UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the quarterly period ended ~~September 30, 2017~~March 31, 2018

	OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number 1-14443

Gartner, Inc.

(Exact name of Registrant as specified in its charter)



Delaware	04-3099750
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

P.O. Box 10212	06902-7700
56 Top Gallant Road	(Zip Code)
Stamford, CT
(Address of principal executive offices)

Registrant’s telephone number, including area code: (203) 316-1111

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company (check one):



Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨
	Smaller reporting company ¨	Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

As of ~~October 31, 2017, 90,651, 439~~April 30, 2018, 91,240,213 shares of the registrant’s common shares were outstanding.

Table of Contents



	Page
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Condensed Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017	3
Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	4
Condensed Consolidated Statements of Comprehensive ~~(Loss)~~ Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	5
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	6
Notes to Condensed Consolidated Financial Statements	7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2831
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4544
ITEM 4. CONTROLS AND PROCEDURES	4645
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	4745
ITEM 1A. RISK FACTORS	4745
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4845
ITEM 6. EXHIBITS	4947

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GARTNER, INC.

Condensed Consolidated Balance Sheets

(Unaudited; in thousands, except share data)


	September 30,			December 31,			March 31,			December 31,
	2017			2016			2018			2017
Assets
Current assets:
Cash and cash equivalents	$	630,016		$	474,233		$	189,979		$	538,908
Fees receivable, net of allowances of $10,000 and $7,400, respectively	874,283			643,013
Fees receivable, net of allowances of $7,100 and $12,700 respectively							1,134,964			1,176,843
Deferred commissions	143,063			141,410			207,161			205,260
Prepaid expenses and other current assets	164,921			84,540			175,204			124,632
Assets held-for-sale							603,354			542,965
Total current assets	1,812,283			1,343,196			2,310,662			2,588,608
Property, equipment and leasehold improvements, net	216,021			121,606			223,086			221,507
Goodwill	3,145,046			738,453			2,956,642			2,987,294
Intangible assets, net	1,564,465			76,801			1,247,771			1,292,022
Other assets	273,677			87,279			176,867			193,742
Total Assets	$	7,011,492		$	2,367,335		$	6,915,028		$	7,283,173
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	550,207		$	440,771		$	532,538		$	666,821
Deferred revenues	1,512,227			989,478			1,719,637			1,630,198
Current portion of long-term debt	419,601			30,000			789,724			379,721
Liabilities held-for-sale							143,957			145,845
Total current liabilities	2,482,035			1,460,249			3,185,856			2,822,585
Long-term debt, net of deferred financing fees	2,922,229			664,391			2,186,061			2,899,124
Other liabilities	743,818			181,817			555,540			577,999
Total Liabilities	6,148,082			2,306,457			5,927,457			6,299,708
Stockholders’ Equity
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued or outstanding	—			—			—			—
Common stock, $.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for September 30, 2017 and 156,234,415 shares issued for December 31, 2016	82			78
Common stock, $.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods							82			82
Additional paid-in capital	1,748,610			863,127			1,788,045			1,761,383
Accumulated other comprehensive loss, net	(1,216		)	(49,683		)
Accumulated other comprehensive income, net							32,225			1,508
Accumulated earnings	1,539,978			1,644,005			1,613,980			1,647,284
Treasury stock, at cost, 72,956,127 and 73,583,172 common shares, respectively	(2,424,044		)	(2,396,649		)
Treasury stock, at cost, 72,391,175 and 72,779,205 common shares, respectively							(2,446,761		)	(2,426,792		)
Total Stockholders’ Equity	863,410			60,878			987,571			983,465
Total Liabilities and Stockholders’ Equity	$	7,011,492		$	2,367,335		$	6,915,028		$	7,283,173

See the accompanying notes to the condensed consolidated financial statements.

GARTNER, INC.

Condensed Consolidated Statements of Operations

(Unaudited; in thousands, except per share data)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2018			2017
Revenues:
Research	$	653,443		$	466,877		$	1,778,481		$	1,371,157		$	763,924		$	511,306
Events													46,087			35,269
Consulting	72,117			73,707			242,404			237,876			82,896			78,594
Events	44,953			33,475			171,427			132,290
Talent Assessment & Other	57,572			—			104,673			—			70,658			—
Total revenues	828,085			574,059			2,296,985			1,741,323			963,565			625,169
Costs and expenses:
Cost of services and product development	332,207			223,122			921,820			666,585			357,209			237,609
Selling, general and administrative	421,163			269,902			1,133,633			799,322			487,745			304,244
Depreciation	17,340			9,531			45,637			27,390			16,410			10,240
Amortization of intangibles	51,224			6,221			123,014			18,614			51,646			6,290
Acquisition and integration charges	30,500			16,557			142,104			32,958			59,266			13,272
Total costs and expenses	852,434			525,333			2,366,208			1,544,869			972,276			571,655
Operating (loss) income	(24,349		)	48,726			(69,223		)	196,454			(8,711		)	53,514
Interest expense, net	(38,762		)	(5,932		)	(88,624		)	(19,294		)	(35,059		)	(5,906		)
Other income, net	1,171			1,954			1,653			5,086			899			889
(Loss) income before income taxes	(61,940		)	44,748			(156,194		)	182,246			(42,871		)	48,497
(Benefit) provision for income taxes	(13,760		)	14,264			(52,166		)	55,149			(23,284		)	12,064
Net (loss) income	$	(48,180	)	$	30,484		$	(104,028	)	$	127,097		$	(19,587	)	$	36,433

Net (loss) income per share:
Basic	$	(0.53	)	$	0.37		$	(1.19	)	$	1.54		$	(0.22	)	$	0.44
Diluted	$	(0.53	)	$	0.36		$	(1.19	)	$	1.52		$	(0.22	)	$	0.43
Weighted average shares outstanding:
Basic	90,624			82,638			87,585			82,549			91,005			82,835
Diluted	90,624			83,803			87,585			83,761			91,005			84,095

See the accompanying notes to the condensed consolidated financial statements.

GARTNER, INC.

Condensed Consolidated Statements of Comprehensive ~~(Loss)~~ Income

(Unaudited; in thousands)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net (loss) income $ (48,180 ) $ 30,484
$ (104,028 ) $ 127,097
Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments 46,319
(3,032 ) 51,714
2,371
Interest rate swaps – net change in deferred loss 1,302
3,214
(3,396 ) (5,865 )
Pension – net change in deferred actuarial loss 52
37
149
112
Other comprehensive (loss) income, net of tax 47,673
219
48,467
(3,382 )
Comprehensive (loss) income $ (507 ) $ 30,703
$ (55,561 ) $ 123,715



	Three Months Ended
	March 31,
	2018			2017
Net (loss) income	$	(19,587	)	$	36,433
Other comprehensive income, net of tax:
Foreign currency translation adjustments	20,547			4,371
Interest rate swaps – net change in deferred gain or loss	10,114			(2,568		)
Pension plans – net change in deferred actuarial loss	56			48
Other comprehensive income, net of tax	30,717			1,851
Comprehensive income	$	11,130		$	38,284

See the accompanying notes to the condensed consolidated financial statements.

GARTNER, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited; in thousands)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2018			2017
Operating activities:
Net (loss) income	$	(104,028	)	$	127,097		$	(19,587	)	$	36,433
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	168,651			46,004			68,056			16,530
Stock-based compensation expense	67,930			36,128			30,958			22,576
Deferred taxes	(99,450		)	(13,415		)	(39,175		)	(11,998		)
Amortization and write-off of deferred financing fees	13,236			2,611			1,868			468
Changes in assets and liabilities, net of acquisitions:
Fees receivable, net	(15,090		)	26,242			56,771			(57,919		)
Deferred commissions	3,231			12,376			(512		)	3,002
Prepaid expenses and other current assets	(32,159		)	(43,402		)	(53,851		)	(5,315		)
Other assets	(76,548		)	21,597			14,421			(16,730		)
Deferred revenues	198,353			114,197			76,854			92,373
Accounts payable, accrued, and other liabilities	108,141			(47,172		)	(133,079		)	(109,025		)
Cash provided by operating activities	232,267			282,263
Cash provided by (used in) operating activities							2,724			(29,605		)
Investing activities:
Additions to property, equipment and leasehold improvements	(75,619		)	(36,877		)	(17,679		)	(10,700		)
Acquisitions - cash paid (net of cash acquired)	(2,634,809		)	(29,363		)	—			(111,165		)
Other							1,000			—
Cash used in investing activities	(2,710,428		)	(66,240		)	(16,679		)	(121,865		)
Financing activities:
Proceeds from employee stock purchase plan	8,550			6,931			4,124			3,022
Proceeds from borrowings	3,025,000			747,500			—			955,000
Payments for deferred financing fees	(51,171		)	(4,975		)	—			(18,773		)
Payments on borrowings	(339,624		)	(827,500		)	(304,813		)	—
Purchases of treasury stock	(37,188		)	(52,889		)	(28,394		)	(21,978		)
Cash provided by (used in) financing activities	2,605,567			(130,933		)
Net increase in cash and cash equivalents	127,406			85,090
Effects of exchange rates on cash and cash equivalents	28,377			7,668
Cash and cash equivalents, beginning of period	474,233			372,976
Cash and cash equivalents, end of period	$	630,016		$	465,734
Cash (used in) provided by financing activities							(329,083		)	917,271
Net (decrease) increase in cash and cash equivalents and restricted cash							(343,038		)	765,801
Effects of exchange rates on cash and cash equivalents and restricted cash							3,610			6,007
Cash and cash equivalents and restricted cash, beginning of period							567,058			499,354
Cash and cash equivalents and restricted cash, end of period							$	227,630		$	1,271,162

See the accompanying notes to the condensed consolidated financial statements.

GARTNER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 — Business and Basis of Presentation

Business. Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory ~~company. The~~ company ~~helps~~and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow. We believe that we have an unmatched combination of expert-led, practitioner-sourced and data-driven research that steers clients toward the right decisions on the issues that matter most. We're trusted as an objective resource and critical partner by more than 15,000 organizations in more than 100 countries - across all major functions, in every industry and enterprise ~~size with~~size. To learn more about how we help decision makers fuel the ~~objective insights they need to make the right decisions. Gartner's comprehensive suite~~future of services delivers strategic advice and proven best practices to help clients succeed in their mission-critical priorities. Gartner is headquartered in Stamford, Connecticut, U.S.A., and has more than 14,000 associates serving clients in over 11,000 enterprises in approximately 100 countries. business, visit gartner.com.

Gartner delivers its principal products and services globally through four business segments: Research, Events, Consulting ~~Events,~~ and Talent Assessment & Other. Our revenues by business segment are discussed below under the heading "Revenue Recognition." When used in these notes, the terms “Gartner,” “Company,” “we,” “us,” or “our” refer to Gartner, Inc. and its consolidated subsidiaries.

The Company acquired two businesses during 2017, L2, Inc. ("L2") and CEB Inc. ("CEB"). Note 2 — Acquisitions provides additional information regarding these acquisitions. As a result of these acquisitions, the Company has made certain changes to its reportable segments effective June 30, 2017, which are described in Note 5 — Segment Information.

Basis of presentation. The accompanying interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), as defined in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 270 for interim financial information and with the applicable instructions of the U.S. Securities &and Exchange Commission (“SEC”) Rule 10-01 of Regulation S-X on Form 10-Q and should be read in conjunction with the consolidated financial statements and related notes of the Company filed in its Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2017. The fiscal year of Gartner is the twelve-month ~~calendar~~ period from January 1 through December 31. In the opinion of management, all normal recurring accruals and adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented herein have been included. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 may not be indicative of the results of operations for the remainder of ~~2017~~2018 or beyond.

Principles of consolidation. The accompanying interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

Use of estimates. The preparation of the accompanying interim condensed consolidated financial statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of fees receivable, goodwill, intangible assets, and other long-lived assets, as well as tax accruals and other liabilities. In addition, estimates are used in revenue recognition, income tax expense or benefit, performance-based compensation charges, depreciation and amortization. Management believes its use of estimates in these interim condensed consolidated financial statements to be reasonable.

Management continually evaluates and revises its estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. Management adjusts these estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time. As a result, differences between our estimates and actual results could be material and would be reflected in the Company’s consolidated financial statements in future periods.

Adoption of new accounting standards. The Company adopted the accounting standards described below during the three months ended March 31, 2018:

Stock Compensation Award Modifications — On January 1, 2018, the Company adopted ASU No. 2017-09, "Compensation—Stock Compensation - Scope of Modification Accounting" ("ASU No. 2017-09"). ASU No. 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The adoption of ASU No. 2017-09 had no impact on the Company's consolidated financial statements.

Retirement Benefits Cost Presentation — On January 1, 2018, the Company adopted ASU No. 2017-07, "Compensation—Retirement Benefits" ("ASU No. 2017-07"). ASU No. 2017-07 improves the reporting of net benefit cost in the financial statements, and provides additional guidance on the presentation of net benefit cost in the income statement and clarifies the components

eligible for capitalization. The adoption of ASU No. 2017-07 had an immaterial impact on the classification of benefit expense on the Company's Condensed Consolidated Statements of Operations.

Partial Sales of Non-financial Assets — On January 1, 2018, the Company adopted ASU No. 2017-05, "Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-financial Assets" ("ASU No. 2017-05"). ASU No. 2017-05 clarifies the scope of the FASB’s recently established guidance on non-financial asset de-recognition as well as the accounting for partial sales of non-financial assets. It conforms the de-recognition guidance on non-financial assets with the model for revenue transactions. The adoption of ASU No. 2017-05 had no impact on the Company's consolidated financial statements.

Definition of a Business — On January 1, 2018, the Company adopted ASU No. 2017-01, "Clarifying the Definition of a Business" ("ASU No. 2017-01"). ASU No. 2017-01 changes the U.S. GAAP definition of a business. Such change can impact the accounting for asset purchases, acquisitions, goodwill impairment and other assessments. The adoption of ASU No. 2017-01 had no impact on the Company's consolidated financial statements.

Presentation of Restricted Cash — On January 1, 2018, the Company adopted ASU No. 2016-18, "Restricted Cash" ("ASU No. 2016-18"). ASU No. 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on an entity's statement of cash flows. ASU No. 2016-18 must be applied using a retrospective transition method to each comparative period presented in an entity's financial statements.

As a result of the adoption of ASU No. 2016-18, the Company's restricted cash balances are now included in the beginning-of-period and end-of-period total amounts presented on the accompanying Condensed Consolidated Statements of Cash Flows. When compared to the Company's previously issued statement of cash flows for the three months ended March 31, 2017, the adoption of ASU No. 2016-18 resulted in: (i) a reduction of $18.2 million in cash used in investing activities; (ii) an increase of $43.3 million in the end-of-period total cash amount; and (iii) an increase of $25.1 million in the beginning-of-period total cash amount. Below is a table reconciling the beginning-of-period and end-of-period total cash amounts included in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Cash Flow Statements (in thousands).



	March 31,				December 31,
	2018		2017		2017		2016
Cash and cash equivalents	$	189,979	$	1,227,891	$	538,908	$	474,233
Restricted cash classified in (1), (2):
Prepaid expenses and other current assets	18,143		25,121		15,148		25,121
Other assets	—		18,150		3,002		—
Cash classified as held-for-sale (3)	19,508		—		10,000		—
Cash and cash equivalents and restricted cash per the Condensed Consolidated Statements of Cash Flows	$	227,630	$	1,271,162	$	567,058	$	499,354

(1)

Restricted cash pertains to escrow accounts established in connection with certain of the Company's business acquisitions. Generally, such cash is restricted to use due to provisions contained in the underlying asset purchase agreement. The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims, etc.).


(2)	Restricted cash is recorded in Prepaid expenses and other current assets and Other assets in the Company's consolidated balance sheets with the short-term or long-term classification dependent on the projected timing of disbursements to the sellers.


(3)	Represents cash classified as a held-for-sale asset for certain businesses that were acquired as part of the CEB acquisition. See Note 2 — Acquisitions and Divestitures for additional information.

Income Taxes — On January 1, 2018, the Company adopted ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory" ("ASU No. 2016-16"). ASU No. 2016-16 accelerates the recognition of taxes on certain intra-entity transactions. U.S. GAAP previously required deferral of the income tax implications of an intercompany sale of assets until the assets were sold to a third party or recovered through use. Under ASU No. 2016-16, the seller’s tax effects and the buyer’s deferred taxes on asset transfers are immediately recognized upon the sale.

Pursuant to the transition rules in ASU No. 2016-16, any taxes attributable to pre-2018 intra-entity transfers that were previously deferred should be accelerated and recorded to accumulated earnings on the date of adoption. As a result of this transition rule, certain of the Company's balance sheet income tax accounts pertaining to pre-2018 intra-entity transfers, which aggregated $13.7 million, were reversed against accumulated earnings on January 1, 2018. ASU No. 2016-16 could have a material post-adoption

impact on the Company's consolidated financial statements, depending on the nature, size and tax consequences of future intra-entity transfers, if any. However, ASU 2016-16 had no impact on the Company's operating results during the three months ended March 31, 2018.

Statement of Cash Flows — On January 1, 2018, the Company adopted ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments" ("ASU No. 2016-15"). ASU No. 2016-15 sets forth classification requirements for certain cash flow transactions. The adoption of ASU No. 2016-15 had no impact on the Company's consolidated financial statements.

Financial Instruments Recognition and Measurement — On January 1, 2018, the Company adopted ASU No. 2016-01, "Financial Instruments Overall - Recognition and Measurement of Financial Assets and Liabilities" ("ASU No. 2016-01") to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Among the significant changes required by ASU No. 2016-01 is that equity investments are to be measured at fair value with changes in fair value recognized in net income. The adoption of ASU No. 2016-01 had no impact on the Company's consolidated financial statements.

Revenue Recognition — On January 1, 2018, the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU No. 2014-09"). The adoption of the standard did not ~~adopt any significant~~have a material impact on the Company's accounting policies or consolidated financial statements. However, as required by ASU No. 2014-09, the Company's disclosures around revenue recognition have been significantly expanded.

The following sections provide an overview of the Company's revenues by segment along with the required disclosures under the new standard:

Our business and our revenues

Gartner delivers its principal products and services globally through four business segments: Research, Events, Consulting and Talent Assessment & Other. Our revenues by business segment are discussed below:

Research

Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of an enterprise through research and other reports, briefings, proprietary tools, access to our analysts, peer networking services and membership programs that enable our clients to make better decisions. Gartner's traditional strengths in information technology (“IT”), marketing and supply chain research were enhanced in 2017 with Gartner's acquisition of CEB Inc. ("CEB"), which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, finance, sales and legal.

Research revenues are mainly derived from subscription contracts for research products, representing approximately 90% of the segment’s revenue. The related revenues are deferred and recognized ratably over the applicable contract term (i.e., as we provide the service over the contract period). Fees derived from assisting organizations in selecting the right business software for their needs are recognized at a point in time (i.e., when the lead is provided to the vendor).

The Company enters into subscription contracts for research products that generally are for twelve-month periods or longer. Approximately 65% of our annual and multi-year Research subscription contracts provide for billing of the first annual period upon signing. In subsequent years, multi-year subscription contracts are normally billed prior to the contract’s anniversary date. Our other Research subscription contracts are usually invoiced in advance, commencing with the contract signing, on (i) a quarterly, monthly or other recurring basis or (ii) in accordance with a customized invoicing schedule. Research contracts are generally non-cancelable and non-refundable, except for government contracts that may have cancellation or fiscal funding clauses, which historically have not produced material cancellations. It is our policy to record the amount of a subscription contract that is billable as a fee receivable at the time the contract is signed with a corresponding amount as deferred revenue because the contract represents a legally enforceable claim.

Events

Events provides business professionals across an organization with the opportunity to learn, share and network. From our flagship Chief Information Officer event, Gartner Symposium/ITxpo, to industry-leading conferences focused on specific business roles and topics, to member-driven sessions, our events enable attendees to experience the best of Gartner insight and advice live.

We earn revenues from both the attendees and exhibitors at our events. Attendees are generally invoiced for the full attendance fee upon their completion of an online registration form or their signing of a contract, while exhibitors typically make several

individual payments commencing with the signing of a contract. We collect almost all of the invoiced amounts in advance of the related event, resulting in the recording of deferred revenue. We recognize both the attendee and exhibitor revenue as we satisfy our related performance obligations (i.e., when the related symposium, conference, summit or exhibition is held).

The Company defers certain costs directly related to its events and expenses those costs in the period during which the related symposium, conference or exhibition occurs. The Company's policy is to defer only those costs, primarily prepaid site and production services costs, which are incremental and are directly attributable to a specific event. Other costs of organizing and producing our events, primarily Company personnel and non-event specific expenses, are expensed in the period incurred. At the end of each fiscal quarter, the Company assesses, on an event-by-event basis, whether the expected direct costs of producing a scheduled event will exceed the expected revenues. If such costs are expected to exceed revenues, the Company records the expected loss in the period determined.

Consulting

Consulting provides customized solutions to unique client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving IT performance with a focus on cost, performance, efficiency and quality, and contract optimization services.

Consulting revenues, primarily derived from custom consulting and measurement services, are principally generated from fixed fee or time and materials engagements. Revenues from fixed fee engagements are recognized on a proportional performance basis, while revenues from time and material engagements are recognized as work is delivered and/or services are provided. In both of these circumstances, we satisfy our performance obligations and control of the services are passed to our customers over time (i.e., during the duration of the contract or consulting engagement). On a contract-by-contract basis, we typically use actual labor hours incurred compared to total expected labor hours to measure the Company’s proportional performance in respect of our fixed fee engagements. If our labor and other costs on an individual contract are expected to exceed the total contract value or the contract’s funded ceiling amount, the Company reflects an adjustment to the contract’s overall profitability in the period determined. Revenues related to contract optimization engagements are contingent in nature and are only recognized at a point in time when all of the conditions related to their payment have been satisfied.

Consulting customers are invoiced based on the specific terms and conditions in their underlying contracts. We typically invoice our Consulting customers after we have satisfied some or all of the related performance obligation and the related revenue has been recognized. We record fees receivable for amounts that are billed or billable. We also record contract assets, which represent amounts for which we have recognized revenue but lack the unconditional right to payment as of the balance sheet date due to our required continued performance under the relevant contract, progress billing milestones, or other billing-related restrictions. The Company’s contract assets are discussed below.

Talent Assessment & Other

The Talent Assessment & Other segment helps organizations assess, engage, manage and improve talent. These services are provided through knowledge and skills assessments, training programs, workshops, and survey and questionnaire services.

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

In April 2018, the Company sold its CEB Talent Assessment and CEB Workforce Survey and Analytics businesses, which were reported in the Talent Assessment & Other segment. Note 2 - Acquisitions and Divestitures provides additional information regarding these divestitures.

Overview of ASU No. 2014-09

ASU No. 2014-09 requires a five-step evaluative process that consists of:


(1)	Identifying the contract with the customer;


(2)	Identifying the performance obligations in the contract;


(3)	Determining the transaction price for the contract;


(4)	Allocating the transaction price to the performance obligations in the contract; and


(5)	Recognizing revenue when (or as) performance obligations are satisfied.

ASU No. 2014-09 is intended to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses in existing revenue recognition rules; provide a more robust framework for addressing revenue recognition issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and provide more useful information to users of financial statements through improved disclosures.

