivalents $ 299,852 $ 142,739 $ 157,113 $ 142,739 $ 120,181 $ 22,558 2013 vs. 2012 2012 vs. 2011 Cash provided by operating activities $ 315,654 $ 279,813 $ 35,841 $ 279,813 $ 255,566 $ 24,247 Cash used in investing activities (36,498 ) (54,673 ) 18,175 (54,673 ) (41,954 ) (12,719 ) Cash used by financing activities (153,855 ) (72,570 ) (81,285 ) (72,570 ) (186,559 ) 113,989 Net increase 125,301 152,570 (27,269 ) 152,570 27,053 125,517 Effects of exchange rates (1,163 ) 4,543 (5,706 ) 4,543 (4,495 ) 9,038 Beginning cash and cash equivalents 299,852 142,739 157,113 142,739 120,181 22,558 Ending cash and cash equivalents $ 423,990 $ 299,852 $ 124,138 $ 299,852 $ 142,739 $ 157,113 which wethat were paid for the renovation of our Stamford headquarters facility. Up to $25.0 million of these expenditures are reimbursable byThe Company received reimbursements from the facility landlord andof $13.0 million was reimbursed in 2012 and $9.0 million in 2011. The reimbursements are included2011, which were recorded in operating cash flows.2011 VERSUS 2010OperatingOperating cash flow increased by 24%, or $50.1 million in 2011 compared to 2010. The increase was primarily due to $40.6 million in higher net income and lower cash payments for acquisition costs, severance, and other costs. We also received $9.0 million in landlord cash reimbursements for capital expenditures on the renovation of our Stamford headquarters facility. These increased cash flows were partially offset by higher cash bonus and commission payments we paid in 2011 due to our stronger financial performance.InvestingWe used $8.1 million of additional cash in our investing activities in 2011 compared to 2010, due to higher capital expenditures. Capital expenditures were $42.0 million in 2011 compared to $21.7 million in 2010. We also made $12.2 million in payments related to the acquisition of Burton Group in early 2010, which we acquired in December 2009. The $42.0 million of capital expenditures in the 2011 period included $9.5 million we paid for the renovation of our Stamford headquarters facility, which is fully reimbursable by the landlord. The Company received reimbursement of $9.0 million of this amount in 2011.FinancingWe used an additional $15.0 million of cash in our financing activities in 2011 compared to 2010, primarily due to additional share repurchases. During 2011, we used $212.0 million for share repurchases, compared to $99.8 million in 2010. The increase in cash used for share repurchases in 2011 was substantially offset by lower debt repayments in 2011 compared to 2010. On a net basis, we repaid $99.8 million of debt in 2010 and we paid $4.8 million in fees related to our refinancing, compared to $20.1 million of debt repayments in 2011.24At December 31, 2012, we had $200.0 million outstanding under our 2010 whichfive-year, $200.0$150.0 million term loan and a $400.0$600.0 million revolving credit facility.facility (the “2013 Credit Agreement”). Under the revolving credit facility, amounts may be borrowed, repaid, and re-borrowed through the maturity date of the agreement in March 2018. The 2010 Credit Agreementcredit arrangement contains an expansion feature by which the term loan and revolving credit facility may be increased, at the Company’s option and under certain conditions, by up to an additional $150.0$250.0 million in the aggregate. The Company had a total of $200.0 million outstanding under the 2013 Credit Agreement as of December 31, 2013, which consisted of $144.4 million outstanding under the term loan and $55.6 million outstanding under the revolver. As of December 31, 2013, we had $541.1 million of borrowing availability under the revolver.1916 consecutive quarterly installments with thewhich commenced on June 30, 2013, plus a final payment due in December 2015,on March 7, 2018, and may be prepaid at any time without penalty or premium at the Company’s option. The revolving credit facility may be used for loans, and up to $40.0 million may be used for letters of credit. The revolving loans may be borrowed,December 2015,March 7, 2018, at which time all amounts borrowed must be repaid. See Note 5 —- Debt herein in the Notes to the Condensed Consolidated Financial Statements for additional information regarding the 20102013 Credit Agreement.presentssummarizes the Company’s contractual cash commitments due after December 31, 20122013 (in thousands): Due In Due In Due In Due In Commitment Description: Less Than
1 Year 2-3
Years 4-5
Years More Than
5 Years Total Debt – principal and interest (1) $ 47,100 $ 168,900 $ 300 $ 5,300 $ 221,600 Operating leases (2) 37,820 53,9550 24,590 75,055 191,420 Deferred compensation arrangement (3) 2,730 5,185 3,160 20,240 31,315 Tax liabilities (4) 2,225 — — — 2,225 Other (5) 16,500 13,900 1,790 — 32,190 Totals $ 106,375 $ 241,940 $ 29,840 $ 100,595 $ 478,750 Commitment Description: Total Debt – principal and interest (1), (2) $ 20,555 $ 50,485 $ 160,620 $ 5,210 $ 236,870 Operating leases (3) 34,525 48,135 25,985 82,485 191,130 Deferred compensation arrangement (4) 3,280 5,920 3,800 23,410 36,410 Tax liabilities (5) 1,520 — — — 1,520 Other (6) 21,500 5,560 — — 27,060 Totals $ 81,380 $ 110,100 $ 190,405 $ 111,105 $ 492,990 (1) Includes both the term and revolvercontractual principal amounts borroweddue under the Company’s 20102013 Credit Agreement, which matures in December 2015(see Note 5 — Debt in the Notes to the Consolidated Financial Statements for additional information), as well as estimated interest payments.March 2018. Amounts borrowed under the term loan arrangement have been classified in the table based on the scheduled repayment dates, while revolver borrowings are classified in the Due In 2-34-5 Years category since the amounts are not contractually due until December 2015. Also included is the $5.0 million the Company borrowed in December 2012 under a State of Connecticut economic development program which has a 10 year maturity and is included in the Due In More Than 5 Years category.2018. Interest payments on amounts outstanding under the 20102013 Credit Facility are based on a floating rate. However, the Company has a $200.0 million notional interest rate swap that converts the variable interest payments on the debt to a 2.26% fixed rate on the first $200.0 million of borrowings. As a result, in order to calculate an estimate for the future interest payments, the Company has used a rate of 3.76%3.64%, which includes the swap rate of 2.26% plus a loan margin of 1.50%,1.38%. See Note 5 — Debt in the Notes to the Consolidated Financial Statements for additional information on the 2010Company's 2013 Credit Facility.Agreement.(2) The Company's $5.0 million State of Connecticut economic development loan is included in the Due In More Than 5 Years category since it has a 10 year maturity. Interest payments on the loan have been calculated based on the contractual fixed rate of interest of 3%. See Note 5 — Debt in the Notes to the Consolidated Financial Statements for additional information on the loan. (3) The Company leases various facilities, furniture, autos, and computer equipment. These leases expire between 2013 and 2027 (seeSee Note 1 — Business and Significant Accounting Policies in the Notes to the Consolidated Financial Statements for additional information).information on the Company's leases.(3)(4)Represents the Company’s liability to participants in its supplemental deferred compensation arrangement (see Note 13 — Employee Benefits in the Notes to the Consolidated Financial Statements for additional information). Amounts payable to active employees whose payment date is unknown have been included in the Due In More Than 5 Years category since the Company cannot determine when the amounts will be paid. (4)(5)Includes interest and penalties. In addition to the $2.2 million tax liability, $16.5 million of unrecognized tax benefits have been recorded as liabilities, and we are uncertain as to if or when such amounts may be settled. Related to the unrecognized tax benefits not includedamount presented in the table, the Company also has also recorded a liabilityliabilities of $13.1 million for unrecognized tax benefits and $3.1 million for related potential interest and penalties of $3.4 million.penalties. We are uncertain as to when or if such amounts may be settled.(5)(6)Includes contractual commitments for software, building maintenance, and telecom services. Also included are amounts due for share repurchase transactions that occurred in late December 2013 and were settled in early January 2014. See Note 7 — Stockholders' Equity in the Notes to the Consolidated Financial Statements for additional information on the Company's share repurchases. 252012:2012
(In thousands, except per share data) First Second Third Fourth Revenues $ 369,171 $ 397,482 $ 374,406 $ 474,749 Operating income 53,556 62,722 49,768 79,661 Net income 34,221 41,484 31,375 58,823 Net income per share: (1) Basic $ 0.37 $ 0.44 $ 0.34 $ 0.63 Diluted $ 0.36 $ 0.43 $ 0.33 $ 0.61 2011
(In thousands, except per share data) First Second Third Fourth Revenues $ 329,567 $ 365,543 $ 345,784 $ 427,694 Operating income 45,781 51,568 47,250 69,463 Net income 29,191 32,223 30,464 45,024 Net income per share: (1) Basic $ 0.30 $ 0.33 $ 0.32 $ 0.48 Diluted $ 0.29 $ 0.32 $ 0.31 $ 0.46 2013 (In thousands, except per share data) First Second Third Fourth Revenues $ 406,754 $ 446,047 $ 410,705 $ 520,707 Operating income 54,005 73,987 58,743 88,757 Net income 36,675 46,514 38,194 61,418 Net income per share: (1) Basic $ 0.39 $ 0.50 $ 0.41 $ 0.67 Diluted $ 0.38 $ 0.49 $ 0.40 $ 0.65 2012 (In thousands, except per share data) First Second Third Fourth Revenues $ 369,171 $ 397,482 $ 374,406 $ 474,749 Operating income 53,556 62,722 49,768 79,661 Net income 34,221 41,484 31,375 58,823 Net income per share: (1) Basic $ 0.37 $ 0.44 $ 0.34 $ 0.63 Diluted $ 0.36 $ 0.43 $ 0.33 $ 0.61 (1) The aggregate of the four quarters’ basic and diluted earnings per common share may not equal the reported full calendar year amounts due to the effects of share repurchases, dilutive equity compensation, and rounding. Other Comprehensive Income Reclassifications. FebruaryJuly 2013, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)ASU No. 2013-02,Reporting2013-11, "Presentation of Amounts Reclassified Outan Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"). ASU 2013-11 addresses the balance sheet presentation of Accumulated Other Comprehensive Income. The standardan unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 requires that public companies present information about reclassification adjustments from accumulated other comprehensive incomean unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in theirthe financial statements inas a single notereduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or ona tax credit carryforward. ASU No. 2013-11 is effective for the face of the financial statements. Public companies will also have to provide this information in both their annualCompany’s fiscal quarter ending March 31, 2014 and interim financial statements.impacts balance sheet presentation only. The new requirements will take effect for Gartner beginning January 1, 2013 and will be applied prospectively. While the Company has not completed its analysis of the new standard, it believes the new rule may result in additional disclosures and changes tobalance sheet impact will not be material.presentation of the Statement of Comprehensive Income.Balance Sheet Offsetting. In December 2011, theFASB issued ASUNo. 2011-11, Disclosures about Offsetting2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets and Liabilities. The newwithin a Foreign Entity or of an Investment in a Foreign Entity. ASU No. 2013-05 provides updated guidance requires disclosures aboutto resolve diversity in practice concerning the release of the cumulative foreign currency translation adjustment into net income when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets and liabilities that are offsetwithin a foreign entity. When a company ceases to have a controlling financial interest, the company should recognize any related cumulative translation adjustment into net income only if the sale or have the potential to be offset under U.S. GAAP rules. The new disclosure requirements mandate that entities disclose both gross and net information about financial instruments and transactions eligible for offsettransfer results in the statementcomplete or substantially complete liquidation of financial position as well as instruments and transactions subject to an agreement similar tothe foreign entity in which the subsidiary had resided. Upon a master netting arrangement. In addition,partial sale, the standard requires disclosurecompany should release into earnings a pro rata portion of collateral received and posted in connection with master netting agreements or similar arrangements. These disclosures are intended to address differences in the asset and liability offsetting requirements under U.S. GAAP and International Financial Reporting Standards. This new guidance will becumulative translation adjustment. ASU No. 2013-05 is effective for Gartner for interim and annual reporting periods beginning January 1, 2013, with retrospective application required. While the adoption of this new guidance may result in additional disclosures, we do not expect it to have an impact on the Company’s Consolidated Balance Sheets.fiscal quarter ending March 31, 2014. The guidance in ASU 2013-05 will only impact the Company's financial statements upon the occurrence of a transaction within its scope.20102013 Credit Agreement. At December 31, 2012,2013, we had $150.0$200.0 million outstanding under the 2013 Credit Agreement, which consisted of $144.4 million outstanding under the term loan and $50.0$55.6 million outstanding under the revolver. Borrowingsthis facility are floatingthe 2013 Credit Agreement bear interest at a rate which may beequal to, at Gartner’s option, either prime-based or Eurodollar-based. The(1) the greatest of: the Administrative Agent’s prime rate; the average rate paidon overnight federal funds plus 1/2 of 1%; and the Eurodollar rate (adjusted for these borrowings includes a base floating ratestatutory reserves) plus 1%, in each case plus a margin equal to between 0.50%0.25% and 0.75% depending on Gartner’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended, or (2) the Eurodollar rate (adjusted for statutory reserves) plus a margin equal to between 1.25% and 1.75%, depending on prime borrowings and between 1.50% and 2.25% on Eurodollar-based borrowings.20102013 Credit Agreement (not including the expansion feature) by approximately $0.9 million.26Approximately 46% of our revenues for both201146% of our revenues, respectively, were derived from sales outside of the U.S. As a result, we conduct business in numerous currencies other than the U.S dollar. Among the major foreign currencies in which we conduct business are the Eurodollar,Euro, the British Pound, the Japanese Yen, the Australian dollar, and the Canadian dollar. Our foreign currency exposure results in both translation risk and transaction risk:TRANSLATION RISK2012,2013, we had almost $300.0$424.0 million of cash and cash equivalents, with approximately half58% denominated in foreign currencies. If the foreign exchange rates of the major currencies in which we operate changed in comparison to the U.S. dollar by 10%, the amount of cash and cash equivalents we would have reported on December 31, 20122013 would have increased or decreased by approximately $12.0$20.0 million.TRANSACTION RISK2012,2013, we had 6889 outstanding foreign currency forward contracts with a total notional amount of $76.1approximately $61.0 million and an immaterial net unrealized gain. Allloss. Substantially all of these contracts matured by the end of January 2013.contracts.contract. The majority of the Company’s cash and cash equivalents and its interest rate swap contractscontract are with large investment grade commercial banks that are participants in the Company’s 20102013 Credit Agreement. Accounts receivable balances deemed to be collectible from customers have limited concentration of credit risk due to our diverse customer base and geographic dispersion.2011, and 2010,2011, together with the reports of KPMG LLP, our independent registered public accounting firm, are included herein in this Annual Report on Form 10-K.2012,2013, of the effectiveness of the design and operation of our disclosure controls and procedures, (as such term is defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934 (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 our 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 Act.272012.2013. In making this assessment, management used the criteria set forth in the Internal Control-Integrated Framework (1992) 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.2012,2013, Gartner’s internal control over financial reporting was effective.20122013 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 15.20122013 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.282013.2014. If the Proxy Statement is not filed with the SEC by April 30, 2013,2014, such information will be included in an amendment to this Annual Report filed by April 30, 2013.2014. See also Item 1. Business — Available Information.2013.2014. If the Proxy Statement is not filed with the SEC by April 30, 2013,2014, such information will be included in an amendment to this Annual Report filed by April 30, 2013.2013.2014. If the Proxy Statement is not filed with the SEC by April 30, 2013,2014, such information will be included in an amendment to this Annual Report filed by April 30, 2013.2013.2014. If the Proxy Statement is not filed with the SEC by April 30, 2013,2014, such information will be included in an amendment to this Annual Report filed by April 30, 2013.2014.2013.2014. If the Proxy Statement is not filed with the SEC by April 30, 2013,2014, such information will be included in an amendment to this Annual Report filed by April 30, 2013.
