UNITED STATES
| þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended December 31, | |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Delaware | 04-3099750 |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
| P.O. Box 10212 | |
| 56 Top Gallant Road | |
| Stamford, CT | 06902-7700 |
| (Address of principal executive offices) | (Zip Code) |
| (203) 316-1111 | |
| (Registrant’s telephone number, | |
| including area code) | |
| Title of each class | Name of each exchange on which registered | |
| Common Stock, $.0005 par value per share | New York Stock Exchange | |
Large accelerated filerþ | Accelerated filero | Non-accelerated filero | Smaller reporting companyo |
2016.
| Document | Parts Into Which Incorporated | |
Proxy Statement for the Annual Meeting of Stockholders to be held May | Part III | |
GARTNER, INC.2012
gartner.com. technology insights that CIOs, supply chain professionals, digital marketing professionals, executives and other technology practitioners need to make the right decisions, every day. In addition to our analysts, we have We recognize the value of our intellectual property in the governance principles that have been adopted by our Board and (iv) charters for each of the Board’s standing committees: Audit, Compensation and Governance/Nominating.ITinformation technology (IT) leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to supply chain professionals, digital marketing professionals and technology investors, we are the valuable partner to clients in over 13,30010,796 distinct organizations.enterprises. We work with clients to research, analyze and interpret the business of IT within the context of their individual roles. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and as of December 31, 2012, we2015, had 5,4687,834 associates, including 1,4051,731 research analysts and consultants, and clients in 85over 90 countries.and supply chain, and digital marketing issues. The findings from this research are delivered through our three business segments —– Research, Consulting and Events:•Research provides objective insight on critical and timely technology and supply chain initiatives for CIOs, other IT professionals, supply chain leaders, technology companies and the investment community through reports, briefings, proprietary tools, access to our analysts, peer networking services and membership programs that enable our clients to make better decisions about their IT and supply chain investments.•Consulting provides customized solutions to unique client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving IT performance with a focus on cost, performance, efficiency, and quality.•Events provide IT, supply chain and business professionals the opportunity to attend various symposia, conferences and exhibitions to learn, contribute and network with their peers. From our flagship event Symposium/ITxpo, to summits focused on specific technologies and industries, to experimental workshop-style seminars, our events distill the latest Gartner research into applicable insight and advice.www.gartner.com. today are changing how businesses and organizations work and what they do at an increasingly rapid pace. Today, everyone is living and working in the midst of a technological revolution. Major technologicalThe nexus of four powerful forces - including– social, media, mobile, cloud and information, coupled with the "Internet of things" – are drivingblurring the line between the physical and digital worlds, creating unprecedented change on a scale not seen before infacing every organization around the world, from business enterprises and units within enterprises of every size, to governments and government agencies, as well as other organizations. This change falls into three categories: optimizing the use of technology to improve performance across every function in the organization; managing disruptive technology-based innovation; and protecting the organization from security threats. This technology revolution is likely towill remain vibrant for decades to come. (IT) is critical to supporting increased productivity, service and performance improvement, and revenue growth. IT and the supply chain are viewed today as strategic components of growth and operating performance.cyber-security. As the costs of IT solutions continue to rise, IT executives and professionals have realized the importance of making well-informed decisions and increasingly seek to maximize their returns on IT capital investments. As a result, anyevery IT investment decision in an enterprise is subject to increased financial scrutiny, especially in the current challenging economic climate. In addition, today’s IT marketplace is dynamic and complex. Technology providers continually introduce new products with a wide variety of standards and features that are prone to shorter life cycles. Users of technology —– a group that encompasses nearly all organizations —– must keep abreast of new developments in technology to ensure that their IT systems are reliable, efficient, secure, and meet both their current and future needs.-– and how – to successfully use IT and the supply chainharness technology to achieve their objectives.mission critical priorities. We employ a diversified business model that utilizes and leverages the breadth and depth of our intellectual capital. The foundation of our business model is our ability to create and distribute our proprietary research content as broadly as possible via published reports and briefings, consulting and advisory services, and our events, including the Gartner Symposium/ITxpo.Our 902ITxpo series.timely, high-quality,compelling, relevant, independent and objective research and fact-based analysis on every major IT initiative and all aspects of the IT industry.industry, including supply chain and digital marketing. Through our robust product portfolio, our global research team provides thought leadership and3503606 experienced consultants who combine our objective, independent research with a practical business perspective focused on the IT industry. Finally, our events are the largest of their kind, gathering together highly qualified audiences ofthat include CIOs and other senior businessIT executives, frontline IT architects and IT professionals, supply chain leaders, digital marketing leaders, and purchasers and providers of technology and supply chain products and services.•RESEARCH. Gartner delivers independent, objective IT research and insight primarily through a subscription-based, digital media service. Gartner Research is the fundamental building block for all Gartner services and covers all technology-related markets, topics and industries, as well as supply chain topics. We combine our proprietary research methodologies with extensive industry and academic relationships to create Gartner solutions that address each role within an IT organization. Our Research agenda is defined by clients’ needs, focusing on the critical issues, opportunities and challenges they face every day. Our Research analysts are in regular contact with both technology providers and technology users, enabling them to identify the most pertinent topics in the IT marketplace and develop relevant product enhancements to meet the evolving needs of users of our research. They provide in-depth analysis on all aspects of technology, including hardware; software and systems; services; IT management; market data and forecasts; and vertical-industry issues. Our proprietary research content, presented in the form of reports, briefings, updates and related tools, is delivered directly to the client’s desktop via our website and/or product-specific portals. Clients normally sign subscription contracts that provide access to our research content for individual users over a defined period of time, which is typically one year.•CONSULTING. Gartner Consulting deepens relationships with our Research clients by extending the reach of our research through custom consulting engagements. Gartner Consulting brings together our unique research insight, benchmarking data, problem-solving methodologies and hands-on experience to improve the return on a client’s IT investment. Our consultants provide fact-based consulting services to help clients use and manage IT to optimize business performance.Consulting solutions capitalize on Gartner assets that are invaluable to IT decision making, including: (1) our extensive research, which ensures that our consulting analyses and advice are based on a deep understanding of the IT environment and the business of IT; (2) our market independence, which keeps our consultants focused on our client’s success; and (3) our market-leading benchmarking capabilities, which provide relevant comparisons and best practices to assess and improve performance.Gartner Consulting provides solutions to CIOs and other IT executives, and to those professionals responsible for IT applications, enterprise architecture, go-to-market strategies, infrastructure and operations, programs and portfolio management, and sourcing and vendor relationships. Consulting also provides targeted consulting services to professionals in specific industries. Finally, we provide actionable solutions for IT cost optimization, technology modernization and IT sourcing optimization initiatives.•EVENTS. Gartner Symposium/ITxpo events and Gartner Summit events are gatherings of technology’s most senior IT professionals, business strategists and practitioners. Gartner Events offers current, relevant and actionable technology sessions led by Gartner analysts to clients and non-clients. These sessions are augmented with technology showcases, peer exchanges, analyst one-on-one meetings, workshops and keynotes by technology’s top leaders. They also provide attendees with an opportunity to interact with business executives from the world’s leading technology companies.Gartner Events attract high-level IT and business professionals who seek in-depth knowledge about technology products and services. Gartner Symposium/ITxpo events are large, strategic conferences held in various locations throughout the world for CIOs and other senior IT and business professionals. Gartner Summit events focus on specific topics, technologies and industries, providing IT professionals with the insight, solutions and networking opportunities to succeed in their job role. Finally, we offer targeted events for CIOs and IT executives, such as CIO Leadership Forum.•Superior IT research content — We believe that we create the broadest, highest-quality and most relevant research coverage of the IT industry. Our research analysis generates unbiased insight that we believe is timely, thought-provoking and comprehensive, and that is known for its high quality, independence and objectivity.•Our leading brand name — We have provided critical, trusted insight under the Gartner name for over 30 years.•Our global footprint and established customer base — We have a global presence with clients in 85 countries on six continents. For both 2012 and 2011, 46% of our revenues were derived from sales outside of the U.S.•Experienced management team — Our management team is composed of IT research veterans and experienced industry executives.•Substantial operating leverage in our business model — We have the ability to distribute our intellectual property and expertise across multiple platforms, including research publications, consulting engagements, conferences and executive programs, to derive incremental revenues and profitability.•Vast network of analysts and consultants — As of December 31, 2012, we had 1,405 research analysts and consultants located around the world. Our analysts collectively speak 47 languages and are located in 26 countries, enabling us to cover all aspects of IT on a global basis.againstwith consulting firms and other information providers, including electronic and print media companies. These indirect competitors could choose to compete directly with us in the future. In addition, we face competition from free sources of information that are available to our clients through the Internet. Limited barriers to entry exist in the markets in which we do business. As a result, new competitors may emerge and existing competitors may start to provide additional or complementary services. However,While we believe the breadth and depth of our research assets position us well versus our competition. Increased competition, mayincreased competition could result in loss of market share, diminished value in our products and services, reduced pricing, and increased sales and marketing expenditures.property, and weproperty. We also enter into agreements with our employees as appropriate that protect our intellectual property, and we enforce these agreements if necessary.5,4687,834 employees as of December 31, 2012,2015, an increase of 10%16% compared to the prior year end as we continued to invest for future growth. We have 976had 1,289 employees located at our headquarters in Stamford, Connecticut and a nearby office in Trumbull, Connecticut; 2,1983,194 employees located elsewhere in the United States;States in 33 other offices; and 2,2943,351 employees located outside of the United States.States in 60 offices. Our employees may be subject to collective bargaining agreements at a company or industry level, or works councils, in those foreign countries where this is part of the local labor law or practice. We have experienced no work stoppages and consider our relations with our employees to be favorable.investor relationsInvestor Relations section of our website is located atwww.investor.gartner.com. We make available free of charge, on or through the investor relationsInvestor Relations section of our website, printable copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”).controllerController and other financial managers, (ii) Global Code of Conduct, which applies to all Gartner officers, directors and employees, wherever located, (iii) Board Principles and Practices, the corporate5
In addition, revenue from our contract optimization business can fluctuate significantly from period to period and is not predictable. major events. expenditures to create and maintain client brand loyalty. If we fail to effectively promote and maintain the Gartner brand, or incur excessive expenses in doing so, our future business and operating results could be adversely impacted. Additionally, our effective tax rate is increased as the U.S dollar strengthens against foreign currencies, which could impact our operating results. Such events could also impact the timing and budget decisions of our clients, which could negatively impact our business. Our outstanding debt However, we may require additional cash resources due to changed business conditions, implementation of our strategy and stock repurchase program, to repay indebtedness or to pursue future business opportunities requiring substantial investments of additional Among these conditions are government deficit spendingSevere downward pressures on global commodity prices and a lower growth rate in China have contributed to a general outlook of weaker economic growth both in the U.S. and other countries, ongoing uncertaintyabroad in global trade, difficulties related2016. Recent geopolitical events, such as the terrorist attacks in France, have added to the refinancing of sovereign debt, and currency stability. In addition, there continues to be risks related to one or more Euro-Zone countries discontinuing the use of the Euro as their currency.uncertainty. These conditions could negatively and materially affect future demand for our products and services.services in general, in certain geographic regions, or in particular industry sectors. Such difficulties could include the ability to maintain client retention, wallet retention and consulting utilization rates, achieve contract value and consulting backlog growth, attract attendees and exhibitors to our events or obtain new clients. Such developments could negatively impact our financial condition, results of operations, and cash flows.financial condition.cash flows. We face direct competition from a significant number of independent providers of information products and services, including information available on the Internet free of charge. We also compete indirectly against consulting firms and other information providers, including electronic and print media companies, some of which may have greater financial, information gathering and marketing resources than we do. These indirect competitors could also choose to compete directly with us in the future. In addition, limitedlow barriers to entry exist in the markets in which we do business. As a result, additional new competitors may emerge and existing competitors may start to provide additional or complementary services. Additionally, technological advances may provide increased competition from a variety of sources.predictionspublished data, opinions or viewpoints prove to be wrong or are not substantiated by appropriate research, our reputation may suffer and demand for our products and services may decline. In addition, we must continue to improve our methods for delivering our products and services in a cost-effective manner.manner via the Internet and mobile applications. Failure to increase and improve ourmaintain state of the art electronic delivery capabilities could adversely affect our future business and operating results.products and services, develop or acquireexisting as well as new products and services to address those needs, deliver all products and services in a timely, user-friendly and state of the art manner, and appropriately position and price new products and services relative to the marketplace and our costs of producingdeveloping them. Any failure to achieve successful client acceptance of new products and services could have a material adverse effect on our business, results of operations and financial position. Additionally, significant delays in new product or servicesservice releases or significant problems in creating new products or services could adversely affect our business, the results of operations and our financial position.70%approximately 73% and 69%72% of our total revenues for 20122015 and 2011,2014, respectively. Generating new sales of our subscription-based products and services, both to new and existing clients, is a challenging, costly, and often a time consuming process. If we are unable to generate new sales, due to competition or other factors, our revenues will be adversely affected.6agreementscontracts are generallytypically for twelve months.months or longer. Our ability to maintain contract renewals is subject to numerous factors, including the following:•delivering high-quality and timely analysis and advice to our clients;•understanding and anticipating market trends and the changing needs of our clients; and•delivering products and services of the quality and timeliness necessary to withstand competition.researchResearch client retention rate was 83%84% at December 31, 20122015 and 82%85% at December 31, 2011,2014, there can be no guarantee that we will continue to maintain this rate of client renewals.19%15% of our total revenues for 2012in 2015 and 21% for 2011.17% in 2014. Consulting engagements typically are project-based and non-recurring. Our ability to replace consulting engagements is subject to numerous factors, including the following:•delivering consistent, high-quality consulting services to our clients;•tailoring our consulting services to the changing needs of our clients; and•our ability to match the skills and competencies of our consulting staff to the skills required for the fulfillment of existing or potential consulting engagements.locationssuitable venues for our conferences, symposia and events their profitability could suffer, and our financial condition and results of operations may be adversely affected. In addition, because our events are scheduled in advance and held at specific locations, the success of these events can be affected by circumstances outside of our control, such as labor strikes, transportation shutdowns and travel restrictions, economic slowdowns, reductions in government spending, geo-political crises, terrorist attacks, war, weather, natural disasters, communicable diseases, and other occurrences impacting the global, regional, or national economy,economies, the occurrence of any of which could negatively impact the success of the event and asevent. We also face the global economy recovers,challenge of procuring venues that are sizeable enough at a reasonable cost to accommodate some of our ability to procure space for our events and keep associated costs down could become more challenging.20122015 and 2011,2014, approximately $255.0$345.0 million and $225.0$310.0 million, respectively, of our Research contract value and Consulting backlog wastotal contracts were attributable to governments.government entities. We believe substantially all of the amountamounts attributable to governmentsgovernment entities at December 31, 20122015 will be filled in 2013.2016. Our U.S. government contracts are subjectservices, andservices. Additionally, our contracts at the state and local levels, as well as foreign government contracts, are subject to various governmentgovernmental authorizations and funding approvals and mechanisms. In general, most if not all of these contracts may be terminated at any time without cause or penalty (“termination for convenience”). Additionally, manySimilarly, contracts with U.S. federal, state and local, and foreign governments and their respective agencies are subject to increasingly complex bidding procedures, compliance requirements and municipalities across the United States are under severe financial strain and are considering significant budget cuts.intense competition. Should appropriations for the governments and agencies that contract with us be curtailed, or should our government contracts be terminated for convenience, we may experience a significant loss of consolidated and segment and consolidated revenues. the limited pool of these qualified professionals from, among others, technology companies, market research firms, consulting firms, financial services companies and electronic and print media companies, some of which have a greater ability to attract and compensate these professionals. SomeRecent improvements in the U.S economy have heightened this competition. Additionally, some of the personnel that we attempt to hire are subject to non-compete agreements that could impede our short-term recruitment efforts. Any failureinability to retain key personnel, or to hire and train additional qualified personnel as required to support the evolving needs of clients or the projected growth in our business, could adversely affect the quality of our products and services, as well as future business and operating results.785over 90 countries and a substantial amount of our revenues arerevenue is earned outside of the U.S. Our operating results are subject to the risks inherent in international business activities, including general political and economic conditions in each country, changes in market demand as a result of tariffs and other trade barriers, challenges in staffing and managing foreign operations, changes in regulatory requirements, compliance with numerous foreign laws and regulations, differences between U.S. and foreign tax rates and laws, and the difficulty of enforcing client agreements, collecting accounts receivable and protecting intellectual property rights in international jurisdictions. Furthermore, we rely on local distributors or sales agents in some international locations. If any of these arrangements are terminated by our agent or us, we may not be able to replace the arrangement on beneficial terms or on a timely basis, or clients of the local distributor or sales agent may not want to continue to do business with us or our new agent.internationalbusiness and operations expose usmay be conducted in countries where corruption has historically penetrated the economy. It is our policy to comply, and to require our local partners and those with whom we do business to comply, with all applicable anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and U.K. Bribery Act, and with applicable local laws of the foreign countries in which we operate. Our business and reputation may be adversely affected if we fail to comply with such laws.rates.rates from our international operations.Revenues earned outside the U.S. are typically transacted in local currencies, which may fluctuate significantly against the U.S. dollar. While we may use forward exchange contracts to a limited extent to seek to mitigate foreign currency risk, our revenues and results of operations could be adversely affected by unfavorable foreign currency fluctuations.orterrorist acts, war, and other geo-political events maycould disrupt our business. We operate in numerous U.S. and international locations, and we have offices in a number of major cities across the globe. A major weather event, terrorist attack, earthquake, flood, drought, volcanic activity, disease, or other catastrophic natural disaster could significantly disrupt our operations. In addition, acts of civil unrest, failure of critical infrastructure, terrorism, armed conflict, war, and abrupt political change, as well as responses by various governments and the international community to such acts, can have a negative effect on our business. Such events could cause delays in initiating or completing sales, impede delivery of our products and services to our clients, disrupt or shut down the Internet or other critical client-facing and business processes, orimpede the travel of our personnel and clients, dislocate our critical internal functions and personnel. Our corporate headquarters is located approximately 30 miles from New York City,personnel, and we have an operations center located in Ft. Myers, Florida, a hurricane-prone area. We also operate in numerous international locations, and we have offices in a number of major cities across the globe. Abrupt political change, terrorist activity, and armed conflict pose a risk of general economic disruption in affected countries and regions, which may negatively impact our sales and increase our operating costs. Additionally, these conditions also may add uncertainty to the timing and budget decisions of our clients. Such events could significantly harm our ability to conduct normal business operations, andany of which can negatively impact our financial condition and operating results.systems.systems to conduct our operations. Individuals, groups, and state-sponsored organizations may take steps that pose threats to our operations, our computer systems, our employees, and our customers. They may develop and deploy malicious software to gain access to our networks and attempt to steal confidential information, launch distributed denial of service attacks, or attempt other coordinated disruptions. These threats are constantly evolving and becoming more sophisticated, thereby increasing the difficulty of detecting and successfully defending against them. A cyber-attack, widespread Internet failure or Internet access limitations, or disruption of our critical information technology systems through denial of service, viruses, or other events could cause delays in initiating or completing sales, impede delivery of our products and services to our clients, disrupt other critical client-facing or business processes, or dislocate our critical internal functions. Such events could significantly harm our ability to conduct normal business operations and negatively impact our financial condition and operating results. generally acknowledged as standard for the industry to secure our management information systems, including our computer systems, intranet, proprietary websites, email and other telecommunications and data networks, and we carefully scrutinize the security of outsourced website and service providers prior to retaining their services. However, the security measures implemented by us or by our outside service providers may not be effective and our systems (and those of our outside service providers) may be vulnerable to theft, loss, damage and interruption from a number of potential sources and events, including unauthorized access or security breaches, cyber-attacks, computer viruses, power loss, or other disruptive events. Our reputation, brand, financial condition and/orand operating results could be adversely affected if, as a result of a significant cyber event or other technology-related catastrophe, our operations are disrupted or shutdown; our confidential, proprietary information is stolen or disclosed; we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information; we are required to dedicate significant resources to system repairs or increase cyber security protection; or we otherwise incur significant litigation or other costs as a result of these occurrences.and to upgrade our technology and network infrastructure to handle increased traffic on our websites.websites, and to deliver our products and services through emerging channels, such as mobile applications. However, any inefficiencies or operational failures could diminish the quality of our products, services, and user experience, resulting in damage to our reputation and loss of current and potential users, subscribers, and advertisers, potentially harming our financial condition and operating results.8obligationobligations could impact our financial condition or future operating results.$200.0$400.0 million term loan and a $400.0 million$1.1 billion revolving credit facility (the “2010“2014 Credit Agreement”). TheIn addition, the credit arrangement contains an expansion feature by which the term loan and revolving facility may be increased, at our option and under certain conditions, by up to an additional $150.0$500.0 million in the aggregate which may or may not be available to us depending upon prevailing credit market conditions.aggregate. At both December 31, 2012 and 2011,2015, we had a total of $200.0$820.0 million outstanding under the 20102014 Credit Agreement.20102014 Credit Agreement could limit our future financial flexibility. Additionally, a failure to comply with these covenants could result in acceleration of all amounts outstanding under the arrangement,2014 Credit Agreement, which would materially impact our financial condition unless accommodations could be negotiated with our lenders. No assurance can be given that we would be successful in doing so, in this current financial climate, or that any accommodations that we were able to negotiate would be on terms as favorable as those presently contained in the credit arrangement. The associated debt service costs of this credit arrangement could impair our future operating results. The outstanding debt may limit the amount of cash or additional credit available to us, which could restrain our ability to expand or enhance products and services, respond to competitive pressures or pursue future business opportunities requiring substantial investments of additional capital.capital.capital, including acquisitions. If our existing financial resources are insufficient to satisfy our requirements, we may seek additional borrowings.borrowings or issue debt. Prevailing credit and debt market conditions may negatively affect debt availability and cost, and, as a result, financing may not be available in amounts or on terms acceptable to us, if at all. In addition, the incurrence of additional indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would further restrict our operations.agreements.agreements, non-solicitation agreements and assignment of invention agreements, to the extent permitted under applicable law. When the non-competition period expires, former employees may compete against us. If a former employee chooses to compete against us prior to the expiration of the non-competition period, we seek to enforce these non-compete provisions but there is no assurance that we will be successful in our efforts. Additionally, there can be no assurance that another party will not assert that we have infringed its intellectual property rights.services.services or otherwise support our growth objectives. The risks involved in each acquisition or investment include the possibility of paying more than the value we derive from the acquisition, dilution of the interests of our current stockholders orshould we issue stock in the acquisition, decreased working capital, increased indebtedness, the assumption of undisclosed liabilities and unknown and unforeseen risks, the ability to retain key personnel of the acquired company, the inability to integrate the business of the acquired company, the time to train the sales force to market and sell the products of the acquired business, the potential disruption of our ongoing business and the distraction of management from our day to day business. The realization of any of these risks could adversely affect our business. Additionally, we face competition in identifying acquisition targets and consummating acquisitions.may in the future may be, subject to a variety of legal actions, such as employment, breach of contract, intellectual property-related, and business torts, including claims of unfair trade practices and misappropriation of trade secrets. Given the nature of our business, we are also subject to defamation (including libel and slander), negligence, or other claims relating to the information we publish. Regardless of the merits and despite vigorous efforts to defend any such claim can affect our reputation, and responding to any such claim could be time consuming, result in costly litigation and require us to enter into settlements, royalty and licensing agreements which may not be offered or available on reasonable terms. If a successful claim is made against us andwhich we fail to settle the claimcannot defend or resolve on reasonable terms, our business, results of operations orbrand, and financial positionresults could be materially and adversely affected.9
We face risks related to taxation.taxation. We operateare a global company with operations and clients in numerous domesticover 90 countries. A substantial amount of our earnings is generated outside of the U.S. and foreign taxing jurisdictions. Changes totaxed at rates significantly less than the U.S. statutory federal income tax rate. Our effective tax rate, financial position and results of operations could be adversely affected by earnings being higher than anticipated in jurisdictions with higher statutory tax rates and, conversely, lower than anticipated in jurisdictions that have lower statutory tax rates, by changes in the valuation of our deferred tax assets and/or by changes in tax laws as well asor accounting principles and their interpretation by relevant authorities.