The Company adopted ASU No. 2014-09 using the modified retrospective method of adoption. Under this method of adoption, the cumulative effect of applying the new standard is recorded at the date of initial application, with no restatement of the comparative prior periods presented. The adoption of ASU No. 2014-09 did not result in a cumulative effect adjustment to the Company's Accumulated earnings in its consolidated financial statements. However, the adoption of the new standard required reclassifications of certain amounts presented in the Company’s consolidated balance sheet. As of January 1, 2018, these items were (i) the reclassification of certain fees receivable that met the definition of a contract asset, aggregating $26.7 million, from Fees receivable, net to Prepaid expenses and other current assets; and (ii) the reclassification of a refund liability, aggregating $6.2 million, from the allowance for fees receivable to Accounts payable and accrued liabilities.

Related to our adoption of ASU No. 2014-09, we elected to (i) apply the provisions of this new accounting ~~standards~~guidance only to contracts that were not completed at the date of initial application and (ii) utilize a practical expedient whereby we reflected the aggregate effect of all contract modifications that occurred prior to January 1, 2018 (rather than retrospectively restating the affected contracts) when identifying our satisfied and unsatisfied performance obligations, determining the transaction prices with our customers, and allocating such transaction prices to our satisfied and unsatisfied performance obligations. These two elections had no financial impact.

Prior to January 1, 2018, the Company recognized revenue in accordance with then-existing U.S. GAAP and SEC Staff Accounting Bulletin No. 104, "Revenue Recognition" (“prior GAAP”). Under both ASU No. 2014-09 and prior GAAP, revenue can only be recognized when all of the required criteria are met. Although there were some minor changes to the Company’s revenue recognition policies and procedures effective January 1, 2018 with the adoption of ASU No. 2014-09, there were no material differences between the timing and amount of revenues recognized under ASU No. 2014-09 and prior GAAP. The accompanying Condensed Consolidated Statements of Operations present revenues net of any sales or value-added taxes that we collect from customers and remit to government authorities.

ASU No. 2014-09 requires that we assess at inception all of the promises in a customer contract to determine if a promise is a separate performance obligation. To identify our performance obligations, we consider all of the services promised in a customer contract, regardless of whether they are explicitly stated or are implied by customary business practices. If we conclude that a service is separately identifiable and distinct from the other offerings in a contract, we account for such a promise as a separate performance obligation.

If a customer contract has more than one performance obligation, then the total contract consideration is allocated among the separate deliverables based on their stand-alone selling prices, which are determined based on the prices at which the Company discretely sells the stand-alone services. If a contract includes a discount or other pricing concession, the transaction price is allocated among the performance obligations on a proportionate basis using the relative stand-alone selling prices of the individual deliverables being transferred to the customer, unless the discount or other pricing concession can be ascribed to specifically identifiable performance obligations.

The contracts with our customers delineate the final terms and conditions of the underlying arrangement, including product descriptions, subscription periods, deliverables, quantity and price of each service purchased. Since the transaction price of almost all of our customer contracts is typically agreed upon upfront and generally does not fluctuate during the ~~nine~~duration of the contract, variable consideration is insignificant. The Company may engage in certain financing transactions with customers but these arrangements have been limited in number and not material.

Required Disclosures under ASU No. 2014-09

ASU No. 2014-09 requires significantly expanded disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. These additional disclosures are provided below:

Disaggregated Revenues

We believe that disaggregating the Company’s revenues by primary geographic location and the timing of when revenue is recognized achieves the disclosure objectives in ASU No. 2014-09. Our disaggregated revenue information by reportable segment is presented for the periods indicated in the tables below (in thousands).

Three Months Ended March 31, 2018



	Research		Events		Consulting		Talent Assessment & Other		Total
Primary Geographic Markets: (1)
United States and Canada	$	489,713	$	24,069	$	45,129	$	34,594	$	593,505
Europe, Middle East and Africa	184,547		16,891		29,938		28,290		259,666
Other International	89,664		5,127		7,829		7,774		110,394
Total revenues	$	763,924	$	46,087	$	82,896	$	70,658	$	963,565

Three Months Ended March 31, 2017



	Research		Events		Consulting		Talent Assessment & Other		Total
Primary Geographic Markets: (1)
United States and Canada	$	327,492	$	17,663	$	47,832	$	—	$	392,987
Europe, Middle East and Africa	115,802		14,095		23,823		—		153,720
Other International	68,012		3,511		6,939		—		78,462
Total revenues	$	511,306	$	35,269	$	78,594	$	—	$	625,169


(1)	Revenues are reported based on where the sale is fulfilled.

Three Months Ended March 31, 2018



	Research		Events		Consulting		Talent Assessment & Other		Total
Timing of Revenue Recognition:
Transferred over time (1)	$	701,096	$	—	$	74,010	$	58,946	$	834,052
Transferred at a point in time (2)	62,828		46,087		8,886		11,712		129,513
Total revenues	$	763,924	$	46,087	$	82,896	$	70,658	$	963,565

Three Months Ended March 31, 2017



	Research		Events		Consulting		Talent Assessment & Other		Total
Timing of Revenue Recognition:
Transferred over time (1)	$	466,706	$	—	$	64,994	$	—	$	531,700
Transferred at a point in time (2)	44,600		35,269		13,600		—		93,469
Total revenues	$	511,306	$	35,269	$	78,594	$	—	$	625,169

(1)

These Research revenues were recognized in connection with performance obligations that were satisfied over time using a time-elapsed output method to measure progress. The corresponding Consulting revenues were recognized over time using labor hours as an input measurement basis. Talent Assessment & Other revenues in this category were recognized using either a time-elapsed output method, performance-based milestone approach or labor hours, depending on the nature of the underlying customer contract.


(2)	The revenues in this category were recognized in connection with performance obligations that were satisfied at the point in time the contractual deliverables were provided to the customer.

Determining a measure of progress for performance obligations that are satisfied over time and when control transfers for performance obligations that are satisfied at a point in time requires us to make judgments that affect the timing of when revenue is recognized. A key factor in this determination is when the customer is able to direct the use of, and can obtain substantially all of the benefits from, the deliverable.

For performance obligations recognized in accordance with a time-elapsed output method, the Company’s efforts are expended consistently throughout the contractual period and the Company transfers control evenly by providing stand-ready services. For performance obligations satisfied under our Consulting fixed fee and time and materials engagements, we believe that labor hours are the best measure of depicting the Company’s progress because labor output corresponds directly to the value of the Company’s performance to date as control is transferred. In our Talent Assessment & Other segment, we select a method to assess the completion of our performance obligations that best aligns with the specific characteristics of the individual customer contract. We believe that these methods to measure progress provide a reasonable and supportable determination as to when we transfer control over these services to our customers.

For customer contracts that are greater than one year in duration, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2018 was approximately $2.1 billion. The Company expects to recognize $1,060.6 million, $856.7 million and $209.8 million of this revenue (most of which pertains to Research) during the remainder of 2018, the year ending December 31, 2019 and thereafter, respectively. The Company applies the practical expedient allowed in ASU No. 2014-09 and, accordingly, it does not disclose such performance obligation information for customer contracts that have original durations of one year or less.

Customer Contract Assets and Liabilities

The timing of the recognition of revenues, the amount and timing of our billings and cash collections, as well as upfront customer payments, result in the recording of both assets and liabilities on our Condensed Consolidated Balance Sheets.

The payment terms and conditions in our customer contracts vary. In some cases, customers prepay and, in other cases, after we conduct a credit evaluation, payment may be due in arrears. Because the timing of the delivery of our services typically differs from the timing of customer payments, the Company recognizes either a contract asset (we perform either fully or partially under the contract but a contingency remains) or a contract liability (upfront customer payments precede our performance, resulting in deferred revenue). Amounts recorded as contract assets are reclassified to fees receivable when all of the outstanding conditions have been resolved and our right to payment becomes unconditional. Contracts with payments due in arrears are also recognized as fees receivable. As our contractual performance obligations are satisfied over time or at a point in time, the Company correspondingly relieves its contract liabilities and records the associated revenue.

The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers, to exclude our held-for-sale businesses (in thousands):



	March 31,		December 31,
	2018		2017
Assets:
Fees receivable, gross (1)	$	1,142,064	$	1,162,871

Contract assets (2)	$	27,593	$	26,672

Contract liabilities:
Deferred revenues (current liability) (3)	$	1,719,637	$	1,630,198
Non-current deferred revenues (3)	16,139		16,205
Total contract liabilities	$	1,735,776	$	1,646,403


(1)	Fees receivable represent the unconditional right of payment from our customers and includes both billed and unbilled amounts.

(2)

Contract assets represent recognized revenue for which we do not have an unconditional right to payment as of the balance sheet date because the project may be subject to a progress milestone or some other billing restriction. In the accompanying Condensed Consolidated Balance Sheets, contract assets are recorded in Prepaid expenses and other current assets as of March 31, 2018 and Fees receivable, net as of December 31, 2017.


(3)	Deferred revenues represent amounts (i) for which the Company has received an upfront customer payment or (ii) that pertain to recognized fees receivable. Both situations occur before the completion of our performance obligation(s).

During the three months ended ~~September 30,~~March 31, 2018, the Company recognized $605.5 million of revenue that was attributable to deferred revenues that were recorded at December 31, 2017. Such amount primarily consisted of (i) Research and Talent Assessment & Other revenue that was recognized ratably as control of the goods or services passed to the customer and (ii) Events revenue pertaining to symposia, conferences, summits or exhibitions that occurred during the calendar quarter. During the three months ended March 31, 2018, the Company recorded no material impairments related to its contract assets. The Company does not in the normal course of business recognize revenues from performance obligations satisfied in prior periods.

Allowance for Losses and Revenue Reserves

As of December 31, 2017, the Company maintained an allowance for losses that included a bad debt allowance and a revenue reserve. Provisions to the Company’s allowance for losses were charged against earnings as either a reduction in revenues or an increase in expense.

Effective with the adoption of ASU No. 2014-09 on January 1, 2018, the allowance for losses, which is classified as an offset to the gross amount of fees receivable, and the related charge against earnings (i.e., bad debt expense) is now comprised solely of estimated uncollectible fees receivable due to credit and other associated risks. The revenue reserve previously reported as part of the allowance for losses has been reclassified and is now reported as a liability in accordance with ASU No. 2014-09. The revenue reserve is maintained for amounts deemed to be uncollectible for reasons other than bad debt. The amount of the revenue reserve is based on past experience and current estimates. As of March 31, 2018, the revenue reserve balance was $6.9 million and adjustments to the account during the three months ended March 31, 2018 were not significant.

The determination of the allowance for losses is based on historical loss experience, an assessment of current economic conditions, the aging of outstanding receivables, the financial health of specific clients and probable losses. This evaluation is inherently judgmental and requires the use of estimates. The allowance for losses is periodically re-evaluated and adjusted as more information about the ultimate collectability of fees receivable becomes available. Circumstances that could cause the allowance for losses to increase include changes in our clients’ liquidity and credit quality, other factors negatively impacting our clients’ ability to pay their obligations as they come due, and the effectiveness of our collection efforts.

Costs of obtaining and fulfilling a customer contract

Upon the signing of a customer contract, the Company capitalizes the related commission as a recoverable direct incremental cost of obtaining the underlying contract and records a corresponding commission payable. No other amounts are capitalized as a cost

of obtaining or fulfilling a customer contract because no expenditures have been identified that meet the requisite capitalization criteria. For Research, Consulting and Talent Assessment & Other, we generally use the straight-line method of amortization for deferred commissions over a period that is based on the projected recoverability for such costs, using factors such as the underlying contract period, the timing of when the corresponding revenues will be earned, and the anticipated term of the engagement. For Events, deferred commissions are expensed during the period when the related event occurs.

Under all circumstances, deferred commissions are amortized over a period that does not exceed one year. During the three months ended March 31, 2018 and 2017, such amortization expense was $75.9 million and $50.2 million, respectively, and was included in Selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations. The Company recorded no material impairments of its deferred commissions during either the three months ended March 31, 2018 or 2017.

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

Accounting standards effective in 2019

Certain Tax Effects Stranded In Accumulated Other Comprehensive Income — In February 2018, the FASB issued ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU No. 2018-02"). ASU No. 2018-02 provides an entity with the option to reclassify to retained earnings the tax effects from items that have been stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act of 2017 (the “Act”). Upon adoption, ASU No. 2018-02 requires an entity to make new disclosures, including whether or not the entity elected to reclassify the tax effects related to the Act and the entity’s accounting policy for releasing the income tax effects from accumulated other comprehensive income for all other items (i.e., those not pertaining to the Act). Entities may adopt ASU No. 2018-02 using one of two transition methods: (i) retrospective to each period wherein the income tax effects of the Act related to items remaining in accumulated other comprehensive income are recognized or (ii) at the beginning of the period of adoption. ASU No. 2018-02 is effective for Gartner on January 1, 2019; however, early adoption is permitted. We are currently evaluating the potential impact of ASU No. 2018-02 on the Company's consolidated financial statements but no material impact is expected at adoption.

Targeted Improvements to Accounting for Hedging Activities - In August 2017, the FASB issued ~~Accounting Standards Update ("ASU")~~ASU No. 2017-12, "Derivatives and Hedging ~~(Topic 815)~~(" ("ASU No. 2017-12"). ASU No. 2017-12 is intended to improve the financial reporting of hedging relationships to better portray economic results of an entity’s risk management activities in its financial statements. In addition to that main objective, the ~~amendments would make~~standard makes certain targeted improvements to simplify

the application of the hedge accounting guidance in current U.S. GAAP. ASU No. 2017-12 is effective for Gartner on January 1, 2019. We are currently evaluating the ~~potential~~ impact of ASU No. 2017-12 on the Company's consolidated financial statements.

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

~~Stock Compensation Award Modifications~~Leases — In ~~May 2017,~~February 2016, the FASB issued ASU No. ~~2017-09,~~2016-02, "~~Compensation—Stock Compensation - Scope of Modification Accounting~~Leases" ("ASU No. ~~2017-09"~~2016-02")., which will require significant changes in the accounting and disclosure for lease arrangements. Under current U.S. GAAP, lease arrangements that meet certain criteria are considered operating leases and are not recorded on an entity's balance sheet. Because all of our existing lease arrangements are accounted for as operating leases, they are not recorded on the Company's balance sheet. ASU No. ~~2017-09 provides guidance about which changes to~~2016-02 will significantly change the accounting for leases because a right-of-use ("ROU") model will be used wherein a lessee must record an ROU asset and a lease liability on its balance sheet for leases with initial terms ~~or conditions of a share-based payment award require an entity to apply modification accounting.~~longer than 12 months. Under ASU No. ~~2017-09 is~~2016-02, leases will be classified as either finance or operating arrangements, with such classification affecting the pattern of expense recognition in an entity's income statement. ASU No. 2016-02 also requires expanded disclosures about leasing arrangements. ASU No. 2016-02 will be effective for Gartner on January 1, ~~2018.~~2019. We ~~have concluded that~~are currently evaluating the ~~adoption~~potential impact of ASU No. ~~2017-09 will not have a material impact~~2016-02 on ~~the Company's~~our consolidated financial statements.

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

~~Partial Sales of Non-financial Assets — In February 2017, the FASB issued ASU No. 2017-05,~~ ~~"Clarifying the Scope of Asset Derecognition Guidance and~~

Accounting ~~for Partial Sales of Non-financial Assets"~~ ("ASU No. 2017-05"). ASU No. 2017-05 clarifies the scope of the FASB’s recently established guidance on non-financial asset de-recognition as well as the accounting for partial sales of non-financial assets. It conforms the de-recognition guidance on non-financial assets with the model for revenue transactions. ASU No. 2017-05 isstandards effective ~~for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2017-05 will not have a material impact on the Company's consolidated financial statements.~~in 2020

Goodwill Impairment— In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other - Simplifying the Test for Goodwill Impairment" ("ASU No. 2017-04"). ASU No. 2017-04 simplifies the determination of the amount of goodwill to be potentially charged off by eliminating Step 2 of the goodwill impairment ~~test.~~test under current U.S. GAAP. ASU No. 2017-04 is effective for Gartner on January 1, 2020. ~~We have concluded that the~~The adoption of ASU No. 2017-04 ~~will~~is currently not ~~have a material impact on the Company's consolidated financial statements.~~

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

~~Presentation of Restricted Cash —~~ ~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~"Restricted Cash"~~ ("ASU No. 2016-18"). ASU No. 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. If different, a reconciliation of the cash balances reported in the cash flow statement and the balance sheet would needexpected to be provided along with explanatory information. ASU No. 2016-18 is effective for Gartner on January 1, 2018. The adoption of ASU No. 2016-18 will require the Company to disclose restricted cash and, as a result, will change the presentation of the consolidated statements of cash flows.

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

~~Statement of Cash Flows —~~ ~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~"Classification of Certain Cash Receipts and Cash Payments"~~ ("ASU No. 2016-15"). ASU No. 2016-15 sets forth classification requirements for certain cash flow transactions. ASU No. 2016-15 is effective for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2016-15 will not have a material impact on the Company's consolidated financial statements.

Financial Instrument Credit Losses —In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses" ("("ASU No. 2016-13"). ASU No. 2016-13 amends the current financial instrument impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU No. 2016-13 is effective for Gartner on January 1, 2020, with early adoption permitted. We are currently evaluating the potential impact of ASU No. 2016-13 on our consolidated financial statements.

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

~~Financial Instruments Recognition and Measurement~~ ~~— In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments Overall - Recognition and Measurement of Financial Assets and Liabilities~~" ("ASU No. 2016-01") to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Among the significant changes required by ASU No. 2016-01 is that equity investments will be measured at fair value with changes in fair value recognized in net income. ASU No. 2016-01 will be effective for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2016-01 will not have a material impact on the Company's consolidated financial statements.

~~Revenue Recognition~~ ~~— In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers~~" ("ASU No. 2014-09"). ASU No. 2014-09 and related amendments require changes in revenue recognition policies as well as enhanced disclosures. ASU No. 2014-09 is intended to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses in existing revenue recognition rules; provide a more robust framework for addressing revenue recognition issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and provide more useful information to users of financial statements through improved disclosures. The Company has completed an initial assessment of the impact of ASU No. 2014-09 on its existing revenue recognition policies and plans to adopt the rule on January 1, 2018 using the cumulative effect method of adoption. ASU No. 2014-09 also requires significantly expanded disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, which the Company is currently compiling. While the Company has not fully completed its assessment of the impact of ASU No. 2014-09, primarily the completion of our review of the recently-acquired CEB's revenue recognition policies, based on the analysis completed to date, the Company does not currently anticipate that the new rule will have a material impact on its consolidated financial statements.

The FASB ~~also~~ continues to work on a number of other significant accounting standards which, if issued, could materially impact the Company's accounting policies and disclosures in future periods. ~~However, since~~As these standards have not yet been issued, the effective dates and potential impact are unknown.

Note 2 — Acquisitions and Divestitures

Acquisitions

The Company accounts for business acquisitions in accordance with the acquisition method of accounting as prescribed by FASB ASC Topic 805, Business Combinations. The acquisition method of accounting requires the Company to record the net assets and liabilities acquired based on their estimated fair values as of the acquisition date, with any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to be recorded to goodwill. Under the acquisition method, the operating results of acquired companies are included in the Company's consolidated financial statements beginning on the date of acquisition.

The Company ~~completed the following~~did not have any business acquisitions ~~during 2017:~~

~~CEB~~

~~On April 5,~~in the first quarter of 2018. In the first quarter of 2017, the Company acquired 100% of the outstanding capital stock of CEB for an aggregate purchase price of $3.5 billion. The consideration transferred by Gartner included approximately $2.7 billion in cash and $818.7 million in fair value of Gartner common shares. CEB was a publicly-held company headquartered in Arlington, Virginia with approximately 4,900 employees. CEB's primary business is to serve as a leading provider of subscription-based, best practice research and analysis focusing on human resources, sales, finance, IT, and legal. CEB serves executives and professionals at corporate and middle market institutions in over 70 countries.

~~On March 9, 2017, the Company acquired 100% of the outstanding capital stock of~~ L2, ~~a privately-held firm based in New York City with 150 employees, for an aggregate purchase price of $134.2 million. L2 is~~Inc. ("L2"), a subscription-based research business that benchmarks the digital performance of brands.

~~Total Consideration Transferred~~

~~The following table summarizes~~ During the ~~aggregate consideration paid or payable~~three months ended March 31, 2018, the Company finalized its acquisition accounting for ~~these acquisitions (in thousands):~~

Aggregate consideration (1): CEB L2 Total
Cash paid at close (2), (3) $ 2,687,704
$ 134,199
$ 2,821,903
Additional cash paid (2) 12,465
— 12,465
Fair value of Gartner equity awards (4) 818,660
— 818,660
Total (5) $ 3,518,829
$ 134,199
$ 3,653,028


~~(1)~~	~~Includes the total consideration transferred for 100% of the outstanding capital stock of the acquired businesses.~~


~~(2)~~	The cash paid at close represents the gross contractual amount paid. The Company paid the additional $12.5 million in cash in third quarter 2017. Net of cash acquired from these businesses and for cash flow reporting purposes, the Company paid $2.63 billion in cash.


~~(3)~~	~~The Company borrowed a total of approximately $2.78 billion in conjunction with the CEB acquisition (see Note 7 — Debt for additional information).~~


~~(4)~~	~~Consists of the fair value of (i) Gartner common stock issued (see Note 8 — Equity for additional information) and (ii) stock-based compensation replacement awards.~~


~~(5)~~	The Company may also be required to pay up to an additional $20.8 million in cash for L2 which is contingent on the achievement of certain employment conditions by several key employees. This amount is being recognized as compensation expense over approximately three years.

~~The allocation of the purchase price for the~~ L2 and CEB acquisitions are preliminary with respect to various matters, to include leases and leasehold improvements; tax contingencies; and other items. The Company expects to complete the allocation of the purchase price by the end of the accountingInc. ("CEB"), which was acquired on April 5, 2017. There were no material measurement period ~~for~~adjustments recorded during the ~~respective acquisition.~~2018 quarterly period.

~~Preliminary Allocation of Purchase Price~~

~~The following table summarizes the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisitions of L2 and CEB (in thousands):~~

CEB (3)

L2 (4)
Total
Assets:
Cash $ 194,706
$ 4,852
$ 199,558
Fees receivable 175,440
8,277
183,717
Prepaid expenses and other current assets 52,032
1,167
53,199
Property, equipment and leasehold improvements 51,751
663
52,414
Goodwill (1)
2,267,087
109,779
2,376,866
Finite-lived intangible assets (2)
1,574,100
15,890
1,589,990
Other assets 182,720
12,321
195,041
Total assets $ 4,497,836
$ 152,949
$ 4,650,785
Liabilities:
Accounts payable and accrued liabilities $ 130,544
$ 3,050
$ 133,594
Deferred revenues (current) 246,472
13,200
259,672
Other liabilities 601,991
2,500
604,491
Total liabilities $ 979,007
$ 18,750
$ 997,757
Net assets acquired $ 3,518,829
$ 134,199
$ 3,653,028

~~(1)~~

The Company believes the goodwill resulting from the acquisitions is supportable based on anticipated synergies. For CEB, among the factors contributing to the anticipated synergies are a broader market presence, expanded product offerings and market opportunities, and an acceleration of CEB's growth by leveraging Gartner's global infrastructure and best practices in sales productivity and other areas. None of the recorded goodwill is expected to be deductible for tax purposes. See Note 6 — Goodwill and Intangible Assets for additional information.