2014.29EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT 3.1(1) Restated Certificate of Incorporation of the Company. 3.2(2) Bylaws as amended through February 2, 2012. 4.1(1) Form of Certificate for Common Stock as of June 2, 2005. 4.2(3) Credit Agreement, dated as of December 22, 2010, among the Company, the several lenders from time to time parties thereto, and JPMorgan Chase Bank, N.A. as administrative agent. 10.1(4) 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. 10.2(4) First Amendment to 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. 10.4(5)+ 2011 Employee Stock Purchase Plan. 10.6(6)+ 2003 Long-Term Incentive Plan, as amended and restated on June 4, 2009. 10.7(7)+ Amended and Restated Employment Agreement between Eugene A. Hall and the Company dated as of April 13, 2011. 10.8(8)+ Company Deferred Compensation Plan, effective January 1, 2009. 10.9(9)+ Form of Stock Appreciation Right Agreement for executive officers. 10.10(9)+ Form of Performance Stock Unit Agreement for executive officers. 21.1* Subsidiaries of Registrant. 23.1* Consent of Independent Registered Public Accounting Firm 24.1 Power of Attorney (see Signature Page). 31.1* Certification of chief executive officer under Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of chief financial officer under Section 302 of the Sarbanes-Oxley Act of 2002. 32* Certification under Section 906 of the Sarbanes-Oxley Act of 2002. * Filed with this document. + Management compensation plan or arrangement. (1) Incorporated by reference from the Company’s Current Report on Form 8-K dated June 29, 2005 as filed on July 6, 2005. (2) Incorporated by reference from the Company’s Current Report on Form 8-K dated February 2, 2012 as filed on February 7, 2012. (3) Incorporated by reference from the Company’s Annual Report on Form 10-K as filed on February 15, 2011. (4) Incorporated by reference from the Company’s Quarterly Report on form 10-Q as filed on August 9, 2010. (5) Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) as filed on April 18, 2011. 30 (6) Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) as filed on April 21, 2009. (7) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q as filed on August 2, 2011. (8) Incorporated by reference from the Company’s Annual Report on Form 10-K as filed on February 20, 2009. (9) Incorporated by reference from the Company’s Current Report on Form 8-K dated February 12, 201310, 2014 as filed on February 13, 2013.3111, 2014.33343536373839403220122013 and 2011,2012, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2012.2013. 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.20122013 and 2011,2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012,2013, in conformity with U.S. generally accepted accounting principles.2012,2013, based on criteria established inInternal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 22, 201326, 2014 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.22, 2013
26, 2014332012,2013, based on criteria established inInternal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 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.2012,2013, based on criteria established inInternal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.20122013 and 2011,2012, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2012,2013, and our report dated February 22, 201326, 2014 expressed an unqualified opinion on those consolidated financial statements.22, 2013
26, 201434 December 31, 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 299,852 $ 142,739 Fees receivable, net of allowances of $6,400 and $7,260 respectively 463,968 421,033 Deferred commissions 87,933 78,492 Prepaid expenses and other current assets 75,713 63,521 Total current assets 927,466 705,785 Property, equipment and leasehold improvements, net 89,089 68,132 Goodwill 519,506 508,550 Intangible assets, net 11,821 7,060 Other assets 73,395 90,345 Total Assets $ 1,621,277 $ 1,379,872 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 287,763 $ 259,490 Deferred revenues 692,237 611,647 Current portion of long-term debt 90,000 50,000 Total current liabilities 1,070,000 921,137 Long-term debt 115,000 150,000 Other liabilities 129,604 126,951 Total liabilities 1,314,604 1,198,088 Stockholders’ equity: Preferred stock: $.01 par value, authorized 5,000,000 shares; none issued or outstanding — — Common stock: $.0005 par value, authorized 250,000,000 shares for both periods; 156,234,415 shares issued for both periods 78 78 Additional paid-in capital 679,871 646,815 Accumulated other comprehensive income, net 5,968 5,793 Accumulated earnings 908,482 742,579 Treasury stock, at cost, 62,873,100 and 62,891,251 common shares, respectively (1,287,726 ) (1,213,481 ) Total stockholders’ equity 306,673 181,784 Total Liabilities and Stockholders’ Equity $ 1,621,277 $ 1,379,872 December 31, 2013 2012 ASSETS Current assets: Cash and cash equivalents $ 423,990 $ 299,852 Fees receivable, net of allowances of $7,000 and $6,400 respectively 490,923 463,968 Deferred commissions 106,287 87,933 Prepaid expenses and other current assets 63,682 75,713 Total current assets 1,084,882 927,466 Property, equipment and leasehold improvements, net 91,759 89,089 Goodwill 519,203 519,506 Intangible assets, net 6,107 11,821 Other assets 81,631 73,395 Total Assets $ 1,783,582 $ 1,621,277 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 325,059 $ 287,763 Deferred revenues 766,114 692,237 Current portion of long-term debt 68,750 90,000 Total current liabilities 1,159,923 1,070,000 Long-term debt 136,250 115,000 Other liabilities 126,093 129,604 Total Liabilities 1,422,266 1,314,604 Stockholders’ equity: Preferred stock: $.01 par value, authorized 5,000,000 shares; none issued or outstanding — — Common stock: $.0005 par value, authorized 250,000,000 shares for both periods; 156,234,415 shares issued for both periods 78 78 Additional paid-in capital 718,644 679,871 Accumulated other comprehensive income, net 8,345 5,968 Accumulated earnings 1,091,283 908,482 Treasury stock, at cost, 64,268,863 and 62,873,100 common shares, respectively (1,457,034 ) (1,287,726 ) Total Stockholders’ Equity 361,316 306,673 Total Liabilities and Stockholders’ Equity $ 1,783,582 $ 1,621,277 35 Year Ended December 31, 2012 2011 2010 Revenues: Research $ 1,137,147 $ 1,012,062 $ 865,000 Consulting 304,893 308,047 302,117 Events 173,768 148,479 121,337 Total revenues 1,615,808 1,468,588 1,288,454 Costs and expenses: Cost of services and product development 659,067 608,755 552,238 Selling, general and administrative 678,843 613,707 543,174 Depreciation 25,369 25,539 25,349 Amortization of intangibles 4,402 6,525 10,525 Acquisition and integration charges 2,420 — 7,903 Total costs and expenses 1,370,101 1,254,526 1,139,189 Operating income 245,707 214,062 149,265 Interest income 1,046 1,249 1,156 Interest expense (9,905 ) (11,216 ) (16,772 ) Other (expense) income, net (1,252 ) (1,911 ) 436 Income before income taxes 235,596 202,184 134,085 Provision for income taxes 69,693 65,282 37,800 Net income $ 165,903 $ 136,902 $ 96,285 Net income per share: Basic $ 1.78 $ 1.43 $ 1.01 Diluted $ 1.73 $ 1.39 $ 0.96 Weighted average shares outstanding: Basic 93,444 96,019 95,747 Diluted 95,842 98,846 99,834 Year Ended December 31, 2013 2012 2011 Revenues: Research $ 1,271,011 $ 1,137,147 $ 1,012,062 Consulting 314,257 304,893 308,047 Events 198,945 173,768 148,479 Total revenues 1,784,213 1,615,808 1,468,588 Costs and expenses: Cost of services and product development 713,484 659,067 608,755 Selling, general and administrative 760,458 678,843 613,707 Depreciation 28,996 25,369 25,539 Amortization of intangibles 5,446 4,402 6,525 Acquisition and integration charges 337 2,420 — Total costs and expenses 1,508,721 1,370,101 1,254,526 Operating income 275,492 245,707 214,062 Interest income 1,551 1,046 1,249 Interest expense (10,388 ) (9,905 ) (11,216 ) Other expense, net (216 ) (1,252 ) (1,911 ) Income before income taxes 266,439 235,596 202,184 Provision for income taxes 83,638 69,693 65,282 Net income $ 182,801 $ 165,903 $ 136,902 Net income per share: Basic $ 1.97 $ 1.78 $ 1.43 Diluted $ 1.93 $ 1.73 $ 1.39 Weighted average shares outstanding: Basic 93,015 93,444 96,019 Diluted 94,830 95,842 98,846 36 Year Ended December 31, 2012 2011 2010 Net income $ 165,903 $ 136,902 $ 96,285 Other comprehensive income (loss) Foreign currency translation adjustments 4,318 (4,454 ) 582 Interest rate swap hedge - deferred (loss) gain (127 ) (7,790 ) 6,243 Pension - deferred actuarial (loss) gain (5,993 ) 283 (1,012 ) Subtotal (1,802 ) (11,961 ) 5,813 Tax effect of comprehensive income (loss) items 1,977 3,116 (2,497 ) Other comprehensive income (loss) 175 (8,845 ) 3,316 Comprehensive income $ 166,078 $ 128,057 $ 99,601 Year Ended December 31, 2013 2012 2011 Net income $ 182,801 $ 165,903 $ 136,902 Other comprehensive income (loss), net of tax Foreign currency translation adjustments 503 4,318 (4,454 ) Interest rate hedge - deferred gain (loss) 2,107 (76 ) (4,674 ) Pension - deferred actuarial (loss) gain (233 ) (4,067 ) 283 Other comprehensive income (loss), net of tax 2,377 175 (8,845 ) Comprehensive income $ 185,178 $ 166,078 $ 128,057 37 Common
Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income, Net Accumulated
Earnings Treasury
Stock Total
Stockholders’
Equity Balance at December 31, 2009 $ 78 $ 590,864 $ 11,322 $ 509,392 $ (999,121 ) $ 112,535 Net income — — — 96,285 — 96,285 Other comprehensive income — — 3,316 — — 3,316 Issuances under stock plans — (30,254 ) — — 53,822 23,568 Stock compensation tax benefits — 18,520 — — — 18,520 Common share repurchases — — — — (99,820 ) (99,820 ) Stock compensation expense — 32,652 — — — 32,652 Balance at December 31, 2010 $ 78 $ 611,782 $ 14,638 $ 605,677 $ (1,045,119 ) $ 187,056 Net income — — — 136,902 — 136,902 Other comprehensive loss — — (8,845 ) — — (8,845 ) Issuances under stock plans — (23,579 ) — — 43,624 20,045 Stock compensation tax benefits — 25,778 — — — 25,778 Common share repurchases — — — — (211,986 ) (211,986 ) Stock compensation expense — 32,834 — — — 32,652 Balance at December 31, 2011 $ 78 $ 646,815 $ 5,793 $ 742,579 $ (1,213,481 ) $ 181,784 Net income — — — 165,903 — 165,903 Other comprehensive income — — 175 — — 175 Issuances under stock plans — (24,626 ) — — 37,059 12,433 Stock compensation tax benefits — 21,304 — — — 21,304 Common share repurchases — — — — (111,304 ) (111,304 ) Stock compensation expense — 36,378 — — — 36,378 Balance at December 31, 2012 $ 78 $ 679,871 $ 5,968 $ 908,482 $ (1,287,726 ) $ 306,673 Balance at December 31, 2010 $ 78 $ 611,782 $ 14,638 $ 605,677 $ (1,045,119 ) $ 187,056 Net income — — — 136,902 — 136,902 Other comprehensive loss — — (8,845 ) — — (8,845 ) Issuances under stock plans — (23,579 ) — — 43,624 20,045 Stock compensation tax benefits — 25,778 — — — 25,778 Common share repurchases — — — — (211,986 ) (211,986 ) Stock compensation expense — 32,834 — — — 32,834 Balance at December 31, 2011 $ 78 $ 646,815 $ 5,793 $ 742,579 $ (1,213,481 ) $ 181,784 Net income — — — 165,903 — 165,903 Other comprehensive income — — 175 — — 175 Issuances under stock plans — (24,626 ) — — 37,059 12,433 Stock compensation tax benefits — 21,304 — — — 21,304 Common share repurchases — — — — (111,304 ) (111,304 ) Stock compensation expense — 36,378 — — — 36,378 Balance at December 31, 2012 $ 78 $ 679,871 $ 5,968 $ 908,482 $ (1,287,726 ) $ 306,673 Net income — — — 182,801 — 182,801 Other comprehensive income — — 2,377 — — 2,377 Issuances under stock plans — (21,354 ) — — 27,388 6,034 Stock compensation tax benefits — 25,392 — — — 25,392 Common share repurchases — — — — (196,696 ) (196,696 ) Stock compensation expense — 34,735 — — — 34,735 Balance at December 31, 2013 $ 78 $ 718,644 $ 8,345 $ 1,091,283 $ (1,457,034 ) $ 361,316 38 Year Ended December 31, 2012 2011 2010 Operating activities: Net income $ 165,903 $ 136,902 $ 96,285 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of intangibles 29,771 32,064 35,874 Stock-based compensation expense 36,378 32,865 32,634 Excess tax benefits from employee stock-based compensation exercises (21,304 ) (25,572 ) (18,364 ) Deferred taxes 973 (965 ) (2,609 ) Amortization and write-off of debt issue costs 2,008 2,288 1,567 Changes in assets and liabilities: Fees receivable, net (38,617 ) (58,887 ) (48,177 ) Deferred commissions (8,871 ) (6,928 ) (2,184 ) Prepaid expenses and other current assets (10,604 ) 3,540 (376 ) Other assets 15,113 4,397 (34,130 ) Deferred revenues 71,645 91,765 85,336 Accounts payable, accrued, and other liabilities 37,418 44,097 59,643 Cash provided by operating activities 279,813 255,566 205,499 Investing activities: Additions to property, equipment and leasehold improvements (44,337 ) (41,954 ) (21,694 ) Acquisitions (net of cash received) (10,336 ) — (12,151 ) Cash used in investing activities (54,673 ) (41,954 ) (33,845 ) Financing activities: Proceeds from employee stock-based compensation plans and ESP Plan 12,430 20,011 23,527 Proceeds from borrowings 35,000 — 200,000 Payments on debt (30,000 ) (20,156 ) (313,627 ) Purchases of treasury stock (111,304 ) (211,986 ) (99,820 ) Excess tax benefits from employee stock-based compensation exercises 21,304 25,572 18,364 Cash used by financing activities (72,570 ) (186,559 ) (171,556 ) Net increase in cash and cash equivalents 152,570 27,053 98 Effects of exchange rates on cash and cash equivalents 4,543 (4,495 ) 3,509 Cash and cash equivalents, beginning of period 142,739 120,181 116,574 Cash and cash equivalents, end of period $ 299,852 $ 142,739 $ 120,181 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 8,968 $ 13,312 $ 11,484 Income taxes, net of refunds received $ 46,907 $ 24,126 $ 25,486 Year Ended December 31, 2013 2012 2011 Operating activities: Net income $ 182,801 $ 165,903 $ 136,902 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of intangibles 34,442 29,771 32,064 Stock-based compensation expense 34,735 36,378 32,865 Excess tax benefits from employee stock-based compensation exercises (25,392 ) (21,304 ) (25,572 ) Deferred taxes 16,663 973 (965 ) Amortization and write-off of debt issue costs 2,710 2,008 2,288 Changes in assets and liabilities: Fees receivable, net (28,097 ) (38,617 ) (58,887 ) Deferred commissions (18,608 ) (8,871 ) (6,928 ) Prepaid expenses and other current assets (1,187 ) (10,604 ) 3,540 Other assets (5,268 ) 15,113 4,397 Deferred revenues 80,938 71,645 91,765 Accounts payable, accrued, and other liabilities 41,917 37,418 44,097 Cash provided by operating activities 315,654 279,813 255,566 Investing activities: Additions to property, equipment and leasehold improvements (36,498 ) (44,337 ) (41,954 ) Acquisitions (net of cash received) — (10,336 ) — Cash used in investing activities (36,498 ) (54,673 ) (41,954 ) Financing activities: Proceeds from employee stock-based compensation plans and ESP Plan 6,042 12,430 20,011 Proceeds from borrowings 205,625 35,000 — Payments on debt (205,625 ) (30,000 ) (20,156 ) Purchases of treasury stock (181,736 ) (111,304 ) (211,986 ) Fees paid for debt refinancing (3,553 ) — — Excess tax benefits from employee stock-based compensation exercises 25,392 21,304 25,572 Cash used by financing activities (153,855 ) (72,570 ) (186,559 ) Net increase in cash and cash equivalents 125,301 152,570 27,053 Effects of exchange rates on cash and cash equivalents (1,163 ) 4,543 (4,495 ) Cash and cash equivalents, beginning of period 299,852 142,739 120,181 Cash and cash equivalents, end of period $ 423,990 $ 299,852 $ 142,739 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 8,500 $ 8,968 $ 13,312 Income taxes, net of refunds received $ 50,767 $ 46,907 $ 24,126 392011, and 20102011 herein refer to the fiscal year unless otherwise indicated.(“ (“SAB 104”). Revenues are only recognized once all required criteria for recognition have been met. The accompanying Consolidated Statements of Operations presents revenues net of any sales or value-added taxes that we collect from customers and remit to government authorities.$34.0$37.0 million at December 31, 20122013 and $29.2$34.0 million at December 31, 2011.
2012.402011, and 2010,2011, the Company recognized $34.7 million, $36.4 million, $32.9 million, and $32.6$32.9 million, respectively, of stock-based compensation expense, (see Note 8 — Stock-Based Compensation),a portion of which is recorded in both COS and SG&A in the Consolidated Statements of Operations.As we prepare our consolidated financial statements, we We estimate our income taxes in each of the jurisdictions where we operate. This process involves estimating our current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and$30.3$30.8 million $26.2, $30.3 million, and $23.5$26.2 million in 2013, 2012, and 2011, and 2010, respectively.improvementsimprovement or the remaining term of the related leases.lease. The Company had total depreciation expense of $29.0 million, $25.4 million, and $25.5 million in 2013, 2012, and $25.3 million in 2012, 2011, and 2010, respectively.41Property, equipment and leasehold improvements, The Company's total fixed assets, less accumulated depreciation and amortization, consistconsisted of the following (in thousands): Useful Life December 31, (Years) 2012 2011 Computer equipment and software 2 - 7 $ 135,167 $ 130,733 Furniture and equipment 3 - 8 29,907 34,828 Leasehold improvements 2 - 15 64,346 63,773 229,420 229,334 Less — accumulated depreciation and amortization (140,331 ) (161,202 ) $ 89,089 $ 68,132 Useful Life December 31, Category (Years) 2013 2012 Computer equipment and software 2-7 $ 136,640 $ 135,167 Furniture and equipment 3-8 34,024 29,907 Leasehold improvements 2-15 70,261 64,346 $ 240,925 $ 229,420 Less — accumulated depreciation and amortization (149,166 ) (140,331 ) Property, equipment, and leasehold improvements, net $ 91,759 $ 89,089 20122013 and 2011,2012, net capitalized development costs for internal use software were $14.4$14.1 million and $13.6$14.4 million respectively., respectively, which is included in the Computer equipment and software category above. Amortization of capitalized internal software development costs, which is classified in Depreciation in the Consolidated Statements of Operations, totaled $8.2 million, $7.4 million, and $7.8 million during 2013, 2012, and $7.9 million during 2012, 2011, and 2010, respectively. renewalThe Stamford facility accommodates research and analysis, marketing, sales, client support, production, corporate services,In addition to the Company's executive offices, the facility hosts a number of business and administration.support functions. In 2010 the Company entered into a new 15 year lease agreement for this facility which provides for a reduced rental until completion of certain renovation work. In accordance with FASB ASC Topic 840, the Companywas accounted for the new Stamford lease as an operating lease arrangement. The total minimum payments the Company is obligated to pay under this lease, including contractual escalation clauses and reduced rents during the renovation period (see below), are being expensed on a straight-line basis over the lease term.has provided a $25.0$25.0 million tenant improvement allowance to bewhich was used to renovate the three buildings. The renovation work began in 2011 and is expected to bewas completed in early 2013. The $25.0 million contractual amount due from the landlord was recorded as a tenant improvement allowance in Other assets and as deferred rent in Other Liabilities on the Consolidated Balance Sheets. As the renovation work progresses and payments are received from the landlord, the tenant improvement receivable is relieved and leasehold improvement assets are recorded in Property, equipment, and leasehold improvements. The leasehold improvement assets are being amortized to Depreciation expense over their useful lives, beginning when the assets are placed in service. The amount recorded as deferred rent is being amortized as a reduction to rent expense (SG&A) on a straight-line basis over the term of the lease.As of December 31, 2012, the Company had $21.0 million of remaining unamortized deferred rent resulting from the tenant improvement allowance, of which $1.5 million is recorded in Accounts payable and accrued liabilities and $19.5 million is recorded in Other liabilities on the Company’s Consolidated Balance Sheets. The Company paid $7.7 million, $17.0 million, and $9.5 million in renovation costs for this project in 2013, 2012, and 2011, respectively, which are recorded as leasehold improvement assets and are being amortized over their useful lives. The paid renovation costs were classified as cash outflows in the Investing activities section of the Company’s Consolidated Statements of Cash Flows. The Company received landlord cash reimbursements for these expenditures of $3.0 million, $13.0 million, and $9.0 million in 2013, 2012, and 2011, respectively, which were recorded as deferred rent and are being amortized as a reduction to rent expense on a straight-line basis over the term20122013 are as follows (in thousands):December 31, 2012 Trade
Name Customer
Relationships Content Software Total Gross cost, December 31, 2011 $ 5,758 $ 7,210 $ — $ — $ 12,968 Additions due to acquisition (1) 240 3,170 3,170 1,955 8,535 Foreign currency translation impact 21 182 277 169 649 Gross cost 6,019 10,562 3,447 2,124 22,152 Accumulated amortization (2) (3,531 ) (5,896 ) (497 ) (407 ) (10,331 ) Balance, December 31, 2012 $ 2,488 $ 4,666 $ 2,950 $ 1,717 $ 11,821 December 31, 2013 Content Software Total Gross cost, December 31, 2012 $ 6,019 $ 10,562 $ 3,447 $ 2,124 $ 22,152 Foreign currency translation impact 4 (416 ) 49 19 (344 ) Gross cost 6,023 10,146 3,496 2,143 21,808 Accumulated amortization (1), (2) (4,817 ) (8,372 ) (1,388 ) (1,124 ) (15,701 ) Balance, December 31, 2013 $ 1,206 $ 1,774 $ 2,108 $ 1,019 $ 6,107 December 31, 2012 Content Software Total Gross cost, December 31, 2011 $ 5,758 $ 7,210 $ — $ — $ 12,968 Additions due to acquisition (3) 240 3,170 3,170 1,955 8,535 Foreign currency translation impact 21 182 277 169 649 Gross cost 6,019 10,562 3,447 2,124 22,152 Accumulated amortization (1), (2) (3,531 ) (5,896 ) (497 ) (407 ) (10,331 ) Balance, December 31, 2012 $ 2,488 $ 4,666 $ 2,950 $ 1,717 $ 11,821 42 December 31, 2011 Trade
Name Customer
Relationships Total Gross cost, December 31, 2010 $ 5,758 $ 7,210 $ 12,968 Foreign currency translation impact — — — Gross cost 5,758 7,210 12,968 Accumulated amortization (2) (2,303 ) (3,605 ) (5,908 ) Balance, December 31, 2011 $ 3,455 $ 3,605 $ 7,060 (1) The Company acquired Ideas International in 2012 and recorded a total of $8.5 million of amortizable intangible assets. See Note 2—Acquisitions above for additional information.(2) being amortized against earnings over the following periods: Trade name—2 to 5 years; Customer relationships—4 years;years; Content—4 years;years; Software—3 years. years.(2) Aggregate amortization expense related to intangible assets was $5.4 million, $4.4 million, and $6.5 million in 2013, 2012, and $10.5 million in 2012, 2011, and 2010, respectively.(3) 2013 $ 5,490 2014 3,615 2015 2,005 2016 711 $ 11,821 2014 $ 3,530 2015 1,915 2016 662 $ 6,107 20122013 based in part on the demonstrated historical trend of the fair values of the Company’s reporting units substantially exceeding their carrying values and itsthe Company's recent financial performance. Among the factors included in the Company’s qualitative assessment were general economic conditions and the competitive environment; actual and projected reporting unit financial performance;20122013 (in thousands): Research Consulting Events Total Balance, December 31, 2010 (1) $ 368,521 $ 99,817 $ 41,927 $ 510,265 Foreign currency translation adjustments (1,541 ) (140 ) (34 ) (1,715 ) Balance, December 31, 2011 $ 366,980 $ 99,677 $ 41,893 $ 508,550 Addition due to acquisition (2) 7,455 — — 7,455 Foreign currency translation adjustments 2,790 672 39 3,501 Balance, December 31, 2012 $ 377,225 $ 100,349 $ 41,932 $ 519,506 Research Consulting Events Total Balance, December 31, 2011 (1) $ 366,980 $ 99,677 $ 41,893 $ 508,550 Addition due to acquisition (2) 7,455 — — 7,455 Foreign currency translation adjustments 2,790 672 39 3,501 Balance, December 31, 2012 $ 377,225 $ 100,349 $ 41,932 $ 519,506 Foreign currency translation adjustments (657 ) 328 26 (303 ) Balance, December 31, 2013 $ 376,568 $ 100,677 $ 41,958 $ 519,203 (1) The Company does not have an accumulated goodwill impairment losses.loss.