United States, Ireland, India, Canada, United Kingdom, Japan, and France.
At the present time, we are executing against a board-approved share repurchase program to reduce the number of outstanding shares of our Common Stock. At December 31, 2015, approximately $1.1 billion remained available for share purchases under this program. No assurance can be given that we will continue these activities in the future when the program is completed, or in the event that the price of our Common Stock reaches levels at which repurchases are not accretive.
•the ability of our Board of Directors to issue and determine the terms of preferred stock;•advance notice requirements for inclusion of stockholder proposals at stockholder meetings; and•the anti-takeover provisions of Delaware law.
2935 domestic and 4960 international offices and weoffices. We have a significant presence in Stamford, Connecticut; Ft. Myers, Florida; and Egham, the United Kingdom. The Company does not own any properties.isare located in approximately 213,000 square feet of leased office space in three buildings located on the same campus in Stamford. This facility also accommodates research and analysis, marketing, sales, client support, production, corporate services, and administration. In 2010, the Company entered into an amended and restatedThe Company's lease agreement foron the Stamford headquarters facility that provides for a term of fifteen years. The amended lease also grants the Companyexpires in 2027 and contains three five-year renewal options to renew the lease at fair market value for five years each, an option to purchase the facility at fair market value, and a $25.0 million tenant improvement allowance provided by the landlord to renovate the three buildings comprising the facility. The renovation work commenced in 2011 and to date the renovation of two buildings has been completed. Renovation on the third building is expected to be completed in March 2013.Ourvalue. In Ft. Myers, operations are located in 120,000we lease 258,000 square feet of leased office space in one building for which the lease will expire in 2026. Our Egham location has approximately 72,000 square feet of leased office space in two buildings for whichlocated on the same campus, and we also recently leased an additional 21,601 square feet of space in a separate but nearby building that houses a staff training facility. All three of our Ft. Myers leases expire in 20202030. In Egham we lease approximately 67,800 square feet of office space, and 2025, respectively.45,000 square feet of temporary space, and we have an agreement to occupy under lease a new 120,000 square foot adjacent building, which is presently under construction. Occupancy is expected in mid-2017. Our other domestic and international locations support our research, consulting, domestic and international sales efforts, and other functions.We evaluate our space needs on a continuous basis as our business changes. While ourfacilitiesand planned facility expansions are adequate for our current and foreseeable needs, shouldcurrently anticipated needs. However, we expect to continue to invest in our business by adding headcount. As a result, we may need additional office space in various locations. Should additional space be necessary, we believe that it will be available and at reasonable terms.
2015. material to our consolidated or segment results for 2015. Gartner is headquartered in Stamford, Connecticut, U.S.A., and as of December 31, 2015, we had 7,834 associates, including 1,731 research analysts and consultants, and clients in over 90 countries. 2015. 2015, which is the highest in the Company's history. 52,595. information regarding goodwill and amortizable intangible assets. position. 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 39% in the 2014 period compared to 40% in the 2013 period. year-end 2013. 2014 Acquisitions. 2013. the 2014 period. reserves due to audit settlements, and increased tax exempt income. During NET INCOME was 2014 2013 2014 Events revenues increased increased 3 points year-over-year. 2014 2015 period. OBLIGATIONS AND COMMITMENTS (deficit) equity. A measure of the potential impact of foreign currency translation The effectiveness of management’s internal control over financial reporting as of December 31, 29, 2016. 29, 2016. Commission (COSO). products for twelve-month periods or longer. The majority of research contracts are billable upon signing, absent special terms granted on a limited basis from time to time. Research contracts are non-cancelable and non-refundable, except for government contracts that may have cancellation or fiscal funding clauses, which historically have not produced material cancellations. It is our policy to record the entire amount of the contract that is billable as a fee receivable at the time the contract is signed with a corresponding amount as deferred revenue, since the contract represents a legally enforceable claim. clients, and probable losses. These costs primarily relate to personnel. Operations (see Note 8 — Stock-Based Compensation for additional information). position. 2015. amount of impairment, if any, is measured based on the difference between projected discounted future operating cash flows using a discount rate reflecting the Company’s average cost of funds and the carrying value of the asset. The Company did not record any the three year period ended December 31, 2015. information). Fair value disclosures.The Company has a limited number of assets and liabilities that are adjusted to fair value at each balance sheet date. The Company’s fair value disclosures are included in Note 12 — Fair Value Disclosures. 2015. revenue recognition requirements; providing a more robust framework for addressing revenue issues; improving comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and providing more useful information to users of financial statements through improved revenue disclosure requirements. ASU No. 2014-09 is effective for Gartner on January 1, 2018. We continue to evaluate the impact of ASU No. 2014-09. the first half of 2016, of which $13.6 million will be paid from escrow. 2015. Hedges rate on $700.0 million of 30 day notional borrowings. The following table summarizes transactions relating to Common Stock for the three hedge) were recorded in Interest expense, net of tax effect. See Note 11 – Derivatives and Hedging for information regarding the hedges. Company’s defined benefit pension plans. The following table presents the number of common share equivalents that were not included in the computation of diluted EPS in the table above because the effect would have been assets, net of the valuation allowance at December 31, 2015. losses which are not likely to be realized. at the end of 2026. These amounts have been reduced for unrecognized tax benefits, consistent with FASB ASU 2013-11. deferred taxes and additional paid in capital. positions. and $0.1 million, respectively. The following tables provide information regarding the Company’s outstanding derivatives contracts as of, and for, the years ended December 31 (in thousands, except for number of outstanding contracts): Consolidated Balance Sheets. The Company’s assets and liabilities that are remeasured to fair value are presented in the following table (in thousands): 2013. The following are the key assumptions used in the computation of pension expense for the years ended December 31:112013,2016, there were 2,1841,429 holders of record of our Common Stock. Our 20132016 Annual Meeting of Stockholders will be held on May 30, 201326, 2016 at the Company’s corporate headquarters in Stamford, Connecticut. We did not submit any matter to a vote of our stockholders during the fourth quarter of 2012. 2012 2011 High Low High Low Quarter ended March 31 $ 43.19 $ 34.39 $ 41.68 $ 33.11 Quarter ended June 30 44.97 39.50 43.39 35.79 Quarter ended September 30 51.45 42.49 41.87 31.98 Quarter ended December 31 48.65 42.81 41.09 32.24 2015 2014 High Low High Low Quarter ended March 31 $ 86.28 $ 74.39 $ 73.53 $ 61.28 Quarter ended June 30 89.10 82.35 75.61 65.55 Quarter ended September 30 92.46 79.93 76.82 67.83 Quarter ended December 31 $ 94.82 $ 81.52 $ 87.58 $ 71.22 20102014 Credit Agreement contains a negative covenant which may limit our ability to pay dividends.$500.0 million share$1.2 billion board authorization to repurchase program, of which $210.2 million remained available for repurchases as of December 31, 2012. Repurchasesthe Company's common stock. The Company may be maderepurchase its common stock from time-to-time through open market purchases, private transactions, tender offers or other transactions. The amountin amounts and timing of repurchases will beat prices the Company deems appropriate, subject to the availability of stock, prevailing market conditions, the trading price of the stock, the Company’s financial performance and other conditions. Repurchases may 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 2014 Credit Agreement. Repurchases may also be made from time-to-time in connection with the settlement of the Company’s shared-basedCompany's share-based compensation awards. Repurchases will be funded from cash flow from operations or borrowings.provides detail related tosummarizes the repurchases of our outstanding Common Stock in the three months ended December 31, 20122015 pursuant to our $1.2 billion share repurchase programauthorization and pursuant to the settlement of share-based compensation awards:Period Total Number of Shares Purchased
(#) Average Price Paid Per Share
($) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(#) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
($000’s) October 205 $ 46.41 205 November 475,282 46.03 475,282 December 2,658 45.63 2,658 Total (1) 478,145 $ 46.02 478,145 $ 210,200 Period October 167,134 $ 83.62 November 30,258 88.35 December 450,097 90.11 Total (1) 647,489 $ 88.35 $ 1.1 (1) For the year ended December 31, 2012,2015, the Company repurchased 2,738,238 shares for a total cost of $111.3 million.6.2 million shares.12(In thousands, except per share data) 2012 2011 2010 2009 2008 STATEMENT OF OPERATIONS DATA: Revenues: Research $ 1,137,147 $ 1,012,062 $ 865,000 $ 752,505 $ 781,581 Consulting 304,893 308,047 302,117 286,847 347,404 Events 173,768 148,479 121,337 100,448 150,080 Total revenues 1,615,808 1,468,588 1,288,454 1,139,800 1,279,065 Operating income 245,707 214,062 149,265 134,477 164,368 Income from continuing operations 165,903 136,902 96,285 82,964 97,148 Income from discontinued operations — — — — 6,723 Net income $ 165,903 $ 136,902 $ 96,285 $ 82,964 $ 103,871 PER SHARE DATA: Basic: Income from continuing operations $ 1.78 $ 1.43 $ 1.01 $ 0.88 $ 1.02 Income from discontinued operations — — — — 0.07 Income per share $ 1.78 $ 1.43 $ 1.01 $ 0.88 $ 1.09 Diluted: Income from continuing operations $ 1.73 $ 1.39 $ 0.96 $ 0.85 $ 0.98 Income from discontinued operations — — — — 0.07 Income per share $ 1.73 $ 1.39 $ 0.96 $ 0.85 $ 1.05 Weighted average shares outstanding Basic 93,444 96,019 95,747 94,658 95,246 Diluted 95,842 98,846 99,834 97,549 99,028 OTHER DATA: Cash and cash equivalents $ 299,852 $ 142,739 $ 120,181 $ 116,574 $ 140,929 Total assets 1,621,277 1,379,872 1,285,658 1,215,279 1,093,065 Long-term debt 115,000 150,000 180,000 124,000 238,500 Stockholders’ equity (deficit) 306,673 181,784 187,056 112,535 (21,316 ) Cash flow from operations 279,814 255,566 205,499 161,937 184,350 (In thousands, except per share data) 2015 2014 2013 2012 2011 STATEMENT OF OPERATIONS DATA: Revenues: Research $ 1,583,486 $ 1,445,338 $ 1,271,011 $ 1,137,147 $ 1,012,062 Consulting 327,735 348,396 314,257 304,893 308,047 Events 251,835 227,707 198,945 173,768 148,479 Total revenues 2,163,056 2,021,441 1,784,213 1,615,808 1,468,588 Operating income 287,997 286,162 275,492 245,707 214,062 Net income $ 175,635 $ 183,766 $ 182,801 $ 165,903 $ 136,902 PER SHARE DATA: Basic income per share $ 2.09 $ 2.06 $ 1.97 $ 1.78 $ 1.43 Diluted income per share $ 2.06 $ 2.03 $ 1.93 $ 1.73 $ 1.39 Weighted average shares outstanding: Basic 83,852 89,337 93,015 93,444 96,019 Diluted 85,056 90,719 94,830 95,842 98,846 OTHER DATA: Cash and cash equivalents $ 372,976 $ 365,302 $ 423,990 $ 299,852 $ 142,739 Total assets 2,174,686 1,904,351 1,783,582 1,621,277 1,379,872 Long-term debt 790,000 385,000 136,250 115,000 150,000 Stockholders’ (deficit) equity (132,400 ) 161,171 361,316 306,673 181,784 Cash provided by operating activities $ 345,561 $ 346,779 $ 315,654 $ 279,814 $ 255,566 ·In 2012 we acquired Ideas International, Inc. and recognized $2.4 million in pre-tax acquisition and integration charges (see Note 2 — Acquisitions in the Notes to the Consolidated Financial Statements). In addition, in 2009 we acquired AMR Research, Inc. and Burton Group, Inc., and in 2010 and 2009 we recognized $7.9 million and $2.9 million in pre-tax acquisition charges. The results of these businesses, which were not material, were included beginning on their respective acquisition dates.·In 2012 we repurchased 2.7 million of our common shares under our share repurchase program at a total cost of $111.3 million. We also repurchased 5.9 million, 3.9 million, 0.3 million, and 9.7 million of our common shares in 2011, 2010, 2009, and 2008, respectively (see Note 7 — Stockholders’ Equity in the Notes to the Consolidated Financial Statements).·In 2010 we refinanced our debt (see Note 5 — Debt in the Notes to the Consolidated Financial Statements). In conjunction with the refinancing, we recorded $3.7 million in incremental pre-tax charges in that year related to the termination of the previous credit arrangement.·In 2008 we sold our Vision Events business, which had been part of our Events segment. Accordingly, the results of operations of this business and the related gain on sale were reported as a discontinued operation.13In 2012 weIdeas International Limited (“Ideas International”), a publicly-owned Australian corporation (seeother companies in 2015 which is described in Note 2 — AcquisitionAcquisitions in the Notes to the Condensed Consolidated Financial Statements for additional information). Ideas International’s business operationsincluded in this Annual Report on Form 10-K. The operating results of these acquired businesses have been integrated into the Company’s Research segment, and its operating results and business measurements are included in the Company’sour consolidated and segment operating results beginning on the datetheir respective dates of acquisition. The impact of the acquisition wasand these results were not material.statements.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,” or other words of similar meaning.primarily of CIOs, and other senior IT personnel, executives, and executivesothers from a wide variety of business enterprises, government agencies and the investment community.•Research provides objective insight on critical and timely technology and supply chain initiatives for CIOs, other IT professionals, supply chain leaders, technology companies and the investment community through reports, briefings, proprietary tools, access to our analysts, peer networking services, and membership programs that enable our clients to make better decisions about their IT and supply chain investments.•Consulting provides customized solutions to unique client needs through on-site, day-to-day support, as well as proprietary tools for measuring and improving IT performance with a focus on cost, performance, efficiency, and quality.•Events provide IT, supply chain, and business professionals the opportunity to attend various symposia, conferences and exhibitions to learn, contribute and network with their peers. From our flagship event Symposium/ITxpo, to Summits focused on specific technologies and industries, to experimental workshop-style Seminars, our events distill the latest Gartner research into applicable insight and advice.BUSINESS SEGMENT BUSINESS MEASUREMENTS Research 14 earlier,ago, by the total contract value from a year earlier,ago, excluding the impact of foreign currency exchange. When wallet retention exceeds client retention, it is an indication of retention of higher-spending clients, or increased spending by retained clients, or both. Wallet retention is calculated at an enterprise level, which represents a single company or customer. Consulting Events $1,615.8 million$2.163 billion in 2012,2015, an increase of 10%7% over 2011 while diluted earnings per share increased by $.34 per share, to $1.73. Excluding the impact of foreign currency, 2012 total revenues increased 12% over 2011.Research revenues rose 12% year-over-year, to $1,137.1 million in 2012,2014 on a reported basis and the contribution margin increased 1 point, to 68%. At December 31, 2012, Research contract value was $1,262.9 million, an increase of 14% over December 31, 201113% adjusted for the impact of foreign currency exchange. Client retentionDiluted earnings per share increased to $2.06 per share in 2015 from $2.03 per share in 2014.83%69%, the same as 2014. At December 31, 2015, Research contract value was $1.761 billion, an increase of 10% over December 31, 2014 on a reported basis and 14% adjusted for the impact of foreign currency exchange. Both client and wallet retention was 99%remained strong, at 84% and 105%, respectively, at December 31, 2012.20122015 decreased 1%6% when compared to 2011, while2014 but were flat when adjusted for the foreign exchange impact. The gross contribution margin was 36%.33% in 2015 compared to 34% in 2014. Consultant utilization was 67% for 2012 compareddeclined by 2 points in 2015, to 65% in 2011, and we66%. We had 503606 billable consultants at December 31, 20122015 compared to 481535 at year-end 2011.2014. Backlog increased 2%15% year-over-year, to $102.7$117.7 million at December 31, 2012.17%11% year-over-year, to $173.8 million, while$251.8 million. Adjusted for the foreign currency impact, Events revenues increased 18%. The segment contribution margin was 46%.52% in 2015, a 3 point increase over 2014. We held 6265 events in 20122015 compared to 6061 in 2011, with an increase in overall attendance2014, while the number of 8%,attendees increased 7% year-over-year, to 46,307.increased 9%was $345.6 million in 2012 compared to 2011, to $279.8 million. We continued to focus on maximizing shareholder value in 2012, and we repurchased 2.7 million of our common shares outstanding during the year.2015. We ended 20122015 with almost $300.0$373.0 million in cash and cash equivalents. In addition to our record year-end cash balance, as of year-end 2012 we also had almost $347.0equivalents while $656.0 million ofwas available for borrowing capacity on our $400.0 millionunder the revolving credit facility.line. We believe that we have adequate liquidity to meet our currently anticipated needs.The Company’s 2010 Credit Agreement expiresDecember 2015. The Company is currently exploring refinancing optionsBarcelona, Spain ("Nubera"), and Capterra, Inc., based in Arlington, Virginia ("Capterra"), both of which help organizations find the right business software to take advantage of favorable market conditions.