~~(2)~~

All of the acquired intangible assets are finite-lived. The determination of the fair value of the finite-lived intangible assets required management judgment and the consideration of a number of factors. In determining the fair values, management primarily relied on income valuation methodologies, in particular discounted cash flow models. The use of discounted cash flow models required the use of estimates, significant among them projected cash flows related to the particular asset; the useful lives of the particular assets; the selection of royalty and discount rates used in the models; and certain published industry benchmark data. In establishing the estimated useful lives of the finite-lived intangible assets, the Company relied on both internally-generated data for similar assets as well as certain published industry benchmark data. We believe the values we have assigned to the finite-lived intangible assets are both reasonable and supportable. See Note 6 — Goodwill and Intangible Assets for additional information regarding the finite-lived intangible assets.

~~(3)~~

The Company's financial statements include the operating results of CEB beginning on April 5, 2017, the date of acquisition. CEB's operating results and the related goodwill are being reported as part of the Company's Research, Events, and Talent Assessment & Other segments. The Company recorded certain measurement period adjustments for the CEB preliminary purchase price allocation during the third quarter of 2017, primarily related to certain tenant improvement incentives, which increased Prepaid expenses and Other assets, with a reduction to goodwill.

Had the Company acquired CEB in prior periods, the impact to the Company's operating results would have been material, and as a result the following pro forma consolidated financial information (unaudited) is presented as if CEB had been acquired by the Company on January 1, 2016 (in thousands, except per share amounts):

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Pro forma total revenue $ 891,003
$ 756,083
$ 2,664,450
$ 2,233,942
Pro forma net (loss) (7,283 ) (40,825 ) (71,122 ) (133,379 )
Pro forma basic and diluted (loss) per share (0.08 ) (0.45 ) (0.79 ) (1.48 )

~~The pro forma results have been prepared in accordance with U.S. GAAP and include the following pro forma adjustments:~~

(a) An increase in interest expense and amortization of debt issuance costs related to the financing of the CEB acquisition. Note 7 — Debt provides further information regarding the Company's borrowings related to the CEB acquisition;

~~(b) A decrease in revenue as a result of the required fair value adjustment to deferred revenue; and~~

(c) An adjustment for additional depreciation and amortization expense as a result of the preliminary purchase price allocation for finite-lived intangible assets and property, equipment, and leasehold improvements.

~~(4)~~

The Company's financial statements include the operating results of L2 beginning on March 9, 2017, the acquisition date. L2's operating results were not material to the Company's consolidated operating results and segment results for either the three or nine months ended September 30, 2017. Had the Company acquired L2 in prior periods, the impact to the Company's operating results would not have been material, and as a result pro forma financial information for L2 for prior periods has not been presented. L2's operating results and the related goodwill are being reported as part of the Company's Research segment.

The Company recognized ~~$30.5 million and $142.1~~$59.3 million of acquisition and integration charges in ~~the three and nine months ended September 30, 2017, respectively,~~2018 compared to ~~$16.6 million and $33.0~~$13.3 million in ~~the three and nine months ended September 30, 2016.~~2017. The additional charges during ~~2017 primarily~~2018 consisted of higher professional fees, severance, stock-based compensation charges, and accruals for exit costs for certain office space that the Company does not intend to occupy ~~at a new building~~ in Arlington, Virginia that ~~was~~were related to ~~the CEB acquisition.~~our acquisition of CEB. The following table presents a summary of the ~~amounts~~activity related to ~~this space~~our accrual for exit costs at all of our facilities for the ~~period~~quarter ended ~~September 30, 2017~~March 31, 2018 (in thousands):

For the period ended September 30, 2017
Liability balance at December 31, 2016 $ —
Charges during the six months ended June 30, 2017 20,149
Liability balance at June 30, 2017 20,149
Charges and adjustments during the three months ended September 30, 2017 974
Liability balance at September 30, 2017 $ 21,123



Liability balance at December 31, 2017	$	12,961
Charges and adjustments, net	44,230
Payments	(4,734		)
Liability balance at March 31, 2018 (1)	$	52,457


(1)	In total, we estimate that we will make net cash payments of approximately $61.2 million for exit costs in connection with the activities described herein. Through March 31, 2018, in the aggregate, we have expensed $57.3 million and paid $4.9 million related to such activities.

Divestitures

CEB Talent Assessment business

On April 3, 2018, the Company sold its CEB Talent Assessment business in all cash transaction for a purchase price of $400.0 million. The purchase price is subject to customary adjustments and other deal-related expenses. The CEB Talent Assessment business was acquired by Gartner as part of the CEB acquisition in April 2017 and was a significant portion of the Company's Talent Assessment & Other segment. During the first quarter of 2018, the CEB Talent Assessment business contributed approximately $47.0 million of revenue and recognized pre-tax income of approximately $2.1 million.

CEB Workforce Survey & Analytics business

On April 30, 2018, the Company sold its CEB Workforce Survey and Analytics ("WS&A") business in an all cash transaction for a purchase price of $29.0 million. The purchase price is subject to customary adjustments and other deal-related expenses. The WS&A business was also acquired by Gartner as part of the CEB acquisition in April 2017 and was reported with the Talent Assessment & Other segment.

The Company has classified the related assets and liabilities of these businesses as held-for-sale in its Consolidated Balance Sheets.

The principal components of the held-for-sale assets and liabilities for these businesses are summarized in the table below (in thousands):



	March 31, 2018 (1)		December 31, 2017 (1)
Cash and cash equivalents	$	19,508	$	10,000
Fees receivable, net	49,191		50,928
Goodwill	246,661		212,994
Intangible assets, net	264,145		250,472
Other assets (2)	23,849		18,571
Total assets held-for-sale	$	603,354	$	542,965

Accounts payable and accrued liabilities	$	26,467	$	32,388
Deferred revenues	65,846		61,450
Other liabilities	51,644		52,007
Total liabilities held-for-sale	$	143,957	$	145,845

(1) March 31, 2018 includes both the CEB Talent Assessment business and the WS&A business. December 31, 2017 includes the CEB Talent Assessment business only.

(2) Other assets includes property, equipment and leasehold improvements, net.

Note 3 — Computation of Net (Loss) Income per Share

Basic earnings per share (“EPS”) is computed by dividing net (loss) income by the weighted average number of shares of Common Stock outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in earnings. When the impact of common share equivalents is anti-dilutive, they are excluded from the calculation.

The following table sets forth the calculation of basic and diluted (loss) income per share (in thousands, except per share data):


	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
	2017			2016		2017			2016		2018			2017
Numerator:
Net (loss) income used for calculating basic and diluted (loss) income per common share	$	(48,180	)	$	30,484	$	(104,028	)	$	127,097	$	(19,587	)	$	36,433

Denominator:
Weighted average number of common shares used in the calculation of basic (loss) income per share	90,624			82,638		87,585			82,549
Weighted average common shares used in the calculation of basic (loss) income per share											91,005			82,835
Common stock equivalents associated with stock-based compensation plans (1), (2)	—			1,165		—			1,212		—			1,260
Shares used in the calculation of diluted (loss) income per share	90,624			83,803		87,585			83,761		91,005			84,095

Basic (loss) income per share	$	(0.53	)	$	0.37	$	(1.19	)	$	1.54	$	(0.22	)	$	0.44
Diluted (loss) income per share	$	(0.53	)	$	0.36	$	(1.19	)	$	1.52	$	(0.22	)	$	0.43


(1)	For the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2017, certain common stock equivalents were not included in the computation of diluted income per share because the effect would have been anti-dilutive. These common share equivalents totaled less than ~~0.2~~0.4 million for ~~both 2016 periods.~~the 2017 period presented.


(2)	~~Approximately 1.4~~For the three months ended March 31, 2018, approximately 1.3 million common stock equivalents ~~for both the three and nine months ended September 30, 2017~~ were completely excluded from the calculation of diluted (loss) per share because they were anti-dilutive.

Note 4 — Stock-Based Compensation

The Company grants stock-based compensation awards as an incentive for employees and directors to contribute to the Company’s long-term success. The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents. As of ~~September 30, 2017~~March 31, 2018, the Company had ~~5.5~~4.9 million shares of its common stock, par value $.0005 per share, (the “Common Stock”), available for stock-based compensation awards under its 2014 Long-Term Incentive Plan.

The Company accounts for stock-based compensation awards in accordance with FASB ASC Topics 505 and 718 and SEC Staff Accounting Bulletins No. 107 and No. 110. Stock-based compensation expense is based on the fair value of the award on the date of grant. The Company recognizes stock-based compensation expense over the period that the related service is performed, which is generally the same as the vesting period of the underlying award. Currently, the Company issues treasury shares upon the exercise, release or settlement of stock-based compensation awards.

Determining the appropriate fair value model and calculating the fair value of stock-based compensation awards requires the use of certain ~~complex and~~ subjective assumptions, including the expected life of a stock-based compensation award and Common Stock price volatility. In addition, determining the appropriate periodic stock-based compensation expense requires management to estimate the likelihood of the achievement of certain performance targets. The assumptions used in calculating the fair values of stock-based compensation awards and the related periodic expense represent management’s best estimates, which involve inherent uncertainties and the application of judgment. As a result, if circumstances change and the Company deems it necessary in the future to modify the assumptions it made or to use different assumptions, or if the quantity and nature of the Company’s stock-based compensation awards changes, then the amount of expense may need to be adjusted and future stock-based compensation expense could be materially different from what has been recorded in the current period.

Stock-Based Compensation Expense

The Company recognized the following stock-based compensation expense by award type and expense category line item induring the periods indicated (in millions):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
Award type	2017		2016		2017		2016		2018		2017
Stock appreciation rights	$	1.1	$	1.3	$	5.2	$	4.3	$	3.5	$	2.8
Restricted stock units	13.2		8.0		62.3		31.3		27.2		19.6
Common stock equivalents	0.1		0.2		0.5		0.5		0.2		0.2
Total (1)	$	14.4	$	9.5	$	68.0	$	36.1	$	30.9	$	22.6


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
Expense category line item	2017		2016		2017		2016		2018		2017
Cost of services and product development	$	6.1	$	4.6	$	21.5	$	17.0	$	11.4	$	9.3
Selling, general and administrative	7.1		4.9		30.8		19.1		18.2		13.3
Acquisition and integration charges (2)	1.2		—		15.7		—		1.3		—
Total (1)	$	14.4	$	9.5	$	68.0	$	36.1	$	30.9	$	22.6

(1) Includes charges of ~~$2.1~~$17.8 million and ~~$2.5~~$14.5 million during the three months ended ~~September 30, 2017~~March 31, 2018 and ~~2016, respectively, and $22.6 million and $16.5 million during the nine months ended September 30,~~ 2017, ~~and 2016,~~ respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis.

(2) These charges are primarily the result of the acceleration of the vesting of certain restricted stock units related to the CEB acquisition.

As of ~~September 30, 2017,~~March 31, 2018, the Company had ~~$97.4~~$125.8 million of total unrecognized stock-based compensation cost, which is expected to be expensed over the remaining ~~weighted-average~~weighted average service period of approximately ~~2.5~~2.9 years.

Stock-Based Compensation Awards

The disclosures presented below provide information regarding the Company’s stock-based compensation awards, all of which ~~are~~have been classified as equity awards in accordance with FASB ASC Topic 505.

Stock Appreciation Rights

Stock-settled stock appreciation rights ("SARs") permit the holder to participate in the appreciation of the value of the Common Stock. After the applicable vesting criteria have been satisfied, SARs are settled in shares of Common Stock upon exercise by the employee. SARs vest ratably over a four-year service period and expire seven years from the date of grant. The fair value of a SARs award is recognized as compensation expense on a straight-line basis over four years. SARs have only been awarded to the Company’s executive officers.

When SARs are exercised, the number of shares of Common Stock issued is calculated as follows: (1) the total proceeds from the exercise of the SARs award (calculated as the closing price of the Common Stock as reported on the New York Stock Exchange on the date of exercise less the exercise price of the SARs award, multiplied by the number of SARs exercised) is divided by (2) the closing price of the Common Stock ~~as reported on the New York Stock Exchange~~ on the date of exercise. The Company withholds a portion of the shares of the Common Stock issued upon exercise to satisfy statutory tax withholding requirements. SARs recipients do not have any stockholder rights until the shares of Common Stock are issued in respect of the award, which is subject to the prior satisfaction of the vesting and other criteria relating to such grants.

The following table summarizes changes in SARs outstanding during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2018:

Stock Appreciation Rights ("SARs") (in millions)
Per Share
Weighted
Average
Exercise Price

Per Share
Weighted
Average
Grant Date
Fair Value

Weighted
Average
Remaining
Contractual
Term (Years)
Outstanding at December 31, 2016 1.3
$ 66.22
$ 15.77
4.40
Granted 0.3
99.07
22.02
6.35
Exercised (0.3 ) 51.25
14.74
n/a
Outstanding at September 30, 2017 (1) (2) 1.3
76.64
17.36
4.57
Vested and exercisable at September 30, 2017 (2) 0.6
$ 64.71
$ 15.60
3.49



	Stock Appreciation Rights ("SARs") (in millions)	Per Share Weighted Average Exercise Price		Per Share Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2017	1.2	$	76.73	$	17.35	4.28
Granted	0.3	114.26		25.63		6.86
Outstanding at March 31, 2018 (1) (2)	1.5	85.06		19.15		4.70
Vested and exercisable at March 31, 2018 (2)	0.8	$	70.96	$	16.39	3.56

~~n/a=not applicable.~~

(1) As of ~~September 30, 2017,~~March 31, 2018, 0.7 million of the total SARs outstanding were unvested. The Company expects that substantially all of those unvested awards will vest in future periods.

(2) As of ~~September 30, 2017,~~March 31, 2018, the total SARs outstanding had an intrinsic value of ~~$62.8~~$47.6 million. On such date, SARs vested and exercisable had an intrinsic value of ~~$33.4~~$35.1 million.

The fair value of a SARs award is determined on the date of grant using the Black-Scholes-Merton valuation model with the following weighted average assumptions:


	Nine Months Ended				Three Months Ended
	September 30,				March 31,
	2017		2016		2018		2017
Expected dividend yield (1)	—	%	—	%	—	%	—	%
Expected stock price volatility (2)	22	%	22	%	21	%	22	%
Risk-free interest rate (3)	1.8	%	1.1	%	2.5	%	1.8	%
Expected life in years (4)	4.5		4.4		4.5		4.5


(1)	The expected dividend yield assumption was based on both the Company's historical and anticipated dividend payouts. Historically, the Company has not paid cash dividends on its Common Stock.


(2)	The determination of expected stock price volatility was based on both historical Common Stock prices and implied volatility from publicly traded options in the Common Stock.


(3)	The risk-free interest rate was based on the yield of a U.S. Treasury security with a maturity similar to the expected life of the award.


(4)	The expected life represents the Company’s estimate of the weighted average period of time the SARs are expected to be outstanding (that is, the period between the service inception date and the expected exercise date).

Restricted Stock Units

Restricted stock units ("RSUs") give the awardee the right to receive shares of Common Stock when the vesting conditions are met and certain restrictions lapse. Each RSU that vests entitles the awardee to one share of Common Stock. RSU awardees do not have any of the rights of a Gartner stockholder, including voting rights and the right to receive dividends and distributions, until the shares are released. The fair value of an RSU award is determined on the date of grant based on the closing price of the Common Stock as reported on the New York Stock Exchange on that date. Service-based RSUs vest ratably over four years and are expensed on a straight-line basis over the vesting period. Performance-based RSUs are subject to the satisfaction of both performance and service conditions, vest ratably over four years and are expensed on an accelerated basis over the vesting period.

The following table summarizes the changes in RSUs outstanding during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018:

Restricted
Stock Units
("RSUs")
(in millions)

Per Share
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2016 1.3
$ 73.19
Granted (1) (2) 1.1
105.45
Vested and released (0.7 ) 78.44
Forfeited (0.1 ) 93.18
Outstanding at September 30, 2017 (3) (4) 1.6
$ 91.37



	Restricted Stock Units ("RSUs") (in millions)		Per Share Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017	1.5		$	91.47
Granted (1)	0.7		114.33
Vested and released	(0.6	)	86.21
Outstanding at March 31, 2018 (2) (3)	1.6		$	101.52

(1)

The ~~1.1~~0.7 million of RSUs granted during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 consisted of ~~0.2~~0.3 million of performance-based RSUs awarded to executives and ~~0.9~~0.4 million of service-based RSUs awarded to non-executive ~~employees~~employees. The performance-based awards include RSUs in final settlement of 2017 grants and ~~non-management board members. The~~approximately 0.2 million of ~~performance-based~~ RSUs ~~represents~~representing the target amount of the grant for the year ~~which~~ending December 31, 2018 that is tied to an increase in ~~the Company's~~Gartner's total contract value for ~~2017.~~2018. Total contract value for this determination represents the value attributable to all of ~~the Company's~~Gartner's subscription-related ~~contracts but not including CEB contract value.~~revenue contracts. The ~~final~~ number of performance-based RSUs that will ultimately be awarded for ~~2017~~2018 ranges from 0% to 200% of the target amount ~~with the final number dependent~~and will be finalized based on the actual increase in Gartner's total contract value for ~~2017~~2018 as measured on December 31, ~~2017.~~2018. If the specified minimum level of achievement is not met, the performance-based RSUs pertaining to 2018 will be forfeited in their entirety and any previously recorded compensation expense will be reversed.


(2)	~~Includes 0.6 million of RSUs awarded to employees that joined Gartner as a result of the CEB acquisition.~~


~~(3)~~	The Company expects that substantially all of the RSUs outstanding will vest in future periods.


~~(4)~~(3)	As of ~~September 30, 2017,~~March 31, 2018, the weighted average remaining contractual term of the RSUs outstanding was approximately ~~1.4~~1.8 years.

Common Stock Equivalents

Common stock equivalents ("CSEs") are convertible into Common Stock. Each CSE entitles the holder to one share of Common Stock. Members of our Board of Directors receive their directors’ fees in CSEs unless they opt to receive up to 50% of those fees in cash. Generally, CSEs have no defined term and are converted into shares of Common Stock when service as a director terminates unless the director has elected an accelerated release. The fair value of a CSE award is determined on the date of grant based on the closing price of the Common Stock as reported on the New York Stock Exchange on that date. CSEs vest immediately and, as a result, they are recorded as expense on the date of grant.

The following table summarizes the changes in CSEs outstanding during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018:


	Common Stock Equivalents ("CSEs")		Per Share Weighted Average Grant Date Fair Value		Common Stock Equivalents ("CSEs")		Per Share Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016	107,338		$	20.74
Outstanding at December 31, 2017					110,013		$	23.19
Granted	4,382		118.75		1,624		116.06
Converted to shares of Common Stock upon grant	(3,177	)	118.71		(998	)	124.94
Outstanding at September 30, 2017	108,543		$	21.82
Outstanding at March 31, 2018					110,639		$	23.59

Employee Stock Purchase Plan

The Company has an employee stock purchase plan (the “ESP Plan”) under which eligible employees are permitted to purchase shares of Common Stock through payroll deductions, which may not exceed 10% of an employee’s compensation, ~~(or~~or $23,750 in any calendar ~~year),~~year, at a price equal to 95% of the closing price of the Common Stock as reported on the New York Stock Exchange at the end of each offering period. As of ~~September 30, 2017~~March 31, 2018, the Company had 0.8 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 ~~$8.6~~$4.1 million and ~~$6.9~~$3.0 million in cash from employee share purchases under the ESP Plan during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 and ~~2016~~2017, respectively.

Note 5 — Segment Information

~~On April 5, 2017, Gartner completed its acquisition of CEB. With the CEB acquisition, Gartner is reporting~~Our products and services are delivered through four ~~business~~ segments ~~reflecting the Company’s enlarged scale~~– Research, Events, Consulting and breadth of advisory services aligned to the mission-critical priorities of virtually all functional business leaders across every industry and size of enterprise worldwide. The Company’s reportable segments areTalent Assessment & Other, as follows:

Research ~~- includes our previous Gartner Research segment as well as~~provides trusted, objective insights and advice on the ~~results~~mission-critical priorities of ~~CEB’s core subscription-based best practice~~leaders across all functional areas of the enterprise through research and decision support research activities. In addition, Research now includes our Strategic Advisory Services ("SAS") business, which was previously included in the Consulting segment. Research consists primarily of subscription-based research products,other reports, briefings, proprietary tools, access to ~~research inquiry,~~our analysts, peer networking services and membership ~~programs.~~programs that enable our clients to make better decisions. Gartner's traditional strengths in IT, marketing and supply chain research were enhanced in 2017 with Gartner's acquisition of CEB, Inc., which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, finance, sales and legal.

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

Consulting ~~- includes our previous Gartner Consulting segment except,~~provides customized solutions to unique client needs through on-site, day-to-day support, as ~~noted above, the results of our SAS business are now included in the Research segment. Consulting consists primarily of consulting~~well as proprietary tools for measuring and ~~measurement engagements.~~

~~Events~~ ~~- includes our previous Gartner Events segment~~improving IT performance with a focus on cost, performance, efficiency and ~~the results of CEB’s former Evanta business and destination event activities. Events consists of various symposia, conferences, exhibitions, and destination activities.~~quality.

Talent Assessment & Other ~~- this~~helps organizations assess, engage, manage and improve talent. This is ~~a new segment for Gartner~~accomplished through knowledge and ~~it includes CEB's previously disclosed Talent Assessment business as well as certain CEB non-subscription based talent products~~skills assessments, training programs, workshops, and ~~services. On October 4, 2017, the Company announced that it has initiated a process to explore~~survey and ~~evaluate strategic alternatives for the Talent Assessment business, which is a substantial part of the Talent Assessment & Other segment. See Note 14 — Subsequent Event for additional information.~~questionnaire services.

The Company evaluates segment performance and allocates resources based on gross contribution margin. Gross contribution, as presented in the table below, is defined as operating income or loss excluding certain Cost of services and product development expenses, Selling, general and administrative expenses, Depreciation, Amortization of intangibles, and Acquisition and integration charges. Certain bonus and fringe benefit costs included in consolidated Cost of services and product development are not allocated to segment expense. The accounting policies used by the reportable segments are the same as those used by the Company. There are no intersegment revenues. The Company does not identify or allocate assets, including capital expenditures, by reportable segment. Accordingly, assets are not reported by segment because the information is not available by segment and is not reviewed in the evaluation of segment performance or in making decisions in the allocation of resources.