(2) Company acquired Ideas International in mid-2012 and recorded $7.5 million of goodwill. All of the recorded goodwill resultingadditions are from the Company's acquisition has been included in the Research segment.of Ideas International. See Note 2—Acquisitions above for additional information.432012, 2011, or 2010.$2.7 million, and $2.4$2.7 million of expense for these plans in 2013, 2012, 2011, and 2010,2011, respectively. The Company classifies pension expense in SG&A in the Consolidated Statements of Operations.and $200.0 million of debt outstanding at both December 31, 2013 and 2012 and 2011. See(see Note 5—Debt for additional information regarding the Company’s debt.(expense) income,expense, net within the Consolidated Statements of Operations. Net currency transaction (losses)losses were $(0.9) million, $(2.3) million, $(1.3)and $(1.3) million in 2013, 2012, and $(4.8) million in 2012, 2011, and 2010, respectively. The Company enters into foreign currency forward exchange contracts to mitigate the effects of adverse fluctuations in foreign currency exchange rates on these transactions. These contracts generally have a short duration and are recorded at fair value with both realized and unrealized gains and losses recorded in Other (expense) income,expense, net. The net (loss) gain (loss) from these contracts was $(0.1) million, $0.6 million, $(1.2) million in 2013, 2012, and $2.8 million in 2012, 2011, and 2010, respectively.On January 1, 2012, the Company retrospectively adopted FASB Accounting Standards Update (“ASU”) No. 2011-05,Comprehensive Income (Topic 220-10): Presentation of Comprehensive Income,and a related amendment. Comprehensive income includes income and expense items from nonowner sources and consists of two separate components: net income as reported and other comprehensive income. ASU No. 2011-05 eliminates the option to report comprehensive income and its components in the statement of stockholders’ equity. Instead, the new rule optionally requires the presentation of net income and comprehensive income in one continuous statement, or in two separate, but consecutive statements. The Company has presented net income, other comprehensive income and its components, andreports comprehensive income in a new, separate statement calledtermed theConsolidated Statements of Comprehensive Income, which is included herein.While the Company’s presentation ofherein. The additional required comprehensive income has changed, there were no changes to the components or amounts thatdisclosures are recognizedincluded in net income or other comprehensive income under existing accounting guidance. As a result, the adoption of this new rule did not impact the Company’s results of operations, cash flows, or financial position.In February 2013, the FASB issued ASU No. 2013-02,Reporting of Amounts Reclassified Out of Accumulated OtherNote 2 — Comprehensive Income,Income.whichupdates ASU No. 2011-05. The standard requires that public companies present information about reclassification adjustments from accumulated other comprehensive income in their financial statements in a single note or on the face of the financial statements. Public companies will have to provide this information in both their annual and interim financial statements. The new requirements will take effect for Gartner beginning January 1, 2013 and will be applied prospectively. While the Company has not completed its analysis of the new standard, it believes the new rule may result in additional disclosures and changes to the presentation of the Statement of Comprehensive Income.2012.2011 and 20102011, the Company recorded $196.7 million, $111.3 million, $212.0 million, and $99.8$212.0 million, respectively, of stock repurchases (see Note 7 — Stockholders’ Equity). Shares repurchased by the Company are added to treasury shares and are not retired.44Balance sheet offsetting.In December 2011,July 2013, theFASB issued ASUNo. 2011-11, Disclosures about Offsetting Assets and Liabilities2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"). The new guidanceASU 2013-11 addresses the balance sheet presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 requires disclosures about assets and liabilities that are offsetan unrecognized tax benefit, or have the potential toa portion of an unrecognized tax benefit, should be offset under U.S. GAAP rules. These disclosures are intended to address differencespresented in the asset and liability offsetting requirements under U.S. GAAP and International Financial Reporting Standards. The new disclosure requirements mandate that entities disclose both gross and net information about financial instruments and transactions eligible for offset in the statement of financial positionstatements as well as instruments and transactions subject to an agreement similara reduction to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreementsdeferred tax asset for a net operating loss carryforward, a similar tax loss, or similar arrangements. However, as of year-end 2012, the FASB is considering certain amendments toa tax credit carryforward. ASU No. 2011-11 which may limit the scope of the new rules. ASU No. 2011-11 will be2013-11 is effective for Gartner for interim and annual reporting periods beginning January 1, 2013, with retrospective application required. While the adoption of this new guidance may result in additional disclosures, we do not expect it to have an impact on the Company’s Consolidated Balance Sheets.Other comprehensive income disclosures.See discussion above inComprehensive Income.2 — ACQUISITIONS2012In May 2012 the Company acquired Ideas International Limited (“Ideas International”), a publicly-owned Australian corporation (ASX: IDE) headquartered outside of Sydney with 40 employees. Ideas International provided intelligence on IT infrastructure configurationsfiscal quarter ending March 31, 2014 and pricing data to IT professionals and vendors. The Company paid aggregate cash consideration of $18.8 million for 100% of the outstanding shares of Ideas International. The Company’s strategic objectives in acquiring Ideas International are to leverage Gartner’s scale and worldwide distribution capability, introduce Ideas International’s products and services to Gartner’s much larger end user client base, and further penetrate the technology vendor market. Ideas International’s business operations have been integrated into the Company’s Research segment.Gartner’s financial statements include the operating results of Ideas International beginning with the date of acquisition. These results were not material to the Company’s 2012 results. The Company recorded $2.4 million of pre-tax acquisition and integration charges for this acquisition in 2012, which is classified in Acquisition and integration charges in the Consolidated Statements of Operations. Included in these charges are legal, consulting, and severance costs, all of which were direct and incremental charges from the acquisition. Had the Company acquired Ideas International on January 1, 2010, the impact to the Company’s operating results for 2011 and 2010 would not have been material, and as a result pro forma financial information for those periods has not been presented.The acquisition was accounted for under the acquisition method of accounting as prescribed by FASB ASC Topic 805,Business Combinations.The acquisition method of accounting requires the consideration paid to be allocated to the net assets and liabilities acquired based on their estimated fair values as of the acquisition date, and any excess of the purchase price over the estimated fair value of the net assets acquired, including identifiable intangible assets, must be allocated to goodwill. The Company considers its allocation of the respective purchase price to be preliminary, particularly with respect to the valuation of certain tax related items. In accordance with FASB ASC Topic 805, a final determination of the purchase price allocation and resulting goodwill must be made within one year of the acquisition date. The Company anticipates that none of the recorded goodwill arising from the acquisition will be deductible for tax purposes. All of the recorded goodwill was included in the Company’s Research segment.impacts balance sheet presentation only. The Company believes the recorded goodwillbalance sheet impact will not be material.supportedeffective for the Company’s fiscal quarter ending March 31, 2014. The guidance in ASU 2013-05 will only impact the Company's financial statements upon the occurrence of a transaction within its scope.anticipated revenues related toperiod.acquisition.Theyear ended December 31, 2013 is presented in the following table, summarizes the preliminary allocationnet of the purchase price to the fair value of the assets acquired and liabilities assumed in the acquisition (dollars intax (in thousands) (1):Assets: Cash $ 8,502 Fees receivable 1,310 Prepaid expenses and other current assets 560 Goodwill and amortizable intangible assets (1) 15,990 Total assets $ 26,362 Liabilities: Accounts payable and accrued liabilities $ 2,203 Deferred revenues (2) 5,321 Total liabilities $ 7,524 Interest Rate Swap Defined Benefit Pension Plans Foreign Currency Translation Adjustments Total Balance - December 31, 2012 $ (6,010 ) $ (1,578 ) $ 13,556 $ 5,968 Changes during the period: Change in AOCI before reclassifications to income (297 ) (257 ) 503 (51 ) Reclassifications from AOCI to income during the period (2), (3) 2,404 24 — 2,428 Other comprehensive income (loss) for the period 2,107 (233 ) 503 2,377 Balance - December 31, 2013 $ (3,903 ) $ (1,811 ) $ 14,059 $ 8,345 (1) Includes $7.5 million allocated to goodwill and $8.5 million allocated to amortizable intangible assets (see Note 1—Business and Significant Accounting Policies above for additional information).Amounts in parentheses represent deferred losses.(2) The fair valueinterest rate swap is accounted for as a cash flow hedge. The reclassified amount resulted in additional expense for the period which was recorded in Interest expense in the Consolidated Statements of Operations and is net of $1.6 million of related tax benefit reflected in the cost to fulfillProvision for income taxes. See Note 11 - Derivatives and Hedging for additional information regarding the deferred revenue obligations was determined by estimatingswap and the costs to provide the services plus a normal profit margin, and did not include costs associated with selling efforts.Company's hedging activities.2009The Company acquired all of the outstanding shares of AMR Research and Burton Group in 2009 for total net cash of $116.7 million, of which $12.2 million was paid in 2010 and $104.5 million was paid in 2009. The Company recorded $7.9 million of acquisition and integration expenses related to these acquisitions during 2010.