meet their needs. Note 2 - Acquisitions in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K provides additional information regarding these acquisitions.15Statements.Statements included in this Form 10-K. 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 described below. also 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 may ultimately differ materially from actual results. On-goingSEC Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (“SAB 101”), andthe requirements of U.S. GAAP as well as SEC Staff Accounting Bulletin No. 104, Revenue Recognition (“SAB 104”). Revenue is only recognized once all required criteria for revenue recognition have been met. Revenue by significant source is accounted for as follows:products andproducts. The related revenues are deferred and recognized ratably over the applicable contract term. Fees derived from research reprints areassisting organizations in selecting the right business software for their needs is recognized when the reprint is shipped.leads are provided to vendors.measurementdetermination of likely and probable losses and the allowance for losses is based on historical loss experience, aging of outstanding receivables, an assessment of current economic conditions, andthe aging of outstanding receivables, the financial health of specific clients.clients, and probable losses. This evaluation is inherently judgmental and requires estimates. These valuation reserves are periodically re-evaluated and adjusted as more information about the ultimate collectability of fees receivable becomes available. Circumstances that could cause our valuation reserves to increase include changes in our clients’ liquidity and credit quality, other factors negatively impacting our clients’ ability to pay their obligations as they come due, and the effectiveness of our collection efforts. December 31, 2012 2011 Total fees receivable $ 470,368 $ 428,293 Allowance for losses (6,400 ) (7,260 ) Fees receivable, net $ 463,968 $ 421,033 16 December 31, 2015 2014 Total fees receivable $ 587,663 $ 558,807 Allowance for losses (6,900 ) (6,700 ) Fees receivable, net $ 580,763 $ 552,107 on a periodic basis shouldif events or circumstances indicate potential impairment. If we determine that the fair value of a reporting unit or an intangible asset is less than its related carrying amount, we must recognize an impairment charge against earnings. Among the factors we consider important that could trigger an impairment review are the following:Significant under-performanceour current operating results relative to our annual plan or historical performance; changes in our strategic plan or projected future operating results;Significantuse of our assets; restructuring charges or other changes in our business segments; competitive pressures and changes in the manner of our use of acquired assetsgeneral economy or in the strategy for our overall business;Significant negative industry or general economic trends;Significantmarkets in which we operate; a significant decline in our stock price for a sustained period; andOur our market capitalization relative to our net book value.Thebased on either a qualitativequantitative or qualitative assessmentin nature, or a combination of the two. Both methods require the use of estimates which in turn contain judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the resulting estimates are subject to uncertainty. In 2012, we completed the requiredIf our annual goodwill impairment test utilizingevaluation determines that the fair value of a reporting unit is less than its related carrying amount, we may recognize an impairment charge against earnings. Among the factors we consider in a qualitative approach. Based onassessment 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 requiresassessment, the Company believestest determined that the fair values of the Company’sCompany's reporting units continue to substantially exceed their respective carrying amounts.values. See Note 1 — Business and Significant Accounting Policies in the Notes to the Consolidated Financial Statements for additional discussion.As we prepare our consolidated financial statements, weThe 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 together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We record a valuation allowance to reduce ourIn assessing the realizability of deferred tax assets, when future realizationmanagement considers if it is in question.more likely than not that some or all of the deferred tax assets will not be realized. We consider the availability of loss carryforwards, existingprojected reversal of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessingmaking this assessment. The Company recognizes the need fortax benefit from an uncertain tax position only if it is more likely than not the valuation allowance. Intax position will be sustained based on the event we determine that we are able to realize our deferred tax assets in the future in excesstechnical merits of the net recorded amount, an adjustment is made to reduce the valuation allowance and increase income in the period such determination is made. Likewise, if we determine that we will not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the valuation allowance is charged against income in the period such determination is made.TopicsTopic No. 505 and 718 as interpreted byand SEC Staff Accounting Bulletins No. 107 (“SAB No. 107”) and No. 110 (“SAB 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, net of estimated forfeitures (see Note 8 — Stock-Based Compensation in the Notes to the Consolidated Financial Statements for additional information regarding stock-based compensation)information).after year end.
the end of our fiscal year.17tables summarizetable presents the changes in selected line items in our Consolidated Statements of OperationOperations for the threetwo years ended December 31, 2012 (dollars in2015 (in thousands): Twelve Months
Ended
December 31,
2012 Twelve Months
Ended
December 31,
2011 Increase
(Decrease)
$ Increase
(Decrease)
% Total revenues $ 1,615,808 $ 1,468,588 $ 147,220 10 % Costs and expenses: Cost of services & product development 659,067 608,755 (50,312 ) (8 )% Selling, general and administrative 678,843 613,707 (65,136 ) (11 )% Depreciation 25,369 25,539 170 1 % Amortization of intangibles 4,402 6,525 2,123 33 % Acquisition & integration charges 2,420 — (2,420 ) (100 )% Operating income 245,707 214,062 31,645 15 % Interest expense, net (8,859 ) (9,967 ) 1,108 11 % Other expense, net (1,252 ) (1,911 ) 659 34 % Provision for income taxes (69,693 ) (65,282 ) (4,411 ) (7 )% Net income $ 165,903 $ 136,902 $ 29,001 21 % Twelve Months Ended
December 31,
2011 Twelve Months Ended
December 31,
2010 Increase (Decrease)
$ Increase
(Decrease)
% Total revenues $ 1,468,588 $ 1,288,454 $ 180,134 14 % Costs and expenses: Cost of services & product development 608,755 552,238 (56,517 ) (10 )% Selling, general and administrative 613,707 543,174 (70,533 ) (13 )% Depreciation 25,539 25,349 (190 ) (1 )% Amortization of intangibles 6,525 10,525 4,000 38 % Acquisition & integration charges — 7,903 7,903 100 % Operating income 214,062 149,265 64,797 43 % Interest expense, net (9,967 ) (15,616 ) 5,649 36 % Other (expense) income, net (1,911 ) 436 (2,347 ) >(100 )% Provision for income taxes (65,282 ) (37,800 ) (27,482 ) (73 )% Net income $ 136,902 $ 96,285 $ 40,617 42 % Total revenues $ 2,163,056 $ 2,021,441 $ 141,615 7 % Costs and expenses: Cost of services & product development 839,076 797,933 (41,143 ) (5 ) Selling, general and administrative 962,677 876,067 (86,610 ) (10 ) Depreciation 33,789 31,186 (2,603 ) (8 ) Amortization of intangibles 13,342 8,226 (5,116 ) (62 ) Acquisition & integration charges 26,175 21,867 (4,308 ) (20 ) Operating income 287,997 286,162 1,835 1 Interest expense, net (20,782 ) (10,887 ) (9,895 ) (91 ) Other income (expense), net 4,996 (592 ) 5,588 >100 Provision for income taxes (96,576 ) (90,917 ) (5,659 ) (6 ) Net income $ 175,635 $ 183,766 $ (8,131 ) (4 )% 2012 VERSUS 201120122015 increased $147.2$141.6 million, or 10%7%, compared to the twelve months ended December 31, 2011. Total revenues2014. Revenues increased 12% excludingby double-digits in our Research and Events businesses but declined 6% in Consulting. Excluding the unfavorable impact of foreign currency. Revenuescurrency, total revenues increased by double-digits13% in both our Research and Events segments but declined slightly in Consulting. Revenues increased across all of our geographic regions, with a double-digit increase in Research revenues in every region.An overview of our2015 compared to 2014.follows:Revenues from sales to United States and Canadian clients increased 10%, to $947.1 million in 2012 from $861.5 million in 2011.Revenues from sales to clients in Europe,for the Middle East and Africa increased to $458.6 million in 2012 from $437.2 million in 2011, a 5% increase.Revenues from sales to clients in our Other International region increased to $210.1 million in 2012 from $169.9 million in 2011, a 24% increase.twelve months ended (in thousands): 18Geographic Region December 31, 2015 December 31, 2014 Increase (Decrease) $ Increase (Decrease) % U.S. and Canada $ 1,347,676 $ 1,204,476 $ 143,200 12 % Europe, Middle East, Africa 557,165 570,334 (13,169 ) (2 ) Other International 258,215 246,631 11,584 5 Totals $ 2,163,056 $ 2,021,441 $ 141,615 7 % An overview offollows:for the twelve months ended (in thousands):Research revenues increased 12% in 2012, to $1,137.1 million compared to $1,012.1 million in 2011, and comprised 70% and 69% of our total revenues in 2012 and 2011, respectively.Consulting revenues decreased 1% in 2012, to $304.9 million compared to $308.0 million in 2011, and comprised 19% and 21% of our total revenues in 2012 and 2011, respectively.Segment December 31, 2015 December 31, 2014 Increase (Decrease) $ Increase (Decrease) % Research $ 1,583,486 $ 1,445,338 $ 138,148 10 % Consulting 327,735 348,396 (20,661 ) (6 ) Events 251,835 227,707 24,128 11 Totals $ 2,163,056 $ 2,021,441 $ 141,615 7 % Events revenues increased 17% in 2012, to $173.8 million compared to $148.5 million in 2011, and comprised 11% of total revenues in 2012 and 10% in 2011. Total revenues $ 2,021,441 $ 1,784,213 $ 237,228 13 % Costs and expenses: Cost of services & product development 797,933 713,484 (84,449 ) (12 ) Selling, general and administrative 876,067 760,458 (115,609 ) (15 ) Depreciation 31,186 28,996 (2,190 ) (8 ) Amortization of intangibles 8,226 5,446 (2,780 ) (51 ) Acquisition & integration charges 21,867 337 (21,530 ) >(100) Operating income 286,162 275,492 10,670 4 Interest expense, net (10,887 ) (8,837 ) (2,050 ) (23 ) Other expense, net (592 ) (216 ) (376 ) >(100) Provision for income taxes (90,917 ) (83,638 ) (7,279 ) (9 ) Net income $ 183,766 $ 182,801 $ 965 1 % Geographic Region December 31, 2014 December 31, 2013 Increase (Decrease) $ Increase (Decrease) % U.S. and Canada $ 1,204,476 $ 1,049,734 $ 154,742 15 % Europe, Middle East, Africa 570,334 508,755 61,579 12 Other International 246,631 225,724 20,907 9 Totals $ 2,021,441 $ 1,784,213 $ 237,228 13 % Segment December 31, 2014 December 31, 2013 Increase (Decrease) $ Increase (Decrease) % Research $ 1,445,338 $ 1,271,011 $ 174,327 14 % Consulting 348,396 $ 314,257 34,139 11 Events 227,707 $ 198,945 28,762 14 Totals $ 2,021,441 $ 1,784,213 $ 237,228 13 % 8%12% in 2012,2014 compared to 2013, or $50.3$84.4 million, to $659.1$797.9 million compared to $608.8$713.5 million in 2011.2013. The impact of foreign currency exchange for the full year was not significant. The increase was primarily due to higher payroll and related benefits costs from additional headcount, as wewhich increased 12%. The headcount increase reflects our continued to invest to support the growthinvestment in our Research business and to a lesser extent, merit salary increases. We also had higher conference costs and related travel expenses due to an increase inincludes the number of events, as well as additional attendees and exhibitors at our events. These additional costs were partially offset byemployees resulting from the favorable impact of foreign currency.2014 Acquisitions. COS as a percentage of revenues was 41% for both periods.$65.1$115.6 million in 2012,2014, or 11%15%, to $678.8$876.1 million compared to $613.7$760.5 million in 2011.2013. Excluding the favorable impact of foreign currency exchange, SG&A expense increased 16% year-over-year. The increase was primarily due to higher payroll and related benefits costs which was partially offset by favorable foreign currency impact. The higher payroll and benefit cost was primarily driven by our investment infrom additional headcount, and to a lesser extent, higher sales commissions, and merit salary increases. The increased headcount includes our investment in additional quota-bearing sales associates, which increased to 1,4171,881 at December 31, 2012,2014, a 12%14% increase over the prior year-end.decreased slightlyincreased 8% in 2014 compared to 2013, which reflects our additional investment in fixed assets.certain assets becoming fully depreciated which was only partially offset by the additional depreciation related to asset additions. Capital expenditures increased to $44.3 million in 2012 from $42.0 million in 2011, which includes $17.0 million and $9.5 million, respectively, of expenditures for the renovation of our Stamford headquarters facility. Up to $25.0 million of these expenditures are reimbursable by the facility landlord, and as of December 31, 2012, $22.0 million had been reimbursed.AMORTIZATION OF INTANGIBLES decreased year-over-year due to certain intangibles becoming fully amortized, which was only partially offset by the additional amortizationarising from the intangible assets recorded from the Ideas International acquisition in mid-2012.$2.4$21.9 million in 2012 and zero2014 compared to $0.3 million in 2011.2013. These charges relatedare directly-related to our acquisitions and primarily include amounts accrued for payments contingent on the acquisitionachievement of Ideas International and includedcertain employment conditions, legal, consulting, and severance and other costs.$31.6$10.7 million year-over-year, or 15%4%, to $245.7$286.2 million in 20122014 from $214.1$275.5 million in 2011.2013. The increased operating income was attributable to higher segment contributions from our Research and Events businesses. Operating income as a percentage of revenues was 14% in 2014 and 15% for both periods. Although both Research and Events had higher segment contributions in 2012, these increases were partially offset by a lower contribution in Consulting, as well as higher SG&A expenses, as discussed above.declined by 11% in 2012 when compared to 2011. The decline was primarilyincreased 23% year-over-year due to a lower average amount of debt outstanding, which declined to $207.0 millionadditional borrowings in 2012 from $220.0 million in 2011, as well as lower amortization of capitalized debt refinancing costs.$1.3$0.6 million in 20122014 and $1.9$0.2 million in 2011.2013. These expenses primarily consisted of net foreign currency exchange gains and losses.$69.7$90.9 million in 20122014 compared to $65.3$83.6 million in 20112013 and the effective tax rate was 29.6%33.1% for 20122014 compared to 32.3%31.4% for 2011.2013. The lowerhigher effective tax rate in 20122014 was primarily attributabledue to the recognitionimpact of tax benefitscertain favorable items in 2012 resulting from the settlement of tax audits,2013, as well as the unfavorable mix of pretax income by jurisdiction in 2014 which was partially offset by foreign tax credit benefits recorded in 2012 relating to2014. The favorable items in 2013 included the recognitionenactment of certain statebeneficial legislation in 2013, the release of tax credits.2012, the Company closed2014, the Internal Revenue Service (“IRS”)closed its audit of its 2007the Company's 2011 and 2010 federal income tax return.returns. The resolution of the audit did not have a materialoperations of the Company.In 2011 the IRS commenced an audit of the Company’s federal income tax returns for the 2008 and 2009 tax years. The IRS has proposed adjustments for both 2008 and 2009 and the Company expects to settle the audit in early 2013. Although the audit has not been fully resolved, the Company believes that the ultimate disposition will not have a material adverse effect on its consolidated financial position, cash flows, or results of operations.19The American Taxpayer Relief Act of 2012 (the “Tax Act”) was enacted in January of 2013 and contains beneficial tax provisions for the Company which apply retroactively to 2012. However, since the Tax Act was passed in 2013, approximately $1.5 million of tax benefits relating to its retroactive application will be recorded by the Company in the first quarter of 2013.$165.9$183.8 million in 20122014 and $136.9$182.8 million in 2011,2013, an increase of $29.0 million, or 21%1%, primarily due to a higheras the increased operating income whichin 2014 was partiallysubstantially offset by $4.4 million in higheradditional income tax charges. Although the year-over-year effective tax rate declined, pre-tax income increased substantially, resulting in the higher dollar amount of tax charges. Both basic and dilutedDiluted earnings per share increased 24%5% year-over-year, to $2.03 in 2014, primarily due to the higher net income and to a lesser extent a lower number of weighted-average shares outstanding.2011 VERSUS 2010TOTAL REVENUES for the twelve months ended December 31, 2011 increased $180.1 million, or 14%, compared to the twelve months ended December 31, 2010. Total revenues increased 11% excluding the impact of foreign currency. Revenues increased across all of our geographic regions and in all three of our business segments on a reported basis.An overview of our results by geographic region follows:Revenues from sales to United States and Canadian clients increased 12%, to $861.5 million in 2011 from $765.8 million in 2010.Revenues from sales to clients in Europe, the Middle East and Africa increased to $437.2 million in 2011 from $380.8 million in 2010, a 15% increase.Revenues from sales to clients in our Other International region increased 20%, to $169.9 million in 2011 from $141.9 million in 2010.An overview of our results by segment follows:Research revenues increased 17% in 2011, to $1,012.1 million compared to $865.0 million in 2010, and comprised 69% and 67% of our total revenues in 2011 and 2010, respectively.Consulting revenues increased 2% in 2011, to $308.0 million compared to $302.1 million in 2010, and comprised approximately 21% and 23% of our total revenues in 2011 and 2010, respectively.Events revenues increased 22% in 2011, to $148.5 million compared to $121.3 million in 2010, and comprised approximately 10% of total revenues in both 2011 and 2010.Please refer to the section of this MD&A below entitled “Segment Results” for a further discussion of revenues and results by segment.COST OF SERVICES AND PRODUCT DEVELOPMENT (“COS”) expense increased 10% in 2011, or $56.5 million, to $608.8 million compared to $552.2 million in 2010. Approximately half of the increase was due to higher payroll and related benefits costs resulting from our investment in additional headcount and merit salary increases. The rest of the increase was primarily due to the negative impact of foreign currency translation, as well as incremental expenses and additional investment in the Events business. COS as a percentage of revenues improved by 2 points year-over-year, primarily driven by higher research revenues and the operating leverage inherent in our Research business.SELLING, GENERAL AND ADMINISTRATIVE (“SG&A”) expense increased by $70.5 million in 2011, or 13%, to $613.7 million from $543.2 million in 2010. The increase was primarily due to higher payroll and to a lesser extent, the negative impact of foreign currency translation. Excluding the unfavorable impact of foreign exchange, SG&A expense increased 11% year-over-year. The higher payroll costs resulted from additional investment in headcount, as well as higher sales commissions and merit salary increases. The increased headcount was primarily due to our investment in additional quota-bearing sales associates, which increased 21% compared to December 31, 2010.DEPRECIATION expense increased slightly year-over-year. Capital spending increased to $42.0 million in 2011 from $21.7 million in 2010. The $42.0 million of capital expenditures in 2011 included $9.5 million of expenditures related to the renovation of our Stamford headquarters facility, of which $9.0 million was reimbursed by our landlord in 2011.AMORTIZATION OF INTANGIBLES decreased 38% year-over-year due to certain intangibles becoming fully amortized in 2010.ACQUISITION AND INTEGRATION CHARGES was zero in 2011 and $7.9 million in 2010. These charges related to the acquisitions of AMR Research and Burton Group in December 2009 and included legal, consulting, severance, and other costs.20OPERATING INCOME increased $64.8 million year-over-year, or 43%, to $214.1 million in 2011 from $149.3 million in 2010. Operating income as a percentage of revenues improved by 3 points year-over-year, to 15% in 2011 compared to 12% in 2010, primarily due to a significantly higher segment contribution from the Research business and to a lesser extent, lower intangible amortization and acquisition and integration charges.INTEREST EXPENSE, NET was $10.0 million in 2011 compared to $15.6 million in 2010, a 36% decline. The $15.6 million of interest expense in 2010 included $3.7 million of incremental expense related to the refinancing of our debt (See Note 5 — Debt in the Notes to the Consolidated Financial Statements). Excluding the $3.7 million incremental charge, Interest expense, net declined approximately 15% year-over-year, primarily due to a lower average amount of debt outstanding, which declined to $220.0 million in 2011 from $326.0 million in 2010.OTHER (EXPENSE) INCOME, NET was $(1.9) million in 2011, which primarily consisted of net foreign currency exchange losses, and $0.4 million in 2010, which consisted of a $2.4 million gain from an insurance recovery related to a prior period loss, offset by net foreign currency exchange losses.PROVISION FOR INCOME TAXES was $65.3 million in 2011 compared to $37.8 million in 2010 and the effective tax rate was 32.3% for 2011 compared to 28.2% for 2010. The lower effective tax rate in 2010 was primarily attributable to the release of valuation allowances relating to certain net operating losses.NET INCOME was $136.9 million in 2011 and $96.3 million in 2010, an increase of $40.6 million, or 42%, primarily due to a substantially higher operating income, which was partially offset by higher income tax charges. Basic earnings per share increased 42% year-over-year while diluted earnings per share increased 45% due to the higher net income.segments:Research 2012 vs. 2011 2011 vs. 2010 As Of And
For The
Twelve Months
Ended
December 31,
2012 As Of And
For the
Twelve Months
Ended
December 31,
2011 Increase
(Decrease) Percentage
Increase
(Decrease) As Of And
For The
Twelve Months
Ended
December 31,
2011 As Of And
For the
Twelve Months
Ended
December 31,
2010 Increase
(Decrease) Percentage
Increase
(Decrease) Financial Measurements: Revenues (1) $ 1,137,147 $ 1,012,062 $ 125,085 12 % $ 1,012,062 $ 865,000 $ 147,062 17 % Gross contribution (1) $ 774,342 $ 682,136 $ 92,206 14 % $ 682,136 $ 564,527 $ 117,609 21 % Gross contribution margin 68 % 67 % 1 point — 67 % 65 % 2 points — Business Measurements: Contract value (1) $ 1,262,865 $ 1,115,801 $ 147,064 13 % $ 1,115,801 $ 977,710 $ 138,091 14 % Client retention 83 % 82 % 1 point — 82 % 83 % (1) point — Wallet retention 99 % 99 % — — 99 % 98 % 1 point — 2014 2014 2013 Financial Measurements: Revenues (1) $1,583,486 $1,445,338 $ 138,148 10 % $1,445,338 $1,271,011 $ 174,327 14 % Gross contribution (1) $1,096,827 $1,001,914 $ 94,913 9 % $1,001,914 $879,384 $ 122,530 14 % Gross contribution margin 69 % 69 % — — 69 % 69 % — — Business Measurements: Contract value (1) $1,760,700 $1,603,200 $ 157,500 10 % $1,603,200 $1,423,179 $ 180,021 13 % Client retention 84 % 85 % (1) point — 85 % 83 % 2 points — Wallet retention 105 % 106 % (1) point — 106 % 104 % 2 points — (1) Dollars in thousands. 2012201112%10% in 20122015 compared to 2011 but excluding the unfavorable effect of foreign currency translation, Research segment revenues increased 14%. The segment gross contribution margin increased by 1 point, driven by higher revenues and the operating leverage in this business. Contribution margin improved in spite of a 10% increase in segment headcount as we continue to invest for future growth.Research contract value increased 13% in 2012, to $1,262.9 million, but increased 14% year-over-year excluding2014. Excluding the unfavorable impact of foreign currency, translation. We had double-digitResearch revenues increased 16% in 2015. The segment gross contribution margin was 69% in both annual periods. The contribution margin remained at 69% in spite of a 12% increase in segment headcount, mostly driven by new hires but also to a lesser extent the additional employees resulting from our acquisitions. The overall headcount increase reflects our continuing investment in this business.across allin contract value was broad-based, with every region, client size, and industry sector growing at double-digit rates, with the exception of our Research product linesthe Energy and client sizes, and almost every industry group.Utilities sector, which still increased year-over-year but at a slower rate. The number of our research client organizations we serveenterprises increased by 7%8% in 2012,2015, to 13,305, and has increased 27% since 2009. We attribute the increase in contract value and the number of client organizations we serve to our extraordinary research content, our continuing focus on sales effectiveness, and the expansion in the number of our quota-bearing sales associates.10,796. Both client retention and wallet retention remained strong, during 2012 at 83%84% and 99%, respectively.