The following tables present operating information about the Company’s reportable segments for the periods indicated (in thousands).:



Three Months Ended March 31, 2018	Research		Events		Consulting		Talent Assessment & Other (1)		Consolidated
Revenues	$	763,924	$	46,087	$	82,896	$	70,658	$	963,565
Gross contribution	531,456		16,190		24,124		43,044		614,814
Corporate and other expenses									(623,525		)
Operating loss									$	(8,711	)



Three Months Ended March 31, 2017	Research		Events		Consulting		Talent Assessment & Other		Consolidated
Revenues (2)	$	511,306	$	35,269	$	78,594	$	—	$	625,169
Gross contribution (2)	351,113		13,567		23,937		—		388,617
Corporate and other expenses									(335,103		)
Operating income									$	53,514

(1) In April 2018, the Company sold its CEB Talent Assessment and CEB Workforce Survey and Analytics businesses. These two businesses were acquired in April 2017 with the CEB acquisition. The results of these businesses are included in the Talent Assessment & Other segment results for the three ~~and nine~~ months ended ~~September 30, 2017 include the results of CEB beginning on the acquisition date:~~

Three Months Ended September 30, 2017 Research Consulting Events Talent Assessment & Other Consolidated
Revenues $ 653,443
$ 72,117
$ 44,953
$ 57,572
$ 828,085
Gross contribution 436,222
16,188
16,011
31,215
499,636
Corporate and other expenses

(523,985 )
Operating (loss)

$ (24,349 )

Three Months Ended September 30, 2016 Research Consulting Events Talent Assessment & Other Consolidated
Revenues (1) $ 466,877
$ 73,707
$ 33,475
$ —
$ 574,059
Gross contribution (1) 322,646
18,215
14,529
—
355,390
Corporate and other expenses

(306,664 )
Operating income

$ 48,726

Nine Months Ended September 30, 2017 Research Consulting Events Talent Assessment & Other Consolidated
Revenues $ 1,778,481
$ 242,404
$ 171,427
$ 104,673
$ 2,296,985
Gross contribution 1,187,906
71,558
79,313
48,512
1,387,289
Corporate and other expenses

(1,456,512 )
Operating (loss)

$ (69,223 )

Nine Months Ended September 30, 2016 Research Consulting Events Talent Assessment & Other Consolidated
Revenues (1) $ 1,371,157
$ 237,876
$ 132,290
$ —
$ 1,741,323
Gross contribution (1) 954,276
71,110
63,574
—
1,088,960
Corporate and other expenses

(892,506 )
Operating income

$ 196,454

~~(1) Effective June 30, 2017, the Company began reporting the results of its SAS business~~March 31, 2018. Additional information regarding these divestitures is included in ~~Research whereas previously the SAS business was reported with Consulting. As a result, revenues of $5.4 million~~Note 2 — Acquisitions and $20.2 million pertaining to the three and nine months ended September 30, 2016, respectively, were reclassified from Consulting to Research to be comparable with the current year presentation. Gross contribution of $3.4 million and $13.2 million for the three and nine months ended September 30, 2016, respectively, was also reclassified from Consulting to Research.Divestitures.

(2)

In 2017, the Company began reporting the results of its Strategic Advisory Services ("SAS") business in Research whereas previously the SAS business was reported with Consulting. As a result, revenues of $6.7 million pertaining to the three months ended March 31, 2017 were reclassified from Consulting to Research to be comparable with the current year presentation. Gross contribution of $4.4 million for the three months ended March 31, 2017 was also reclassified from Consulting to Research.

The following table provides a reconciliation of total segment gross contribution to net (loss) income for the periods indicated (in thousands):


	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
	2017			2016		2017			2016		2018			2017
Total segment gross contribution	$	499,636		$	355,390	$	1,387,289		$	1,088,960	$	614,814		$	388,617
Costs and expenses:
Cost of services and product development - unallocated (1)	3,758			4,453		12,124			14,222		8,458			1,057
Selling, general and administrative	421,163			269,902		1,133,633			799,322		487,745			304,244
Depreciation and amortization	68,564			15,752		168,651			46,004		68,056			16,530
Acquisition and integration charges	30,500			16,557		142,104			32,958		59,266			13,272
Operating (loss) income	(24,349		)	48,726		(69,223		)	196,454		(8,711		)	53,514
Interest expense and other, net	37,591			3,978		86,971			14,208		34,160			5,017
(Benefit) provision for income taxes	(13,760		)	14,264		(52,166		)	55,149		(23,284		)	12,064
Net (loss) income	$	(48,180	)	$	30,484	$	(104,028	)	$	127,097	$	(19,587	)	$	36,433


(1)	The unallocated amounts consist of certain bonus and related fringe costs recorded in consolidated Cost of services and product development expense that are not allocated to segment expense. The Company's policy is to only allocate bonus and related fringe charges to segments for up to 100% of the segment employee's target bonus. Amounts above 100% are absorbed by corporate.

Note 6 — Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired. Evaluations of the recoverability of goodwill are performed in accordance with FASB ASC Topic 350, which requires an annual assessment of potential goodwill impairment at the reporting unit level and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. The annual assessment of the recoverability of recorded goodwill can be based on either a qualitative or quantitative assessment or a combination of the two approaches. Both methods utilize estimates which, in turn, require judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the resulting estimates are subject to uncertainty. If our annual goodwill impairment evaluation determines that the fair value of a reporting unit is less than its related carrying amount, we may recognize an impairment charge. In connection with our most recent annual impairment test of goodwill during the quarter ended September 30, 2017, which indicated no impairment of recorded goodwill, the Company utilized the qualitative approach in assessing the fair values of its reporting units relative to their respective carrying values.

The following table presents changes to the carrying amount of goodwill by ~~reportable~~ segment during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 (in thousands):

Research Consulting Events
Talent Assessment & Other

Total
Balance at December 31, 2016 (1) $ 595,450
$ 96,480
$ 46,523
$ —
$ 738,453
Additions due to acquisitions (2) 1,717,750
—
123,423
535,693
2,376,866
Foreign currency translation impact 23,183
1,375
1,462
3,707
29,727
Balance at September 30, 2017 $ 2,336,383
$ 97,855
$ 171,408
$ 539,400
$ 3,145,046



	Research			Events			Consulting		Talent Assessment & Other			Total
Balance at December 31, 2017 (1), (2)	$	2,619,677		$	187,920		$	97,798	$	81,899		$	2,987,294
Reclassified as held-for-sale (3)	—			—			—		(20,547		)	(20,547		)
Foreign currency translation impact and other (4)	(17,958		)	(170		)	528		7,495			(10,105		)
Balance at March 31, 2018	$	2,601,719		$	187,750		$	98,326	$	68,847		$	2,956,642


(1)	The Company does not have any accumulated goodwill impairment losses.


(2)	~~The goodwill additions are due~~Excludes certain amounts related to held-for-sale operations.


(3)	Represents amounts reclassified as held-for-sale assets related to the ~~acquisitions~~CEB Talent Assessment and WS&A businesses. See Note 2 — Acquisitions and Divestitures for additional information.


(4)	Includes the foreign currency translation impact and certain measurement period adjustments related to the acquisition of CEB ~~and L2 during~~in April ~~2017 and March 2017, respectively (see Note 2 for additional information regarding our recent acquisitions).~~2017.

Finite-Lived Intangible Assets

The following tables present reconciliations of the carrying amounts of the Company's finite-lived intangible assets as of the dates indicated (in thousands):


September 30, 2017	Customer Relationships			Software			Content			Other			Total
Gross cost at December 31, 2016	$	63,369		$	16,025		$	3,728		$	33,645		$	116,767
Additions due to acquisitions (1)	1,251,000			181,000			143,500			14,490			1,589,990
March 31, 2018																Customer Relationships			Software			Content			Other			Total
Gross cost at December 31, 2017 (1)																$	1,200,316		$	123,424		$	104,313		$	54,929		$	1,482,982
Write-off of fully amortized intangible assets	—			—			(4,227		)	—			(4,227		)	—			—			(228		)	—			(228		)
Reclassified as held-for-sale (2)																(7,170		)	(321		)	(241		)	(39		)	(7,771		)
Foreign currency translation impact	12,073			1,194			6,080			496			19,843			15,218			491			251			(171		)	15,789
Gross cost	1,326,442			198,219			149,081			48,631			1,722,373			1,208,364			123,594			104,095			54,719			1,490,772
Accumulated amortization ~~(2)~~(3)	(75,173		)	(24,419		)	(36,884		)	(21,432		)	(157,908		)	(119,075		)	(32,410		)	(63,778		)	(27,738		)	(243,001		)
Balance at September 30, 2017	$	1,251,269		$	173,800		$	112,197		$	27,199		$	1,564,465
Balance at March 31, 2018 (1)																$	1,089,289		$	91,184		$	40,317		$	26,981		$	1,247,771


December 31, 2016	Customer Relationships			Software			Content			Other			Total
December 31, 2017																Customer Relationships			Software			Content			Other			Total
Gross cost(1)	$	63,369		$	16,025		$	3,728		$	33,645		$	116,767		$	1,200,316		$	123,424		$	104,313		$	54,929		$	1,482,982
Accumulated amortization ~~(2)~~(3)	(16,744		)	(8,904		)	(2,033		)	(12,285		)	(39,966		)	(92,983		)	(26,344		)	(47,475		)	(24,158		)	(190,960		)
Balance at December 31, 2016	$	46,625		$	7,121		$	1,695		$	21,360		$	76,801
Balance at December 31, 2017 (1)																$	1,107,333		$	97,080		$	56,838		$	30,771		$	1,292,022

(1) ~~The additions were primarily due~~Excludes amounts related to ~~the acquisitions of CEB and L2 during April 2017 and March 2017, respectively (see Note 2 for additional information regarding our recent acquisitions).~~held-for-sale operations.


(2)	Represents amounts reclassified (net) as held-for-sale assets related to the WS&A business. See Note 2 — Acquisitions and Divestitures for additional information.

~~(2)~~(3) Finite-lived intangible assets are amortized using the straight-line method over the following periods: Customer relationships—4 to 13 years; Software—3 to 7 years; Content—1.5 to 5 years; and ~~Other (consisting of trade names and non-competes) —2~~Other—2 to 5 years.

Amortization expense related to finite-lived intangible assets was ~~$51.2~~$51.6 million and ~~$6.2~~$6.3 million during the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $123.0 million and $18.6 million during the nine months ended September 30, 2017 and 2016,~~ respectively. The estimated future amortization expense by year for finite-lived intangible assets ~~will be~~is as follows (in thousands):


2017 (remaining three months)	$	59,743
2018	222,102
2018 (remaining nine months)			$	138,953
2019	165,855		135,868
2020	158,981		129,461
2021	138,639		108,979
2022			99,363
Thereafter	819,145		635,147
	$	1,564,465	$	1,247,771

Note 7 — Debt

2016 Credit Agreement

The Company ~~entered into~~has a ~~term loan and revolving~~ credit facility on June 17, 2016 (the "2016 Credit Agreement"). As discussed below, the 2016 Credit Agreement was amended three times during 2017 in conjunction with the acquisition of CEB. As of September 30, 2017, the 2016 Credit Agreementthat provides for a $1.5 billion Term loan A facility, a $500.0 million Term loan B facility, and a $1.2 billion revolving credit ~~facility.~~facility (the "2016 Credit Agreement"). The 2016 Credit Agreement contains certain customary restrictive loan covenants, including, among others, financial covenants that apply a maximum leverage ratio and a minimum interest expense coverage ratio, and covenants limiting Gartner’s ability to incur indebtedness, grant liens, make acquisitions, merge, dispose of assets, pay dividends, repurchase stock, make investments and enter into certain transactions with affiliates. The Company was in full compliance with the covenants as of ~~September 30, 2017.~~

The Company borrowed a total of $2.78 billion for the CEB acquisition. The Company borrowed $1.675 billion under the 2016 Credit Agreement, which consisted of $900.0 million under an increased Term loan A facility, $500.0 million under a new Term loan B facility, and $275.0 million on its existing revolving credit facility. The $1.675 billion drawn under the 2016 Credit Agreement, along with the funds raised through the issuance of $800.0 million Senior Notes and $300.0 million 364-day Bridge Credit Facility discussed below, were used to fund the CEB acquisition and related costs. As discussed below, the funds borrowed under the 364-day Bridge Credit Facility were completely repaid by September 30, 2017.

On January 20, 2017, the Company entered into a First Amendment to the 2016 Credit Agreement, which was entered into to permit the acquisition of CEB and the incurrence of additional debt to finance, in part, the acquisition and repay certain debt of CEB, and to modify certain covenants. On March 20, 2017, the Company entered into a Second Amendment to the 2016 Credit Agreement. The Second Amendment was also entered into in connection with the acquisition of CEB and was executed primarily to extend the maturity date of the Term loan A facility and revolving credit facility through March 20, 2022 and to revise the interest rate and amortization schedule. On April 5, 2017, in conjunction with the closing of the CEB acquisition, the Company entered into a Third Amendment to the 2016 Credit Agreement with its lenders which increased the aggregate principal amount of the existing Term loan A facility by $900.0 million and added a new incremental Term loan B facility in an aggregate principal amount of $500.0 million.31, 2018.

The Term loan A facility ~~will be~~is being repaid in 16 consecutive quarterly installments that commenced on June 30, 2017, plus a final payment to be made on March 20, 2022. The additional amount drawn under the Term loan A facility has the same maturity date and is subject to the same interest, repayment terms, amortization schedules, representations and warranties, affirmative and negative covenants and events of default as the amounts outstanding under such facility prior to entry by the Company into the Incremental Amendment. The revolving credit facility may be borrowed, repaid, and re-borrowed through March 20, 2022, at which time all amounts must be repaid. Amounts borrowed under the Term loan A facility and the revolving credit facility bear interest at a rate equal to, at the Company's option, either:

(i) the greatest of: (x) the Administrative Agent’s prime rate; (y) the average rate on Federal Reserve Board of New York rate plus 1/2 of 1%; and (z) the eurodollar rate (adjusted for statutory reserves) plus 1%, in each case plus a margin equal to between 0.125% and 1.50% depending on Gartner’s consolidated leverage ratio as of the end of the four consecutive fiscal quarters most recently ended; or

(ii) the eurodollar rate (adjusted for statutory reserves) plus a margin equal to between 1.125% and 2.50%, depending on Gartner’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended.

The Term loan B facility contains representations and warranties, affirmative and negative covenants and events of default that are the same as the Term loan A facility and revolving credit facility, except that a breach of financial maintenance covenants will not result in an event of default under the Term loan B facility unless the lenders under the revolving credit facility and Term loan A facility have accelerated the revolving loans and Term loan A loans and terminated their commitments thereunder. Additionally, the Term loan B facility includes mandatory prepayment requirements related to asset sales (subject to reinvestment), debt incurrence (other than permitted debt) and excess cash flow, subject to certain limitations described therein. The Term loan B facility will mature on April 5, 2024 and amounts outstanding thereunder will bear interest at a rate per annum equal to, at the option of Gartner, (i) adjusted LIBOR plus 2.00% or (ii) an alternate base rate plus 1.00%.

~~364-day Bridge Credit Facility~~

On The Term loan B facility is being repaid in 28 consecutive quarterly installments that commenced on June 30, 2017, plus a final payment to be made on April 5, 2017, in conjunction with the acquisition of CEB, the Company entered into a senior unsecured 364-day Bridge Credit Facility in an aggregate principal amount of $300.0 million, which was immediately drawn down to fund a portion of the purchase price associated with the CEB acquisition. The Company repaid $100.0 million of the 364-day Bridge Credit Facility during the second quarter of 2017 and the remaining $200.0 million was repaid during the third quarter of 2017.2024.

Senior Notes

~~On March 30, 2017, in conjunction with the acquisition of CEB, the~~The Company ~~issued~~has $800.0 million aggregate principal amount of 5.125% Senior Notes due 2025 (the “Senior Notes”). ~~The proceeds of the Senior Notes were also used to fund a portion of the purchase price associated with the CEB acquisition.~~

The Senior Notes were issued at an issue price of 100.00% and bear interest at a fixed rate of 5.125% per annum. ~~Starting on October 1, 2017, interest~~Interest on the Senior Notes ~~will be~~is payable on April 1 and October 1 of each year. The Senior Notes will mature on April 1, 2025.

The Company may redeem some or all of the Senior Notes at any time on or after April 1, 2020 for cash at the

redemption prices set forth in the Note Indenture, plus accrued and unpaid interest to, but not including, the redemption date. Prior to April 1, 2020,

the Company may redeem up to 40% of the aggregate principal amount of the Senior Notes with the proceeds of certain equity offerings at a redemption price of 105.125% plus accrued and unpaid interest to, but not including, the redemption date. In addition, the Company may redeem some or all of the Senior Notes prior to April 1, 2020, at a redemption price of 100% of the principal amount of the Senior Notes plus accrued and unpaid interest to, but not including, the redemption date, plus a “make-whole” premium. If the Company experiences specific kinds of change of control, it will be required to offer to purchase the Senior Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest.

The Senior Notes are the Company’s general unsecured senior obligations, and are effectively subordinated to all of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s non-guarantor subsidiaries, equal in right of payment to all of the Company’s and Company’s guarantor subsidiaries’ existing and future senior indebtedness and senior in right of payment to all of the Company’s future subordinated indebtedness, if any.

Outstanding Borrowings ~~- September 30, 2017~~

The following table summarizes the Company’s total outstanding borrowings as of the dates indicated (in thousands):


	Balance			Balance
	September 30,			December 31,			March 31,			December 31,
Description:	2017			2016			2018			2017
2016 Credit Agreement - Term loan A facility (1)	$	1,447,875		$	585,000		$	1,410,750		$	1,429,312
2016 Credit Agreement - Term loan B facility (1)	497,500			—			495,000			496,250
2016 Credit Agreement - Revolving credit facility (1), (2)	640,000			115,000			310,000			595,000
Senior notes (3)	800,000			—
Senior Notes (3)							800,000			800,000
Other (4)	2,500			2,500			2,385			2,500
Principal amount outstanding (5)	$	3,387,875		$	702,500		$	3,018,135		$	3,323,062
Less: deferred financing fees (6)	(46,045		)	(8,109		)	(42,350		)	(44,217		)
Net balance sheet carrying amount	$	3,341,830		$	694,391
Net balance sheet carrying amount (7)							$	2,975,785		$	3,278,845

(1)

The contractual annualized interest rate as of ~~September 30, 2017~~March 31, 2018 on the Term loan A and B facilities was ~~3.23%~~3.88%, which consisted of a floating eurodollar base rate of ~~1.23%~~1.88% plus a margin of 2.00%. The contractual annualized interest rate on the revolving credit facility was ~~3.73%~~4.38%, which consisted of a floating eurodollar base rate of ~~1.23%~~1.88% plus a margin of 2.50%. However, the Company has interest rate swap contracts which effectively convert the floating eurodollar base rates on a portion of the amounts outstanding to a fixed base rate.


(2)	The Company had ~~$534.0~~$866.0 million of available borrowing capacity on the revolver (not including the expansion feature) as of ~~September 30, 2017.~~March 31, 2018.


(3)	Consists of $800.0 million principal amount of Senior Notes ~~outstanding, which the Company issued on March 30, 2017 to finance in part the CEB acquisition.~~outstanding. The Senior Notes pay a fixed rate of 5.125% and ~~have an eight year maturity.~~mature on April 1, 2025.


(4)	Consists of a $2.5 million State of Connecticut economic development loan with a 3.00% fixed rate of interest. The loan was originated in 2012 and has a 10 year maturity. Principal payments are deferred for the first five years and the loan may be repaid at any ~~point~~time by the Company without penalty.


(5)	The average annual effective ~~rates~~rate on the Company's total debt outstanding for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, including the effect of its interest rate swaps discussed below, ~~were 4.01% and 3.73%, respectively.~~was 4.14%.


(6)	The deferred financing fees are being amortized to Interest expense, net over the term of the ~~respective~~related debt obligation. ~~During the nine months ended September~~


(7)	On April 30, ~~2017,~~2018, the Company ~~paid $51.2~~repaid $400.0 million ~~in additional deferred financing fees~~of the Term loan B facility and ~~recorded a charge~~$50.0 million of ~~approximately $6.1 million for~~ the ~~write-off of deferred financing fees related to the prior financing arrangement.~~revolving credit facility.

Interest Rate Swaps

The Company has fixed-for-floating interest rate swap contracts which it designates as accounting hedges of the forecasted interest payments on the Company’s variable rate borrowings. The Company pays base fixed rates on the swaps and in return receives a floating eurodollar base rate on 30 day notional borrowings. The Company accounts for the interest rate swaps as cash flow hedges in accordance with FASB ASC Topic 815. Since the swaps hedge forecasted interest payments, changes in the fair value of the swaps are recorded in accumulated other comprehensive income (loss), a component of equity, as long as the swaps continue to be highly effective hedges of the designated interest rate risk. Any ineffective portion of change in the fair value of the hedges is recorded in earnings. All of the Company's swaps were highly effective hedges of the forecasted interest payments as of ~~September 30, 2017~~March 31, 2018. The interest rate swaps had a total ~~negative~~positive fair value ~~(liability)~~(asset) to the Company of ~~$8.0~~$17.3 million at ~~September 30, 2017~~March 31, 2018, which is deferred and recorded in Accumulated other comprehensive ~~loss,~~income, net of tax effect.

Note 8 — Equity

Share Repurchase ~~Program~~Authorization

The Company has a $1.2 billion board approved authorization to repurchase the Company's common stock, of which $1.1 billion remained available as of ~~September 30, 2017.~~March 31, 2018. The Company may repurchase its common stock from time to time in amounts and at 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 be made through open market purchases, private transactions or other transactions and will be funded from cash on hand and borrowings under the Company’s credit arrangement.

The Company’s recent share repurchase activity is presented in the following table:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2017		2016		2017		2016		2018		2017
Number of shares repurchased (1)	26,725		9,882		348,236		542,792
Number of shares repurchased (1), (2)									239,268		218,752
Cash paid for repurchased shares (in thousands) ~~(2)~~	$	3,275	$	922	$	37,188	$	52,889	$	28,394	$	21,978

(1) The average purchase price for repurchased shares was ~~$122.53~~$118.73 and ~~$106.79~~$100.47 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~respectively, and $93.33 and $84.17 for the three and nine months ended September 30, 2016.~~

respectively.

(2) ~~The cash paid for~~All of the ~~nine months ended September 30, 2016 includes $7.2 million for share repurchases that were executed~~shares repurchased in ~~late December 2015 and were settled in early January 2016.~~

~~Share Issuance Related~~both quarterly periods related to the ~~Acquisition of CEB~~

On April 5, 2017, the Company completed the CEB acquisition and issued 7.4 million of its common shares at a fair value of $109.65 per common share. Note 2 — Acquisitions provides additional information regarding the CEB acquisition. The fair valuesettlement of the Company's ~~common stock was determined based on an average of the high and low prices of the common stock as reported by the New York Stock Exchange on April 5, 2017, the date of the acquisition.~~

share-based compensation awards.