(3) The pension reclassification amount was recorded in SGA expense in the Consolidated Statements of Operations and had an immaterial tax effect. See Note 13 - Employee Benefits for additional information regarding the Company's defined benefit pension plans. December 31, 2012 2011 Security deposits $ 7,740 $ 6,581 Debt issuance costs 2,768 3,866 Benefit plan-related assets 37,016 38,403 Non-current deferred tax assets 22,527 22,795 Tenant improvement allowance (1) — 16,062 Other 3,344 2,638 Total other assets $ 73,395 $ 90,345 (1)The balance as of December 31, 2011 represented the landlord receivable related to the renovation of the Company’s Stamford headquarters facility, the majority of which was collected during 2012, with the balance reclassified to current assets. See Note 1 — Business and Significant Accounting Policies for additional information. December 31, 2013 2012 Security deposits $ 5,505 $ 7,740 Debt issuance costs 4,878 2,768 Benefit plan-related assets 42,367 37,016 Non-current deferred tax assets 24,371 22,527 Other 4,510 3,344 Total other assets $ 81,631 $ 73,395 December 31, 2012 2011 Accounts payable $ 27,344 $ 27,573 Payroll, employee benefits, severance 71,892 66,110 Bonus payable 68,776 62,191 Commissions payable 49,128 42,328 Taxes payable 18,897 15,917 Rent and other facilities costs 4,310 5,046 Professional, consulting, audit fees 8,355 6,907 Events fulfillment liabilities 4,209 2,255 Other accrued liabilities 34,852 31,163 Total accounts payable and accrued liabilities $ 287,763 $ 259,490 December 31, 2013 2012 Accounts payable $ 17,671 $ 27,344 Payroll, employee benefits, severance 83,224 71,892 Bonus payable 75,758 68,776 Commissions payable 57,078 49,128 Taxes payable 14,392 18,897 Rent and other facilities costs 3,903 4,310 Professional, consulting, audit fees 9,159 8,355 Events fulfillment liabilities 6,600 4,209 Other accrued liabilities 57,274 34,852 Total accounts payable and accrued liabilities $ 325,059 $ 287,763 December 31, 2012 2011 Non-current deferred revenue $ 5,508 $ 4,572 Interest rate swap liabilities 10,017 9,891 Long-term taxes payable 16,760 20,141 Deferred rent (1) 19,586 21,046 Benefit plan-related liabilities 54,779 47,326 Other 22,954 23,975 Total other liabilities $ 129,604 $ 126,951 December 31, 2013 2012 Non-current deferred revenue $ 8,959 $ 5,508 Interest rate swap liability 6,505 10,017 Long-term taxes payable 9,590 16,760 Deferred rent (1) 18,127 19,586 Benefit plan-related liabilities 58,000 54,779 Other 24,912 22,954 Total other liabilities $ 126,093 $ 129,604 46 (1) Represents the remaining unamortized long-term deferred rent on the $25.0 million tenant improvement allowance on the Company’s Stamford headquarters facility. See Note 1 — Business and Significant Accounting Policies above for additional information. 2010hasentered into a new credit arrangement thatin early 2013 (the “2013 Credit Agreement”) to take advantage of favorable credit conditions. The 2013 Credit Agreement provides for a five-year, $200.0$150.0 million term loan and a $400.0$600.0 million revolving credit facility which it entered into in December 2010 (the “2010 Credit Agreement”). The Company terminated its prior credit arrangement when it entered intofacility. In addition, the 2010 Credit Agreement and paid down the remaining amounts outstanding. The 20102013 Credit Agreement contains an expansion feature by which the term loan and revolving credit facility may be increased, at the Company’s option and under certain conditions, by up to an additional $150.0$250.0 million in the aggregate.is beingwill be repaid in 1916 consecutive quarterly installments which commenced on March 31, 2011,June 30, 2013, plus a final payment due on December 22, 2015,in March 2018, and may be prepaid at any time without penalty or premium (other than applicable breakage costs) at the Company’s option. The revolving credit facility may be used for loans, and up to $40.0 million may be used for letters of credit. The revolving loans may be borrowed, repaid and re-borrowed until December 22, 2015,March 2018, at which time all amounts borrowed must be repaid.20102013 Credit Agreement bear interest at a rate equal to, at the Company’sGartner’s option, either (i)(1) the greatest of: the administrative agent’sAdministrative Agent’s prime rate; the average rate on overnight federal funds plus 1/2 of 1%; and the eurodollarEurodollar rate (adjusted for statutory reserves) plus 1%, in each case plus a margin equal to between 0.50%0.25% and 1.25%0.75% depending on the Company’sGartner’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended, or (ii)(2) the eurodollarEurodollar rate (adjusted for statutory reserves) plus a margin equal to between 1.50%1.25% and 2.25%1.75%, depending on the Company’sGartner’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended.20102013 Credit Agreement contains certain customary restrictive loan covenants, including, among others, financial covenants requiring a maximum leverage ratio, a minimum interest expense coverage ratio, and covenants limiting the Company’sGartner’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 Company was in full compliance with thesethe loan covenants as of December 31, 2012.In December 2010, the Company recorded certain incremental pre-tax charges due to the termination of the prior credit arrangement. The majority of these charges would have been recognized as expenses in 2011, but accounting rules required their accelerated recognition in 2010. These accelerated pre-tax charges included $3.3 million for deferred losses on interest rate swap contracts that had been recorded in Other Comprehensive Income (OCI) since the swaps had previously been designated as accounting hedges, and $0.4 million for the write-off of a portion of capitalized debt issuance costs related to the previous debt. In accordance with FASB ASC Topic 815, the deferral of the unrealized losses on the swaps recorded in OCI was no longer permitted since the forecasted interest payments related to the previous debt would not occur. Both the capitalized debt issuance write-off and the interest rate swap charge were classified in Interest expense in the Consolidated Statements of Operations for the year ended December 31, 2010.provides information regardingsummarizes the Company’s total outstanding borrowings:Description: Amount
Outstanding
December 31,
2012
(In thousands) Contractual
Annualized
Interest Rate
December 31,
2012 Amount
Outstanding
December 31,
2011
(In thousands) 2010 Credit Facility - term loan (1) $ 150,000 1.81 % $ 180,000 2010 Credit Facility - revolver (1), (2) 50,000 1.81 % 20,000 Other (3) 5,000 3.00 % — Total $ 205,000 $ 200,000 Amount Outstanding December 31, Amount Outstanding December 31, Description: 2013 2012 Term loan (1) $ 144,375 $ 150,000 Revolver (1), (2) 55,625 50,000 Other (3) 5,000 5,000 Total (4) $ 205,000 $ 205,000 (1) BothThe contractual annual interest rate as of December 31, 2013 on both the term loan and the revolver loan rateswas 1.62%, which consisted of a floating Eurodollar base rate of 0.31%0.24% plus a margin of 1.5%1.38%. However, the Company has an interest rate swap contract which converts the floating Eurodollar base rate to a 2.26% fixed base rate on the first $200.0 million of Company borrowings (see below). As a result, the Company’s effective annual interest rate on the $200.0 million of outstanding debt under the 20102013 Credit Facility as of December 31, 2012,2013, including the margin, was 3.76%3.64%.(2) The Company had $346.6$541.1 million of available borrowing capacity on the revolver (not including the expansion feature) as of December 31, 2012.2013.47(3) In December 2012 the Company borrowedConsists of a $5.0 million under a previously disclosed financial assistance package provided by an economic development program through the State of Connecticut in connectioneconomic development loan with the Company’s renovationa 3.0% fixed rate of its Stamford headquarters facility.interest. The loan was originated in 2012 and has a 10 year maturity and bears a 3% fixed rate of interest.maturity. Principal payments are deferred for the first five years and the loan may be repaid at any point by the Company without penalty. The loan has a principal forgiveness provision in which up to $2.5 million of the loan may be forgiven if the Company meets certain employment targets in the State of Connecticut during the first five years of the loan.(4) As of December 31, 2013, $68.7 million of debt was classified as short term and $136.3 million was classified as long term on the Consolidated Balance Sheets. Swap Hedgeentered intohas a $200.0 million notional fixed-for-floating interest rate swap contract in December 2010 which it designateddesignates as a hedge of the forecasted interest payments on the Company’s variable rate borrowings. Under the swap terms, the Company pays a base fixed rate of 2.26% and in return receives a floating Eurodollar base rate.2012,2013, there was no ineffective portion of the hedge. The interest rate swap had a negative fair value to the Company of $10.0$6.5 million at December 31, 2012, which is classifiedrecorded in OCI, net of tax effect.$10.1$9.8 million of letters of credit and related guarantees outstanding at year-end 2012.2013. The Company issues these instruments in the ordinary course of business to facilitate transactions with customers and others.furniture, and computer and office equipment, furniture, and other assets under non-cancelable operating lease arrangementsagreements expiring between 20132014 and 2027. The future minimum annual cash payments under non-cancelablethese operating lease agreements atas of December 31, 2012, are2013 were as follows (in thousands):Year ended December 31, 2013 $ 37,820 2014 31,660 2015 22,295 2016 14,680 2017 9,910 Thereafter 75,055 Total minimum lease payments (1) $ 191,420 Year ended December 31, 2014 $ 34,525 2015 27,720 2016 20,415 2017 14,840 2018 11,145 Thereafter 82,485 Total minimum lease payments (1) $ 191,130 (1) Excludes $2.2$1.2 million of future contractual sublease rental income.2012,2013, we did not have any indemnification agreements that could require material payments.$.0005$.0005 per share (“Common Stock”) are entitled to one vote per share on all matters to be voted by stockholders. The Company does not currently pay cash dividends on its Common Stock. Also, our credit arrangement contains a negative covenant which may limit our ability to pay dividends.482012: Balance at December 31, 2010 156,234,415 60,245,718 Issuances under stock plans — (3,244,705 ) Purchases for treasury (1) — 5,890,238 Balance at December 31, 2011 156,234,415 62,891,251 Issuances under stock plans — (2,756,389 ) Purchases for treasury (1) — 2,738,238 Balance at December 31, 2012 156,234,415 62,873,100 Issuances under stock plans — (2,037,091 ) Purchases for treasury (1) — 3,432,854 Balance at December 31, 2013 156,234,415 64,268,863 Issued
Shares Treasury
Stock
Shares Balance at December 31, 2009 156,234,415 60,356,672 Issuances under stock plans — (4,029,673 ) Purchases for treasury — 3,918,719 Balance at December 31, 2010 156,234,415 60,245,718 Issuances under stock plans — (3,244,705 ) Purchases for treasury (1) — 5,890,238 Balance at December 31, 2011 156,234,415 62,891,251 Issuances under stock plans — (2,756,389 ) Purchases for treasury — 2,738,238 Balance at December 31, 2012 156,234,415 62,873,100 (1) Includes 2,148,434 shares the Company repurchased directly from ValueAct Capital Master Fund, L.P. (“ValueAct”) in two separate transactions during 2011. The total cost of therepurchased shares in 2013 was $196.7 million, of which $181.7 million was paid in 2013 and $15.0 million was paid in early 2014. The total cost of repurchased directly from ValueActshares in 2012 and 2011 was $75.2 million.$111.3 million and $212.0 million respectively.program.The Company has aauthorization. On February 4, 2014, the Company’s Board of Directors authorized $800.0 million to repurchase the Company's common stock. This authorization succeeds the Company’s prior $500.0 million share repurchase program, ofauthorization, which $210.2 million remained available for share repurchases as of December 31, 2012. Repurchaseswas substantially utilized. The Company may be maderepurchase its common stock from time-to-time through open market purchases, private transactions, tender offers or other transactions. The amounttime to time in amounts and timing of repurchases will beat prices 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 also be made from time-to-time in connection with the settlement of the Company’s shared-based compensation awards. Repurchases maythrough open market purchases, private transactions or other transactions and will be funded from cash flow from operations or borrowings.The Company paid cash of $111.3 million, $212.0 million,on hand and $99.8 million, in 2012, 2011, and 2010, respectively, for common stock repurchases. The $212.0 million paid for share repurchases in 2011 includesborrowings under the cost of the shares repurchased directly from ValueAct.2012,2013, the Company had 6.4 million shares of Common Stock available for awards of stock-based compensation under its 2003 Long-Term Incentive Plan.but these estimateswhich involve inherent uncertainties and the application of judgment. As a result, if factors 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.Award type: 2012 2011 2010 Stock appreciation rights $ 6.4 $ 4.4 $ 4.6 Common stock equivalents 0.5 0.5 0.5 Restricted stock units 29.5 28.0 27.5 Total (1) $ 36.4 $ 32.9 $ 32.6 Award type: 2013 2012 2011 Stock appreciation rights $ 5.2 $ 6.4 $ 4.4 Common stock equivalents 0.6 0.5 0.5 Restricted stock units 28.9 29.5 28.0 Total (1) $ 34.7 $ 36.4 $ 32.9 49 (1) $5.1$12.5 million, $5.1 million, and $3.1 millionin 2013, 2012 and $3.1 million in both 2011, and 2010respectively, for awards to retirement-eligible employees since these awards vest on an accelerated basisas follows (in millions):Amount recorded in: 2012 2011 2010 Costs of services and product development $ 15.3 $ 14.8 $ 14.8 Selling, general, and administrative 21.1 18.1 17.8 Total $ 36.4 $ 32.9 $ 32.6 Amount recorded in: 2013 2012 2011 Costs of services and product development $ 15.3 $ 15.3 $ 14.8 Selling, general, and administrative 19.4 21.1 18.1 Total $ 34.7 $ 36.4 $ 32.9 2012,2013, the Company had $38.5$41.0 million of total unrecognized stock-based compensation cost, which is expected to be recognized as stock-based compensation expense over the remaining weighted-average service period of approximately 2.2 years.four-yearfour-year service period and expire seven years from the grant date. The fair value of SARs awards is recognized as compensation expense on a straight-line basis over four years.years. SARs have only been awarded to the Company’s executive officers.2012: SARs in