105% respectively, as of December 31, 2015.212011201017% in 201114% compared to 2010 and reached the one billion dollar level for the first time. Excluding the favorable effect2013. The impact of foreign currencyexchange translation Research segment revenues increased 14%.was not significant. The segment gross contribution margin increased by 2 points, to 67%, as higher segment revenues and the operating leverage in this business resulted in a higher segment contribution.was 69% for both periods. Research contract value increased 13% in 2014 to $1.603 billion, and increased 14% in 2011, to $1,115.8 million. Foreignyear-over-year adjusted for the impact of foreign currency translation had an immaterial impact year-over-year on contract value. We had double-digittranslation. Our growth in contract value growth in mostwas broad-based, with every region, industry segment, and client size growing at double-digit rates compared to 2013. The number of our Research product lines,research client sizes, and industry groups.enterprises increased by 10% in 2014, to 9,958. Client retention and wallet retention remained strong at 82%were 85% and 99%,106% as of December 31, 2014, respectively.Consulting 2012 vs. 2011 2011 vs. 2010 As Of And
For The
Twelve Months
Ended
December 31,
2012 As Of And
For the
Twelve Months
Ended
December 31,
2011 Increase
(Decrease) Percentage
Increase
(Decrease) As Of And
For The
Twelve Months
Ended
December 31,
2011 As Of And
For the
Twelve Months
Ended
December 31,
2010 Increase
(Decrease) Percentage
Increase
(Decrease) Financial Measurements: Revenues (1) $ 304,893 $ 308,047 $ (3,154 ) (1 )% $ 308,047 $ 302,117 $ 5,930 2 % Gross contribution (1) $ 109,253 $ 114,838 $ (5,585 ) (5 )% $ 114,838 $ 121,885 $ (7,047 ) (6 )% Gross contribution margin 36 % 37 % (1) point — 37 % 40 % (3) points — Business Measurements: Backlog (1) $ 102,718 $ 100,564 $ 2,154 2 % $ 100,564 $ 100,839 $ (275 ) — Billable headcount 503 481 22 5 % 481 473 8 2 % Consultant utilization 67 % 65 % 2 points — 65 % 68 % (3) points — Average annualized revenue per billable headcount (1) $ 430 $ 424 $ 6 1 % $ 424 $ 424 $ — — 2015 2014 2014 2013 Financial Measurements: Revenues (1) $327,735 $348,396 $ (20,661 ) (6 )% $348,396 $314,257 $ 34,139 11 % Gross contribution (1) $107,193 $119,931 $ (12,738 ) (11 )% $119,931 $107,565 $ 12,366 11 % Gross contribution margin 33 % 34 % (1) point — 34 % 34 % — Business Measurements: Backlog (1) $117,700 $102,600 $ 15,100 15 % $102,600 $106,130 $ (3,530 ) (3 )% Billable headcount 606 535 71 13 % 535 509 26 5 % Consultant utilization 66 % 68 % (2) points — 68 % 64 % 4 points — Average annualized revenue per billable headcount (1) $ 391 $ 442 $ (51 ) (12 )% $ 442 $ 409 $ 33 8 % (1) Dollars in thousands. 20122011revenuesrevenue decreased 1%6% year-over-year due tobut was essentially flat excluding the negative foreign exchange impact. The revenue decline was primarily in our core consulting practice, which was mainly driven by the foreign exchange impact. We also had lower revenues in our contract optimization business. Contract optimization revenues,practice, which can fluctuate from period to period, currently represent about 10%period. The year-over-year gross contribution margin declined by 1 point, primarily driven by higher headcount. Backlog increased by $15.1 million year-over-year, or 15%, to $117.7 million at December 31, 2015, which is the highest backlog in the Company's history.total Consulting segment revenues and have been declining over time as a percentage of overall segment revenue.foreign exchange. The decrease in contract optimization revenueincrease was substantially offset byprimarily due to higher core consulting revenues whichand to a lesser extent, higher contract optimization revenues. Contract optimization revenues can fluctuate from period to period but are generally about 10-15% of total annual Consulting segment revenues. The gross contribution margin was 34% for both periods. Backlog decreased $3.5 million, or 3%, year-over-year, to $102.6 million at December 31, 2014. 2015 2014 2014 2013 Financial Measurements: Revenues (1) $251,835 $227,707 $ 24,128 11 % $227,707 $198,945 $ 28,762 14 % Gross contribution (1) $130,527 $112,384 $ 18,143 16 % $112,384 $91,216 $ 21,168 23 % Gross contribution margin 52 % 49 % 3 points — 49 % 46 % 3 points — Business Measurements: Number of events 65 61 4 7 % 61 64 (3 ) (5 )% Number of attendees 52,595 49,047 3,548 7 % 49,047 44,986 4,061 9 % (1) Dollars in thousands. 5% year-over-year, driven by additional demand and increased headcount. Strategic advisory (“SAS”) revenues were flat year-over-year, in accordance with our segment plan.$24.1 million when comparing 2015 to 2014, or 11%. Excluding the unfavorablenegative impact of foreign currency translation, revenues increased 1%18% year-over-year. We held 65 events in 2015, consisting of 61 ongoing events and 4 new events, compared to 61 events in 2014. The year-over-year revenue increase was primarily attributable to higher attendee revenue at our ongoing events and to a lesser extent, higher exhibitor revenue.The number of attendees in 2015 increased 7%, while the number of exhibitors increased 4%. Average revenue per attendee rose 9% and average revenue per exhibitor increased 2%. The gross contribution margin declined by 1 point due to the lower revenues in our contract optimization business, which has a higher contribution margin than core consulting or SAS. Backlog increased 2% year-over-year, to $102.7 million at December 31, 2012.2011 VERSUS 2010Consulting revenues increased 2% year-over-year primarily due to higher revenues in core consulting. Excluding the favorable impact of foreign currency translation, revenues were down slightly. The gross contribution margin declined by 3 points due to lower utilization in core consulting and higher payroll and benefit costs resulting from merit salary increases and the full year impact in 2011 from the additional headcount we added in the fourth quarter of 2010. Backlog was down slightly year-over-year, to $100.6 million at December 31, 2011.Events 2012 vs. 2011 2011 vs. 2010 As Of And
For The
Twelve Months
Ended
December 31,
2012 As Of And
For the
Twelve Months
Ended
December 31,
2011 Increase
(Decrease) Percentage
Increase
(Decrease) As Of And
For The
Twelve Months
Ended
December 31,
2011 As Of And
For the
Twelve Months
Ended
December 31,
2010 Increase
(Decrease) Percentage
Increase
(Decrease) Financial Measurements: Revenues (1) $ 173,768 $ 148,479 $ 25,289 17 % $ 148,479 $ 121,337 $ 27,142 22 % Gross contribution (1) $ 80,119 $ 66,265 $ 13,854 21 % $ 66,265 $ 55,884 $ 10,381 19 % Gross contribution margin 46 % 45 % 1 point — 45 % 46 % (1) point — Business Measurements: Number of events 62 60 2 3 % 60 56 4 7 % Number of attendees 46,307 42,748 3,559 8 % 42,748 37,219 5,529 15 % (1)Dollars in thousands.222012 VERSUS 201117% year-over-year,$28.8 million when comparing 2014 to 2013, or $25.3 million, but excluding14%. Excluding the unfavorable impact of foreign currency translation, revenues increased 20%16% year-over-year. We held 6261 events in 2012 compared to 60 in 2011. The 62 events held in 2012 consisted2014, consisting of 5759 ongoing events and 52 new event launches, with 3 events, heldcompared to 64 events in prior years discontinued, while the2013. The year-over-year revenue increase was primarily attributable to higher exhibitor revenue at our ongoing events and to a lesser extent, higher attendee revenue. The overall number of attendees andincreased 9%, while the number of exhibitors increased 8% and 20%, respectively.10%. Average revenue per attendee rose 3%6% and average revenue per exhibitor increased 1%9%. Both the additional revenue and the higher contribution margin in 2012 were primarily due to the significantly higher exhibitor volume at our ongoing events.2011 VERSUS 2010Events revenues increased 22% year-over-year, or $27.1 million. Excluding the favorable impact of foreign currency translation, revenues increased 21%. We held 60 events in 2011, which consisted of 53 ongoing events and 7 new event launches, compared to 56 events in 2010. We discontinued 3 events in 2011 that had been held in prior years. The additional revenue we earned in 2011 was attributable to significantly higher revenue at our ongoing events, with double-digit increases in the number of attendees and exhibitors. Average revenue per attendee rose 2% and average revenue per exhibitor increased 5%. For full year 2011, gross contribution margin decreased 1 point, primarily due to incremental expenses and additional investment in the business to strengthen the portfolio and provide a foundation for future growth.financehad $373.0 million of cash and cash equivalents at December 31, 2015 and $656.0 million of available borrowing capacity under our operations primarily through2014 Credit Agreement. In addition, the 2014 Credit Agreement contains an expansion feature by which the Company may borrow up to an additional $500.0 million in the aggregate under certain conditions. We believe that our consistently strong operating cash generated fromflow, as well as our operating activities. For 2012,existing cash balances and our available borrowing capacity under our 2014 Credit Agreement, provide us with adequate liquidity to meet our currently anticipated needs. However, should we need to borrow additional amounts, we believe we would be able to do so on reasonable terms.$279.8$345.6 million which wasin 2015. In addition, we also borrowed an additional $420.0 million on a net basis under our 2014 Credit Agreement. During 2015 we used $196.2 million in cash to acquire other businesses and we also used $509.0 million in cash to repurchase our common shares. We currently have a $1.2 billion board approved authorization to repurchase the highest in the Company’s historyCompany's common stock, and an increaseas of 9% over 2011.December 31, 2015, approximately $1.1 billion of this authorization remains.12%10% in 20122015 compared to 2011,2014, and constituted 70%73% and 69%72% of our total revenues in 20122015 and 2011,2014, respectively. Our ResearchThe majority of our research contracts generally renew annually and typically are paid in advance and renew annually, and combined with a strong customer retention rate and high incremental margins, has generally resulted in continuously strong growth in operating cash flow each year.flow. Our cash flow generation has also been enhanced bybenefited from our continuing efforts to improve the operating efficiencies of our businesses as well as a focus on the effectiveoptimal management of our working capital as we increase our sales volume.In addition to the strong increase in our operating cash flows, we also had almost $300.0 million of cash and cash equivalents at year-end 2012, which was the highest cash balance in the Company’s history, and $347.0 million of available borrowing capacity under our revolving credit facility at year-end 2012. We believe that our strong operating cash flow, as well as our existing cash balances and our available borrowing capacity, provide us with adequate liquidity to meet our currently anticipated needs.The Company’s 2010 Credit Agreement expires in December 2015. The Company is currently exploring refinancing options to take advantage of favorable market conditions.2012,2015, approximately $167.0$351.0 million of our total of $373.0 million in cash and cash equivalents was held outside the U.S. Approximately half ofOf the amount$351.0 million of cash and cash equivalents held overseas, approximately 80% represents unremitted earnings of our non-U.S subsidiaries. Under U.S. accounting rules, no provision for U.S. federal and localincome taxes that may result from the remittance of such earnings is required for these unremitted overseas earnings if the Company intends to reinvest such funds overseas.overseas indefinitely. Our current plans do not demonstrate a need to repatriate these undistributed earnings to fund our U.S. operations or otherwise satisfy the liquidity needs of our U.S operations, and as a result weoperations. We intend to reinvest these earnings in our non-U.S. operations, except in instances in which the repatriation of these earnings would result in minimal additional tax. As a result, no provision for U.S. federal and statethe Company has not recognized additional income taxes has been recorded fortax expense that could result from the remittance of these unremitted earnings. However, should our liquidity needs change or we decide to repatriate some or all of these unremitted earnings, we may be required to accrue for U.S.additional taxes aswhich could have a result,material effect on our consolidated financial position, cash flows, and these charges could be material and would be recordedresults of operations in future periods.23disclosuretable summarizes and explains the changes in our cash and cash equivalents for the three years endingended December 31, 20122015 (in thousands): 2012 vs. 2011 2011 vs. 2010 Twelve Months
Ended
December 31,
2012 Twelve Months
Ended
December 31,
2011 Increase
(Decrease) Twelve Months
Ended
December 31,
2011 Twelve Months
Ended
December 31,
2010 Increase
(Decrease) Cash provided by operating activities $ 279,813 $ 255,566 $ 24,247 $ 255,566 $ 205,499 $ 50,067 Cash used for investing activities (54,673 ) (41,954 ) (12,719 ) (41,954 ) (33,845 ) (8,109 ) Cash used in financing activities (72,570 ) (186,559 ) 113,989 (186,559 ) (171,556 ) (15,003 ) Net increase 152,570 27,053 125,517 27,053 98 26,955 Effects of exchange rates 4,543 (4,495 ) 9,038 (4,495 ) 3,509 (8,004 ) Beginning cash and cash equivalents 142,739 120,181 22,558 120,181 116,574 3,607 Ending cash and cash equivalents $ 299,852 $ 142,739 $ 157,113 $ 142,739 $ 120,181 $ 22,558 2012 2015 vs. 2014 2014 vs. 2013 Cash provided by operating activities $ 345,561 $ 346,779 $ (1,218 ) $ 346,779 $ 315,654 $ 31,125 Cash used in investing activities (242,357 ) (162,777 ) (79,580 ) (162,777 ) (36,498 ) (126,279 ) Cash used by financing activities (67,690 ) (208,670 ) 140,980 (208,670 ) (153,855 ) (54,815 ) Net increase (decrease) 35,514 (24,668 ) 60,182 (24,668 ) 125,301 (149,969 ) Effects of exchange rate changes (1) (27,840 ) (34,020 ) 6,180 (34,020 ) (1,163 ) (32,857 ) Beginning cash and cash equivalents 365,302 423,990 (58,688 ) 423,990 299,852 124,138 Ending cash and cash equivalents $ 372,976 $ 365,302 $ 7,674 $ 365,302 $ 423,990 $ (58,688 ) (1) A number of foreign currencies in which we hold cash weakened relative to the U.S. dollar over the past two years. As a result, the effects of foreign currency exchange rates has had a significant impact on our cash and cash equivalents balances. 2011increased by 9%, or $24.2 million, in 2012 compareddecreased slightly when comparing 2015 to 2011, which was primarily due to higher2014. The decrease reflects the negative impact of a stronger U.S. dollar and lower 2015 net income. We also had lowerincome, as well as additional cash payments for employee incentives related to our acquisitions, income taxes, and interest on our debt and other items, as well as higher cash reimbursements related toobligations in the renovation of our Stamford headquarters facility. These increased cash flows2015 period. Partially offsetting these elements were partially offset by higher cash payments for income taxes during 2012.InvestingCash used for investing purposes was $54.7 millionadditional collections in 2012, an increase in cash used of $12.7 million compared to 2011, due to $10.3 million of cash used for the acquisition of Ideas International and higher capital expenditures.Capital expenditures were $44.3 million in 2012 compared to $42.0 million in 2011, which included $17.0 million and $9.5 million, respectively, which we paid for the renovation of our Stamford headquarters facility. Up to $25.0 million of these expenditures are reimbursable by the facility landlord, and $13.0 million was reimbursed in 2012 and $9.0 million in 2011. The reimbursements are included in operating cash flows.Financing$114.0 million less cash in our financing activities in 2012 compared to 2011, primarily due to a lower number of shares repurchased. Cash used for share repurchases was $111.3 million in 2012 compared to $212.0 million in 2011, with 2.7 million and 5.9 million of shares repurchased, respectively. Cash used also declined due to net debt activity, as we borrowed an additional $5.0$79.6 million in 2012 compared to $20.1 million of debt repayments in 2011.2011 VERSUS 2010OperatingOperating cash flow increased by 24%, or $50.1 million in 2011 compared to 2010. The increase was primarily due to $40.6 million in higher net income and lower cash payments for acquisition costs, severance, and other costs. We also received $9.0 million in landlord cash reimbursements for capital expenditures on the renovation of our Stamford headquarters facility. These increased cash flows were partially offset by higher cash bonus and commission payments we paid in 2011 due to our stronger financial performance.InvestingWe used $8.1 million of additional cash in our investing activities in 20112015 compared to 2010,2014, primarily due to higher capital expenditures. Capital expenditures were $42.0the acquisitions we made during 2015. In total, we used $196.2 million and $124.3 million of cash (net of the cash acquired) for acquisitions in 2015 and 2014, respectively. The Company used both existing cash and additional borrowings to finance its 2015 acquisitions. We also used an additional $7.6 million in 2011 compared to $21.7 million in 2010. We also made $12.2 million in payments related to the acquisition of Burton Group in early 2010, which we acquired in December 2009. The $42.0 million ofcash for capital expenditures in the 20112015 period, included $9.5with a total of $46.1 million used in 2015 compared to $38.5 million in 2014.paid for the renovation of our Stamford headquarters facility, which is fully reimbursable by the landlord. The Company received reimbursement of $9.0 million of this amount in 2011.FinancingWe used an additional $15.0$67.7 million of cash in our financing activities in 2011during 2015 compared to 2010, primarily due to additional share repurchases. During 2011, we$208.7 million of cash used $212.0in 2014. The Company used $509.0 million of cash for share repurchases in 2015 compared to $99.8$432.0 million in 2010. The increase in cash used for share repurchases in 2011 was substantially offset by lower debt repayments2014. The Company borrowed an additional $420.0 million in 2011 compared to 2010. On2015 on a net basis we repaid $99.8compared to $200.0 million of debtnet additional borrowings in 20102014. Additions to financing cash flows from employee share-based activities were $21.4 million 2015 and $28.0 million in 2014.$4.8a total of $109.9 million (net of the cash acquired), and an additional $14.3 million was placed in escrow. The Company used both existing cash and additional borrowings to finance its 2014 acquisitions. We also used an additional $2.0 million in fees related tocash for capital expenditures in the 2014 period.refinancing,financing activities during 2014 compared to $20.1$153.9 million of cash used in 2013. During 2014, the Company used $432.0 million of cash for share repurchases, which was partially offset by $195.4 million of net proceeds from debt repayments in 2011.issuance and related debt issuance costs and $28.0 million from employee share-based activity. During 2013, the Company used $182.0 million of cash for share repurchases and $4.0 million for debt refinancing fees, which was partially offset by $32.0 million from employee share-based activities. 24At31, 2012, we had $200.0 million outstanding under our 2010 Credit Agreement which2014 that provides for a five-year, $200.0$400.0 million term loan and a $400.0 million revolving credit facility. The 2010 Credit Agreement contains an expansion feature by which the term loan and$1.1 billion revolving credit facility may be increased, at(the “2014 Credit Agreement”). Under the Company’s option and under certain conditions, by up to an additional $150.0 million in the aggregate. The term loan will be repaid in 19 consecutive quarterly installments with the final payment due in December 2015, and may be prepaid at any time without penalty or premium at the Company’s option. The revolving credit facility, may be used for loans, and up to $40.0 million may be used for letters of credit. The revolving loansamounts may be borrowed, repaid, and re-borrowed untilthrough the maturity date of the agreement in December 2019. The term and revolving facilities may be increased, at the Company's option, by up to an additional $500.0 million in the aggregate. As of December 31, 2015, at which time all amounts borrowed must be repaid.the Company had $380.0 million outstanding under the term facility and $440.0 million under the revolver. See Note 5 —- Debt in the Notes to the Consolidated Financial Statements for additional information regarding the 20102014 Credit Agreement.contractual commitments that contractually require future payment.cash payments. The following table presentssummarizes the Company’s contractual cash commitments due after December 31, 20122015 (in thousands): Due In Due In Due In Due In Commitment Description: Less Than