Accumulated Other Comprehensive ~~(Loss)~~ Income (Loss), net ("~~AOCL/I"~~AOCI/L")

The following tables disclose information about changes in ~~AOCL/I~~AOCI/L by component and the related amounts reclassified out of ~~AOCL/I~~AOCI/L to income during the periods indicated (net of tax, in thousands) (1):

For the three months ended ~~September 30, 2017~~March 31, 2018:

Interest Rate
Swaps

Defined
Benefit
Pension Plans

Foreign
Currency
Translation
Adjustments
Total
Balance - June 30, 2017 $ (6,107 ) $ (5,700 ) $ (37,082 ) $ (48,889 )
Changes during the period:

Change in AOCL/I before reclassifications to income 9
—
46,319
46,328
Reclassifications from AOCL/I to income during the period (2), (3) 1,293
52
—
1,345
Other comprehensive (loss) income for the period 1,302
52
46,319
47,673
Balance – September 30, 2017 $ (4,805 ) $ (5,648 ) $ 9,237
$ (1,216 )



	Interest Rate Swaps		Defined Benefit Pension Plans			Foreign Currency Translation Adjustments		Total
Balance – December 31, 2017	$	2,483	$	(5,861	)	$	4,886	$	1,508
Changes during the period:
Change in AOCI/L before reclassifications to income	9,365		—			20,547		29,912
Reclassifications from AOCI/L to income during the period (2), (3)	749		56			—		805
Other comprehensive income for the period	10,114		56			20,547		30,717
Balance – March 31, 2018	$	12,597	$	(5,805	)	$	25,433	$	32,225

For the three months ended ~~September 30, 2016:~~

Interest Rate
Swaps Defined
Benefit
Pension Plans Foreign
Currency
Translation
Adjustments Total
Balance – June 30, 2016 $ (12,158 ) $ (4,757 ) $ (31,088 ) $ (48,003 )
Changes during the period:
Change in AOCL/I before reclassifications to income 2,076
—
(3,032 ) (956 )
Reclassifications from AOCL/I to income during the period (2), (3) 1,138
37
—
1,175
Other comprehensive (loss) income for the period 3,214
37
(3,032 ) 219
Balance – September 30, 2016 $ (8,944 ) $ (4,720 ) $ (34,120 ) $ (47,784 )

~~For the nine months ended September 30,~~March 31, 2017:

Interest Rate
Swaps Defined
Benefit
Pension Plans Foreign
Currency
Translation
Adjustments Total
Balance – December 31, 2016 $ (1,409 ) $ (5,797 ) $ (42,477 ) $ (49,683 )
Changes during the period:
Change in AOCL/I before reclassifications to income (6,912 ) —
51,714
44,802
Reclassifications from AOCL/I to income during the period (2), (3) 3,516
149
—
3,665
Other comprehensive (loss) income for the period (3,396 ) 149
51,714
48,467
Balance – September 30, 2017 $ (4,805 ) $ (5,648 ) $ 9,237
$ (1,216 )

~~For the nine months ended September 30, 2016:~~

Interest Rate
Swaps Defined
Benefit
Pension Plans Foreign
Currency
Translation
Adjustments Total
Balance – December 31, 2015 $ (3,079 ) $ (4,832 ) $ (36,491 ) $ (44,402 )
Changes during the period:
Change in AOCL/I before reclassifications to income (9,376 ) —
2,371
(7,005 )
Reclassifications from AOCL/I to income during the period (2), (3) 3,511
112
—
3,623
Other comprehensive (loss) income for the period (5,865 ) 112
2,371
(3,382 )
Balance – September 30, 2016 $ (8,944 ) $ (4,720 ) $ (34,120 ) $ (47,784 )



	Interest Rate Swaps			Defined Benefit Pension Plans			Foreign Currency Translation Adjustments			Total
Balance – December 31, 2016	$	(1,409	)	$	(5,797	)	$	(42,477	)	$	(49,683	)
Changes during the period:
Change in AOCI/L before reclassifications to income	(3,393		)	—			4,371			978
Reclassifications from AOCI/L to income during the period (2), (3)	825			48			—			873
Other comprehensive income (loss) for the period	(2,568		)	48			4,371			1,851
Balance – March 31, 2017	$	(3,977	)	$	(5,749	)	$	(38,106	)	$	(47,832	)


(1)	Amounts in parentheses represent debits (deferred losses).


(2)	The reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net of tax effect. See Note 10 – Derivatives and Hedging for information regarding the hedges.


(3)	The reclassifications related to defined benefit pension plans were recorded in Selling, general and administrative expense, net of tax effect. See Note 12 – Employee Benefits for information regarding the Company’s defined benefit pension plans.

Note 9 — Income Taxes

The provision for income taxes for the three months ended ~~September 30, 2017~~March 31, 2018 was a benefit of ~~$(13.8)~~$(23.3) million on a pretax loss of ~~$(61.9)~~$(42.9) million compared to an expense of ~~$14.3~~$12.1 million on pretax income of ~~$44.7~~$48.5 million in the three months ended ~~September 30, 2016.~~March 31, 2017. The effective income tax rate was ~~22.2%~~54.3% for the three months ended ~~September 30, 2017~~March 31, 2018 and ~~31.9%~~24.9% for the same period in ~~2016.~~ 2017.

The quarter-over-quarter change in the effective income tax rate was primarily attributable to ~~increases in non-deductible acquisition and integration charges.~~

the relative impact of stock-based compensation benefits quarter-over-quarter. The ~~provision for income taxes for~~tax benefits from stock-based compensation during the ~~nine months ended September 30, 2017 was a benefit~~first quarter of ~~$(52.2) million on a pretax loss of $(156.2) million compared to an expense of $55.1 million~~2018 increased the tax rate on pretax ~~income of $182.2 million~~losses while such benefits in the ~~nine months ended September 30, 2016. The effective income~~first quarter of 2017 decreased the tax rate ~~was 33.4% for~~on pretax income. In addition to the ~~nine months ended September 30, 2017 and 30.3% for~~impact of stock-based compensation, the ~~same period in 2016. The~~ change in the effective income tax rate quarter-over-quarter was ~~primarily~~driven by a reduction in the U.S. tax rate effective for 2018 as well as tax benefits recognized in 2018 for unrealized capital losses on the divestiture of the CEB Talent Assessment business.

The Tax Cuts and Jobs Act (the "Act”) was enacted on December 22, 2017. Among other things, the Act reduces the U.S. federal corporation tax rate from 35% to 21%, requires companies to pay a one-time transition tax on accumulated deferred foreign income (“ADFI”) of foreign subsidiaries that were previously tax deferred and creates a new tax on global intangible low-taxed income (“GILTI”) attributable to foreign subsidiaries. As of March 31, 2018, we have not completed our accounting for the tax effects of enactment of the Act because all of the necessary information is not currently available, prepared or analyzed. As such, the amounts we have recorded are provisional estimates and as permitted by the SEC per Staff Accounting Bulletin No. 118. We expect to complete the accounting for the impact of tax reform by the fourth quarter of 2018 as we complete our analysis and receive additional guidance from the Internal Revenue Service pertaining to the Act.

Companies have the option to account for the GILTI tax as a ~~favorable estimated mix~~period cost in the period incurred, or to recognize deferred taxes for temporary differences including outside basis differences expected to reverse as a result of the GILTI provisions. The Company has not yet determined its policy election with respect to GILTI. We have, however, included an estimate of the current year GILTI impact in the 2018 tax provision calculation.

Upon enactment of the Act, we remeasured U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21% and recorded a provisional amount which reduced our 2017 income tax expense by $123.2 million. We are still analyzing certain aspects of the Act and refining our deferred tax calculations, which could affect the measurement of these balances or give rise to new deferred tax amounts. We did not adjust the initial provisional amount in the three months ended March 31, 2018.

The tax on ADFI is based on post-1986 earnings and profits ("E&P") of our foreign subsidiaries that were previously deferred from U.S. income taxes. We recorded a provisional amount for this one-time transition tax liability, resulting in an increase in ~~stock-based compensation benefits.~~income tax expense of $63.6 million in 2017. We have not yet completed our calculation of the tax on ADFI given the need to obtain, prepare and analyze various information relevant to such calculation including, but not limited to, our post-1986 E&P, foreign taxes and amounts held in cash or other specified assets on various measurement dates. We did not adjust the initial provisional amount in the three months ended March 31, 2018.

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had gross unrecognized tax benefits of ~~$72.2~~$63.2 million and ~~$37.1~~$60.3 million, respectively. ~~The increase is largely attributable to unrecognized tax benefits of CEB included in the purchase price allocation.~~ It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $8.0 million within the next 12 months, due to the anticipated closure of audits and the expiration of certain statutes of limitation.

In July 2015, the United States Tax Court (the “Court”) issued an opinion relating to the treatment of stock-based compensation expense in an inter-company cost-sharing arrangement. In its opinion, the Court held that affiliated companies may exclude stock-based compensation expense from their cost-sharing arrangement. The Internal Revenue Service is appealing the decision. Because of uncertainty related to the final resolution of this litigation and the recognition of potential benefits to the Company, the Company has not recorded any financial statement benefit associated with this decision. The Company will monitor developments related to this case and the potential impact of those developments on the Company’s consolidated financial statements.

Note 10 — Derivatives and Hedging

The Company enters into a limited number of derivative contracts to mitigate the cash flow risk associated with changes in interest rates on variable rate debt and changes in foreign exchange rates on forecasted foreign currency transactions. The Company accounts for its outstanding derivative contracts in accordance with FASB ASC Topic 815, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet ~~and recognized~~ at fair value. The following tables provide information regarding the Company’s outstanding derivatives contracts as of the dates indicated (in thousands, except for number of outstanding contracts):


September 30, 2017
March 31, 2018
Derivative Contract Type	Number of Outstanding Contracts	Notional Amounts		Fair Value Asset (Liability), Net (3)			Balance Sheet Line Item	Unrealized Loss Recorded in OCI			Number of Outstanding Contracts	Notional Amounts		Fair Value Asset (Liability), Net (3)			Balance Sheet Line Item	Unrealized Gain Recorded in AOCI/L
Interest rate swaps (1)	5	$	1,400,000	$	(8,009	)	Other liabilities	$	(4,805	)	5	$	1,400,000	$	17,314		Other assets	$	12,597
Foreign currency forwards (2)	29	102,262		(88		)	Accrued liabilities	—			46	313,425		(495		)	Accrued liabilities	—
Total	34	$	1,502,262	$	(8,097	)		$	(4,805	)	51	$	1,713,425	$	16,819			$	12,597


December 31, 2016
December 31, 2017
Derivative Contract Type	Number of Outstanding Contracts	Notional Amounts		Fair Value Asset (Liability), Net (3)			Balance Sheet Line Item	Unrealized Loss Recorded in OCI			Number of Outstanding Contracts	Notional Amounts		Fair Value Asset (Liability), Net (3)		Balance Sheet Line Item	Unrealized Gain Recorded in AOCI/L
Interest rate swaps (1)	3	$	700,000	$	(2,349	)	Other liabilities	$	(1,409	)	5	$	1,400,000	$	3,412	Other assets	$	2,483
Foreign currency forwards (2)	84	86,946		(320		)	Accrued liabilities	—			137	686,764		448		Other current assets	—
Total	87	$	786,946	$	(2,669	)		$	(1,409	)	142	$	2,086,764	$	3,860		$	2,483


(1)	The swaps have been designated and are accounted for as cash flow hedges of the forecasted interest payments on borrowings. As a result, changes in the fair value of the swaps are deferred and ~~are~~ recorded in ~~AOCL/I,~~AOCI/L, net of tax effect (see Note 7 — Debt for additional information).

(2)

The Company has foreign exchange transaction risk since it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other ~~expense,~~income, net since the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding contracts ~~outstanding~~ at ~~September 30, 2017~~March 31, 2018 matured by the end of ~~October 2017.~~April 2018.


(3)	See Note 11 — Fair Value Disclosures for the determination of the fair value of these instruments.

At ~~September 30, 2017,~~March 31, 2018, all of the Company’s derivative counterparties were investment grade financial institutions. The Company did not have any collateral arrangements with its derivative counterparties, and none of the derivative contracts contained credit-risk related contingent features. The following table provides information regarding amounts recognized in the Condensed Consolidated Statements of Operations for derivative contracts for the periods indicated (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
Amount recorded in: 2017 2016 2017 2016
Interest expense, net (1) $ 2,154
$ 1,895
$ 5,860
$ 5,851
Other (income), net (2) (1,764 ) (814 ) (960 ) (239 )
Total expense, net $ 390
$ 1,081
$ 4,900
$ 5,612



	Three Months Ended
	March 31,
Amount recorded in:	2018			2017
Interest expense (1)	$	945		$	1,375
Other (gain) loss, net (2)	(7,232		)	219
Total (income) expense, net	$	(6,287	)	$	1,594


(1)	Consists of interest expense from interest rate swap contracts.


(2)	Consists of net realized and unrealized gains and losses on foreign currency forward contracts.

Note 11 — Fair Value Disclosures

The Company’s financial instruments include cash equivalents, fees receivable from customers, accounts payable, and accruals which are normally short-term in nature. The Company believes the carrying amounts of these financial instruments reasonably approximate their fair value due to their short-term nature. The Company’s financial instruments also include its outstanding ~~borrowings.~~variable-rate borrowings under the 2016 Credit Agreement. The Company believes the carrying amount of its variable-rate ~~debt~~borrowings reasonably approximates ~~its~~their fair value because the rate of interest on those borrowings reflects current market rates of interest for similar instruments with comparable maturities.

The Company enters into a limited number of derivatives transactions but does not enter into repurchase agreements, securities lending transactions, or master netting arrangements. Receivables or payables that result from derivatives transactions are recorded gross in the ~~Condensed Consolidated Balance Sheets.~~Company's consolidated balance sheets.

FASB ASC Topic 820 provides a framework for the measurement of fair value and a valuation hierarchy based upon the transparency of inputs used in the valuation of assets and liabilities. Classification within the hierarchy is based upon the lowest level of input that is significant to the resulting fair value measurement. The valuation hierarchy contains three levels. Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs, such as internally-created valuation models. The Company does not currently utilize Level 3 valuation inputs to remeasure any of its assets or liabilities. However, ~~level~~Level 3 inputs may be used by the Company in its required annual impairment review of recorded goodwill. Information regarding the periodic assessment of the Company’s goodwill is included in Note 6 — Goodwill and Intangible Assets. The Company does not typically transfer assets or liabilities between different levels of the fair value hierarchy.

The following table presents the fair value of certain financial assets and liabilities (in thousands):


	Fair Value		Fair Value
Description:	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Assets:
Values based on Level 1 inputs:
Deferred compensation plan assets (1)	$	12,478	$	10,247	$	16,746	$	29,108
Total Level 1 inputs	12,478		10,247		16,746		29,108
Values based on Level 2 inputs:
Deferred compensation plan assets (1)	31,050		27,847		59,477		59,017
Foreign currency forward contracts (2)	64		165		156		2,053
Interest rate swap contracts (3)					17,314		3,412
Total Level 2 inputs	31,114		28,012		76,947		64,482
Total Assets	$	43,592	$	38,259	$	93,693	$	93,590
Liabilities:
Values based on Level 2 inputs:
Deferred compensation plan liabilities (1)	$	48,793	$	43,075	$	73,172	$	89,900
Foreign currency forward contracts (2)	152		485		651		1,605
Interest rate swap contracts (3)	8,009		2,349
Senior Notes due 2025 (4)	844,448		—		801,640		837,560
Total Level 2 inputs	901,402		45,909		875,463		929,065
Total Liabilities	$	901,402	$	45,909	$	875,463	$	929,065

(1)

The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees. The assets consist of investments in money market and mutual funds, and company-owned life insurance contracts, all of which are valued based on Level 1 or Level 2 valuation inputs. The related deferred compensation plan liabilities are recorded at fair value, or the estimated amount needed to settle the liability, which the Company considers to be a Level 2 input.


(2)	The Company enters into foreign currency forward exchange contracts to hedge the effects of adverse fluctuations in foreign currency exchange ~~rates.~~rates (see Note 10 - Derivatives and Hedging). Valuation of the foreign currency forward contracts is based on observable foreign currency exchange rates in active markets, which the Company considers a Level 2 input.

(3)

The Company has interest rate swap contracts which hedge the risk of variability from interest payments on its borrowings (see Note 7 — Debt). The fair value of the swaps is based on mark-to-market valuations prepared by a third-party broker. The valuations are based on observable interest rates from recently executed market transactions and other observable market data, which the Company considers Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker through the use of an electronic quotation service.


(4)	As discussed in Note 7 — Debt, the Company ~~issued~~has $800.0 million of principal amount fixed-rate Senior Notes due ~~2025 on March 30, 2017.~~in 2025. The estimated fair value of the notes was derived from quoted market prices provided by an independent dealer which the Company considers to be a Level 2 input.

Note 12 — Employee Benefits

Defined-Benefit Pension Plans

The Company has defined-benefit pension plans in several of its international locations. Benefits paid under these plans are based on years of service and level of employee compensation. The Company’s defined-benefit pension plans are accounted for in accordance with FASB ASC Topics 715 and 960. Net periodic pension expense was ~~$0.9 million and $2.4~~$0.7 million for both the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2018 and ~~$0.9 million and $2.4 million for the three and nine months ended September 30, 2016, respectively.~~2017.

Note 13 — Commitments and Contingencies

Contingencies

The Company is involved in legal proceedings and litigation arising in the ordinary course of business. We believe that the potential liability, if any, in excess of amounts already accrued from all proceedings, claims and litigation will not have a material effect on our financial position, cash flows, or results of operations when resolved in a future period.

The Company has various agreements that may obligate us to indemnify the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arising in the normal course of business under which we customarily agree to hold the other party harmless against losses arising from a breach of representations related to such matters as title to assets sold and licensed or certain intellectual property rights. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of the Company’s obligations and the unique facts of each particular agreement. Historically, payments made by us under these agreements have not been material. As of ~~September 30, 2017,~~March 31, 2018, the Company did not have any material payment obligations under any such indemnification agreements.

Note 14 — Subsequent ~~Event~~Events

~~On October 4, 2017,~~In April 2018, the Company ~~announced that it initiated a process to explore and evaluate strategic alternatives for~~sold its CEB Talent Assessment ~~business, which is a substantial part of its~~and CEB Workforce Survey and Analytics businesses. These two businesses were acquired in April 2017 with the CEB acquisition and were reported by the Company in the Talent Assessment & Other segment. ~~The Talent Assessment & Other segment~~Additional information regarding these divestitures is ~~entirely composed of business operations that were acquired as part of the CEB acquisition.~~included in Note 2 — Acquisitions and Divestitures.

~~As part of this process,~~In addition, on April 30, 2018, the Company ~~intends to consider a range~~repaid $450.0 million of ~~strategic options, which may include, among other things, a sale of~~its outstanding debt. Note 7 — Debt provides additional information regarding the business. There is no timetable for completion of the review process and the Company does not intend to announce any updates until the conclusion of the strategic review. There can be no assurance that this review will result in a transaction being announced or agreed upon.Company's debt obligations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of the following Management’s Discussion and Analysis (“MD&A”) is to ~~help~~ facilitate ~~the~~an understanding of significant factors influencing the quarterly operating results, financial condition and cash flows of Gartner, Inc. Additionally, the MD&A ~~also~~ conveys our expectations of the potential impact of known trends, events or uncertainties that may impact future results. You should read this discussion in conjunction with our condensed consolidated financial statements and related notes included in this report and our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the ~~"2016~~"2017 Form 10-K"). Historical results and percentage relationships are not necessarily indicative of operating results for future periods. References to “Gartner,” the "Company,” “we,” ~~“our,”~~“our” and “us” in this MD&A are to Gartner, Inc. and its consolidated subsidiaries.

~~Acquisition of CEB Inc.~~

OnIn April ~~5, 2017,~~2018 the Company ~~completed~~sold its ~~previously announced acquisition of~~CEB Talent Assessment and CEB Workforce Survey and Analytics businesses. These two businesses were acquired in April 2017 with the CEB Inc. ~~("CEB").~~acquisition and were reported by the Company in the Talent Assessment & Other segment. The results of these businesses are included in the consolidated results of operations and segment results presented below for the three months ended March 31, 2018. Additional information regarding these divestitures is included in Note 2 — Acquisitions and Divestitures in the Notes to the Condensed Consolidated Financial Statements provides additional information regarding the CEB acquisition. Our operating results discussed below for the three and nine months ended September 30, 2017 include the results of CEB beginning on the acquisition date. References to "traditional Gartner" operating results and business measurements below refer to Gartner excluding CEB. References to "CEB" below refer to the operating results and business measurements of CEB subsequent to the acquisition.Statements.

~~Talent Assessment Business - Announcement Regarding Strategic Alternatives~~

On October 4, 2017, the Company announced that it initiated a process to explore and evaluate strategic alternatives for its Talent Assessment business, which is a substantial part of its Talent Assessment & Other segment. The Talent Assessment & Other segment is entirely composed of business operations that were acquired as part of the CEB acquisition. As part of this process, the Company intends to consider a range of strategic options, which may include, among other things, a sale of the business. There is no timetable for completion of the review process and the Company does not intend to announce any updates until the conclusion of the strategic review. There can be no assurance that this review will result in a transaction being announced or agreed upon.

~~Forward-Looking Statements~~FORWARD-LOOKING STATEMENTS

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

We operate in a very competitive and rapidly changing environment that involves numerous risks and uncertainties, some of which are beyond our control. Additionally, our quarterly and annual revenues, operating income, and cash flows fluctuate as a result of many factors, including: the timing of our Symposium/ITxpo series that normally occurs during the fourth quarter, as well as our other events; the amount of new business generated, including from acquisitions; the mix of domestic and international business; domestic and international economic conditions; changes in market demand for our products and services; changes in foreign currency rates; the timing of the development, introduction and marketing of new products and services; competition in the industry; the payment of performance compensation; and other factors. The potential fluctuations in our operating income could cause period-to-period comparisons of operating results not to be meaningful and could provide an unreliable indication of future operating results. A description of the risk factors associated with our business is included under “Risk Factors” contained in Item 1A. of our 2017 Annual Report on Form 10-K which is incorporated herein by reference.

Forward-looking statements are subject to risks, estimates and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in “Factors That May Affect Future Performance” and elsewhere in this Quarterly Report on Form 10-Q and in the ~~2016~~2017 Form 10-K. Readers should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur. Readers should carefully review ~~carefully~~ our risk factors described ~~herein and~~ in ~~our 2016~~the 2017 Form 10-K.

BUSINESS OVERVIEW

Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory ~~company. The Company helps~~company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow. We believe our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We’re trusted as an objective resource and critical partner by more than 15,000 organizations in more than 100 countries across all major functions, in every industry and enterprise size with the objective insights they need to make the right decisions. Gartner's comprehensive suite of services delivers strategic advice and proven best practices to help clients succeed in their mission-critical priorities.size. Gartner is headquartered in Stamford, Connecticut, U.S.A., and, ~~has~~as of March 31, 2018, we had more than 14,000 associates ~~serving clients in over 11,000 enterprises in approximately 100 countries.~~(excluding the operations that were held-for-sale as of that date).

Gartner delivers its products and services globally through four business segments: Research, Events, Consulting and Talent Assessment & Other:

Research provides trusted, objective ~~insight~~insights and advice on the mission-critical priorities of ~~functional~~ leaders across all functional areas of the ~~C-suite, as well as technology companies~~enterprise through research and ~~the institutional investment community, through~~other reports, briefings, proprietary tools, access to our analysts, peer networking services and membership programs that enable our clients to make better decisions. Gartner's traditional strengths in IT, marketing and supply chain research were enhanced in 2017 with Gartner's acquisition of CEB, Inc., which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, finance, sales and legal.

Consultingprovides 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~~ provides IT, supply chain, HR, marketing, and other business professionals the opportunity to attend conferences to learn, share and network. From our flagship CIO event Gartner Symposium/ITxpo, to industry-leading conferences focused on specific business roles and topics, to member-driven sessions, our events provide attendees with valuable insight and advice.

Talent Assessment & Other helps organizations assess, engage, manage and improve talent. This is accomplished through knowledge and skills assessments, training programs, workshops, and survey and questionnaire services. ~~These products and services use science and data to assist clients with achieving their particular business results and objectives.~~

BUSINESS MEASUREMENTS

We believe that the following business measurements are important performance indicators for our business segments:



BUSINESS SEGMENT		BUSINESS MEASUREMENTS
Research		Total contract value represents the value attributable to all of our subscription-related contracts. It is calculated as the annualized value of all contracts in effect at a specific point in time, without regard to the duration of the contract. Total contract value primarily includes Research deliverables for which revenue is recognized on a ratable basis, as well as other deliverables (primarily Events tickets) for which revenue is recognized when the deliverable is utilized. Our total contract value consists of Global Technology Sales contract value, which includes sales to users and providers of technology, and Global Business Sales contract value, which includes sales to all other functional leaders.