millions Per Share
Weighted-
Average
Exercise Price Per Share
Weighted-
Average
Grant Date
Fair Value Weighted-
Average
Remaining
Contractual
Term Outstanding at December 31, 2011 2.5 $ 20.39 $ 7.66 4.00 years Granted 0.4 37.81 12.99 6.11 years Forfeited — — — — Exercised (0.9 ) 18.35 6.82 na Outstanding at December 31, 2012 (1), (2) 2.0 $ 24.59 $ 9.04 4.10 years Vested and exercisable at December 31, 2012 (2) 0.8 $ 18.74 $ 7.14 3.12 years Outstanding at December 31, 2012 2.0 $ 24.59 $ 9.04 4.10 years Granted 0.4 49.37 14.88 6.12 years Forfeited — — — — Exercised (0.8 ) 15.99 6.30 na Outstanding at December 31, 2013 (1), (2) 1.6 $ 34.14 $ 11.63 4.34 years Vested and exercisable at December 31, 2013 (1) 0.6 $ 25.63 $ 9.41 3.33 years (1) At December 31, 2012, 1.22013, 1.0 million of these SARs were unvested. The Company expects that substantially all of these unvested awards will vest in future periods.(2) At December 31, 2012,2013, SARs outstanding had an intrinsic value of $42.9$59.1 million. SARs vested and exercisable had an intrinsic value of $23.1$29.0 million. 2012 2011 2010 Expected dividend yield (1) 0 % 0 % 0 % Expected stock price volatility (2) 40 % 38 % 40 % Risk-free interest rate (3) 0.8 % 2.2 % 2.4 % Expected life in years (4) 4.61 4.75 4.75 2013 2012 2011 Expected dividend yield (1) — % — % — % Expected stock price volatility (2) 35 % 40 % 38 % Risk-free interest rate (3) 0.8 % 0.8 % 2.2 % Expected life in years (4) 4.49 4.61 4.75 50 (1) The dividend yield assumption is based on both the history and expectation of the Company’s 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 the implied volatility from publicly traded options in Common Stock. (3) The risk-free interest rate is 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 weighted-average estimate of the period of time the SARs are expected to be outstanding (that is, the period between the service inception date and the expected exercise date). Beginning January 1, 2012, the expected life has been calculated based on the Company’s historical exercise data. Previously, the Company determined the expected life based on a simplified calculation permitted by SEC SAB No. 107 and SAB No. 110 since the necessary historical exercise data was not available. The change in methodology had an insignificant impact on the calculation of the expected life.years.years. Performance-based RSUs are subject to both performance and service conditions, vest ratably over four years, and are expensed on an accelerated basis.2012: Restricted
Stock Units
(RSUs)
(in millions) Per Share
Weighted
Average
Grant Date
Fair Value Outstanding at December 31, 2011 3.1 $ 21.53 Granted (1) 0.7 37.98 Vested and released (1.3 ) 19.53 Forfeited — — Outstanding at December 31, 2012 (2), (3) 2.5 $ 27.95 Outstanding at December 31, 2012 2.5 $ 27.95 Granted (1) 0.7 49.86 Vested and released (1.4 ) 22.47 Forfeited — — Outstanding at December 31, 2013 (2), (3) 1.8 $ 38.83 (1) 20122013 consisted of 0.3 million performance-based RSUs awarded to executives and 0.4 million service-based RSUs awarded to non-executive employees and certain board members. The 0.3 milliontarget number of performance-based RSUs awarded to executive personnel representedexecutives in 2013 was 0.2 million, while the final amount could range from 0% to 200% of the target amount. The final amount ofwas dependent on the RSU award for the year, which was tied to an increase in the Company’sCompany's subscription-based Research contract value (“CV”("CV') for 2012. The final number of performance-based RSUs granted could range from 0% to 200% of the target amount, with the final amount dependent on the actual increase in CV for the year as measured on December 31, 2012.2013. The actual CV increase achieved for 20122013 was 104.3% of the targeted amount,117.1%, which resulted in the grant of 0.3 million performance-based RSUs to executives.RSUs.(2) The Company expects that substantially all of the outstanding awards at December 31, 20122013 will vest in future periods.(3) The weighted-average remaining contractual term of the outstanding RSUs is approximately 0.9 years.1 year.512012: Common Stock
Equivalents
(CSEs) Per Share
Weighted
Average
Grant Date
Fair Value Outstanding at December 31, 2011 97,268 $ 15.93 Granted 11,373 45.30 Converted to common shares (8,096 ) 45.27 Outstanding at December 31, 2012 100,545 $ 16.89 Outstanding at December 31, 2012 100,545 $ 16.89 Granted 9,718 60.34 Converted to common shares (7,784 ) 60.31 Outstanding at December 31, 2013 102,479 $ 17.71 Historically, the Company granted stock options to employees that allowed them to purchase shares of Common Stock at a certain price. has not made any stock option grants sinceuntil 2006. AllAs of December 31, 2013, there were less than 0.2 million remaining outstanding unexercised options, which are fully vested and there is no remaining unamortized cost.expire in 2015. The Company received cash from options exercises in the amount of $1.7 million, $8.6 million, and $16.6 million in 2013, 2012, and $20.7 million in cash from stock option exercises in 2012, 2011, and 2010, respectively.The following table summarizes the changes in stock options outstanding during the year ended December 31, 2012: Options in
millions Per Share
Weighted-
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Term Aggregate
Intrinsic
Value
(in millions) Vested and outstanding at December 31, 2011 1.2 $ 10.93 1.47 years $ 27.7 Expired — — na na Exercised (0.9 ) 10.59 na 25.9 Vested and outstanding at December 31, 2012 0.3 $ 11.73 1.28 years $ 11.7 na=not applicable$23,750$23,750 in any calendar year), at a price equal to 95% of the closing price of the Common Stock as reported by the New York Stock Exchange at the end of each offering period. At December 31, 2012,2013, the Company had approximately 1.31.2 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 $3.8$4.4 million, $3.4$3.8 million, and $2.8$3.4 million in cash from share purchases under the ESP Plan during 2013, 2012, and 2011, and 2010, respectively. for the years ended December 31: 2012 2011 2010 Numerator: Net income used for calculating basic and diluted earnings per common share $ 165,903 $ 136,902 $ 96,285 Denominator:(1) Weighted average number of common shares used in the calculation of basic earnings per share 93,444 96,019 95,747 Common share equivalents associated with stock-based compensation plans 2,398 2,827 4,087 Shares used in the calculation of diluted earnings per share 95,842 98,846 99,834 Earnings per share: Basic $ 1.78 $ 1.43 $ 1.01 Diluted $ 1.73 $ 1.39 $ 0.96 2013 2012 2011 Numerator: Net income used for calculating basic and diluted earnings per common share $ 182,801 $ 165,903 $ 136,902 Weighted average number of common shares used in the calculation of basic earnings per share 93,015 93,444 96,019 Common share equivalents associated with stock-based compensation plans 1,815 2,398 2,827 Shares used in the calculation of diluted earnings per share 94,830 95,842 98,846 Earnings per share: Basic $ 1.97 $ 1.78 $ 1.43 Diluted $ 1.93 $ 1.73 $ 1.39 (1) During 2012, 2011 and 2010, theThe Company repurchased 3.4 million, 2.7 million, 5.9 million, and 3.95.9 million shares of its Common Stock in 2013, 2012, and 2011, respectively.52 2012 2011 2010 Antidilutive common share equivalents as of December 31 (in millions): 0.7 0.5 0.5 Average market price per share of Common Stock during the year $ 43.80 $ 37.53 $ 26.35 2013 2012 2011 Antidilutive common share equivalents as of December 31 (in millions): 0.3 0.7 0.5 Average market price per share of Common Stock during the year $ 57.50 $ 43.80 $ 37.53 2012 2011 2010 U.S. $ 150,023 $ 124,915 $ 78,933 Non-U.S. 85,573 77,269 55,152 Income before income taxes $ 235,596 $ 202,184 $ 134,085 2013 2012 2011 U.S. $ 186,330 $ 150,023 $ 124,915 Non-U.S. 80,109 85,573 77,269 Income before income taxes $ 266,439 $ 235,596 $ 202,184 2012 2011 2010 Current tax expense: U.S. federal $ 25,290 $ 23,327 $ 9,078 State and local 2,508 4,236 2,645 Foreign 18,889 13,845 10,341 Total current 46,687 41,408 22,064 Deferred tax (benefit) expense: U.S. federal 8,494 (5,192 ) 4,263 State and local (753 ) 1,269 72 Foreign (8,080 ) (1,434 ) (6,013 ) Total deferred (339 ) (5,357 ) (1,678 ) Total current and deferred 46,348 36,051 20,386 Benefit (expense) relating to interest rate swap used to increase (decrease) equity 51 3,134 (2,523 ) Benefit from stock transactions with employees used to increase equity 21,304 25,812 18,559 Benefit (expense) relating to defined-benefit pension adjustments used to increase (decrease) equity 1,926 285 375 Benefit (expense) of acquired tax assets (liabilities) used to decrease (increase) goodwill 64 — 1,003 Total tax expense $ 69,693 $ 65,282 $ 37,800 2013 2012 2011 Current tax expense: U.S. federal $ 20,111 $ 25,290 $ 23,327 State and local 4,943 2,508 4,236 Foreign 17,460 18,889 13,845 Total current 42,514 46,687 41,408 Deferred tax (benefit) expense: U.S. federal 18,806 8,494 (5,192 ) State and local 2,742 (753 ) 1,269 Foreign (4,688 ) (8,080 ) (1,434 ) Total deferred 16,860 (339 ) (5,357 ) Total current and deferred 59,374 46,348 36,051 Benefit (expense) relating to interest rate swap used to increase (decrease) equity (1,405 ) 51 3,134 Benefit from stock transactions with employees used to increase equity 25,373 21,304 25,812 Benefit (expense) relating to defined-benefit pension adjustments used to increase (decrease) equity 482 1,926 285 Benefit (expense) of acquired tax assets (liabilities) used to decrease (increase) goodwill (186 ) 64 — Total tax expense $ 83,638 $ 69,693 $ 65,282 December 31, 2012 2011 Expense accruals $ 49,404 $ 40,438 Loss and credit carryforwards 22,433 24,282 Assets relating to equity compensation 18,878 18,226 Other assets 7,613 8,949 Gross deferred tax asset 98,328 91,895 Depreciation (8,995 ) (9,199 ) Intangible assets (23,129 ) (17,024 ) Prepaid expenses (10,500 ) (10,183 ) Gross deferred tax liability (42,624 ) (36,406 ) Valuation allowance (1,943 ) (1,869 ) Net deferred tax asset $ 53,761 $ 53,620 53 December 31, 2013 2012 Expense accruals $ 56,787 $ 49,404 Loss and credit carryforwards 17,648 22,433 Assets relating to equity compensation 19,773 18,878 Other assets 1,306 7,613 Gross deferred tax asset 95,514 98,328 Depreciation (12,067 ) (8,995 ) Intangible assets (25,338 ) (23,129 ) Prepaid expenses (22,517 ) (10,500 ) Gross deferred tax liability (59,922 ) (42,624 ) Valuation allowance (617 ) (1,943 ) Net deferred tax asset $ 34,975 $ 53,761 and $31.4 million and $0.6 million as of December 31, 2011,, respectively, and are included in Prepaid expenses and other current assets and Accounts payable and accrued liabilities in the Consolidated Balance Sheets. Long-term net deferred tax assets and long-term net deferred tax liabilities were $24.4 million and $0.2 million as of December 31, 2013 and $22.5 million and $0.1 million as of December 31, 2012 and $22.8 million and zero as of December 31, 2011,, respectively, and are included in Other assets and Other liabilities in the Consolidated Balance Sheets. It is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.