1 Year 2-3
Years 4-5
Years More Than
5 Years Total Debt – principal and interest (1) $ 47,100 $ 168,900 $ 300 $ 5,300 $ 221,600 Operating leases (2) 37,820 53,9550 24,590 75,055 191,420 Deferred compensation arrangement (3) 2,730 5,185 3,160 20,240 31,315 Tax liabilities (4) 2,225 — — — 2,225 Other (5) 16,500 13,900 1,790 — 32,190 Totals $ 106,375 $ 241,940 $ 29,840 $ 100,595 $ 478,750 Commitment Description: Total Debt – principal and interest (1), (2) $ 42,860 $ 115,689 $ 752,860 $ 5,060 $ 916,469 Operating leases (3) 40,910 67,214 44,314 111,555 263,993 Deferred compensation arrangement (4) 3,511 5,454 3,784 26,322 39,071 Other (5) 17,630 18,849 9,180 14,613 60,272 Totals $ 104,911 $ 207,206 $ 810,138 $ 157,550 $ 1,279,805 (1) Includes both the term and revolver principal amountsAmounts borrowed under the Company’s 2010Company's 2014 Credit Agreement, which matures in December 2015(see2019, have been classified in the table based on the scheduled repayment dates. Projected interest payments on amounts outstanding were based on the effective interest rates as of December 31, 2015. See Note 5 — Debt in the Notes to the Consolidated Financial Statements for additional information), as well as estimated interest payments. Amounts borrowed under the term loan arrangement have been classified in the table based on the scheduled repayment dates, while revolver borrowings are classified in the Due In 2-3 Years category since the amounts are not contractually due until December 2015. Also included is theinformation.(2) The Company also has a $5.0 million the Company borrowed in December 2012 under a State of Connecticut economic development programloan which has a 10 year maturity and is includedclassified in the Due In More Than 5 Years category.category since it has a 10 year maturity. Interest payments on amounts outstanding under the 2010 Credit Facility areloan have been calculated based on a floating rate. However, the Company has a $200.0 million notional interest rate swap that converts the variable interest payments on the debt to a 2.26%contractual fixed rate onof interest. Under certain circumstances, part or all of this debt may be forgiven by the first $200.0 million of borrowings. As a result,State. See Note 5 — Debt in orderthe Notes to calculate an estimatethe Consolidated Financial Statements for the future interest payments, the Company has used a rate of 3.76%, which includes the swap rate of 2.26% plus a loan margin of 1.50%, for the 2010 Credit Facility.additional information.(2)(3)The Company leases various facilities, furniture, autos,computer equipment, and computer equipment.automobiles. These leases expire between 20132016 and 2027 (see2030. See Note 1 — Business and Significant Accounting Policies in the Notes to the Consolidated Financial Statements for additional information).information on the Company's leases.(4) (3)Represents the Company’s liability to participants in itsThe Company has a supplemental deferred compensation arrangement with certain employees (see Note 13 — Employee Benefits in the Notes to the Consolidated Financial Statements for additional information). Amounts payable to active employeeswith a known payment date have been classified in the table based on the payment date. Amounts payable whose payment date is unknown have been included in the Due In More Than 5 Years category since the Company cannot determine when the amounts will be paid.(4)Includes interest and penalties. In addition to the $2.2 million tax liability, $16.5 million of unrecognized tax benefits have been recorded as liabilities, and we are uncertain as to if or when such amounts may be settled. Related to the unrecognized tax benefits not included in the table, the Company has also recorded a liability for potential interest and penalties of $3.4 million.(5) IncludesThe Other category includes (i) contractual commitments for software, building maintenance, telecom, and telecom services.other services; (ii) amounts due for share repurchase transactions that occurred in late December 2015 but were settled in January 2016; and (iii) projected cash contributions to the Company's defined benefit pension plans.25
In addition to the contractual cash commitments included in the table above, the Company has other payables and liabilities that may be legally enforceable but are not considered contractual commitments. Information regarding the Company's payables and liabilities is included in Note 4 — Accounts Payable, Accrued, and Other Liabilities in the Notes to the Consolidated Financial Statements. Among these liabilities is approximately $30.0 million for unrecognized tax benefits and related interest and penalties.two yeartwo-year period ended December 31, 2012:2012
(In thousands, except per share data) First Second Third Fourth Revenues $ 369,171 $ 397,482 $ 374,406 $ 474,749 Operating income 53,556 62,722 49,768 79,661 Net income 34,221 41,484 31,375 58,823 Net income per share: (1) Basic $ 0.37 $ 0.44 $ 0.34 $ 0.63 Diluted $ 0.36 $ 0.43 $ 0.33 $ 0.61 2011
(In thousands, except per share data) First Second Third Fourth Revenues $ 329,567 $ 365,543 $ 345,784 $ 427,694 Operating income 45,781 51,568 47,250 69,463 Net income 29,191 32,223 30,464 45,024 Net income per share: (1) Basic $ 0.30 $ 0.33 $ 0.32 $ 0.48 Diluted $ 0.29 $ 0.32 $ 0.31 $ 0.46 2015 (In thousands, except per share data) First Second Third Fourth Revenues $ 471,186 $ 547,936 $ 500,166 $ 643,768 Operating income 48,682 85,220 52,474 101,621 Net income 28,351 51,155 30,366 65,763 Net income per share: (1) Basic $ 0.33 $ 0.61 $ 0.37 $ 0.80 Diluted $ 0.32 $ 0.61 $ 0.36 $ 0.78 2014 (In thousands, except per share data) First Second Third Fourth Revenues $ 446,702 $ 519,820 $ 470,940 $ 583,979 Operating income 59,170 81,761 49,391 95,840 Net income 37,736 53,040 33,846 59,144 Net income per share: (1) Basic $ 0.41 $ 0.59 $ 0.38 $ 0.67 Diluted $ 0.40 $ 0.58 $ 0.38 $ 0.66 (1) The aggregate of the four quarters’ basic and diluted earnings per common share may not equal the reported full calendar year amounts due to the effects of share repurchases, dilutive equity compensation, and rounding. The FASB hasnew accounting rules whichby the various U.S. standard setting and governmental authorities that have not yet become effective. These new ruleseffective 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 financial statementsConsolidated Financial Statements and related disclosures in future periods:Other Comprehensive Income Reclassifications. periods.February 2013,September 2015, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)(ASU) 2015-16, "Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments" ("ASU No. 2013-02,Reporting2015-16"). ASU No. 2015-16 requires the recognition of Amounts Reclassified Out of Accumulated Other Comprehensive Income.adjustments to business combination provisional amounts, that are identified during the measurement period, in the reporting period in which the adjustments are determined. The standard requires that public companies present information about reclassification adjustments from accumulated other comprehensive income in their financial statements in a single note or on the faceeffects of the financial statements. Public companies willadjustments to provisional amounts on depreciation, amortization or other income effects should be recognized in current-period earnings as if the accounting had been completed at the acquisition date. Disclosure of the portion of the adjustment recorded in current-period earnings that would have been reported in prior reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date is also haverequired. The rule is to provide this information in both their annual and interim financial statements. The new requirements will take effect for Gartner beginning January 1, 2013 and will be applied prospectively. While the Company has not completed its analysis of the new standard, it believes the new rule may result in additional disclosuresretrospectively and changes to the presentation of the Statement of Comprehensive Income.Balance Sheet Offsetting. In December 2011, theFASB issued ASUNo. 2011-11, Disclosures about Offsetting Assets and Liabilities. The new guidance requires disclosures about assets and liabilities that are offset or have the potential to be offset under U.S. GAAP rules. The new disclosure requirements mandate that entities disclose both gross and net information about financial instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. These disclosures are intended to address differences in the asset and liability offsetting requirements under U.S. GAAP and International Financial Reporting Standards. This new guidance will beis effective for Gartner for interim and annual reporting periods beginningon January 1, 2013, with retrospective application required. While the adoption of this new guidance may result in additional disclosures, we do2016. ASU No. 2015-16 will not expect it to have an impact on the Company’s Consolidated Balance Sheets.consolidated financial statements at the date of adoption. However, ASU No. 2016-16 could have an impact on the Company's consolidated financial statements in the future if a transaction occurs within the scope of the rule.
Revenue Recognitionmayif issued could materially impact the Company’sCompany's accounting policies and disclosures in future periods. SinceHowever, since these rules have not yet been issued, the effective dates and potential impact are unknown.2010 Credit Agreement. At December 31, 2012, we had $150.0 million outstanding under the term loan and $50.0 million outstanding under the revolver. Borrowings under this facility are floating rate, which may be either prime-based or Eurodollar-based. The rate paid for these borrowings includes a base floating rate plus a margin between 0.50% and 1.25% on prime borrowings and between 1.50% and 2.25% on Eurodollar-based borrowings.We have anexposure to changes in interest rates through our interest rate swap contractcontracts which effectively convertsconvert the floating base interest rate on the first $200.0$700.0 million of our variable rate borrowings to a 2.26% fixed rate. The Company only hedges the base interest rate risk on the first $200.0 million of its outstanding borrowings. Accordingly,rates. Thus we are exposed to interest rate risk on borrowings only in excess of $200.0 million. A$700.0 million, which equaled $120.0 million at December 31, 2015. As an indication of our exposure to changes in interest rates, a hypothetical 25 basis point increase or decrease in interest rates could changehave changed our 2015 pre-tax annual interest expense on the additional revolver borrowing capacity under the 2010 Credit Agreement (not including the expansion feature)$120.0 million of unhedged borrowings at December 31, 2015 by approximately $0.9$0.3 million.26Approximately 46% of our revenues for both20122015 and 20112014, approximately 41% and 45%, respectively, of the Company's revenues were derived from sales outside of the U.S. As a result, we conduct business in numerous currencies other than the U.S dollar. Among the major foreign currencies in which we conduct business are the Eurodollar,Euro, the British Pound, the Japanese Yen, the Australian dollar, and the Canadian dollar. OurThe reporting currency of our financial statements is the U.S. dollar. As the values of the foreign currency exposure resultscurrencies in both translation risk and transaction risk:TRANSLATION RISKWe arewhich 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 sinceAdjustments resulting from the translation of these assets and liabilities that we report for our foreign subsidiaries are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates, and these exchange rates fluctuate over time. These foreign currency translation adjustments are deferred and are recorded as a component of stockholders’ equity and do not impact our operating results. on our Condensed Consolidated Balance Sheets can be determined through a sensitivity analysis of our cash and cash equivalents. At December 31, 2012, we had almost $300.02015, approximately half of our $373.0 million of cash and cash equivalents with approximately halfwas denominated in foreign currencies. If the foreign exchange rates of the majorforeign currencies in which we operatehold all changed in comparison to the U.S. dollar by 10%, the amount of cash and cash equivalents we would have reported on December 31, 20122015 would have increased or decreased by approximately $12.0$19.0 million.Because The translation of our foreign subsidiaries generally operate in a local functional currency that differs from the U.S. dollar, revenues and expenses in these foreign currencies translate into higher or lower revenues and expenses in U.S. dollars as the U.S. dollar continuously weakens or strengthens against these other currencies. Therefore, changes in exchange rates may affect our consolidated revenues and expenses (as expressed in U.S. dollars) from foreign operations. Historically, thishistorically has not had a material impact on our consolidated earnings has not been material since foreign currency movements in and among the major currencies in which we operate tend to impact our revenues and expenses fairly equally.TRANSACTION RISKWe also have foreign However, our earnings could be impacted during periods of significant exchange transactionrate volatility, or when some or all of the major currencies in which we operate move in the same direction against the U.S dollar.sincearises when our foreign subsidiaries typically enter into transactions in the normal course of business that are denominated in foreign currenciesa currency that may differ from the local functional currency. As these transactions are translated into the local functional currency, gain or loss may result, which is recorded in which the foreign subsidiary operates.current period earnings. We maytypically enter into foreign currency forward exchange contracts to mitigate the effects of some of this foreign currency transaction risk. TheseOur outstanding currency contracts are normally short term in duration and unrealized and realized gains and losses are recognized in current period earnings. Atas of December 31, 2012, we2015 had 68 outstanding foreign currency forward contracts with a total notional amount of $76.1 million and an immaterial net unrealized gain. All of these contracts matured by the end of January 2013.and its interest rate swap contracts, and its foreign exchange contracts are with large investment grade commercial banks that are participants in the Company’s 2010 Credit Agreement.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.2012, 2011,2015, 2014, and 2010,2013, together with the reports of KPMG LLP, our independent registered public accounting firm, are included herein in this Annual Report on Form 10-K.2012,2015, of the effectiveness of the design and operation of our disclosure controls and procedures, (as such term is defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) under the supervision and with the participation of our chief executive officer and chief financial officer. Based upon that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective in alerting them in a timely manner to material Company information required to be disclosed by us in reports filed or submitted under the Act.272012.2015. In making this assessment, management used the criteria set forth in the Internal Control-IntegratedControl — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management’s assessment was reviewed with the Audit Committee of the Board of Directors.2012,2015, Gartner’s internal control over financial reporting was effective.20122015 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included in this Annual Report on Form 10-K in Part IV, Item 15.20122015 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.2830, 2013.29, 2016. If the Proxy Statement is not filed with the SEC by April 30, 2013,29, 2016, such information will be included in an amendment to this Annual Report filed by April 30, 2013.29, 2016. See also Item 1. Business — Available Information.30, 2013.29, 2016. If the Proxy Statement is not filed with the SEC by April 30, 2013,29, 2016, such information will be included in an amendment to this Annual Report filed by April 30, 2013.30, 2013.29, 2016. If the Proxy Statement is not filed with the SEC by April 30, 2013,29, 2016, such information will be included in an amendment to this Annual Report filed by April 30, 2013.30, 2013.29, 2016. If the Proxy Statement is not filed with the SEC by April 30, 2013,29, 2016, such information will be included in an amendment to this Annual Report filed by April 30, 2013.29, 2016.30, 2013.29, 2016. If the Proxy Statement is not filed with the SEC by April 30, 2013,29, 2016, such information will be included in an amendment to this Annual Report filed by April 30, 2013.