		Client retention rate represents a measure of client satisfaction and renewed business relationships at a specific point in time. Client retention is calculated on a percentage basis by dividing our current clients, who were also clients a year ago, by all clients from a year ago. Client retention is calculated at an enterprise level, which represents a single company or customer.

		Wallet retention rate represents a measure of the amount of contract value we have retained with clients over a twelve-month period. Wallet retention is calculated on a percentage basis by dividing the contract value of clients, who were clients one year ago, by the total contract value from a year ago, excluding the impact of foreign currency exchange. When wallet retention exceeds client retention, it is an indication of retention of higher-spending clients, or increased spending by retained clients, or both. Wallet retention is calculated at an enterprise level, which represents a single company or customer.

Events		Number of events represents the total number of hosted destination events completed during the period. Single day, local events are excluded.

		Number of attendees represents the total number of people who attend destination events. Single day, local events are excluded.

Consulting		Consulting backlog represents future revenue to be derived from in-process consulting and measurement engagements.

		Utilization rate represents a measure of productivity of our consultants. Utilization rates are calculated for billable headcount on a percentage basis by dividing total hours billed by total hours available to bill.

		Billing ~~Rate~~rate represents earned billable revenue divided by total billable hours.

		Average annualized revenue per billable headcount represents a measure of the revenue generating ability of an average billable consultant and is calculated periodically by multiplying the average billing rate per hour times the utilization percentage times the billable hours available for one year.

~~Events~~		~~Number of events~~ ~~represents the total number of hosted events completed during the period. Single day, local events are excluded.~~

		~~Number of attendees~~ ~~represents the total number of people who attend events. Single day, local events are excluded.~~

EXECUTIVE SUMMARY OF OPERATIONS AND FINANCIAL POSITION

We have executed a consistent growth strategy since 2005 to drive revenue and earnings growth. The fundamentals of our strategy include a focus on creating extraordinary research insight, delivering innovative and highly differentiated product offerings, building a strong sales capability, providing world class client service with a focus on client engagement and retention, and continuously improving our operational effectiveness. We continue to focus on maximizing shareholder value.

We had total revenues of ~~$828.1~~$963.6 million in the ~~third~~first quarter of 2018, an increase of 54% compared to the first quarter of 2017~~, an increase of~~ ~~44%~~ ~~compared to the~~ ~~third~~ ~~quarter of~~ ~~2016~~. Quarter-over-quarter revenues for Research, Events and ~~Events~~Consulting increased ~~40%~~49%, 31% and ~~34%~~5%, respectively, during the ~~third~~first quarter of ~~2017,~~2018, which included the results of the CEB acquisition. Consulting revenues declined 2% during the 2017 quarterly period. As a result of the CEB acquisition, we added a new reportable segment in second quarter 2017 calledCEB's operating results. Our Talent Assessment & Other ~~which~~segment contributed ~~$57.6~~$70.7 million of revenues during the ~~third~~first quarter of ~~2017.~~2018. For a more complete discussion of our results by segment, see Segment Results below. ~~Additionally, Note 2 — Acquisitions in the Notes to the Condensed Consolidated Financial Statements provides information regarding the CEB acquisition.~~

For the ~~third~~first quarter of ~~2017,~~2018, we had a net loss of ~~$(48.2)~~$19.6 million and a diluted loss per share of ~~$(0.53)~~.$0.22. Cash provided by operating activities was ~~$232.3 million and $282.3~~$2.7 million during the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively. We~~March 31, 2018 compared to $29.6 million of cash used in operating activities during the three months ended March 31, 2017. As of March 31, 2018, we had ~~$630.0~~$190.0 million of cash and cash equivalents at ~~September 30, 2017~~and ~~$534.0~~$866.0 million of available borrowing capacity on our revolving credit facility. For a more complete discussion of our cash flows and financial position, see Liquidity and Capital Resources below.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements requires the application of appropriate accounting policies and the use of estimates. Our significant accounting policies are described in Note 1 in the Notes to ~~the~~ Consolidated Financial Statements of Gartner, Inc. contained in the ~~2016~~2017 Form 10-K. ~~There were no changes in our accounting policies in the current period that had a material impact on our financial statements.~~ Management considers the policies discussed below to be critical to an understanding of our financial statements because their application requires complex and subjective management judgments and estimates. Specific risks for these critical accounting policies are also described below.

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

Our critical accounting policies are ~~as follows:~~described below.

Revenue recognition — On January 1, 2018, the Company adopted Financial Accounting Standards Board Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" ("ASU No. 2014-09"). ASU No. 2014-09 and related amendments required changes in revenue recognition policies as well as enhanced disclosures. Among other things, ASU No. 2014-09 requires a five-step evaluative process that consists of:


(1)	Identifying the contract with the customer;


(2)	Identifying the performance obligations in the contract;


(3)	Determining the transaction price for the contract;


(4)	Allocating the transaction price to the performance obligations in the contract; and


(5)	Recognizing revenue when (or as) performance obligations are satisfied.

The Company adopted ASU No. 2014-09 on January 1, 2018 using the modified retrospective method of adoption. Under this method of adoption, the cumulative effect of applying the new standard is recorded at the date of initial application, with no restatement of the comparative prior periods presented. The adoption of ASU No. 2014-09 did not have a material impact on the Company’s consolidated financial statements. However, the adoption of the new standard required reclassifications of certain amounts presented in the Company’s consolidated balance sheet. Prior to January 1, 2018, the Company recognized revenue in accordance with then-existing generally accepted accounting principles in the ~~requirements~~United States of ~~U.S. GAAP as well as~~America and SEC Staff Accounting Bulletin No. 104, "Revenue ~~Recognition~~Recognition" (“~~SAB 104”~~prior GAAP”). ~~Revenue is~~Under both ASU No. 2014-09 and prior GAAP, revenue can only be recognized ~~once~~when all of the required criteria ~~for~~are met. Note 1 — Business and Basis of Presentation in the Notes to Condensed Consolidated Financial Statements provides additional information regarding our adoption of ASU No. 2014-09 and its impact on the Company's consolidated financial statements and related disclosures.

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

Research revenues are mainly derived from subscription contracts for research products. The related revenues are deferred and recognized ratably over the applicable contract term. Fees derived from assisting organizations in selecting the right business software for their needs isare recognized when the leads are provided to vendors.

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

Consulting revenues are principally generated from fixed fee and time and material engagements. Revenues from fixed fee contracts are recognized on a proportional performance basis. Revenues from time and materials engagements are recognized as work is delivered and/or services are provided. Revenues related to contract optimization contracts are contingent in nature and are only recognized upon satisfaction of all conditions related to their payment.

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

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

The majority of research contracts are billable upon signing, absent special terms granted on a limited basis from time to time. ~~All research~~Research contracts are generally non-cancelable and non-refundable, except for government contracts that may have cancellation or fiscal funding clauses. It is our policy to record the amount of ~~the~~a subscription contract that is billable as a fee receivable at the time the contract is signed with a corresponding amount as deferred revenue ~~since~~because the contract represents a legally enforceable claim.

Uncollectible fees receivable — ~~We maintain~~At December 31, 2017, the Company maintained an allowance for losses ~~which is composed~~that was comprised of a bad debt allowance and a ~~sales~~revenue reserve. ~~Provisions~~In connection with the adoption of ASU No. 2014-09 on January 1, 2018, management concluded that the revenue reserve was a refund liability rather than a contra-receivable due to the nature of the account activity. As a result, the Company reclassified the revenue reserve of $6.2 million on January 1, 2018 from the allowance for losses to Accounts payable and accrued liabilities and will consistently present the revenue reserve in this manner in all future consolidated balance sheets. Note 1 — Business and Basis of Presentation in the Notes to Condensed Consolidated Financial Statements provides additional information regarding our adoption of ASU No. 2014-09 and its impact on the Company's allowance for losses. Increases and decreases in the allowance for losses are charged ~~against~~to earnings, either ~~as a reduction in~~to expense (i.e., the bad debt allowance) or revenues ~~or an increase to expense.~~ (i.e., the revenue reserve).

The determination of the bad debt allowance ~~for losses~~ is based on historical loss experience, an assessment of current economic conditions, the aging of outstanding receivables, the financial health of specific clients and probable losses. This evaluation is inherently judgmental and requires estimates. ~~These valuation reserves are~~The Company's bad debt allowance is periodically re-evaluated and adjusted as more information about the ultimate collectability of fees receivable becomes available. Circumstances that could cause our ~~valuation reserves~~bad debt allowance to increase include changes in our clients’ liquidity and credit quality, other factors negatively impacting our clients’ ability to pay their obligations as they come due and the effectiveness of our collection efforts.

The following table ~~provides~~presents our total fees receivable and the related allowance for losses (in thousands):


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Total fees receivable(1)	$	884,283		$	650,413		$	1,142,064		$	1,189,543
Allowance for losses(2)	(10,000		)	(7,400		)	(7,100		)	(12,700		)
Fees receivable, net	$	874,283		$	643,013		$	1,134,964		$	1,176,843


(1)	Total fees receivable at December 31, 2017 included $26.7 million of contract assets. As a result of the Company's adoption of ASU No. 2014-09 on January 1, 2018, contract assets are now included in Prepaid expenses and other current assets on the Company's Condensed Consolidated Balance Sheet at March 31, 2018.

(2) The allowance for losses at December 31, 2017 included $6.2 million that was attributable to the Company's revenue reserve. As a result of the Company's adoption of ASU No. 2014-09 on January 1, 2018, the revenue reserve balance is now included in Accounts payable and accrued liabilities on the Company's Condensed Consolidated Balance Sheet at March 31, 2018.

Goodwill and other intangible assets ~~—The~~— When we acquire a business, we determine the fair value of the assets acquired and liabilities assumed on the date of acquisition, which may include a significant amount of intangible assets such as customer

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

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

Determining an acquired intangible asset's useful life requires significant judgment and is based on evaluating a number of factors, including, but not limited to, the expected use of the asset, historical client retention rates, consumer awareness and trade name history, as well as any contractual provisions that could limit or extend an asset's useful life.

The Company evaluates recorded goodwill in accordance with ~~Financial Accounting Standards Board ("FASB")~~FASB Accounting Standards Codification ("ASC") Topic 350, which requires goodwill to be assessed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. In addition, an impairment evaluation of our amortizable intangible assets may also be performed if events or circumstances indicate potential impairment. Among the factors that could trigger an impairment review are our current operating results relative to our annual plan or historical performance; changes in our strategic plan or use of our assets; restructuring charges or other changes in our business segments; competitive pressures and changes in the general economy or in the markets in which we operate; and a significant decline in our stock price and our market capitalization relative to our net book value.

FASB ASC Topic 350 requires an annual assessment of the recoverability of recorded goodwill, which can be either quantitative or qualitative in nature, or a combination of the two approaches. Both methods utilize estimates which, in turn, require judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the resulting estimates are subject to uncertainty. If our goodwill impairment evaluation determines that the fair value of a reporting unit is less than its related carrying amount, we may recognize an impairment charge. Among the factors that we consider in a qualitative assessment are general economic conditions and the competitive environment; actual and projected reporting unit financial performance; forward-looking business measurements; and external market assessments. A quantitative analysis requires management to consider each of the factors relevant to a qualitative assessment, as well as the utilization of detailed financial projections, to include the rate of revenue growth, profitability and cash flows, as well as assumptions regarding discount rates, the Company's ~~weighted-average~~weighted average cost of capital and other data, in order to determine a fair value for our reporting units. We conducted a qualitative assessment of the fair value of all of the Company's reporting units during the quarter ended September 30, 2017. The results of this test determined that the fair values of the Company's reporting units continue to exceed their respective carrying values and, as a result, no goodwill impairment was indicated. Note 6 — Goodwill and Intangible Assets in the Notes to Condensed Consolidated Financial Statements provides additional information regarding goodwill and amortizable intangible assets.

Accounting for income taxes — The Company uses the asset and liability method of accounting for income taxes. We estimate our income taxes in each of the jurisdictions where we operate. This process involves estimating our current tax expense or benefit together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included ~~within~~in our consolidated balance sheets. In assessing the realizability of deferred tax assets, ~~management considers~~we consider if it is more likely than not that some or all of the deferred tax assets will not be realized. WeIn making this assessment, we consider the availability of loss carryforwards, projected ~~reversal~~reversals of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning ~~strategies in making this assessment.~~strategies. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained based on the technical merits of the position.

The Company adopted Financial Accounting Standards Board Accounting Standards Update No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory," on January 1, 2018. Note 1 — Business and Basis of Presentation in the Notes to Condensed Consolidated Financial Statements provides information regarding our adoption of this accounting standard and its impact.

Accounting for stock-based compensation — The Company accounts for stock-based compensation awards in accordance with FASB ASC Topics 505 and 718 and SEC Staff Accounting Bulletins No. 107 and No. 110. The Company recognizes stock-based

compensation expense, which is based on the fair value of the award on the date of grant, over the related service ~~period (see~~period. Note 4 — Stock-Based Compensation in the Notes to ~~the~~ Condensed Consolidated Financial Statements ~~for~~provides additional ~~information).~~information regarding stock-based compensation. Determining the appropriate fair value model and calculating the fair value of stock-based compensation awards requires the use of certain ~~complex and~~ subjective assumptions, including the expected life of a stock-based compensation award and the Company’s ~~Common Stock~~common stock price volatility. In addition, determining the appropriate periodic stock-based compensation expense requires management to estimate the likelihood of the achievement of certain performance targets. The assumptions used in calculating the fair values of stock-based compensation awards and the related periodic expense represent management’s best estimates, which involve inherent uncertainties and the application of judgment. As a result, if circumstances change and the Company deems it necessary in the future to modify the assumptions it made or to use different assumptions, or if the quantity and nature of the Company’s stock-based compensation awards changes, then the amount of expense may need to be adjusted and future stock-based compensation expense could be materially different from what has been recorded in the current period.

Restructuring and other accruals — We may record accruals for severance costs, costs associated with excess facilities that we have leased, contract terminations, asset impairments and other costs as a result of ~~on-going~~ongoing actions we undertake to streamline our organization, reposition certain businesses and reduce ongoing costs. Estimates of costs to be incurred to complete these actions, such as future lease payments, sublease income, the fair value of assets, and severance and related benefits, are based on assumptions at the time the actions are initiated. These accruals may need to be adjusted to the extent actual costs differ from such estimates. In addition, these actions may be revised due to changes in business conditions that we did not foresee at the time such plans were approved. We also record accruals during the year for our various employee cash incentive programs. Amounts accrued at the end of each reporting period are based on our estimates and may require adjustment as the ultimate amount paid for these incentives are sometimes not known with certainty until the end of our fiscal year.

RESULTS OF OPERATIONS

~~Overall~~Consolidated Results

The ~~following~~ table below presents an analysis of selected line items and period-over-period changes in our interim Condensed Consolidated Statements of Operations for the periods indicated (in thousands). The operating results of CEB, ~~are included beginning~~which was acquired by Gartner on April 5, 2017, are included in the ~~date of~~results for the ~~acquisition.~~three months ended March 31, 2018.

Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
Income
Increase
(Decrease)
$

Increase
(Decrease)
%
Total revenues $ 828,085
$ 574,059
$ 254,026
44 %
Costs and expenses:

Cost of services and product development 332,207
223,122
(109,085 ) (49 )
Selling, general and administrative 421,163
269,902
(151,261 ) (56 )
Depreciation 17,340
9,531
(7,809 ) (82 )
Amortization of intangibles 51,224
6,221
(45,003 ) >(100)
Acquisition and integration charges 30,500
16,557
(13,943 ) (84 )
Operating (loss) income (24,349 ) 48,726
(73,075 ) >(100)
Interest expense, net (38,762 ) (5,932 ) (32,830 ) >(100)
Other income, net 1,171
1,954
(783 ) (40 )
(Benefit) provision for income taxes (13,760 ) 14,264
28,024
>100
Net (loss) income $ (48,180 ) $ 30,484
$ (78,664 ) >(100)%


	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			Income Increase (Decrease) $			Increase (Decrease) %		Three Months Ended March 31, 2018			Three Months Ended March 31, 2017			Income Increase (Decrease) $			Income Increase (Decrease) %
Total revenues	$	2,296,985		$	1,741,323		$	555,662		32	%	$	963,565		$	625,169		$	338,396		54	%
Costs and expenses:
Cost of services and product development	921,820			666,585			(255,235		)	(38	)	357,209			237,609			(119,600		)	(50	)
Selling, general and administrative	1,133,633			799,322			(334,311		)	(42	)	487,745			304,244			(183,501		)	(60	)
Depreciation	45,637			27,390			(18,247		)	(67	)	16,410			10,240			(6,170		)	(60	)
Amortization of intangibles	123,014			18,614			(104,400		)	>(100)		51,646			6,290			(45,356		)	>(100)
Acquisition and integration charges	142,104			32,958			(109,146		)	>(100)		59,266			13,272			(45,994		)	>(100)
Operating (loss) income	(69,223		)	196,454			(265,677		)	>(100)		(8,711		)	53,514			(62,225		)	>(100)
Interest expense, net	(88,624		)	(19,294		)	(69,330		)	>(100)		(35,059		)	(5,906		)	(29,153		)	>(100)
Other income, net	1,653			5,086			(3,433		)	(67	)	899			889			10			1
(Benefit) provision for income taxes	(52,166		)	55,149			107,315			>100		(23,284		)	12,064			35,348			>100
Net (loss) income	$	(104,028	)	$	127,097		(231,125		)	>(100)%		$	(19,587	)	$	36,433		$	(56,020	)	>(100)%

Total revenues for the three months ended ~~September 30, 2017~~March 31, 2018 increased ~~$254.0~~$338.4 million, to ~~$828.1~~$963.6 million, an increase of ~~44%~~54% compared to the ~~three months ended September 30, 2016 and 43% adjusted for the impact of foreign currency exchange. CEB contributed $165.1 million of the increase. Revenues for the nine months ended September 30,~~same period in 2017 ~~increased $555.7 million, to $2.3 billion, an increase of 32% compared to the nine months ended September 30, 2016~~ on ~~both~~ a reported basis and ~~adjusted for~~49% excluding the foreign ~~exchange~~currency impact, ~~with~~primarily due to the CEB ~~contributing $317.7 million of the increase.~~acquisition. Please refer to the section of this MD&A below entitled “Segment Results” for a discussion of revenues and results by segment.

Cost of services and product development ~~increased $109.1~~was $357.2 million ~~or 49%, in~~during the ~~third quarter~~three months ended March 31, 2018, an increase of ~~2017~~$119.6 million compared to the ~~third quarter of 2016, but~~same period in 2017, or 50% on a reported basis and 45% excluding the ~~impact of~~ foreign ~~exchange, costs increased 48%. Approximately $73.2 million of the~~currency impact. This increase

~~was attributable to CEB. The $35.9 million increase attributable to traditional Gartner~~ was primarily due to higher payroll and related benefits costs resulting from increased headcount, a substantial portion of which ~~increased 18%.~~was related to the CEB acquisition. Cost of services and product development as a percentage of revenues was ~~40%~~37% and ~~39% for~~38% during the ~~third quarter of 2017 and 2016, respectively. For the nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, compared to the same period in 2016, cost of services and product development expense increased $255.2 million, or 38% in the 2017 period. Adjusted for the foreign exchange impact, cost of service and product development increased 39% in the 2017 period. Approximately $159.4 million of the increase was attributable to CEB. Approximately $95.8 million of the increase was attributable to traditional Gartner, with the increase primarily due to higher payroll and benefit costs due to increased headcount, consistent with the quarter. Cost of services and product development as a percentage of revenues was 40% and 38% for the nine months ended September 30, 2017 and 2016, respectively.

Selling, general and administrative (“SG&A”) expense ~~increased $151.3~~was $487.7 million ~~or 56%, in~~during the ~~third quarter~~three months ended March 31, 2018, an increase of ~~2017~~$183.5 million compared to the ~~third quarter of 2016,~~same period in 2017, or 60% on a reported basis and 55% ~~adjusted for~~excluding the ~~impact of~~ foreign ~~exchange. Approximately $96.9 million of the~~currency impact. This increase was ~~attributable to CEB. Traditional Gartner costs for the quarter increased $54.4 million,~~ primarily due to ~~$25.3~~$87.7 million in higher payroll and related benefits costs, ~~reflecting~~mostly driven by increased headcount, with a ~~17% overall~~substantial portion of the headcount ~~increase; $10.0~~increase due to the CEB acquisition; $22.7 million in higher commissions due to increased sales bookings; and ~~$19.1~~$73.1 million in higher facilities and corporate costs and foreign ~~exchange~~currency impact. The overall headcount growth includes ~~a 17% increase~~increases in quota-bearing sales associates at Global Technology Sales and Global Business Sales to 2,746 and 755, respectively, at March 31, 2018. On a combined basis, the total number of quota-bearing sales associates increased by approximately 38% when compared to March 31, 2017, which ~~increased to 2,716 at September 30, 2017. For~~includes associates added as a result of the ~~nine~~CEB acquisition. SG&A expense as a percentage of revenues was 51% and 49% during the three months ended ~~September 30,~~March 31, 2018 and 2017, SG&A expense increased $334.3 million, a 42% increase as reported and 43% adjusted for the foreign exchange impact. Approximately $184.7 million of the increase was attributable to CEB. Approximately $149.6 million of the increase was related to traditional Gartner due to the same drivers as the quarter.respectively.

Depreciation increased ~~$7.8~~$6.2 million, ~~and $18.3 million~~or 60%, during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2018 when compared to the same ~~periods~~period in ~~2016, primarily~~2017 due to property, equipment and leasehold improvements acquired with CEB and ~~to a lesser extent,~~ additional ~~traditional~~ Gartner ~~investment.~~investments.

Amortization of intangibles increased ~~$45.0 million and $104.4~~$45.4 million during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2018 when compared to the same ~~periods~~period in ~~2016~~2017 due to additional amortization from the intangibles recorded in connection with our recent acquisitions.

Acquisition and integration charges increased ~~$13.9 million and $109.1~~$46.0 million during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2018 when compared to the same ~~periods~~period in ~~2016. These increases reflect~~2017. This increase reflects the additional charges resulting from our recent acquisitions and primarily ~~consist~~consists of higher professional fees, severance, stock-based compensation charges and ~~during the 2017 nine month period, an accrual~~accruals for exit costs ~~of approximately $21.1 million~~ for certain office space that the Company does not intend to occupy ~~at a new building~~ in Arlington, Virginia. ~~To date, the Company has not made any payments related to the excess space.~~

~~During the three months ended September 30, 2017, we had~~Operating (loss) income was an operating loss of ~~$(24.3) million compared to operating income of $48.7~~$(8.7) million during the three months ended ~~September 30, 2016.~~March 31, 2018 compared to operating income of $53.5 million for the same period in 2017. The decline reflects several ~~factors. We had a lower segment contribution margin in our Research business resulting from a CEB deferred revenue fair value adjustment. We also had substantially~~factors, to include higher SG&A expenses and acquisition-related costs, including depreciation, amortization of intangibles, and acquisition and integration charges. During the nine months ended September 30, 2017, our operating loss was $(69.2) million, compared to operating income of $196.5 million during the nine months ended September 30, 2016. The 2017 nine month period was similarly affected by the same factors as the third quarter of 2017.