$1.9$0.6 million as of December 31, 20122013 and $1.9 million as of December 31, 2011, respectively,2012 largely relatesrelate to net operating losses.2012,2013, the Company had state and local tax net operating loss carryforwards of $108.8$91.3 million, of which $3.3$2.9 million expire within one to five years, $99.7$87.3 million expire within six to fifteen years, and $5.8$1.1 million expire within sixteen to twenty years. In addition,The Company also had state tax credits of $2.9 million which will expire within two to five years.$30.6$30.3 million, of which $2.1$1.0 million expire over the next 20 years and $28.5$29.3 million can be carried forward indefinitely. As of December 31, 2012In addition, the Company also had foreign tax credit carryforwards of $6.7$1.3 million, the majority of which expire in 2018. 2012 2011 2010 Statutory tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 1.8 3.8 3.3 Foreign income taxed at different rates (6.4 ) (5.9 ) (6.2 ) Subpart F/repatriation of foreign earnings 1.0 (0.4 ) 8.5 Record (release) valuation allowance — (0.4 ) (12.7 ) Foreign tax credits (1.0 ) (2.3 ) (0.8 ) Record (release) reserve for tax contingencies 0.7 3.1 2.0 Other items, net (1.5 ) (0.6 ) (0.9 ) Effective tax rate 29.6 % 32.3 % 28.2 % 2013 2012 2011 Statutory tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 3.2 1.8 3.8 Foreign income taxed at different rates (5.6 ) (6.4 ) (5.9 ) Foreign tax credits — (1.0 ) (2.3 ) Record (release) reserve for tax contingencies 0.3 0.7 3.1 Record (release) valuation allowance (0.5 ) — (0.4 ) Other items, net (1.0 ) (0.5 ) (1.0 ) Effective tax rate 31.4 % 29.6 % 32.3 % and December 31 2011,, the Company had gross unrecognized tax benefits of $17.6$14.5 million and $18.3$17.6 million, respectively. The decrease is primarily attributable to reductions for tax positions of prior years and settlements resulting from closure of tax audits, partially offset by additions in unrecognized tax benefits attributable to 2012.2013. It is reasonably possible that the gross unrecognized tax benefits will be decreased by $4.5$3.1 million within the next 12 months due to anticipated closure of audits and the expiration of certain statutes of limitation. The unrecognized tax benefits relate primarily to the utilization of certain tax attributes. and December 31, 2011,, the Company had $13.1$11.4 million and $15.4$13.1 million, respectively, related to long term uncertain tax positions included in Other Liabilities.The Company accrues interest and penalties related to unrecognized tax benefits in its income tax provision. As of December 31, 2012 and December 31, 2011, the Company had $4.6 million and $4.8 million of accrued interest and penalties respectively, related to unrecognized tax benefits. These amounts are in addition to the gross unrecognized tax benefits noted above. The total amount of interest and penalties recognized in the Consolidated Statements of Operations for years ending December 31, 2012 and December 31, 2011 was $0.4 million and $1.5 million, respectively. 2012 2011 Beginning balance $ 18,345 $ 15,824 Additions based on tax positions related to the current year 4,301 2,269 Additions for tax positions of prior years 105 4,375 Reductions for tax positions of prior years (3,427 ) (746 ) Reductions for expiration of statutes (296 ) (269 ) Settlements (1,372 ) (2,661 ) Change in foreign currency exchange rates (104 ) (447 ) Ending balance $ 17,552 $ 18,345 54 2013 2012 Beginning balance $ 17,552 $ 18,345 Additions based on tax positions related to the current year 4,237 4,301 Additions for tax positions of prior years 827 105 Reductions for tax positions of prior years (1,973 ) (3,427 ) Reductions for expiration of statutes (3,860 ) (296 ) Settlements (1,575 ) (1,372 ) Change in foreign currency exchange rates (720 ) (104 ) Ending balance $ 14,488 $ 17,552 20122013 are potential benefits of $12.6$11.8 million that if recognized would reduce the effective tax rate on income from continuing operations.20072008 and forward, with the exception of India which is open for tax years 2003 and forward. Major taxing jurisdictions include the U.S. (federal and state), the United Kingdom, Canada, Japan, Italy, India, and Ireland.2012,2013, the Company closed the Internal Revenue Service (“IRS”) audit of its 20072008 and 2009 federal income tax return.returns. The resolution of the audit did not have a material adverse effect on the consolidated financial position, cash flows, or results of operations of the Company.2011late 2013 the Company received notice that the IRS commencedintends to conduct an audit of the Company’s federal income tax returns for the 2008Company's 2010 and 20092011 tax years. The IRS has proposed adjustmentsaudits for both 2008these years have commenced and 2009 andare in the Company expects to settle the audit in early 2013.stages of examination. Although the audit has not been fully resolved,final resolution of these audits is uncertain, the Company believes that the ultimate disposition will not have a material adverse effect on its consolidated financial position, cash flows, or results of operations.approximated $85.0are approximately $140.0 million as of December 31, 2012.2013. An estimate of the income tax liability that would be payable if such earnings were not indefinitely invested is $17.0$33.0 million.Derivative Contract Type Interest rate swap (1) 1 $ 200,000 $ (6,505 ) Other liabilities $ (3,903 ) Foreign currency forwards (2) 89 61,325 (60 ) Other current liabilities — Total 90 $ 261,325 $ (6,565 ) $ (3,903 ) Derivative Contract Type Number of
Outstanding
Contracts Contract
Notional
Amount Fair Value
Asset
(Liability)(3) Balance Sheet
Line Item OCI
Unrealized
(Loss), Net
Of Tax Interest rate swap (1) 1 $ 200,000 $ (10,000 ) Other liabilities $ (6,010 ) Foreign currency forwards (2) 68 76,100 4 Other current assets — Total 69 $ 276,100 $ (9,996 ) $ (6,010 ) December 31, 2011Derivative Contract Type Number of
Outstanding
Contracts Contract
Notional
Amount Fair Value
Asset
(Liability)(3) Balance Sheet
Line Item OCI
Unrealized
(Loss), Net
Of Tax Interest rate swap (1) 1 $ 200,000 $ (9,891 ) Other liabilities $ (5,934 ) Interest rate swaps (4) 2 30,750 (98 ) Accrued liabilities — Foreign currency forwards (2) 60 99,585 272 Other current assets — Total 63 $ 330,335 $ (9,717 ) $ (5,934 ) Derivative Contract Type Interest rate swap (1) 1 $ 200,000 $ (10,000 ) Other liabilities $ (6,010 ) Foreign currency forwards (2) 68 76,100 4 Other current assets — Total 69 $ 276,100 $ (9,996 ) $ (6,010 ) (1) The swap is designated as a cash flow hedge of the forecasted interest payments on borrowings. As a result, changes in the fair value of this swap are deferred and are recorded in OCI, net of tax effect (see Note 5 — Debt for additional information). 55(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 offset the economic effects of these foreign currency transaction risks. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income (expense),expense, net since the Company does not designate these contracts as hedges for accounting purposes. AllSubstantially all of the outstanding contracts at December 31, 20122013 matured by the end of February 2013.January 2014.(3) See Note 12 — Fair Value Disclosures below for the determination of the fair value of these instruments. (4)Changes in the fair value of these swaps were recognized in earnings. Both swaps matured in January 2012.2012,2013, the Company’s derivative counterparties were all large 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.Amount recorded in: 2012 2011 2010 Interest expense (1) $ 3.6 $ 4.1 $ 10.7 Other (income) expense, net (2) (0.6 ) 1.2 (2.8 ) Total expense $ 3.0 $ 5.3 $ 7.9 Amount recorded in: 2013 2012 2011 Interest expense (1) $ 4.0 $ 3.6 $ 4.1 Other expense, net (2) 0.1 (0.6 ) 1.2 Total expense $ 4.1 $ 3.0 $ 5.3 (1) Consists of interest expense from interest rate swap contracts. (2) Consists of realized and unrealized gains and losses on foreign currency forward contracts. 20102013 Credit Agreement, and at December 31, 2012,2013, the Company had $200.0 million of floating rate debt outstanding under this arrangement, which is carried at amortized cost. The Company believes the carrying amount of the outstanding borrowings reasonably approximates fair value since the rate of interest on the borrowings reflect current market rates of interest for similar instruments with comparable maturities.On January 1, 2012, the Company adopted ASU No. 2011-04,Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,which updates FASB ASC Topic 820 with new requirements. These include: (1) a prohibition on grouping financial instruments for purposes of determining fair value, except when an entity manages market and credit risks on the basis of the entity’s net exposure to the group; (2) an extension of the prohibition against the use of a blockage factor to all fair value measurements (that prohibition currently applies only to financial instruments with quoted prices in active markets); and (3) a requirement that for recurring Level 3 fair value measurements, entities disclose additional quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements and their potential impact on operating results. The Company has a limited number of assets and liabilities recorded in its Consolidated Balance Sheets that are remeasured to fair value on a recurring basis, and the Company does not currently utilize Level 3 valuation inputs to remeasure any of its assets or liabilities. In addition, the Company typically does not transfer assets or liabilities between different levels of the fair value hierarchy. As a result, the adoption of ASU No. 2011-04 did not result in any changes to the Company’s processes for determining fair values or require additional fair value disclosures.56Description: Fair Value
December 31,
2012 Fair Value
December 31,