29, 2016.29EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT 3.1(1) Restated Certificate of Incorporation of the Company. 3.2(2) Bylaws as amended through February 2, 2012. 4.1(1) Form of Certificate for Common Stock as of June 2, 2005. 4.2(3)4.2* Credit Agreement, dated as of December 22, 2010,16, 2014, among the Company, the several lenders from time to time parties thereto, and JPMorgan Chase Bank, N.A. as administrative agent. 10.1(4)10.1(3) Lease dated April 16, 2010 between Soundview Farms and the Company for premises at 56 Top Gallant Road, 70 Gatehouse Road, and 88 Gatehouse Road, Stamford, Connecticut. 10.2(4)10.2(3) First Amendment to Lease dated April 16, 2010 between Soundview Farms and the Company for premises at 56 Top Gallant Road, 70 Gatehouse Road, and 88 Gatehouse Road, Stamford, Connecticut. 10.4(5)10.4(4)+ 2011 Employee Stock Purchase Plan. 10.6(6)10.5(5)+ 2003 Long-TermLong -Term Incentive Plan, as amended and restated oneffective June 4, 2009.10.6(6)+ 2014 Long-Term Incentive Plan, effective May 29, 2014. 10.7(7)+ Amended and Restated Employment Agreement between Eugene A. Hall and the Company dated as of April 13, 2011. 10.8(8)+ Company Deferred Compensation Plan, effective January 1, 2009. 10.9(9)+ Form of Stock Appreciation Right Agreement for executive officers. 10.10(9)+ Form of Performance Stock Unit Agreement for executive officers. 21.1* Subsidiaries of Registrant. 23.1* Consent of Independent Registered Public Accounting FirmFirm. 24.1 Power of Attorney (see Signature Page). 31.1* Certification of chief executive officer under Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of chief financial officer under Section 302 of the Sarbanes-Oxley Act of 2002. 32* Certification under Section 906 of the Sarbanes-Oxley Act of 2002. * Filed with this document. + Management compensation plan or arrangement. (1) Incorporated by reference from the Company’s Current Report on Form 8-K dated June 29, 2005 as filed on July 6, 2005. (2) Incorporated by reference from the Company’s Current Report on Form 8-K dated February 2, 2012 as filed on February 7, 2012. (3) Incorporated by reference from the Company’s AnnualQuarterly Report on Form 10-Kform 10-Q as filed on February 15, 2011.August 9, 2010. (4) Incorporated by reference from the Company’s Quarterly Report on form 10-QProxy Statement (Schedule 14A) as filed on August 9, 2010.April 18, 2011. (5) Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) as filed on April 18, 2011.21, 200930 (6) Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) as filed on April 21, 2009.15, 2014. (7) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q as filed on August 2, 2011. (8) Incorporated by reference from the Company’s Annual Report on Form 10-K as filed on February 20, 2009. (9) Incorporated by reference from the Company’s Current Report on Form 8-K dated February 12, 20138, 2016 as filed on February 13, 2013.3112, 2016.33343536373839403220122015 and 2011,2014, and the related consolidated statements of operations, comprehensive income, stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended December 31, 2012.2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.20122015 and 2011,2014, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012,2015, in conformity with U.S. generally accepted accounting principles.2012,2015, based on criteria established inInternal Control — Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 22, 201324, 2016 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.22, 2013
24, 2016332012,2015, based on criteria established inInternal Control — Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.2012,2015, based on criteria established inInternal Control — Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission.20122015 and 2011,2014, and the related consolidated statements of operations, comprehensive income, stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended December 31, 2012,2015, and our report dated February 22, 201324, 2016 expressed an unqualified opinion on those consolidated financial statements.22, 2013
24, 201634 December 31, 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 299,852 $ 142,739 Fees receivable, net of allowances of $6,400 and $7,260 respectively 463,968 421,033 Deferred commissions 87,933 78,492 Prepaid expenses and other current assets 75,713 63,521 Total current assets 927,466 705,785 Property, equipment and leasehold improvements, net 89,089 68,132 Goodwill 519,506 508,550 Intangible assets, net 11,821 7,060 Other assets 73,395 90,345 Total Assets $ 1,621,277 $ 1,379,872 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 287,763 $ 259,490 Deferred revenues 692,237 611,647 Current portion of long-term debt 90,000 50,000 Total current liabilities 1,070,000 921,137 Long-term debt 115,000 150,000 Other liabilities 129,604 126,951 Total liabilities 1,314,604 1,198,088 Stockholders’ equity: Preferred stock: $.01 par value, authorized 5,000,000 shares; none issued or outstanding — — Common stock: $.0005 par value, authorized 250,000,000 shares for both periods; 156,234,415 shares issued for both periods 78 78 Additional paid-in capital 679,871 646,815 Accumulated other comprehensive income, net 5,968 5,793 Accumulated earnings 908,482 742,579 Treasury stock, at cost, 62,873,100 and 62,891,251 common shares, respectively (1,287,726 ) (1,213,481 ) Total stockholders’ equity 306,673 181,784 Total Liabilities and Stockholders’ Equity $ 1,621,277 $ 1,379,872 December 31, 2015 2014 ASSETS Current assets: Cash and cash equivalents $ 372,976 $ 365,302 Fees receivable, net of allowances of $6,900 and $6,700 respectively 580,763 552,107 Deferred commissions 124,831 115,381 Prepaid expenses and other current assets 62,427 63,868 Total current assets 1,140,997 1,096,658 Property, equipment and leasehold improvements, net 108,733 97,990 Goodwill 715,359 586,665 Intangible assets, net 96,544 30,689 Other assets 113,053 92,349 Total Assets $ 2,174,686 $ 1,904,351 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Current liabilities: Accounts payable and accrued liabilities $ 387,691 $ 353,761 Deferred revenues 900,801 841,457 Current portion of long-term debt 35,000 20,000 Total current liabilities 1,323,492 1,215,218 Long-term debt 790,000 385,000 Other liabilities 193,594 142,962 Total Liabilities 2,307,086 1,743,180 Stockholders’ (Deficit) Equity: Preferred stock: $.01 par value, authorized 5,000,000 shares; none issued or outstanding — — Common stock: $.0005 par value, authorized 250,000,000 shares for both periods; 156,234,415 shares issued for both periods 78 78 Additional paid-in capital 818,546 764,433 Accumulated other comprehensive loss, net (44,402 ) (21,170 ) Accumulated earnings 1,450,684 1,275,049 Treasury stock, at cost, 73,896,245 and 68,713,890 common shares, respectively (2,357,306 ) (1,857,219 ) Total Stockholders’ (Deficit) Equity (132,400 ) 161,171 Total Liabilities and Stockholders’ (Deficit) Equity $ 2,174,686 $ 1,904,351 35 Year Ended December 31, 2012 2011 2010 Revenues: Research $ 1,137,147 $ 1,012,062 $ 865,000 Consulting 304,893 308,047 302,117 Events 173,768 148,479 121,337 Total revenues 1,615,808 1,468,588 1,288,454 Costs and expenses: Cost of services and product development 659,067 608,755 552,238 Selling, general and administrative 678,843 613,707 543,174 Depreciation 25,369 25,539 25,349 Amortization of intangibles 4,402 6,525 10,525 Acquisition and integration charges 2,420 — 7,903 Total costs and expenses 1,370,101 1,254,526 1,139,189 Operating income 245,707 214,062 149,265 Interest income 1,046 1,249 1,156 Interest expense (9,905 ) (11,216 ) (16,772 ) Other (expense) income, net (1,252 ) (1,911 ) 436 Income before income taxes 235,596 202,184 134,085 Provision for income taxes 69,693 65,282 37,800 Net income $ 165,903 $ 136,902 $ 96,285 Net income per share: Basic $ 1.78 $ 1.43 $ 1.01 Diluted $ 1.73 $ 1.39 $ 0.96 Weighted average shares outstanding: Basic 93,444 96,019 95,747 Diluted 95,842 98,846 99,834 Year Ended December 31, 2015 2014 2013 Revenues: Research $ 1,583,486 $ 1,445,338 $ 1,271,011 Consulting 327,735 348,396 314,257 Events 251,835 227,707 198,945 Total revenues 2,163,056 2,021,441 1,784,213 Costs and expenses: Cost of services and product development 839,076 797,933 713,484 Selling, general and administrative 962,677 876,067 760,458 Depreciation 33,789 31,186 28,996 Amortization of intangibles 13,342 8,226 5,446 Acquisition and integration charges 26,175 21,867 337 Total costs and expenses 1,875,059 1,735,279 1,508,721 Operating income 287,997 286,162 275,492 Interest income 1,766 1,413 1,551 Interest expense (22,548 ) (12,300 ) (10,388 ) Other income (expense), net 4,996 (592 ) (216 ) Income before income taxes 272,211 274,683 266,439 Provision for income taxes 96,576 90,917 83,638 Net income $ 175,635 $ 183,766 $ 182,801 Net income per share: Basic $ 2.09 $ 2.06 $ 1.97 Diluted $ 2.06 $ 2.03 $ 1.93 Weighted average shares outstanding: Basic 83,852 89,337 93,015 Diluted 85,056 90,719 94,830 36 Year Ended December 31, 2012 2011 2010 Net income $ 165,903 $ 136,902 $ 96,285 Other comprehensive income (loss) Foreign currency translation adjustments 4,318 (4,454 ) 582 Interest rate swap hedge - deferred (loss) gain (127 ) (7,790 ) 6,243 Pension - deferred actuarial (loss) gain (5,993 ) 283 (1,012 ) Subtotal (1,802 ) (11,961 ) 5,813 Tax effect of comprehensive income (loss) items 1,977 3,116 (2,497 ) Other comprehensive income (loss) 175 (8,845 ) 3,316 Comprehensive income $ 166,078 $ 128,057 $ 99,601 Year Ended December 31, 2015 2014 2013 Net income $ 175,635 $ 183,766 $ 182,801 Other comprehensive (loss) income, net of tax Foreign currency translation adjustments (23,089 ) (27,461 ) 503 Interest rate hedges - net change in deferred loss (1,339 ) 2,163 2,107 Pension plans - net change in deferred actuarial loss 1,196 (4,217 ) (233 ) Other comprehensive (loss) income, net of tax (23,232 ) (29,515 ) 2,377 Comprehensive income $ 152,403 $ 154,251 $ 185,178 37 Common
Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income, Net Accumulated
Earnings Treasury
Stock Total
Stockholders’
Equity Balance at December 31, 2009 $ 78 $ 590,864 $ 11,322 $ 509,392 $ (999,121 ) $ 112,535 Net income — — — 96,285 — 96,285 Other comprehensive income — — 3,316 — — 3,316 Issuances under stock plans — (30,254 ) — — 53,822 23,568 Stock compensation tax benefits — 18,520 — — — 18,520 Common share repurchases — — — — (99,820 ) (99,820 ) Stock compensation expense — 32,652 — — — 32,652 Balance at December 31, 2010 $ 78 $ 611,782 $ 14,638 $ 605,677 $ (1,045,119 ) $ 187,056 Net income — — — 136,902 — 136,902 Other comprehensive loss — — (8,845 ) — — (8,845 ) Issuances under stock plans — (23,579 ) — — 43,624 20,045 Stock compensation tax benefits — 25,778 — — — 25,778 Common share repurchases — — — — (211,986 ) (211,986 ) Stock compensation expense — 32,834 — — — 32,652 Balance at December 31, 2011 $ 78 $ 646,815 $ 5,793 $ 742,579 $ (1,213,481 ) $ 181,784 Net income — — — 165,903 — 165,903 Other comprehensive income — — 175 — — 175 Issuances under stock plans — (24,626 ) — — 37,059 12,433 Stock compensation tax benefits — 21,304 — — — 21,304 Common share repurchases — — — — (111,304 ) (111,304 ) Stock compensation expense — 36,378 — — — 36,378 Balance at December 31, 2012 $ 78 $ 679,871 $ 5,968 $ 908,482 $ (1,287,726 ) $ 306,673 Balance at December 31, 2012 $ 78 $ 679,871 $ 5,968 $ 908,482 $ (1,287,726 ) $ 306,673 Net income — — — 182,801 — 182,801 Other comprehensive income — — 2,377 — — 2,377 Issuances under stock plans — (21,354 ) — — 27,388 6,034 Stock compensation tax benefits — 25,392 — — — 25,392 Common share repurchases — — — — (196,696 ) (196,696 ) Stock compensation expense — 34,735 — — — 34,735 Balance at December 31, 2013 $ 78 $ 718,644 $ 8,345 $ 1,091,283 $ (1,457,034 ) $ 361,316 Net income — — — 183,766 — 183,766 Other comprehensive loss — — (29,515 ) — — (29,515 ) Issuances under stock plans — (11,727 ) — — 19,527 7,800 Stock compensation tax benefits — 18,671 — — — 18,671 Common share repurchases — — — — (419,712 ) (419,712 ) Stock compensation expense — 38,845 — — — 38,845 Balance at December 31, 2014 $ 78 $ 764,433 $ (21,170 ) $ 1,275,049 $ (1,857,219 ) $ 161,171 Net income — — — 175,635 — 175,635 Other comprehensive loss — — (23,232 ) — — (23,232 ) Issuances under stock plans — (5,964 ) — — 13,495 7,531 Stock compensation tax benefits — 13,928 — — — 13,928 Common share repurchases — — — — (513,582 ) (513,582 ) Stock compensation expense — 46,149 — — — 46,149 Balance at December 31, 2015 $ 78 $ 818,546 $ (44,402 ) $ 1,450,684 $ (2,357,306 ) $ (132,400 ) 38 Year Ended December 31, 2012 2011 2010 Operating activities: Net income $ 165,903 $ 136,902 $ 96,285 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of intangibles 29,771 32,064 35,874 Stock-based compensation expense 36,378 32,865 32,634 Excess tax benefits from employee stock-based compensation exercises (21,304 ) (25,572 ) (18,364 ) Deferred taxes 973 (965 ) (2,609 ) Amortization and write-off of debt issue costs 2,008 2,288 1,567 Changes in assets and liabilities: Fees receivable, net (38,617 ) (58,887 ) (48,177 ) Deferred commissions (8,871 ) (6,928 ) (2,184 ) Prepaid expenses and other current assets (10,604 ) 3,540 (376 ) Other assets 15,113 4,397 (34,130 ) Deferred revenues 71,645 91,765 85,336 Accounts payable, accrued, and other liabilities 37,418 44,097 59,643 Cash provided by operating activities 279,813 255,566 205,499 Investing activities: Additions to property, equipment and leasehold improvements (44,337 ) (41,954 ) (21,694 ) Acquisitions (net of cash received) (10,336 ) — (12,151 ) Cash used in investing activities (54,673 ) (41,954 ) (33,845 ) Financing activities: Proceeds from employee stock-based compensation plans and ESP Plan 12,430 20,011 23,527 Proceeds from borrowings 35,000 — 200,000 Payments on debt (30,000 ) (20,156 ) (313,627 ) Purchases of treasury stock (111,304 ) (211,986 ) (99,820 ) Excess tax benefits from employee stock-based compensation exercises 21,304 25,572 18,364 Cash used by financing activities (72,570 ) (186,559 ) (171,556 ) Net increase in cash and cash equivalents 152,570 27,053 98 Effects of exchange rates on cash and cash equivalents 4,543 (4,495 ) 3,509 Cash and cash equivalents, beginning of period 142,739 120,181 116,574 Cash and cash equivalents, end of period $ 299,852 $ 142,739 $ 120,181 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 8,968 $ 13,312 $ 11,484 Income taxes, net of refunds received $ 46,907 $ 24,126 $ 25,486 Year Ended December 31, 2015 2014 2013 Operating activities: Net income $ 175,635 $ 183,766 $ 182,801 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of intangibles 47,131 39,412 34,442 Stock-based compensation expense 46,149 38,845 34,735 Excess tax benefits from employee stock-based compensation exercises (13,860 ) (20,193 ) (25,392 ) Deferred taxes 344 (759 ) 16,663 Amortization and write-off of debt issue costs 1,512 2,645 2,710 Changes in assets and liabilities: Fees receivable, net (44,476 ) (76,424 ) (28,097 ) Deferred commissions (13,236 ) (12,340 ) (18,608 ) Prepaid expenses and other current assets (13,268 ) (3,017 ) (1,187 ) Other assets (14,733 ) (7,139 ) (5,268 ) Deferred revenues 91,840 105,354 80,938 Accounts payable, accrued, and other liabilities 82,523 96,629 41,917 Cash provided by operating activities 345,561 346,779 315,654 Investing activities: Additions to property, equipment and leasehold improvements (46,128 ) (38,486 ) (36,498 ) Acquisitions (net of cash acquired) (170,604 ) (109,928 ) — Acquisitions - increase in restricted cash (escrow) (25,625 ) (14,363 ) — Cash used in investing activities (242,357 ) (162,777 ) (36,498 ) Financing activities: Proceeds from employee stock-based compensation plans and ESP Plan 7,499 7,767 6,042 Proceeds from borrowings 440,000 400,000 205,625 Payments on debt (20,000 ) (200,000 ) (205,625 ) Purchases of treasury stock (509,049 ) (432,006 ) (181,736 ) Fees paid for debt refinancing — (4,624 ) (3,553 ) Excess tax benefits from employee stock-based compensation exercises 13,860 20,193 25,392 Cash used by financing activities (67,690 ) (208,670 ) (153,855 ) Net increase (decrease) in cash and cash equivalents 35,514 (24,668 ) 125,301 Effects of exchange rates on cash and cash equivalents (27,840 ) (34,020 ) (1,163 ) Cash and cash equivalents, beginning of period 365,302 423,990 299,852 Cash and cash equivalents, end of period $ 372,976 $ 365,302 $ 423,990 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 21,200 $ 10,600 $ 8,500 Income taxes, net of refunds received $ 83,500 $ 70,100 $ 50,767 392012, 2011,2015, 2014, and 20102013 herein refer to the fiscal year unless otherwise indicated.accountsfees 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, performance-based compensation charges, depreciation, and amortization, and the allowance for losses.amortization. Management believes its use of estimates in the accompanying consolidated financial statements to be reasonable.Revenues.101,104, Revenue Recognitionin Financial Statements (“SAB 101”), and SEC Staff Accounting Bulletin No. 104,Revenue Recognition(“SAB 104”). Revenues are only recognized once all required criteria for recognition have been met. The accompanying Consolidated Statements of Operations presentspresent revenues net of any sales or value-added taxes that we collect from customers and remit to government authorities. annual subscription contracts for research products. TheseThe related revenues are deferred and recognized ratably over the applicable contract term. Fees derived from assisting organizations in selecting the right business software for their needs is recognized when the leads are provided to vendors.annually renewable subscription contracts for research products. Reprint fees are recognized when the reprint is shipped.$34.0$43.2 million at December 31, 20122015 and $29.2$44.0 million at December 31, 2011.