Interest expense, net increased ~~$32.8 million and $69.3~~$29.2 million during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2018 when compared to the same ~~periods~~period in ~~2016.~~2017. The ~~increases were~~increase was primarily due to higher outstanding borrowings during ~~2017 compared to 2016.~~2018.

Other income, net ~~for~~was $0.9 million during each of the three months ended March 31, 2018 and 2017. Both periods ~~presented herein primarily reflects~~reflect the net impact of foreign currency gains and losses from our hedging activities, as well as ~~the sale~~sales of certain state tax credits and the recognition of other tax incentives.

(Benefit) provision for income taxes for the three months ended ~~September 30, 2017~~March 31, 2018 was a benefit of ~~$(13.8)~~$(23.3) million on a pretax loss of ~~$(61.9)~~$(42.9) million compared to an expense of ~~$14.3~~$12.1 million on pretax income of ~~$44.7~~$48.5 million in the three months ended ~~September 30, 2016.~~March 31, 2017. The effective income tax rate was ~~22.2%~~54.3% for the three months ended ~~September 30, 2017~~March 31, 2018 and ~~31.9%~~24.9% for the same period in ~~2016.~~2017. The quarter-over-quarter change in the effective income tax rate was primarily attributable to ~~increases in non-deductible acquisition and integration charges.~~

~~(Benefit) provision for income taxes for~~ the ~~nine months ended September 30, 2017 was a benefit~~relative impact of ~~$(52.2) million on a pretax loss~~stock- based compensation benefits quarter-over-quarter. The tax benefits from stock-based compensation during the first quarter of ~~$(156.2) million compared to an expense of $55.1 million~~2018 increased the tax rate on pretax ~~income of $182.2 million~~losses while such benefits in the ~~nine months ended September 30, 2016. The effective income~~first quarter of 2017 decreased the tax rate ~~was 33.4% for~~on pretax income. In addition to the ~~nine months ended September 30, 2017 and 30.3% for~~impact of stock-based compensation, the

~~same period in 2016. The~~ change in the effective income tax rate quarter-over-quarter was ~~primarily attributable to~~driven by a ~~favorable estimated mix~~reduction in the U.S. tax rate effective for 2018 as well as tax benefits recognized in 2018 for unrealized capital losses on the divestiture of ~~earnings and an increase in stock-based compensation benefits.~~the CEB Talent Assessment business.

During the three months ended ~~September 30, 2017,~~March 31, 2018, our net loss was ~~$48.2~~$(19.6) million compared to net income of ~~$30.5~~$36.4 million during the three months ended September 30, 2016. During the nine months ended September 30, 2017, our net loss was $104.0 million, compared to net income of $127.1 million during the nine months ended September 30, 2016. Both the quarter-over-quarter and year-over-year changessame period in 2017. The change primarily ~~reflect declines~~reflects a decline in our operating profitability and higher interest ~~expense, partially offset by~~expense. As a result of such change, our diluted (loss) income ~~tax benefits~~per share was $(0.22) during the three months ended March 31, 2018 compared to $0.43 during the same period in ~~the 2017 periods.~~2017.

SEGMENT RESULTS

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

On April 5, 2017, Gartner completed its acquisition of CEB. With the CEB acquisition, Gartner is now reporting four business segments reflecting the Company’s enlarged scale and breadth of advisory services.

The Company’s reportable segments are as follows:

Research ~~- includes our previous Gartner Research segment as well as~~provides trusted, objective insights and advice on the ~~results~~mission-critical priorities of ~~CEB’s core subscription-based best practice~~leaders across all functional areas of the enterprise through research and decision support research activities. In addition, Research now includes our traditional Gartner Strategic Advisory Services ("SAS") business, which was previously included in the Consulting segment. Research consists primarily of subscription-based research products,other reports, briefings, proprietary tools, access to ~~research inquiry,~~our analysts, peer networking services and membership ~~programs.~~programs that enable our clients to make better decisions. Gartner's traditional strengths in IT, marketing and supply chain research were enhanced in 2017 with Gartner's acquisition of CEB Inc., which added CEB's best practice and talent management research insights across a range of business functions, to include human resources, finance, sales and legal.

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

~~Events~~ ~~- includes the results of our previous Gartner Events segment~~improving IT performance with a focus on cost, performance, efficiency and the results of CEB’s former Evanta business and destination event activities. Events provides IT, Supply chain, HR, Marketing, and other business professionals the opportunity to attend conferences to learn, share and network.quality.

The sections below present the results of these four reportable business segments. References to "traditional Gartner" operating results and business measurements below refer to Gartner excluding CEB. References to "CEB" below refer to the operating results and business measurements of CEB subsequent to the acquisition.

Research

As Of And For The Three Months Ended September 30, 2017 As Of And For The Three Months Ended September 30, 2016
Increase
(Decrease)

Percentage
Increase
(Decrease)
For The Nine Months Ended September 30, 2017 For The Nine Months Ended September 30, 2016 Increase
(Decrease) Percentage
Increase
(Decrease)
Financial Measurements:

Revenues (1) $ 653,443
$ 466,877
$ 186,566
40 % $ 1,778,481
$ 1,371,157
$ 407,324
30 %
Gross contribution (1) $ 436,222
$ 322,646
$ 113,576
35 % $ 1,187,906
$ 954,276
$ 233,630
24 %
Gross contribution margin 67 % 69 % (2) points
—
67 % 70 % (3) points
—

Business Measurements:

Traditional Gartner:
Total contract value (1) $ 2,063,000
$ 1,815,000
$ 248,000
14 %
Client retention 83 % 83 % —
—

Wallet retention 104 % 104 % —
—

CEB:
Total contract value (1) (2) $ 571,000
$ 578,000
$ (7,000 ) (1 )%
Wallet retention 93 % 93 % —
—



	As Of And For The Three Months Ended March 31, 2018			As Of And For The Three Months Ended March 31, 2017			Increase (Decrease)		Percentage Increase (Decrease)
Financial Measurements:
Revenues (1), (2)	$	763,924		$	511,306		$	252,618	49	%
Gross contribution (1), (2)	$	531,456		$	351,113		$	180,343	51	%
Gross contribution margin	70		%	69		%	1 point		—

Business Measurements (3):
Global Technology Sales (4):
Contract value (1), (5)	$	2,270,000		$	2,004,000		$	266,000	13	%
Client retention	83		%	82		%	1 point		—
Wallet retention	104		%	103		%	1 point		—
Global Business Sales (4):
Contract value (1), (5)	$	612,000		$	574,000		$	39,000	7	%
Client retention	82		%	78		%	4 points		—
Wallet retention	99		%	97		%	2 points		—


(1)	Dollars in thousands.

(2)

~~The 2016~~In June 2017, the Company began reporting the results of its Strategic Advisory Services ("SAS") business in Research whereas previously the SAS business was reported with Consulting. Although the impact of the reclassification was not significant, the operating results of the SAS business for the three months ended March 31, 2017 were reclassified from Consulting to Research to be comparable with the current period presentation.


(3)	Includes CEB ~~contract value was calculated based on Gartner's 2017 foreign exchange rates.~~in both the three months ended March 31, 2018 and 2017.


(4)	Global Technology Sales includes sales to users and providers of technology. Global Business Sales includes sales to all other functional leaders.


(5)	Contract values are on a foreign exchange neutral basis.

Research segment revenues increased ~~$186.6~~$252.6 million ~~or 40%,~~on a reported basis during the three months ended ~~September 30, 2017~~March 31, 2018 compared to the same ~~quarter~~period in ~~2016~~2017, or 49% on a reported basis and ~~38% adjusted for~~45% excluding the ~~impact of~~ foreign currency exchange. Traditional Gartner revenues increased $82.1 million in the third quarter of 2017 compared to 2016, which represents an 18% increase on a reported basis, with almost 2 points of the increase due to L2, which we acquired in first quarter 2017. Adjusted for the foreign exchange impact, traditional Gartner revenues increased 16% quarter-over-quarter. CEB contributed $104.5 million of the $186.6 million quarter-over-quarter revenue increase.impact. The ~~quarterly~~ gross contribution margin ~~declined 2 points,~~improved by one point during the three months ended March 31, 2018, primarily ~~driven~~due to improvement in margins for our premium services, partially offset by the impact of the deferred revenue fair value accounting adjustment resulting from the CEB acquisition and to a lesser extent, a modest decline in profitability in our digital markets products and some of our recent acquisitions such as SCM and L2, which have lower gross contribution margins than our traditional business.acquisition.

~~For the nine month periods, revenues increased $407.3 million, or 30%, during 2017 on both~~On a ~~reported basis and adjusted for the impact of~~ foreign currency ~~exchange. Traditional Gartner revenues~~neutral basis, Global Technology Sales ("GTS") and Global Business Sales ("GBS") contract values increased ~~$212.8 million during the nine months ended September 30, 2017~~13% and 7%, respectively, at March 31, 2018 when compared to ~~2016, a 16% increase on both a reported basis and adjusted for the impact of foreign exchange, with L2 also adding approximately 2 points~~March 31, 2017. Total contract value increased to $2.9 billion at March 31, 2018, or 12%. Total contract value at March 31, 2018 increased by double-digits across nearly all of the ~~revenue increase. CEB contributed $194.5 million~~Company’s client sizes and the majority of ~~the 2017 nine month revenue increase. The gross contribution margin declined by 3 points, driven by the same factors as the quarterly decline discussed above.~~

~~Traditional Gartner total contract value was $2.1 billion at September 30, 2017, an increase of 14% as reported and 15% on a foreign exchange neutral basis~~its industry segments when compared to ~~September 30, 2016. Traditional Gartner~~March 31, 2017.

GTS client retention was 83% ~~in both the third quarter~~and 82% as of March 31, 2018 and 2017, ~~and 2016,~~respectively, while wallet retention was 104% ~~in each of those periods. Traditional Gartner total contract value~~and 103%, respectively. GBS client retention was 82% and 78% as of ~~September 30,~~March 31, 2018 and 2017, increased by double-digits across all of the Company’s sales regions, client sizes, and virtually every industry segment compared to September 30, 2016. CEB contract value was $571.0 million at September 30, 2017 andrespectively, while wallet retention was ~~93%.~~99% and 97%, respectively. The number of GTS and GBS client enterprises increased by 7% and 1%, respectively, at March 31, 2018 when compared to March 31, 2017.

~~Consulting~~

Events


	As Of And For The Three Months Ended September 30, 2017			As Of And For The Three Months Ended September 30, 2016			Increase (Decrease)			Percentage Increase (Decrease)		For The Nine Months Ended September 30, 2017			For The Nine Months Ended September 30, 2016			Increase (Decrease)			Percentage Increase (Decrease)		As Of And For The Three Months Ended March 31, 2018			As Of And For The Three Months Ended March 31, 2017			Increase (Decrease)		Percentage Increase (Decrease)
Financial Measurements:
Revenues (1)	$	72,117		$	73,707		$	(1,590	)	(2	)%	$	242,404		$	237,876		$	4,528		2	%	$	46,087		$	35,269		$	10,818	31	%
Gross contribution (1)	$	16,188		$	18,215		$	(2,027	)	(11	)%	$	71,558		$	71,110		$	448		1	%	$	16,190		$	13,567		$	2,623	19	%
Gross contribution margin	22		%	25		%	(3) points			—		30		%	30		%	—			—		35		%	38		%	(3) points		—

Business Measurements:
Backlog (1) (2)	$	91,400		$	89,900		$	1,500		2	%
Billable headcount	682			630			52			8	%
Consultant utilization	61		%	63		%	(2) points			—		64		%	66		%	(2) points			—
Average annualized revenue per billable headcount (1)	$	355		$	368		$	(13	)	(4	)%	$	364		$	387		$	(23	)	(6	)%
Number of destination events (2)																							14			11			3		27	%
Number of destination events attendees (2)																							11,643			9,035			2,608		29	%


~~(1)~~	~~Dollars in thousands.~~


~~(2)~~	~~The September 30, 2016 traditional Gartner backlog of $89.9 million has been restated to reflect the reclassification of the SAS business.~~

Consulting revenues declined 2% during the three months ended September 30, 2017 compared to the same quarter in 2016 on a reported basis and declined 3% adjusted for the impact of foreign currency exchange, with revenue declines in both core consulting and contract optimization. Gross contribution margin was 22% for the three months ended September 30, 2017 and 25% for the three months ended September 30, 2016, with the decline due to a combination of factors, to include a decline in contract optimization revenues, lower utilization, and our investment in additional managing partners.

For the nine month periods, revenues increased 2% during 2017 on a reported basis and 3% adjusted for the impact of foreign currency exchange, while gross contribution margin was flat. Backlog increased by $1.5 million, or 2%, year-over-year. The $91.4 million of backlog at September 30, 2017 represents approximately four months of backlog, which is in line with the Company's operational target.

~~Events~~

As Of And For The Three Months Ended September 30, 2017 As Of And For The Three Months Ended September 30, 2016
Increase
(Decrease)

Percentage
Increase
(Decrease)
For The Nine Months Ended September 30, 2017 For The Nine Months Ended September 30, 2016
Increase
(Decrease)

Percentage
Increase
(Decrease)
Financial Measurements:

Revenues (1) $ 44,953
$ 33,475
$ 11,478
34 % $ 171,427
$ 132,290
$ 39,137
30 %
Gross contribution (1) $ 16,011
$ 14,529
$ 1,482
10 % $ 79,313
$ 63,574
$ 15,739
25 %
Gross contribution margin 36 % 43 % ( 7) points
—
46 % 48 % ( 2) points
—

Business Measurements:

Traditional Gartner:
Number of events (2) 16
15
1
7 % 52
52
—
—
Number of attendees (2) 10,075
7,431
2,644
36 % 37,174
30,522
6,652
22 %
CEB:
Number of events (2) 1
1
—
—
2

Number of attendees (2) 565
767
(202 ) (26 )% 1,040


(1)	Dollars in thousands.


(2)	Single day, local events are excluded.

Events revenues increased ~~$11.5~~$10.8 million, or ~~34%~~31%, during the three months ended September 30, 2017 compared to the same quarter in 2016 on a reported basis and 31% adjusted for the impact of foreign currency exchange. Traditional Gartner revenues increased $8.4 million in the third quarter of 2017 compared to 2016, a 25% increase on a reported basis and 22% adjusted for the foreign exchange impact. CEB contributed $3.1 million of the revenue increase. The gross contribution margin for traditional Gartner was 43% for both periods. In the traditional Gartner business, we held 16 events and 15 events in the third quarter of 2017 and 2016, respectively, while the number of attendees for the third quarter of 2017 increased 36% and exhibitors increased 26% compared to 2016, with average revenue per attendee down by 1% and average revenue per exhibitor flat. CEB held one event with 565 attendees in the third quarter of 2017.

~~Events revenues increased $39.1 million, or 30%, during the nine months ended September 30, 2017~~March 31, 2018 compared to the same period in ~~2016~~2017 on a reported basis and ~~29% adjusted for~~24% excluding the ~~impact of~~ foreign currency ~~exchange. Traditional Gartner~~impact. Both attendee and exhibitor revenues increased ~~$20.6 million~~by double-digits during 2018. We held 14 events during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 with a 29% increase in the number of attendees and a 7% increase in exhibitors compared to ~~2016, a 16% increase as reported,~~the same period in 2017, while the average revenue per exhibitor increased by 19% and ~~15% adjusted for~~ the ~~foreign exchange impact. CEB contributed $18.5 million of the~~average revenue ~~increase.~~per attendee declined by 3%. The ~~traditional Gartner~~ segment gross contribution margin ~~was 48% for both the nine months ended September 30, 2017 and 2016. We held 52 events~~declined three points in the ~~traditional Gartner business in both the nine months ended September 30, 2017 and 2016 while the number~~first quarter of ~~attendees for the 2017 period increased 22% and exhibitors increased 9%~~2018 compared to ~~2016, with average revenue per attendee up by 2% and average revenue per exhibitor up by 3%. CEB held two~~the same period in 2017, primarily due to events ~~with 1,040 attendees during the nine months ended September 30, 2017.~~timing.

~~Talent Assessment & Other~~

Consulting


	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017			As Of And For The Three Months Ended March 31, 2018			As Of And For The Three Months Ended March 31, 2017			Increase (Decrease)		Percentage Increase (Decrease)
Financial Measurements:
Revenues (1)	$	57,572		$	104,673
Gross contribution (1)	$	31,215		$	48,512
Revenues (1) (2)							$	82,896		$	78,594		$	4,302	5	%
Gross contribution (1) (2)							$	24,124		$	23,937		$	187	1	%
Gross contribution margin	54		%	46		%	29		%	30		%	(1) point		—

Business Measurements:
Backlog (1) (3)							$	103,616		$	88,547		$	15,069	17	%
Billable headcount							694			650			44		7	%
Consultant utilization							65		%	65		%	—		—
Average annualized revenue per billable headcount (1)							$	387		$	359		$	28	8	%


(1)	Dollars in thousands.

(2)

In June 2017, the Company began reporting the results of its SAS business in Research whereas previously the SAS business was reported with Consulting. Although the impact of the reclassification was not significant, the operating results of the SAS business for the three months ended March 31, 2017 were reclassified from Consulting to Research to be comparable with the current period presentation.


(3)	The backlog of $88.5 million at March 31, 2017 has been restated to reflect the reclassification of the SAS business.

Consulting revenues increased 5% during the three months ended March 31, 2018 compared to the same period in 2017 on a reported basis and 1% excluding the foreign currency impact, with revenue improvements in labor-based core consulting partially offset by a decline in contract optimization revenue. Gross contribution margin was 29% and 30% for the three months ended March 31, 2018 and 2017, respectively. The margin decline during the first quarter of 2018 was primarily due to lower contract optimization revenue, which has a higher contribution margin than our labor-based core consulting, partially offset by improvements in the margin of our core consulting business. Backlog increased by $15.1 million, or 17%, from March 31, 2017 to March 31, 2018. The $103.6 million of backlog at March 31, 2018 represented approximately four months of backlog, which is in line with the Company's operational target.

Talent Assessment & Other



	Three Months Ended March 31, 2018 (2)
Financial Measurements:
Revenues (1)	$	70,658
Gross contribution (1)	$	43,044
Gross contribution margin	61		%


(1)	Dollars in thousands.

(2) In April 2018, the Company sold its CEB Talent Assessment and CEB Workforce Survey and Analytics businesses, which constituted a significant portion of the overall revenues of this segment. These two businesses were acquired in April 2017 with the CEB acquisition. The results of these businesses are included in the Talent Assessment & Other segment results above for the three months ended March 31, 2018. Additional information regarding these divestitures is included in Note 2 — Acquisitions and Divestitures in the Notes to Condensed Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

We finance our operations through cash generated from our operating activities and ~~borrowings (Note~~borrowings. Note 7 — Debt in the Notes to the Condensed Consolidated Financial Statements herein provides additional information regarding the Company's ~~2016 Credit Agreement and other~~ outstanding debt ~~obligations).~~obligations. At ~~September 30, 2017,~~March 31, 2018, we had ~~$630.0~~$190.0 million of cash and cash equivalents and ~~$534.0~~approximately $866.0 million of available borrowing capacity on the revolving credit facility under our 2016 Credit Agreement. We believe that the Company has adequate liquidity to meet its currently anticipated needs.

We have historically generated significant cash flows from our operating activities. Our operating cash flow has been continuously maintained by the leverage characteristics of our subscription-based business model in our Research segment, which is our largest business segment. Revenues in our Research segment increased 49% in the first quarter 2018 compared to the first quarter of 2017, and has historically constituted the majority of our total revenues. The majority of our Research customer contracts are paid in advance, and combined with a strong customer retention rate and high incremental margins, has resulted in continuously strong operating cash flow. Cash flow generation has also benefited from our ongoing efforts to improve the operating efficiencies of our businesses as well as a focus on the optimal management of our working capital as we increase our sales volume.

Our cash and cash equivalents are held in numerous locations throughout the ~~world. At September 30, 2017,~~world with approximately ~~97% of our cash and cash equivalents was~~81% held overseas ~~with a substantial portion representing accumulated undistributed earnings~~as of ~~our non-U.S. subsidiaries. Under U.S. GAAP, no provision for income taxes that may result from the remittance of accumulated undistributed foreign earnings is required if the~~March 31, 2018. The Company intends to reinvest such earnings overseas indefinitely. While our current plans do not demonstrate a need to repatriate accumulated undistributed foreign earnings to fund our U.S. operations or otherwise satisfy the liquidity needssubstantially all of ~~our U.S. operations, the Company has not asserted~~ its intention to indefinitely reinvest approximately $80.0 million of CEB accumulated undistributed foreign earnings. As a result, the purchase price allocation for CEB includes a deferred tax liability of approximately $12.0 million for the estimated tax that could result from the remittance of these earnings. The Company continues to assert its intention to reinvest all other accumulated undistributed foreign earnings, except in instances in which ~~the~~ repatriation ~~of those earnings~~ would result in minimal additional tax. As a result of the ~~Company has not recognized additional~~U.S. Tax Cuts and Jobs Act of 2017, we believe that the income tax ~~expense that could result from the remittance of all other accumulated undistributed foreign earnings.~~impact if such earnings were repatriated would be minimal.

The following table summarizes the changes in the Company’s cash ~~and cash equivalents~~balances for the periods indicated (in thousands):

Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2016
Cash
Increase
(Decrease)
Cash provided by operating activities $ 232,267
$ 282,263
$ (49,996 )
Cash used in investing activities (2,710,428 ) (66,240 ) (2,644,188 )
Cash provided by (used in) financing activities 2,605,567
(130,933 ) 2,736,500
Net increase in cash and cash equivalents 127,406
85,090
42,316
Effects of exchange rates 28,377
7,668
20,709
Beginning cash and cash equivalents 474,233
372,976
101,257
Ending cash and cash equivalents $ 630,016
$ 465,734
$ 164,282



	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017			Cash Increase (Decrease)
Cash provided by (used in) operating activities	$	2,724		$	(29,605	)	$	32,329
Cash used in investing activities	(16,679		)	(121,865		)	105,186
Cash (used in) provided by financing activities	(329,083		)	917,271			(1,246,354		)
Net (decrease) increase in cash and cash equivalents and restricted cash	(343,038		)	765,801			(1,108,839		)
Effects of exchange rates	3,610			6,007			(2,397		)
Beginning cash and cash equivalents and restricted cash	567,058			499,354			67,704
Ending cash and cash equivalents and restricted cash (1)	$	227,630		$	1,271,162		$	(1,043,532	)

(1) The ending cash balance of $227.6 million at March 31, 2018 was classified on the Condensed Consolidated Balance Sheet as follows: (i) $190.0 million of cash and cash equivalents; (ii) $18.1 million of restricted cash classified in Prepaid expenses and other current assets; and (iii) $19.5 million of cash classified in held-for-sale assets. Note 1 — Business and Basis of Presentation in the Notes to Condensed Consolidated Financial Statements provides additional information regarding cash.

Operating

Cash provided by operating activities was ~~$232.3~~$2.7 million ~~and $282.3~~in the three months ended March 31, 2018 compared to cash used of $29.6 million during the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2017. The ~~decline~~quarter-over-quarter increase was ~~primarily~~ due to ~~(i)~~favorable changes in working capital. The favorable change in working capital was substantially offset by a decline in net income, which was a loss of ~~$104.0~~$19.6 million ~~during the 2017 period~~in first quarter 2018 compared to net income of ~~$127.1~~$36.4 million ~~during~~in the ~~2016~~2017 period, and ~~(ii)~~ substantially higher cash payments for ~~bonuses, commissions,~~interest on our borrowings and acquisition and integration costs ~~during~~in the ~~2017 period.~~2018 period compared to 2017.