2011 Assets: Deferred compensation plan assets (1) $ 27,795 $ 25,050 Foreign currency forward contracts (2) 4 272 $ 27,799 $ 25,322 Liabilities: Deferred compensation plan liabilities (1) $ 31,260 $ 28,100 Interest rate swap contracts (3) 10,000 9,989 $ 41,260 $ 38,089 Description: Fair Value December 31, 2013 Fair Value December 31, 2012 Assets: Deferred compensation plan assets (1) $ 32,555 $ 27,795 Foreign currency forward contracts (2) 116 204 $ 32,671 $ 27,999 Liabilities: Deferred compensation plan liabilities (1) $ 36,410 $ 31,260 Foreign currency forward contracts (2) 176 200 Interest rate swap contracts (3) 6,505 10,000 $ 43,091 $ 41,460 (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 plan’s 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 $8.2 million and $8.0 million as of December 31, 2012 and 2011, respectively. The carrying amount of the life insurance contracts equals their cash surrender value, which approximates fair value. Cash surrender value represents the estimated amount that the Company would receive upon termination of the contract. The Company considers the life insurance contracts to be valued based on a Level 2 input, and these assets had a fair value of $19.6 million and $17.0 million at December 31, 2012 and 2011, respectively. The related deferred compensation plan liabilities are recorded at the amount needed to settle the liability, which approximates fair value, and is based on 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 foreign currency exchange rates in active markets, which the Company considers a Level 2 input. (3) The Company enters intohas an interest rate swap contracts to hedgecontract which hedges the risk from variability of interest rates on its borrowings (see Note 11 — Derivatives and Hedging). To determine theThe fair value of these financial instruments, the Company reliesswap is based on a mark-to-market valuationsvaluation prepared by a third-party broker. Valuation is 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 valuationsvaluation prepared by the third-party broker through the use of an electronic quotation service.2012,2013, the maximum match was $6,800. In addition, the Company, in its discretion, may also contribute at least 1% of an employee’s base compensation, subject to an IRS annual limitation, which was $2,500 for 2012.$7,000. Amounts expensed in connection with the 401k Plan totaled $14.2$15.8 million, $15.9$14.2 million, and $14.6$15.9 million, in 2013, 2012, and 2011, and 2010, respectively.$27.8$32.6 million and $25.1$27.8 million at December 31, 20122013 and 2011,2012, respectively (see Note 12 — Fair Value Disclosures for fair value information). The corresponding deferred compensation liability of $31.3$36.4 million and $28.1$31.3 million at December 31, 20122013 and 2011,2012, respectively, is carried at fair value, and is adjusted with a corresponding charge or credit to compensation cost to reflect the fair value of the amount owed to the employees which is classified in Other liabilities on the Consolidated Balance Sheets. Total compensation expense recognized for the plan was $0.4$0.4 million in both 2013 and 2012 $0.3and $0.3 million in 2011, and zero in 2010. 2012 2011 2010 Service cost $ 1,775 $ 1,890 $ 1,875 Interest cost 980 1,010 840 Expected return on plan assets (115 ) (125 ) — Recognition of actuarial gain (215 ) (135 ) (350 ) Recognition of termination benefits 175 65 65 Total defined benefit pension expense (1) $ 2,600 $ 2,705 $ 2,430 2013 2012 2011 Service cost (1) $ 2,545 $ 1,775 $ 1,890 Interest cost 1,075 980 1,010 Expected return on plan assets (340 ) (115 ) (125 ) Recognition of actuarial loss (gain) 30 (215 ) (135 ) Recognition of termination benefits 455 175 65 Total defined benefit pension expense (2) $ 3,765 $ 2,600 $ 2,705 (1) The higher 2013 service cost was primarily due to additional employees covered under the plans. (2) Pension expense is classified in SG&A in the Consolidated Statements of Operations. 57 2012 2011 2010 Weighted-average discount rate(1) 3.20 % 4.40 % 3.95 % Average compensation increase 2.70 % 2.65 % 2.80 % 2013 2012 2011 Weighted-average discount rate (1) 3.35 % 3.20 % 4.40 % Average compensation increase 2.70 % 2.70 % 2.65 % (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. 2012 2011 2010 Projected benefit obligation at beginning of year $ 21,160 $ 19,730 $ 14,358 Service cost 1,775 1,890 1,875 Interest cost 980 1,010 840 Actuarial loss (gain) due to assumption changes(1) 6,265 (948 ) 1,100 Additions 1,925 — 1,961 Benefits paid(2) (680 ) (390 ) (220 ) Foreign currency impact 180 (132 ) (184 ) Projected benefit obligation at end of year(3) $ 31,605 $ 21,160 $ 19,730 2013 2012 2011 Projected benefit obligation at beginning of year $ 31,605 $ 21,160 $ 19,730 Service cost 2,545 1,775 1,890 Interest cost 1,075 980 1,010 Actuarial loss (gain) due to assumption changes and plan experience (1) 625 6,265 (948 ) Additions and contractual termination benefits 460 1,925 — Benefits paid (2) (1,255 ) (680 ) (390 ) Foreign currency impact (470 ) 180 (132 ) Projected benefit obligation at end of year (3) $ 34,585 $ 31,605 $ 21,160 (1) The 2012 actuarial loss was primarily due to a decline in the weighted-average discount rate. (2) $0.5$0.6 million in 2013; $2.0 million in 2014; $0.8$1.8 million in 2015; $0.9$0.7 million in 2016; $1.2$1.1 million in 2017; $1.0 million in 2018; and $7.0$7.5 million in the five years thereafter.(3) Measured as of December 31. 2012 2011 2010 Projected benefit obligation $ 31,605 $ 21,160 $ 19,730 Plan assets at fair value (1) (8,885 ) (2,480 ) (2,130 ) Funded status – shortfall (2) $ 22,720 $ 18,680 $ 17,600 Amounts recorded in the Consolidated Balance Sheets for the plans: Other liabilities — accrued pension obligation (2) $ 22,720 $ 18,680 $ 17,600 Stockholders’ equity — deferred actuarial (loss) gain (3) $ (1,578 ) $ 2,488 $ 2,205 2013 2012 2011 Projected benefit obligation $ 34,585 $ 31,605 $ 21,160 Plan assets at fair value (1) (13,870 ) (8,885 ) (2,480 ) Funded status – shortfall (2) $ 20,715 $ 22,720 $ 18,680 Amounts recorded in the Consolidated Balance Sheets for the plans: Other liabilities — accrued pension obligation (2) $ 20,715 $ 22,720 $ 18,680 Stockholders’ equity — deferred actuarial (loss) gain (3) $ (1,811 ) $ (1,578 ) $ 2,488 (1) For the year-ended December 31, 2012, the Company contributed $6.4 million to these plans, and benefits paid to participants was $0.7 million. While the actual return on plan assets for these plans was effectively zero in 2012, theThe Company projects a future long-term rate of return on these plan assets of 3.6%3.8%, 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, 2013, the Company contributed $5.9 million to these plans, and benefits paid to participants were $1.3 million.In addition to the plan assets held with third-party trustees, the Company also maintains a reinsurance asset arrangement with a large international insurance company. The reinsurance asset is an asset of the Company whose purpose is to provide funding for benefit payments for one of the plans. At December 31, 2012, the reinsurance asset was carried on the Company’s Consolidated Balance Sheets at its cash surrender value of $8.8 million and is classified in Other Assets. The Company believes the cash58surrender value approximates fair value and is equivalent to aLevel 2 input under the FASB’s fair value framework in ASC Topic 820.(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) 2012,2013, is recorded in Accumulated Other Comprehensive Income (“AOCI”) and will be reclassified out of AOCI and recognized as pension expense over approximately 1415 years, subject to certain limitations set forth in FASB ASC Topic 715. The impact of this amortization on the periodic pension expense in 2013 will2014 is projected to be immaterial. For 2012, 2011, and 2010, approximately $0.2 million,less than $0.1 million, and $0.2 million, respectively,million. The actual amortization of deferred actuarial pension gains were reclassifiedlosses (gains) from AOCI to pension expense. The Company considers the impact of the reclassifications for those years to be immaterial.expense was less than $0.1 million in 2013, $(0.2) million in 2012, and $(0.1) million in 2011.andexpenses, SG&A expenses,expense, depreciation, acquisition and integration charges, and amortization of intangibles. Certain bonus and fringe benefit costs included in consolidated COS are not allocated to segment expense. The accounting policies used by the reportable segments are the same as those used by the Company. There are no intersegment revenues. Research Consulting Events Consolidated 2012 Revenues $ 1,137,147 $ 304,893 $ 173,768 $ 1,615,808 Gross contribution 774,342 109,253 80,119 963,714 Corporate and other expenses (718,007 ) Operating income $ 245,707 Research Consulting Events Consolidated 2011 Revenues $ 1,012,062 $ 308,047 $ 148,479 $ 1,468,588 Gross contribution 682,136 114,838 66,265 863,239 Corporate and other expenses (649,177 ) Operating income $ 214,062 Research Consulting Events Consolidated 2010 Revenues $ 865,000 $ 302,117 $ 121,337 $ 1,288,454 Gross contribution 564,527 121,885 55,884 742,296 Corporate and other expenses (593,031 ) Operating income $ 149,265 Research Consulting Events Consolidated 2013 Revenues $ 1,271,011 $ 314,257 $ 198,945 $ 1,784,213 Gross contribution 879,384 107,565 91,216 1,078,165 Corporate and other expenses (802,673 ) Operating income $ 275,492 Research Consulting Events Consolidated 2012 Revenues $ 1,137,147 $ 304,893 $ 173,768 $ 1,615,808 Gross contribution 774,342 109,253 80,119 963,714 Corporate and other expenses (718,007 ) Operating income $ 245,707 Research Consulting Events Consolidated 2011 Revenues $ 1,012,062 $ 308,047 $ 148,479 $ 1,468,588 Gross contribution 682,136 114,838 66,265 863,239 Corporate and other expenses (649,177 ) Operating income $ 214,062 Twelve months ended December 31, 2013 2012 2011 Total segment gross contribution $ 1,078,165 $ 963,714 $ 863,239 Costs and expenses: Cost of services and product development - unallocated (1) 7,436 6,973 3,406 Selling, general and administrative 760,458 678,843 613,707 Depreciation and amortization 34,442 29,771 32,064 Acquisition and integration charges 337 2,420 — Operating income 275,492 245,707 214,062 Interest expense and other 9,053 10,111 11,878 Provision for income taxes 83,638 69,693 65,282 Net income $ 182,801 $ 165,903 $ 136,902 (1) 59 2012 2011 2010 Revenues: United States and Canada $ 947,075 $ 861,481 $ 765,793 Europe, Middle East and Africa 458,675 437,194 380,771 Other International 210,058 169,913 141,890 Total revenues $ 1,615,808 $ 1,468,588 $ 1,288,454 Long-lived assets:(1) United States and Canada(2) $ 114,557 $ 85,194 $ 69,163 Europe, Middle East and Africa 30,967 23,673 21,856 Other International 16,956 10,754 6,175 Total long-lived assets $ 162,480 $ 119,621 $ 97,194 2013 2012 2011 Revenues: United States and Canada $ 1,049,734 $ 947,075 $ 861,481 Europe, Middle East and Africa 508,755 458,675 437,194 Other International 225,724 210,058 169,913 Total revenues $ 1,784,213 $ 1,615,808 $ 1,468,588 Long-lived assets: (1) United States and Canada (2) $ 123,877 $ 114,557 $ 85,194 Europe, Middle East and Africa 34,363 30,967 23,673 Other International 13,936 16,956 10,754 Total long-lived assets $ 172,176 $ 162,480 $ 119,621 (1) Excludes goodwill and other intangible assets. (2) The 2012 balance for the United States and Canada includes approximately $17.0 million of additionalbalances include costs capitalized in 2012 in connection with the renovation of the Company’s Stamford headquarters facility (see Note 1 — Business and Significant Accounting Policies for additional description). These capitalized costs amounted to $7.7 million in 2013, $17.0 million in 2012, and $9.5 million in 2011. Balance at
Beginning
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Charged
Against
Revenues Deductions
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Reserve Balance
at End
of Year 2012: Allowance for doubtful accounts and returns and allowances $ 7,260 $ 1,930 $ 1,860 $ (4,650 ) $ 6,400 2011: Allowance for doubtful accounts and returns and allowances $ 7,200 $ 930 $ 4,390 $ (5,260 ) $ 7,260 2010: Allowance for doubtful accounts and returns and allowances $ 8,100 $ 800 $ 2,000 $ (3,700 ) $ 7,200 60 2013: Allowance for doubtful accounts and returns and allowances $ 6,400 $ 2,350 $ 5,050 $ (6,800 ) $ 7,000 2012: Allowance for doubtful accounts and returns and allowances $ 7,260 $ 1,930 $ 1,860 $ (4,650 ) $ 6,400 2011: Allowance for doubtful accounts and returns and allowances $ 7,200 $ 930 $ 4,390 $ (5,260 ) $ 7,260 22, 2013.26, 2014. Gartner, Inc. Date: February 22, 201326, 2014By: /s/ Eugene A. Hall Eugene A. Hall Chief Executive Officer Name Title Date /s/ Eugene A. Hall Director and Chief Executive Officer February 22, 201326, 2014Eugene A. Hall (Principal Executive Officer) /s/ Christopher J. Lafond Executive Vice President and Chief Financial Officer February 22, 201326, 2014Christopher J. Lafond (Principal Financial and Accounting Officer) /s/ Michael J. Bingle Director February 22, 201326, 2014Michael J. Bingle /s/ Richard J. Bressler Director February 22, 201326, 2014Richard J. Bressler /s/ Raul E. Cesan Director February 22, 201326, 2014Raul E. Cesan /s/ Karen E. Dykstra Director February 22, 201326, 2014Karen E. Dykstra /s/ Anne Sutherland Fuchs Director February 22, 201326, 2014Anne Sutherland Fuchs /s/ William O. Grabe Director February 22, 201326, 2014William O. Grabe /s/ Stephen G. Pagliuca Director February 22, 201326, 2014Stephen G. Pagliuca /s/ James C. Smith Director February 22, 201326, 2014James C. Smith 61