2014.40CompanyCompany'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 expected direct costs of producing a scheduled event will exceed expected revenues. If such costs are expected to exceed revenues, the Company records the expected loss in the period determined.as an increase to expense. The amountdetermination of the allowance for losses is based on historical loss experience, aging of outstanding receivables, ouran assessment of current economic conditions, andthe aging of outstanding receivables, the financial health of specific clients.as interpreted byand SEC Staff Accounting Bulletins No. 107 (“SAB No. 107”) and No. 110 (“SAB No. 110”). Stock-based compensation cost is based on the fair value of the award on the date of grant, which is expensed over the related service period, net of estimated forfeitures. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period. During 2012, 2011,2015, 2014 and 2010,2013, the Company recognized $36.4$46.1 million, $32.9$38.8 million and $32.6$34.7 million, respectively, of stock-based compensation expense, (see Note 8 — Stock-Based Compensation),a portion of which is recorded in both COS and SG&A in the Consolidated Statements of Operations.As we prepare our consolidated financial statements, we 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 together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We record a valuation allowance to reduce ourIn assessing the realizability of deferred tax assets, when future realizationmanagement considers if it is in question.more likely than not that some or all of the deferred tax assets will not be realized. We consider the availability of loss carryforwards, existingprojected reversal of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessingmaking this assessment. The Company recognizes the need fortax benefit from an uncertain tax position only if it is more likely than not the valuation allowance. Intax position will be sustained based on the event we determine that we are able to realize our deferred tax assets in the future in excesstechnical merits of the net recorded amount, an adjustment is made to reduce the valuation allowance and increase income in the period such determination is made. Likewise, if we determine that we will not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the valuation allowance is charged against income in the period such determination is made.$30.3$33.8 million, $26.2$31.5 million, and $23.5$30.8 million in 2012, 2011,2015, 2014, and 2010,2013, respectively.improvementsimprovement or the remaining term of the related leases.lease. The Company had total depreciation expense of $25.4$33.8 million, $25.5$31.2 million, and $25.3$29.0 million in 2012, 2011,2015, 2014, and 2010,2013, respectively.41Property, equipment and leasehold improvements, The Company's total fixed assets, less accumulated depreciation and amortization, consistconsisted of the following (in thousands): Useful Life December 31, (Years) 2012 2011 Computer equipment and software 2 - 7 $ 135,167 $ 130,733 Furniture and equipment 3 - 8 29,907 34,828 Leasehold improvements 2 - 15 64,346 63,773 229,420 229,334 Less — accumulated depreciation and amortization (140,331 ) (161,202 ) $ 89,089 $ 68,132 Useful Life December 31, Category (Years) 2015 2014 Computer equipment and software 2-7 $ 148,195 $ 144,293 Furniture and equipment 3-8 39,072 37,221 Leasehold improvements 2-15 87,103 78,094 $ 274,370 $ 259,608 Less — accumulated depreciation and amortization (165,637 ) (161,618 ) Property, equipment, and leasehold improvements, net $ 108,733 $ 97,990 At December 31, 2012 and 2011, netNet capitalized development costs for internal use software were $14.4was $14.1 million at both December 31, 2015 and $13.6 million, respectively.2014, which is included in the Computer equipment and software category above. Amortization of capitalized internal software development costs, which is classified in Depreciation in the Consolidated Statements of Operations, totaled $7.4$8.2 million $7.8 million, and $7.9 million during 2012, 2011, and 2010, respectively.Stamford headquarters lease renewalThe Company’s corporate headquarters is located in 213,000 square feeteach of leased office space in three buildings in Stamford, Connecticut. The Stamford facility accommodates research and analysis, marketing, sales, client support, production, corporate services, executive offices, and administration. In 2010 the Company entered into a new 15 year lease agreement for this facility which provides for a reduced rental until completion of certain renovation work. In accordance with FASB ASC Topic 840, the Company accounted for the new Stamford lease as an operating lease arrangement. The total minimum payments the Company is obligated to pay under this lease, including contractual escalation clauses and reduced rents during the renovation period, are being expensed on a straight-line basis over the lease term.Under this arrangement, the landlord has provided a $25.0 million tenant improvement allowance to be used to renovate the three buildings. The renovation work began in 2011 and is expected to be completed in early 2013. The $25.0 million contractual amount due from the landlord was recorded as a tenant improvement allowance in Other assets and as deferred rent in Other Liabilities on the Consolidated Balance Sheets. As the renovation work progresses and payments are received from the landlord, the tenant improvement receivable is relieved and leasehold improvement assets are recorded in Property, equipment, and leasehold improvements. The leasehold improvement assets are being amortized to Depreciation expense over their useful lives, beginning when the assets are placed in service. The amount recorded as deferred rent is being amortized as a reduction to rent expense (SG&A) on a straight-line basis over the term of the lease.As ofyears ended December 31, 2012, the Company had $21.0 million of remaining unamortized deferred rent resulting from the tenant improvement allowance, of which $1.5 million is recorded in Accounts payable and accrued liabilities and $19.5 million is recorded in Other liabilities on the Company’s Consolidated Balance Sheets. The Company paid $17.0 million and $9.5 million in renovation costs for this project in 2012 and 2011, respectively, which are classified as cash outflows in the Investing activities section of the Company’s Consolidated Statements of Cash Flows. The Company received landlord cash reimbursements for these expenditures of $13.0 million and $9.0 million in 2012 and 2011, respectively, which are classified as cash inflows in the Operating activities section of the Company’s Consolidated Statements of Cash Flows.two yeartwo-year period ended December 31, 20122015 are as follows (in thousands):December 31, 2012 Trade
Name Customer
Relationships Content Software Total Gross cost, December 31, 2011 $ 5,758 $ 7,210 $ — $ — $ 12,968 Additions due to acquisition (1) 240 3,170 3,170 1,955 8,535 Foreign currency translation impact 21 182 277 169 649 Gross cost 6,019 10,562 3,447 2,124 22,152 Accumulated amortization (2) (3,531 ) (5,896 ) (497 ) (407 ) (10,331 ) Balance, December 31, 2012 $ 2,488 $ 4,666 $ 2,950 $ 1,717 $ 11,821 December 31, 2015 Content Software Non-Compete Total Gross cost, December 31, 2014 $ 6,924 $ 27,933 $ 3,560 $ 6,569 $ 9,272 $ 54,258 Additions due to acquisitions (1) 3,260 42,620 2,000 11,656 20,075 79,611 Intangibles fully amortized (6,013 ) (7,210 ) — — — (13,223 ) Foreign currency translation impact (27 ) (483 ) (110 ) (2,006 ) (17 ) (2,643 ) Gross cost 4,144 62,860 5,450 16,219 29,330 118,003 Accumulated amortization (3), (4) (681 ) (9,028 ) (3,525 ) (3,699 ) (4,526 ) (21,459 ) Balance, December 31, 2015 $ 3,463 $ 53,832 $ 1,925 $ 12,520 $ 24,804 $ 96,544 December 31, 2014 Content Software Non-Compete Total Gross cost, December 31, 2013 $ 6,023 $ 10,146 $ 3,496 $ 2,143 $ — $ 21,808 Additions due to acquisitions (1) 915 18,054 206 5,000 7,800 31,975 Non-competition agreement (2) — — — — 1,500 1,500 Foreign currency translation impact (14 ) (267 ) (142 ) (574 ) (28 ) (1,025 ) Gross cost 6,924 27,933 3,560 6,569 9,272 54,258 Accumulated amortization (3), (4) (6,202 ) (11,072 ) (2,246 ) (2,603 ) (1,446 ) (23,569 ) Balance, December 31, 2014 $ 722 $ 16,861 $ 1,314 $ 3,966 $ 7,826 $ 30,689 42 December 31, 2011 Trade
Name Customer
Relationships Total Gross cost, December 31, 2010 $ 5,758 $ 7,210 $ 12,968 Foreign currency translation impact — — — Gross cost 5,758 7,210 12,968 Accumulated amortization (2) (2,303 ) (3,605 ) (5,908 ) Balance, December 31, 2011 $ 3,455 $ 3,605 $ 7,060 (1) The Company acquired Ideas International in 2012 and recorded a total of $8.5 million of amortizable intangible assets.additions are due to the Company's acquisitions. See Note 2—2 — Acquisitions above for additional information.(2) The non-competition intangible relates to a separation agreement with the Company's former CFO. (3) Intangible assets are being amortized against earnings over the following periods: Trade name—2 to 54 years; Customer relationships—relationships 4 to 7 years; Content—1.5 to 4 years; Software—3 years; Non-compete—3 to 5 years.(4) Aggregate amortization expense related to intangible assets was $4.4$13.3 million, $6.5$8.2 million, and $10.5$5.4 million in 2012, 2011,2015, 2014, and 2010,2013, respectively.2013 $ 5,490 2014 3,615 2015 2,005 2016 711 $ 11,821 2016 $ 24,074 2017 21,468 2018 18,818 2019 14,321 2020 12,449 Thereafter 5,414 $ 96,544 based on either a qualitativequantitative or qualitative assessmentin nature, or a combination of the two. Both methods utilizerequire the use of estimates which in turn requirecontain judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the resulting estimates are subject to uncertainty.The Company 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 against earnings. We conducted a qualitativequantitative assessment of the fair value of its threeall of the Company's reporting units asduring the third quarter of September 30, 2012 based in part on the demonstrated historical trend2015. The results of this test determined that the fair values of the Company’s reporting units substantially exceeding their carrying values and its recent financial performance. Among the factors included in the Company’s qualitative assessment were general economic conditions and the competitive environment; actual and projected reporting unit financial performance; forward-looking business measurements; and external market assessments. Based on the results of the qualitative assessment, the Company believes the fair values of itsCompany's reporting units continue to substantially exceed their respective carrying values.reporting unitsegment during the two yeartwo-year period ended December 31, 20122015 (in thousands): Research Consulting Events Total Balance, December 31, 2010 (1) $ 368,521 $ 99,817 $ 41,927 $ 510,265 Foreign currency translation adjustments (1,541 ) (140 ) (34 ) (1,715 ) Balance, December 31, 2011 $ 366,980 $ 99,677 $ 41,893 $ 508,550 Addition due to acquisition (2) 7,455 — — 7,455 Foreign currency translation adjustments 2,790 672 39 3,501 Balance, December 31, 2012 $ 377,225 $ 100,349 $ 41,932 $ 519,506 Research Consulting Events Total Balance, December 31, 2013 (1) $ 376,568 $ 100,677 $ 41,958 $ 519,203 Additions due to acquisitions (2) 78,373 — — 78,373 Foreign currency translation adjustments (9,481 ) (1,260 ) (170 ) (10,911 ) Balance, December 31, 2014 $ 445,460 $ 99,417 $ 41,788 $ 586,665 Additions due to acquisitions (2) 138,053 — — 138,053 Foreign currency translation adjustments (8,221 ) (1,005 ) (133 ) (9,359 ) Balance, December 31, 2015 $ 575,292 $ 98,412 $ 41,655 $ 715,359 (1) The Company does not have any accumulated goodwill impairment losses. (2) The Company acquired Ideas International in mid-2012 and recorded $7.5 million of goodwill.addition are due to the Company's acquisitions (See Note 2—Acquisitions for additional discussion). All of the recorded goodwill resulting from the acquisitionthese acquisitions has been included in the Research segment. See Note 2—Acquisitions above for additional information.intangible assets.property, equipment, and leasehold improvements. The Company reviews its long-lived and intangible assets other than goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of the respective asset may not be recoverable. Such evaluation may be based on a number of factors including current and projected operating results and cash flows, changes in management’s strategic direction as well as external economic and market factors. The Company’s policy regarding long-lived assets and intangible assets other than goodwill is to evaluateCompany evaluates the recoverability of these assets by determining whether the balance can be recovered through undiscounted future operating cash flows. ShouldIf events or circumstances indicate that the carrying value might not be recoverable based on undiscounted future operating cash flows, an impairment loss would be recognized. The43material impairment charges for long-lived and intangible assets during 2012, 2011, or 2010.$2.6$3.5 million, $2.7$3.4 million, and $2.4$3.8 million of expense for these plans in 2012, 2011,2015, 2014, and 2010,2013, respectively. The Company classifies pension expense in SG&A in the Consolidated Statements of Operations.Accrued interestInterest accrued on amounts borrowed is classified in Interest expense in the Consolidated Statements of Operations. The Company refinanced its debt in 2014 and had $205.0 million and $200.0$825.0 million of debt outstanding at December 31, 2012 and 2011. See2015 (see Note 5—Debt for additional information regarding the Company’s debt. income,, net within the Consolidated Statements of Operations. Net(losses) were $(2.3)losses of $(2.6) million, $(1.3)$(1.7) million, and $(4.8)$(0.9) million in 2012, 2011,2015, 2014, and 2010,2013, respectively. The Company enters into foreign currency forward exchange contracts to mitigate the effects of adverse fluctuations in foreign currency exchange rates on these transactions. These contracts generally have a short duration and are recorded at fair value with both realized and unrealized gains and losses recorded in Other (expense) income,expense, net. The net (loss) gain (loss) from these contracts was $(0.1) million, $0.6 million, $(1.2) million, and $2.8$(0.1) million in 2012, 2011,2015, 2014, and 2010,2013, respectively.On January 1, 2012, the Company retrospectively adopted FASB Accounting Standards Update (“ASU”) No. 2011-05,Comprehensive Income (Topic 220-10): Presentation of Comprehensive Income,and a related amendment. Comprehensive income includes income and expense items from nonowner sources and consists of two separate components: net income as reported and other comprehensive income. ASU No. 2011-05 eliminates the option to report comprehensive income and its components in the statement of stockholders’ equity. Instead, the new rule optionally requires the presentation of net income and comprehensive income in one continuous statement, or in two separate, but consecutive statements. The Company has presented net income, other comprehensive income and its components, andreports comprehensive income in a new, separate statement calledtermed theConsolidated Statements of Comprehensive Income, which is included herein.While the Company’s presentation ofherein. The Company's comprehensive income has changed, there were no changes to the components or amounts thatdisclosures are recognizedincluded in net income or other comprehensive income under existing accounting guidance. As a result, the adoption of this new rule did not impact the Company’s results of operations, cash flows, or financial position.In February 2013, the FASB issued ASU No. 2013-02,Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,Note 7 — Stockholders' (Deficit) Equity.whichupdates ASU No. 2011-05. The standard requires that public companies present information about reclassification adjustments from accumulated other comprehensive income in their financial statements in a single note or on the face of the financial statements. Public companies will have to provide this information in both their annual and interim financial statements. The new requirements will take effect for Gartner beginning January 1, 2013 and will be applied prospectively. While the Company has not completed its analysis of the new standard, it believes the new rule may result in additional disclosures and changes to the presentation of the Statement of Comprehensive Income.accountsfees receivable, interest rate swaps, and a pension reinsurance asset. The majority of the Company’s cash equivalent investments and its interest rate swap contractcontracts are with investment grade commercial banks that are participants in the Company’s credit facility.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. The Company’s pension reinsurance asset (see Note 13 — Employee Benefits) is maintained with a large international insurance company that was rated investment grade as of December 31, 2012.2012, 20112015, 2014 and 20102013, the Company recorded $111.3used $509.0 million, $212.0$432.0 million, and $99.8$181.7 million, respectively, ofin cash for stock repurchases (see Note 7 — Stockholders’ (Deficit) Equity). Shares repurchased by the Company are added to treasury shares and are not retired.44Recentdevelopments.rules. The Company adopted the following new accounting rules in the year ended December 31, 2015:rulesStandard Update No. 2015-17, "Income Taxes: Balance Sheet Classification of Deferred Taxes" on December 31, 2015. Under ASU No. 2015-17, organizations that present a classified balance are required to classify deferred taxes as noncurrent assets or noncurrent liabilities. The Company early adopted the standard on a prospective basis and prior period balance sheets were not retrospectively adjusted. The impact of the reclassification of these amounts on the Company's December 31, 2015 balance sheet was immaterial.beenan impact on the Company's consolidated financial statements at adoption. However, the rule may impact the Company's consolidated financial statements in future periods if the Company has a discontinued operation.by theaccounting rules. The FASB has also issued accounting rules that have not yet become effective and that may impact the Company’s consolidated financial statements or related disclosures in future periodsperiods. These rules and their potential impact are describeddiscussed below:Balance sheet offsetting.Business Combinations — In December 2011,September 2015, theFASB issued Accounting Standards Update (ASU) 2015-16, "Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments" ("ASUNo. 2011-11, Disclosures about Offsetting Assets and Liabilities2015-16"). The new guidanceASU No. 2015-16 requires disclosures about assets and liabilitiesthe recognition of adjustments to business combination provisional amounts, that are offsetidentified during the measurement period, in the reporting period in which the adjustments are determined. The effects of the adjustments to provisional amounts on depreciation, amortization or other income effects should be recognized in current-period earnings as if the accounting had been completed at the acquisition date. Disclosure of the portion of the adjustment recorded in current-period earnings that would have been reported in prior reporting periods if the potentialadjustment to the provisional amounts had been recognized at the acquisition date is also required. The rule is to be offset under U.S. GAAP rules. These disclosures are intended to address differences in the assetapplied retrospectively and liability offsetting requirements under U.S. GAAP and International Financial Reporting Standards. The new disclosure requirements mandate that entities disclose both gross and net information about financial instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. However, as of year-end 2012, the FASB is considering certain amendments to ASU No. 2011-11 which may limit the scope of the new rules. ASU No. 2011-11 will be effective for Gartner for interim and annual reporting periods beginningon January 1, 2013, with retrospective application required. While the adoption of this new guidance may result in additional disclosures, we do2016. ASU No. 2015-16 will not expect it to have an impact on the Company’s Consolidated Balance Sheets.consolidated financial statements at the date of adoption. However, ASU No. 2016-16 could have an impact on the Company's consolidated financial statements in the future if a transaction occurs within the scope of the rule.Other comprehensive incomeSee discussion above