Investing

Cash used in investing activities was ~~$2.7 billion~~$16.7 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to $121.9 million of cash used ~~of $66.2 million~~ in the ~~same period of 2016.~~2017 period. Cash used in the three months ended March 31, 2017 was substantially higher due to the acquisitions of CEB and L2 in April 2017 and March 2017, respectively. Note 2 — Acquisitions in the Notes to the Condensed Consolidated Financial Statements provides additional information regarding the Company's acquisitions.cash used for a business acquisition.

Financing

Cash ~~provided by~~used in financing activities was ~~$2.6 billion~~$329.1 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to cash ~~used~~provided of ~~$130.9~~$917.3 million during the ~~nine months ended September 30, 2016.~~same period in 2017. During the 2018 period, the Company used $304.8 million in cash for debt principal repayments and used $24.3 million in cash for net share-related activities. During the 2017 period the Company borrowed a total of approximately $3.0 billion and paid: (i) $339.6 million in principal repayments, including $300.0 million for the senior unsecured 364-day Bridge Credit Facility; (ii) $51.2 million for deferred financing fees on borrowings; and (iii) $37.2 million for share repurchases. During the 2016 period, the Company used ~~$52.9~~$18.9 million in cash for ~~share repurchases and $85.0 million for debt~~

~~payments on a~~ net ~~basis, and we realized $6.9 million~~share-related activities, while net cash provided from ~~employee share-related activities. Note 7 — Debt in the Notes to the Condensed Consolidated Financial Statements provides additional information regarding the Company's debt obligations.~~

borrowings was $936.2 million.

OBLIGATIONS AND COMMITMENTS

Debt

As of ~~September 30, 2017,~~March 31, 2018, the Company had ~~$3.4~~$3.0 billion of principal amount of debt outstanding. On April 30, 2018, the Company repaid $450.0 million of the debt outstanding. Note 7 — Debt in the Notes to the Condensed Consolidated Financial Statements provides additional information regarding the Company's debt obligations.

Off-Balance Sheet Arrangements

Through ~~September 30, 2017,~~March 31, 2018, we have not entered into any material off-balance sheet arrangements or transactions with unconsolidated entities or other persons.

~~Contractual Cash Commitments~~

~~The Company has certain commitments that contractually require future cash payments. The table below summarizes the Company's contractual cash commitments as of September 30, 2017 (in thousands).~~

Commitment Description: Due On Or Before December 31, 2017 Due During 2018 and 2019 Due During 2020 and 2021 Due After December 31, 2021 Total
Debt – principal and interest (1) $ 143,791
$ 770,812
$ 404,368
$ 2,945,674
$ 4,264,645
Operating leases (2) 49,233
188,981
157,138
621,337
1,016,689
Deferred compensation arrangement (3) 3,867
10,279
6,764
73,797
94,707
Other (4) 16,494
30,146
28,827
43,358
118,825
Totals $ 213,385
$ 1,000,218
$ 597,097
$ 3,684,166
$ 5,494,866


~~(1)~~	Principal repayments of the Company's debt obligations have been classified in the above table based on both contractual and anticipated repayment dates. Interest payments were based on the effective interest rates as of September 30, 2017. Note 7 — Debt in the Notes to the Condensed Consolidated Financial Statements provides additional information regarding the Company's debt obligations.


~~(2)~~	~~The Company leases various offices, furniture, computer equipment, automobiles and equipment under non-cancelable operating lease agreements expiring between 2017 and 2032.~~


~~(3)~~	The Company has supplemental deferred compensation arrangements with certain of its employees. Amounts payable with known payment dates have been classified in the above table based on those scheduled payment dates. Amounts payable whose payment dates are unknown have been included in the Due After December 31, 2021 category since the Company cannot determine when the amounts will be paid.


~~(4)~~	The Other category includes (i) contractual commitments for software, building maintenance, telecom and other services and (ii) projected cash contributions to the Company's defined benefit pension plans.

In addition to the contractual cash commitments included in the above table, the Company has other payables and liabilities that may be legally enforceable but are not considered contractual commitments.

~~BUSINESS AND TRENDS~~

Our quarterly and annual revenues, operating income, and cash flows fluctuate as a result of many factors, including: the timing of our Symposium/ITxpo series that normally occurs during the fourth quarter, as well as our other events; the amount of new business generated, including from acquisitions; the mix of domestic and international business; domestic and international economic conditions; changes in market demand for our products and services; changes in foreign currency rates; the timing of the development, introduction and marketing of new products and services; competition in the industry; the payment of performance

compensation; and other factors. The potential fluctuations in our operating income could cause period-to-period comparisons of operating results not to be meaningful and could provide an unreliable indication of future operating results.

~~FACTORS THAT MAY AFFECT FUTURE PERFORMANCE~~

We operate in a very competitive and rapidly changing environment that involves numerous risks and uncertainties, some of which are beyond our control. A description of the risk factors associated with our business is included under “Risk Factors” contained herein in Part II, Item 1A., ~~Risk Factors, and in Item 1A. of our~~ ~~2016~~ ~~Annual Report on Form 10-K, which are incorporated herein by reference.~~

RECENTLY ISSUED ACCOUNTING STANDARDS

~~Accounting~~The FASB has issued accounting standards ~~issued by the various U.S. standard setting and governmental authorities~~ that have not yet become effective and that may impact ~~our Consolidated Financial Statements in future periods are described below, together with our assessment of~~ the ~~potential impact they may have on our Consolidated Financial Statements and~~Company’s consolidated financial statements or related disclosures in future ~~periods:~~periods. Note 1 — Business and Basis of Presentation in the Notes to Condensed Consolidated Financial Statements herein provides information regarding these accounting standards.

~~Targeted Improvements to Accounting for Hedging Activities -~~ ~~In August 2017, the FASB issued Accounting Standards Update ("ASU") No. 2017-12, "Derivatives and Hedging (Topic 815)~~" ("ASU No. 2017-12"). ASU No. 2017-12 is intended to improve the financial reporting of hedging relationships to better portray economic results of an entity’s risk management activities in its financial statements. In addition to that main objective, the amendments would make certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP. ASU No. 2017-12 is effective for Gartner on January 1, 2019. We are currently evaluating the potential impact of ASU No. 2017-12 on the Company's consolidated financial statements.

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

~~Stock Compensation Award Modifications~~ ~~— In May 2017, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation - Scope of Modification Accounting~~" ("ASU No. 2017-09"). ASU No. 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. ASU No. 2017-09 is effective for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2017-09 will not have a material impact on the Company's consolidated financial statements.

~~Partial Sales of Non-financial Assets — In February 2017, the FASB issued ASU No. 2017-05,~~ ~~"Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-financial Assets"~~ ("ASU No. 2017-05"). ASU No. 2017-05 clarifies the scope of the FASB’s recently established guidance on non-financial asset de-recognition as well as the accounting for partial sales of non-financial assets. It conforms the de-recognition guidance on non-financial assets with the model for revenue transactions. ASU No. 2017-05 is effective for Gartner on January 1, 2018. We have concluded that the adoption of ASU No. 2017-05 will not have a material impact on the Company's consolidated financial statements.

~~Goodwill Impairment~~ ~~— In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other - Simplifying the Test for Goodwill Impairment~~" ("ASU No. 2017-04"). ASU No. 2017-04 simplifies the determination of the amount of goodwill to be potentially charged off by eliminating Step 2 of the goodwill impairment test. ASU No. 2017-04 is effective for Gartner on January 1, 2020. We have concluded that the adoption of ASU No. 2017-04 will not have a material impact on the Company's consolidated financial statements.

~~Presentation of Restricted Cash —~~ ~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~"Restricted Cash"~~ ("ASU No. 2016-18"). ASU No. 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. If different, a reconciliation of the cash balances reported in the cash flow statement and the balance sheet would need to be provided along with explanatory information. ASU No. 2016-18 is effective for Gartner on January 1, 2018. The adoption of ASU No. 2016-18 will require the Company to disclose restricted cash and, as a result, will change the presentation of the consolidated statements of cash flows.

~~Financial Instrument Credit Losses~~ —~~In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses"~~ ("ASU No. 2016-13"). ASU No. 2016-13 amends the current financial instrument impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU No. 2016-13 is effective for Gartner on January 1, 2020, with early adoption permitted. We are currently evaluating the potential impact of ASU No. 2016-13 on our consolidated financial statements.

The FASB also continues to work on a number of other significant accounting standards which if issued could materially impact the Company's accounting policies and disclosures in future periods. However, since these standards have not yet been issued, the effective dates and potential impact are unknown.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

As of ~~September 30, 2017,~~March 31, 2018, the Company had ~~$3.4~~$3.0 billion in total debt principal outstanding. Note 7 — Debt in the Notes to the Condensed Consolidated Financial Statements provides additional information regarding the Company's debt obligations.

Approximately ~~$2.6~~$2.2 billion of the Company's total debt outstanding as of ~~September 30, 2017~~March 31, 2018 was based on a floating base rate of interest, which potentially exposes the Company to increases in interest rates. However, we partially reduce our overall exposure to changes in interest rates through our interest rate swap contracts, which effectively convert the floating base interest rate on a portion of these variable rate borrowings to fixed rates. Thus we are exposed to base interest rate risk on floating rate borrowings only in excess of any amounts that are not ~~hedged. At September 30, 2017, we had interest rate risk on~~hedged, and at March 31, 2018, the amount of such unhedged borrowings was approximately ~~$1.2 billion of borrowings.~~$800.0 million. As an indication of our potential exposure to changes in interest rates, a hypothetical 25 basis point increase or decrease in interest rates could change our annual pre-tax interest expense by approximately ~~$3.0~~$2.0 million.

FOREIGN CURRENCY RISK

A significant portion of our revenues are earned outside of the U.S., and 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 Euro, the British Pound, the Japanese Yen, the Australian dollar, and the Canadian dollar. The reporting currency of our consolidated financial statements is the U.S. dollar. As the values of the foreign currencies in which we operate fluctuate over time relative to the U.S dollar, the Company is exposed to both foreign currency translation and transaction risk.

Translation risk arises as our foreign currency assets and liabilities are translated into U.S. dollars since the functional currencies of our foreign operations are generally denominated in the local currency. Adjustments resulting from the translation of these assets and liabilities are deferred and recorded as a component of stockholders’ equity. A measure of the potential impact of foreign currency translation can be determined through a sensitivity analysis of our cash and cash equivalents. At ~~September 30, 2017,~~March 31, 2018, we had ~~$630.0~~$190.0 million of cash and cash equivalents, a portion of which was denominated in foreign currencies. If the exchange rates of the foreign currencies we hold all changed in comparison to the U.S. dollar by 10%, the amount of cash and cash equivalents we would have reported on ~~September 30, 2017~~March 31, 2018 would have increased or decreased by approximately ~~$36.0~~$15.0 million. The translation of our foreign currency revenues and expenses historically has not had a material impact on our consolidated earnings since movements in and among the major currencies in which we operate tend to impact our revenues and expenses fairly equally. However, our earnings could be impacted during periods of significant exchange rate volatility, or when some or all of the major currencies in which we operate move in the same direction against the U.S dollar.

Transaction risk arises when our foreign subsidiaries enter into transactions that are denominated in a currency that may differ from the local functional currency. As these transactions are translated into the local functional currency, a gain or loss may result, which is recorded in current period earnings. We typically enter into foreign currency forward exchange contracts to mitigate the effects of some of this foreign currency transaction risk. Our outstanding currency contracts as of ~~September 30, 2017~~March 31, 2018 had an immaterial net unrealized loss.

CREDIT RISK

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

ITEM 4. CONTROLS AND PROCEDURES

We have established disclosure controls and procedures that are designed to ensure that the information we are required to disclose in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported in a timely manner. Specifically, these controls and procedures ensure that the information is accumulated and communicated to our executive management team, including our chief executive officer and our chief financial officer, to allow timely decisions regarding required disclosure.

Management conducted an evaluation, as of ~~September 30, 2017~~March 31, 2018, of the effectiveness of the design and operation of our disclosure controls and procedures, 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 the Company’s disclosure controls and procedures are effective in alerting them in a timely manner to material Company information required to be disclosed by us in reports filed under the Exchange Act.

~~Except as noted below, there~~There have been no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company acquired two businesses in 2017, L2 and CEB. We are currently in the process of integrating these businesses, evaluating their internal controls, and implementing the Company's internal control structure over these operations. Due to the timing of these acquisitions, we will exclude them from the scope of our Sarbanes-Oxley Section 404 report on internal control over financial reporting for our fiscal year ending December 31, 2017. This exclusion is in accordance with the general guidance issued by the Staff of the Securities and Exchange Commission that an assessment of a recent business acquisition may be omitted from management's report on internal control over financial reporting in the first year of consolidation. We expect to complete the implementation of our internal control structure over these acquisitions in 2018.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in legal and administrative proceedings and litigation arising in the ordinary course of business. We believe that the potential liability, if any, in excess of amounts already accrued from all proceedings, claims and litigation will not have a material effect on our financial position or results of operations when resolved in a future period.

ITEM 1A. RISK FACTORS

Risk factors associated with our business are included under “Risk Factors” contained in Item 1A. of the Company's ~~2016~~2017 Form 10-K and are incorporated herein by reference. On April 5, 2017, the Company completed its acquisition of CEB Inc. ("CEB"). Note 2 — Acquisitions in the Notes to the Condensed Consolidated Financial Statements herein provides additional information regarding the CEB acquisition. As a result of the CEB acquisition, the Company has identified additional risk factors, which are discussed below:

With the CEB acquisition, we now have products and services that relate to human talent assessment, management, and development, which are a new line of business for the Company. Failure to successfully manage and grow this new business, or to evaluate a strategic alternative for this line of business, could negatively impact our business, operating results, financial condition, and liquidity.

As a result of the acquisition of CEB, a portion of our revenue is now derived from products, services, and tools that relate to human talent assessment, management, and development. Revenue from these activities is concentrated in our Talent Assessment & Other business segment, which is a new line of business for the Company and in which we have no prior experience. Revenue from these activities is affected in part by our ability to create new offerings as demand changes, and our ability to support existing offerings. If we fail to successfully manage and grow this new business, our operating results, financial condition, and liquidity could be negatively impacted. Also, economic downturns in certain segments or geographic regions may cause reductions in discretionary spending by our customers, which may adversely affect our ability to maintain or grow the volume of business.

On October 4, 2017, we initiated a process to explore and evaluate strategic alternatives for our Talent Assessment business, which is a substantial part of our Talent Assessment & Other segment. We may be unable to find a suitable strategic alternative and this process may negatively impact our efforts to integrate and develop this line of business as we explore our options.

With the CEB acquisition, we acquired new types of products and services tailored for the public sector, in particular U.S. government agencies. These offerings subject us to a variety of new risks, which could harm our reputation, result in fines or penalties against us, and adversely impact our financial results.

Certain products and services acquired with CEB are tailored for the public sector, and in particular U.S. government agencies. These products and services are new to Gartner and thus expose us to new risks and potentially added costs. Revenue from these offerings is reported in our Talent Assessment & Other segment, which is a new line of business for the Company and in which we have no prior experience.

If we fail to comply with applicable laws and regulations it could result in contract terminations, suspension or debarment from contracting with the U.S. government, civil fines and damages, and criminal prosecution and penalties, any of which could have an adverse, material effect on our operating results. U.S. government agencies, including the Defense Contract Audit Agency (“DCAA”), may audit our U.S. government contracts and contractors’ administration processes and systems. An unfavorable outcome to an audit by the DCAA or another agency could result in a loss of business and/or fines and cause our operating results to differ from those anticipated. If an investigation uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeitures of profits, suspension of payments, fines, and suspension or debarment from doing business with the U.S. government. In addition, we would suffer serious harm to our reputation if allegations of impropriety were made against us. Each of these factors could have an adverse, material effect on our operating results.

With the CEB acquisition, we assumed a significant amount of additional leased office space. This additional space subjects us to a number of risks, including a plan to consolidate our space in Arlington, Virginia and sublease unused space.

We assumed significant additional leased office space as a result of the CEB acquisition, in particular in Arlington, which formerly served as CEB's headquarters location, and where the majority of its staff is currently located. Gartner is expected to continue

with a plan originally approved by CEB before the acquisition to relocate and consolidate its office space in Arlington into a single, nearby building that is currently under construction, and sublease the entirety of the existing space.

The consolidation plan subjects Gartner to two significant office leases in Arlington. We plan to continue to sublease a substantial portion of the existing space to an existing major subtenant and seek additional subtenants. If we are unable to sublease all or part of the additional space at acceptable rents or at all, or if the major subtenant defaults on its lease obligation with us or otherwise terminates its sublease with us, we may experience a loss of planned sublease rental income, which could result in a material charge for the excess space and adversely affect our operating results. Also, if the new space is not completed on schedule, or if the landlord or its guarantors default on their obligations pursuant to the new lease, we may incur additional expenses. In addition, unanticipated difficulties in consolidating our operations in this new space, including IT system interruptions or other infrastructure support problems, could result in a delay in moving into the new space, resulting in a loss of employee and operational productivity and a loss of revenue and/or additional expenses, which could also have an adverse, material impact on our operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities during the period covered by this report.

Issuer Purchases of Equity Securities

~~We have~~The Company has a $1.2 billion board ~~approved~~ authorization to repurchase the Company's common ~~stock, of which $1.1 billion remained available as of September 30, 2017.~~stock. The Company may repurchase its common stock from ~~time to time~~time-to-time in amounts and at 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 be made through open market purchases, private transactions or other transactions and will be funded from cash on hand and

borrowings under the Company’s ~~credit agreement.~~2016 Credit Agreement. Repurchases may also be made from time-to-time in connection with the settlement of the Company's share-based compensation awards.

The following table ~~provides detail related to~~summarizes the repurchases of our outstanding ~~Common Stock~~common stock during the three months ended ~~September 30, 2017~~:March 31, 2018 pursuant to our $1.2 billion share repurchase authorization and pursuant to the settlement of share-based compensation awards:

Period
Total
Number of
Shares
Purchased

Average
Price Paid
Per Share

Approximate
Dollar Value of Shares
that may yet be purchased
under our $1.2B Share Repurchase Program
(in billions) (1)
2017

July 10,202
$ 126.25

August 13,294
119.31

September 3,229
124.04

Total for quarter 26,725
$ 122.53
$ 1.1



Period	Total Number of Shares Purchased (#)	Average Price Paid Per Share ($)		Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under The Plans Or Programs (in billions)
2018
January	28,085	$	126.03
February	181,956	117.79
March	29,227	117.52
Total for quarter	239,268	$	118.73	$	1.1

(1) AsAll of ~~September 30, 2017.~~the shares repurchased during the three months ended March 31, 2018 were pursuant to the settlement of share-based compensation awards. No shares were repurchased under the Company's publicly-announced $1.2 billion share repurchase program.

ITEM 6. EXHIBITS



EXHIBIT NUMBER		DESCRIPTION OF DOCUMENT


10.1* #+		Form of ~~2017 Restricted~~2018 Stock ~~Unit for Certain Officers.~~Appreciation Right Agreement.

~~10.2~~10.2*+		~~Gartner, Inc. Long-Term Incentive Plan, effective August 1, 2017 (incorporated by reference to Exhibit 10.1 to the Company's~~ Form ~~8-K filed with the Commission on August 2, 2017).~~of 2018 Performance Stock Unit Agreement.

31.1*		Certification of chief executive officer under Rule 13a — 14(a)/15d — 14(a).

31.2*		Certification of chief financial officer under Rule 13a — 14(a)/15d — 14(a).

32*		Certification under 18 U.S.C. 1350.

101*		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, (ii) the Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ (iii) the Condensed Consolidated Statements of Comprehensive ~~(Loss)~~ Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ (iv) the Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ and (v) the Notes to Condensed Consolidated Financial Statements.

* Filed with this document.

~~# Denotes management compensatory~~+ Management compensation plan or arrangement.

Items 3, 4, and 5 of Part II are not applicable and have been omitted.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Gartner, Inc.

Date:	~~November 2, 2017~~May 8, 2018	/s/ Craig W. Safian
		Craig W. Safian
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

5048



Aggregate consideration (1):	CEB		L2		Total
Cash paid at close (2), (3)	$	2,687,704	$	134,199	$	2,821,903
Additional cash paid (2)	12,465		—		12,465
Fair value of Gartner equity awards (4)	818,660		—		818,660
Total (5)	$	3,518,829	$	134,199	$	3,653,028



	CEB (3)		L2 (4)		Total
Assets:
Cash	$	194,706	$	4,852	$	199,558
Fees receivable	175,440		8,277		183,717
Prepaid expenses and other current assets	52,032		1,167		53,199
Property, equipment and leasehold improvements	51,751		663		52,414
Goodwill (1)	2,267,087		109,779		2,376,866
Finite-lived intangible assets (2)	1,574,100		15,890		1,589,990
Other assets	182,720		12,321		195,041
Total assets	$	4,497,836	$	152,949	$	4,650,785
Liabilities:
Accounts payable and accrued liabilities	$	130,544	$	3,050	$	133,594
Deferred revenues (current)	246,472		13,200		259,672
Other liabilities	601,991		2,500		604,491
Total liabilities	$	979,007	$	18,750	$	997,757
Net assets acquired	$	3,518,829	$	134,199	$	3,653,028



	For the period ended September 30, 2017
Liability balance at December 31, 2016	$	—
Charges during the six months ended June 30, 2017	20,149
Liability balance at June 30, 2017	20,149
Charges and adjustments during the three months ended September 30, 2017	974
Liability balance at September 30, 2017	$	21,123



Three Months Ended September 30, 2016	Research		Consulting		Events		Talent Assessment & Other		Consolidated
Revenues (1)	$	466,877	$	73,707	$	33,475	$	—	$	574,059
Gross contribution (1)	322,646		18,215		14,529		—		355,390
Corporate and other expenses									(306,664		)
Operating income									$	48,726



	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			Cash Increase (Decrease)
Cash provided by operating activities	$	232,267		$	282,263		$	(49,996	)
Cash used in investing activities	(2,710,428		)	(66,240		)	(2,644,188		)
Cash provided by (used in) financing activities	2,605,567			(130,933		)	2,736,500
Net increase in cash and cash equivalents	127,406			85,090			42,316
Effects of exchange rates	28,377			7,668			20,709
Beginning cash and cash equivalents	474,233			372,976			101,257
Ending cash and cash equivalents	$	630,016		$	465,734		$	164,282



Commitment Description:	Due On Or Before December 31, 2017		Due During 2018 and 2019		Due During 2020 and 2021		Due After December 31, 2021		Total
Debt – principal and interest (1)	$	143,791	$	770,812	$	404,368	$	2,945,674	$	4,264,645
Operating leases (2)	49,233		188,981		157,138		621,337		1,016,689
Deferred compensation arrangement (3)	3,867		10,279		6,764		73,797		94,707
Other (4)	16,494		30,146		28,827		43,358		118,825
Totals	$	213,385	$	1,000,218	$	597,097	$	3,684,166	$	5,494,866



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Approximate Dollar Value of Shares that may yet be purchased under our $1.2B Share Repurchase Program (in billions) (1)
2017
July	10,202	$	126.25
August	13,294	119.31
September	3,229	124.04
Total for quarter	26,725	$	122.53	$	1.1