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 a related amendment is intended to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses inComprehensive Income.2012In May 2012 the Company acquired Ideas International Limited (“Ideas International”), a publicly-owned Australian corporation (ASX: IDE) headquartered outside of Sydney with 40 employees. Ideas International provided intelligence on IT infrastructure configurations and pricing data to IT professionals and vendors. paid aggregate cash consideration of $18.8 million forcompleted the following business acquisitions during the years ended December 31:sharescapital stock of Ideas International. each of Nubera eBusiness S.L., based in Barcelona, Spain ("Nubera") on July 1, 2015 and Capterra, Inc., based in Arlington, Virginia ("Capterra") on September 24, 2015. Both of these acquired businesses assist organizations in selecting the right business software for their needs.Company’s strategic objectives in acquiring Ideas International are to leverage Gartner’s scale and worldwide distribution capability, introduce Ideas International’s products and services to Gartner’s much larger end user client base, and further penetratefollowing table provides information regarding the technology vendor market. Ideas International’s business operations have been integrated intocash paid for the Company’s Research segment.Gartner’s financial statements include the operating results of Ideas International beginning with the date of acquisition. These results were not materialCompany's 2015 acquisitions (in millions): Total Aggregate purchase price (1), (2) $ 206.9 Less: cash acquired (3) (10.7 ) Net cash paid during 2015 (3) $ 196.2 (1) The aggregate purchase price represents the gross cash paid for 100% of the outstanding capital stock of the acquired businesses. This includes $179.2 million paid for Capterra and approximately $27.7 million paid for Nubera. (2) The aggregate purchase price includes $30.0 million placed in escrow to cover potential indemnification claims. Of this amount, $25.6 million is restricted cash and is reported in Other Assets on the Company's Condensed Consolidated Balance Sheets. (3) Cash acquired represents the amount of cash from the acquired businesses. The net cash paid represents the amount paid for cash flow reporting purposes. Company’s 2012 results.aggregate purchase price paid for these businesses, the Company may also be required to pay up to an additional $32.0 million in cash in the future subject to the continuing employment of certain key employees. The Company recorded $2.4$32.0 million of pre-tax acquisitionis being recognized as compensation expense over three years and integration charges for this acquisitionwill be reported in 2012, which is classified inthe line Acquisition and integration chargesIntegration Charges in the Consolidated Statements of Operations. Included in these charges are legal, consulting, and severance costs, all of which were direct and incremental charges from the acquisition. Had the Company acquired Ideas International on January 1, 2010, the impact to the Company’s operating results for 2011 and 2010 would not have been material, and as a result pro forma financial information for those periods has not been presented.The acquisition was accounted for under the acquisition method of accounting as prescribed by FASB ASC Topic 805,Business Combinations.The acquisition method of accounting requires the consideration paid to be allocated to the net assets and liabilities acquired based on their estimated fair values as of the acquisition date, and any excess of the purchase price over the estimated fair value of the net assets acquired, including identifiable intangible assets, must be allocated to goodwill. The Company considers its allocation of the respective purchase price to be preliminary, particularly with respect to the valuation of certain tax related items. In accordance with FASB ASC Topic 805, a final determination of the purchase price allocation and resulting goodwill must be made within one year of the acquisition date. The Company anticipates that none of the recorded goodwill arising from the acquisition will be deductible for tax purposes. All of the recorded goodwill was included in the Company’s Research segment. The Company believes the recorded goodwill is supported by the anticipated revenues related to the acquisition.acquired and liabilities assumed in the acquisition (dollars in thousands)2015 acquisitions (in millions):Assets: Cash $ 8,502 Fees receivable 1,310 Prepaid expenses and other current assets 560 Goodwill and amortizable intangible assets (1) 15,990 Total assets $ 26,362 Liabilities: Accounts payable and accrued liabilities $ 2,203 Deferred revenues (2) 5,321 Total liabilities $ 7,524 Total Assets: Cash $ 10.7 Receivables and other assets 12.8 Amortizable intangible assets (1) 79.6 Goodwill (1) 138.1 Total assets $ 241.2 Liabilities: Payables and accrueds (2) $ 34.3 Total liabilities $ 34.3 Net assets acquired $ 206.9 (1) Includes $7.5$68.5 million allocated to goodwill and $8.5$121.1 million allocated toof amortizable intangible assets (see Note 1—Business and Significant Accounting Policies abovegoodwill, respectively, for additional information).Capterra and approximately $11.1 million and $17.0 million of amortizable intangible assets and goodwill, respectively, for Nubera.(2) Includes $25.6 million Capterra escrow liability. The fair value of the costescrow liability is scheduled to fulfill the deferred revenue obligations was determined by estimating the costs to provide the services plus a normal profit margin, and did not include costs associated with selling efforts.be paid in late 2017 from restricted cash.2009
The Company acquired all100% of the outstanding shares of AMR Researchthree companies, Software Advice, Inc., (“Software Advice”), Market-Visio Oy ("Market-Visio"), and Burton GroupSircleIT Inc. during 2014. The aggregate purchase price of these acquisitions was $115.4 million. Software Advice assists customers with software purchases, while Market-Visio was previously an independent sales agent of Gartner research products. SircleIT Inc. is a developer of cloud-based knowledge automation software. For cash flow reporting the Company paid $109.9 million in 2009cash on a net basis in 2014 for total net cash of $116.7these acquisitions. In addition, the Company placed $14.4 million in escrow, of which $12.2$0.8 million was paid out in 2010 and $104.5 million was paid in 2009.2015. The Company recorded $7.9$110.3 million of acquisitiongoodwill and other intangible assets related to the 2014 acquisitions and $5.1 million of other assets on a net basis.expenses related to these acquisitionscharges in the Consolidated Statements of Operations. The Company paid $9.2 million of the $31.9 million in early 2015 and anticipates that it will pay the remaining $22.7 million during 2010. December 31, 2012 2011 Security deposits $ 7,740 $ 6,581 Debt issuance costs 2,768 3,866 Benefit plan-related assets 37,016 38,403 Non-current deferred tax assets 22,527 22,795 Tenant improvement allowance (1) — 16,062 Other 3,344 2,638 Total other assets $ 73,395 $ 90,345 (1)The balance as of December 31, 2011 represented the landlord receivable related to the renovation of the Company’s Stamford headquarters facility, the majority of which was collected during 2012, with the balance reclassified to current assets. See Note 1 — Business and Significant Accounting Policies for additional information. December 31, 2015 2014 Security deposits $ 6,699 $ 4,951 Debt issuance costs, net 6,169 7,781 Benefit plan-related assets 42,168 43,293 Non-current deferred tax assets 26,418 17,960 Acquisition escrow - restricted cash 25,625 14,363 Other 5,974 4,001 Total other assets $ 113,053 $ 92,349 December 31, 2012 2011 Accounts payable $ 27,344 $ 27,573 Payroll, employee benefits, severance 71,892 66,110 Bonus payable 68,776 62,191 Commissions payable 49,128 42,328 Taxes payable 18,897 15,917 Rent and other facilities costs 4,310 5,046 Professional, consulting, audit fees 8,355 6,907 Events fulfillment liabilities 4,209 2,255 Other accrued liabilities 34,852 31,163 Total accounts payable and accrued liabilities $ 287,763 $ 259,490 December 31, 2015 2014 Accounts payable $ 31,570 $ 16,802 Payroll and employee benefits payable 85,575 79,831 Severance and retention bonus payable 38,557 26,965 Bonus payable 90,989 83,000 Commissions payable 66,054 64,888 Taxes payable 13,714 18,538 Professional, consulting, audit fees 10,164 9,429 Other accrued liabilities 51,068 54,308 Total accounts payable and accrued liabilities $ 387,691 $ 353,761 December 31, 2012 2011 Non-current deferred revenue $ 5,508 $ 4,572 Interest rate swap liabilities 10,017 9,891 Long-term taxes payable 16,760 20,141 Deferred rent (1) 19,586 21,046 Benefit plan-related liabilities 54,779 47,326 Other 22,954 23,975 Total other liabilities $ 129,604 $ 126,951 46(1)Represents the remaining unamortized long-term deferred rent on the $25.0 million tenant improvement allowance on the Company’s Stamford headquarters facility. See Note 1 — Business and Significant Accounting Policies above for additional information. December 31, 2015 2014 Non-current deferred revenue $ 7,603 $ 7,056 Interest rate swap liability 5,132 2,900 Long-term taxes payable 13,784 8,506 Deferred rent 15,207 16,667 Benefit plan-related liabilities 62,675 64,994 Other 89,193 42,839 Total other liabilities $ 193,594 $ 142,962 2010$200.0$400.0 million term loan and a $400.0 million$1.1 billion revolving credit facility which it entered into in December 2010 (the “2010 Credit Agreement”). The Company terminated its prior credit arrangement when it entered intofacility. In addition, the 2010 Credit Agreement and paid down the remaining amounts outstanding. The 20102014 Credit Agreement contains an expansion feature by which the term loan and revolving credit facility may be increased, at the Company’s option and under certain conditions, by up to an additional $150.0$500.0 million in the aggregate.is beingwill be repaid in 1916 consecutive quarterly installments which commenced on March 31, 2011,2015, plus a final payment due onin December 22, 2015,2019, and may be prepaid at any time without penalty or premium (other than applicable breakage costs) at the Company’s option. The revolving credit facility may be used for loans, and up to $40.0 million may be used for letters of credit. The revolving loans may be borrowed, repaid and re-borrowed until December 22, 2015,2019, at which time all amounts borrowed must be repaid.20102014 Credit Agreement bear interest at a rate equal to, at Gartner’s option, either:Company’s option, eithergreater of: (i) the greatest of: the administrative agent’s prime rate; (ii) the average rate on overnight federal funds plus 1/2 of 1%; and(iii) the eurodollar rate (adjusted for statutory reserves) plus 1%,; in each case plus a margin equal to between 0.50%0.125% and 1.25%0.50% depending on the Company’sGartner’s consolidated leverage ratio as of the end of the four consecutive fiscal quarters most recently ended,ended; or (ii)1.50%1.125% and 2.25%1.50%, depending on the Company’sGartner’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended.20102014 Credit Agreement contains certain customary restrictive loan covenants, including, among others, financial covenants requiring a maximum leverage ratio, a minimum interest expense coverage ratio, and covenants limiting the Company’sGartner’s ability to incur indebtedness, grant liens, make acquisitions, be acquired, dispose of assets, pay dividends, repurchase stock, make capital expenditures, make investments and enter into certain transactions with affiliates. The Company was in full compliance with thesethe loan covenants as of December 31, 2012.In December 2010, the Company recorded certain incremental pre-tax charges due to the termination of the prior credit arrangement. The majority of these charges would have been recognized as expenses in 2011, but accounting rules required their accelerated recognition in 2010. These accelerated pre-tax charges included $3.3 million for deferred losses on interest rate swap contracts that had been recorded in Other Comprehensive Income (OCI) since the swaps had previously been designated as accounting hedges, and $0.4 million for the write-off of a portion of capitalized debt issuance costs related to the previous debt. In accordance with FASB ASC Topic 815, the deferral of the unrealized losses on the swaps recorded in OCI was no longer permitted since the forecasted interest payments related to the previous debt would not occur. Both the capitalized debt issuance write-off and the interest rate swap charge were classified in Interest expense in the Consolidated Statements of Operations for the year ended December 31, 2010.provides information regardingsummarizes the Company’s total outstanding borrowings:Description: Amount
Outstanding
December 31,
2012
(In thousands) Contractual
Annualized
Interest Rate
December 31,
2012 Amount
Outstanding
December 31,
2011
(In thousands) 2010 Credit Facility - term loan (1) $ 150,000 1.81 % $ 180,000 2010 Credit Facility - revolver (1), (2) 50,000 1.81 % 20,000 Other (3) 5,000 3.00 % — Total $ 205,000 $ 200,000 Amount Outstanding December 31, Amount Outstanding December 31, Description: 2015 2014 Term loan (1) $ 380,000 $ 400,000 Revolver (1), (2) 440,000 — Other (3) 5,000 5,000 Total (4), (5) $ 825,000 $ 405,000 (1) BothThe contractual annual interest rate as of December 31, 2015 on both the term loan and the revolver loan rateswas 1.80%, which consisted of a floating Eurodollar base rate of 0.31%0.42% plus a margin of 1.5%1.38%. However, the Company has an interest rate swap contractcontracts which convertsconvert the floating Eurodollareurodollar base rate to a 2.26% fixed base rate on the first $200.0$700.0 million of Company borrowings (see below). As a result, the Company’s effective annual interest rate on the $200.0 million of outstanding debt under the 2010 Credit Facility as of December 31, 2012, including the margin, was 3.76%.(2) The Company had $346.6$656.0 million of available borrowing capacity on the revolver (not including the expansion feature) as of December 31, 2012.2015.47(3) In December 2012 the Company borrowedConsists of a $5.0 million under a previously disclosed financial assistance package provided by an economic development program through the State of Connecticut in connectioneconomic development loan with the Company’s renovationa 3.0% fixed rate of its Stamford headquarters facility.interest. The loan was originated in 2012 and has a 10 year maturity and bears a 3% fixed rate of interest.maturity. Principal payments are deferred for the first five years and the loan may be repaid at any point by the Company without penalty. The loan has a principal forgiveness provision in which up to $2.5 million of the loan may be forgiven if the Company meets certain employment targets in the State of Connecticut during the first five years of the loan.(4) As of December 31, 2015, $35.0 million of the debt was classified as short term and $790.0 million was classified as long term on the Consolidated Balance Sheets. (5) The weighted-average annual interest rate on the Company's outstanding debt as of December 31, 2015 was 2.76%, which includes the impact of the Company's interest swap contracts. Swap Hedgeentered into a $200.0 million notionalhas three fixed-for-floating interest rate swap contract in December 2010contracts which it designateddesignates as a hedgeaccounting hedges of the forecasted interest payments on $700.0 million of the Company’s variable rate borrowings. Under the swap terms, theThe Company pays a base fixed rate of 2.26%rates on these swaps ranging from 1.53% to 1.60% and in return receives a Eurodollarfloating eurodollar base rate.swapswaps as a cash flow hedgehedges in accordance with FASB ASC Topic No. 815. Since the swap is hedgingswaps hedge forecasted interest payments, changes in the fair value of the swapswaps are recorded in OCIaccumulated other comprehensive (loss) income, a component of equity, as long as the swap continuesswaps continue to be a highly effective hedgehedges of the designated interest rate risk. Any ineffective portion of change in the fair value of the hedgehedges is recorded in earnings. AtAll of the swaps were highly effective hedges of the forecasted interest payments as of December 31, 2012, there was no ineffective portion of the hedge.2015. The interest rate swapswaps had a total negative fair value to the Company as of $10.0 million at December 31, 2012,2015 and 2014 of $5.1 million and $2.9 million, respectively, which is deferred and classified in OCI,accumulated other comprehensive (loss) income, net of tax effect.$10.1$8.2 million of letters of credit and related guarantees outstanding at year-end 2012.2015. The Company issues these instruments in the ordinary course of business to facilitate transactions with customers and others.furniture, and computer and office equipment, furniture, and other assets under non-cancelable operating lease arrangementsagreements expiring between 20132016 and 2027.2030. The future minimum annual cash payments under non-cancelablethese operating lease agreements atas of December 31, 2012, are2015 were as follows (in thousands):Year ended December 31, 2013 $ 37,820 2014 31,660 2015 22,295 2016 14,680 2017 9,910 Thereafter 75,055 Total minimum lease payments (1) $ 191,420 (1)Excludes $2.2 million of future contractual sublease rental income.Year ended December 31, 2016 $ 40,910 2017 37,565 2018 29,649 2019 25,074 2020 19,240 Thereafter 111,555 Total minimum lease payments $ 263,993 2012,2015, we did not have any indemnification agreements that could require material payments.$.0005$.0005 per share (“Common Stock”) are entitled to one vote per share on all matters to be voted by stockholders. The Company does not currently pay cash dividends on its Common Stock. Also, our credit arrangement2014 Credit Agreement contains a negative covenant which may limit our ability to pay dividends.48years’years ending December 31, 2012: Balance at December 31, 2012 156,234,415 62,873,100 Issuances under stock plans — (2,037,091 ) Purchases for treasury (1) — 3,432,854 Balance at December 31, 2013 156,234,415 64,268,863 Issuances under stock plans — (1,452,419 ) Purchases for treasury (1) — 5,897,446 Balance at December 31, 2014 156,234,415 68,713,890 Issuances under stock plans — (1,003,746 ) Purchases for treasury (1) — 6,186,101 Balance at December 31, 2015 156,234,415 73,896,245 Issued
Shares Treasury
Stock
Shares Balance at December 31, 2009 156,234,415 60,356,672 Issuances under stock plans — (4,029,673 ) Purchases for treasury — 3,918,719 Balance at December 31, 2010 156,234,415 60,245,718 Issuances under stock plans — (3,244,705 ) Purchases for treasury (1) — 5,890,238 Balance at December 31, 2011 156,234,415 62,891,251 Issuances under stock plans — (2,756,389 ) Purchases for treasury — 2,738,238 Balance at December 31, 2012 156,234,415 62,873,100 (1) Includes 2,148,434 shares theThe Company repurchased directly from ValueAct Capital Master Fund, L.P. (“ValueAct”)used a total of $509.0 million, $432.0 million, and $181.7 million in two separate transactions during 2011. The total cost of the shares repurchased directly from ValueAct was $75.2 million.cash for share repurchases in 2015, 2014, and 2013, respectively.program.authorization. The Company has a $500.0 million share$1.2 billion board authorization to repurchase program, of which $210.2 million remained available for share repurchases as of December 31, 2012. Repurchasesthe Company's common stock. The Company may be maderepurchase its common stock from time-to-time through open market purchases, private transactions, tender offers or other transactions. The amountin amounts and timing of repurchases will beat prices the Company deems appropriate, subject to the availability of stock, prevailing market conditions, the trading price of the stock, the Company’s financial performance and other conditions. Repurchases may also be made from time-to-time in connection with the settlement of the Company’s shared-based compensation awards. Repurchases maythrough open market purchases, private transactions or other transactions and will be funded from cash on hand and borrowings under the Company’s 2014 Credit Agreement. As of December 31, 2015, approximately $1.1 billion of this authorization remained available for repurchases. Interest Rate Swaps Defined Benefit Pension Plans Foreign Currency Translation Adjustments Total Balance - December 31, 2014 $ (1,740 ) $ (6,028 ) $ (13,402 ) $ (21,170 ) Changes during the period: Change in AOCL/I before reclassifications to income (6,356 ) 986 (23,089 ) (28,459 ) Reclassifications from AOCL/I to income during the period (2), (3) 5,017 210 — 5,227 Other comprehensive (loss) income for the period (1,339 ) 1,196 (23,089 ) (23,232 ) Balance - December 31, 2015 $ (3,079 ) $ (4,832 ) $ (36,491 ) $ (44,402 ) Interest Rate Swap Defined Benefit Pension Plans Foreign Currency Translation Adjustments Total Balance - December 31, 2013 $ (3,903 ) $ (1,811 ) $ 14,059 $ 8,345 Changes during the period: Change in AOCL/I before reclassifications to income (292 ) (4,275 ) (27,461 ) (32,028 ) Reclassifications from AOCL/I to income during the period (2), (3) 2,455 58 — 2,513 Other comprehensive income (loss) for the period 2,163 (4,217 ) (27,461 ) (29,515 ) Balance - December 31, 2014 $ (1,740 ) $ (6,028 ) $ (13,402 ) $ (21,170 ) from operations or borrowings.Company paid cashreclassifications related to defined benefit pension plans were recorded in Selling, general and administrative expense, net of $111.3 million, $212.0 million, and $99.8 million, in 2012, 2011, and 2010, respectively,tax effect. See Note 13 – Employee Benefits for common stock repurchases. The $212.0 million paid for share repurchases in 2011 includesinformation regarding the cost of the shares repurchased directly from ValueAct.2012,2015, the Company had 6.47.0 million shares of Common Stock available for awards of stock-based compensation under its 20032014 Long-Term Incentive Plan.as interpreted byand SEC Staff Accounting Bulletins No. 107 (“SAB No. 107”) and No. 110 (“SAB No. 110”). Stock-based compensation expense is based on the fair value of the award on the date of grant, which is then recognized as expense over the related service period, net of estimated forfeitures. The service period is the period over which the related service is performed, which is generally the same as the vesting period. Currently, the Company issues treasury shares upon the exercise, release or settlement of stock-based compensation awards.but these estimateswhich involve inherent uncertainties and the application of judgment. As a result, if factors change and the Company deems it necessary in the future to modify the assumptions it made or to use different assumptions, or if the quantity and nature of the Company’s stock-based compensation awards changes, then the amount of expense may need to be adjusted and future stock-based compensation expense could be materially different from what has been recorded in the current period.Award type: 2012 2011 2010 Stock appreciation rights $ 6.4 $ 4.4 $ 4.6 Common stock equivalents 0.5 0.5 0.5 Restricted stock units 29.5 28.0 27.5 Total (1) $ 36.4 $ 32.9 $ 32.6 Award type: 2015 2014 2013 Stock appreciation rights $ 5.7 $ 5.0 $ 5.2 Common stock equivalents 0.6 0.6 0.6 Restricted stock units 39.8 33.2 28.9 Total (1) $ 46.1 $ 38.8 $ 34.7 49 (1) $5.1$20.1 million, $14.8 million, and $12.5 millionin 20122015, 2014 and $3.1 million in both 2011 and 20102013, respectively, for awards to retirement-eligible employees since theseemployees. These awards vest on an accelerated basisAmount recorded in: 2012 2011 2010 Costs of services and product development $ 15.3 $ 14.8 $ 14.8 Selling, general, and administrative 21.1 18.1 17.8 Total $ 36.4 $ 32.9 $ 32.6 Amount recorded in: 2015 2014 2013 Costs of services and product development $ 20.6 $ 17.6 $ 15.3 Selling, general, and administrative 25.5 21.2 19.4 Total $ 46.1 $ 38.8 $ 34.7 2012,2015, the Company had $38.5$47.9 million of total unrecognized stock-based compensation cost, which is expected to be recognized as stock-based compensation expense over the remaining weighted-average service period of approximately 2.2 years.four-yearfour-year service period and expire seven years from the grant date. The fair value of SARs awards is recognized as compensation expense on a straight-line basis over four years.years. SARs have only been awarded to the Company’s executive officers.2012: SARs in
millions Per Share
Weighted-
Average
Exercise Price Per Share
Weighted-
Average
Grant Date
Fair Value Weighted-
Average
Remaining
Contractual
Term Outstanding at December 31, 2011 2.5 $ 20.39 $ 7.66 4.00 years Granted 0.4 37.81 12.99 6.11 years Forfeited — — — — Exercised (0.9 ) 18.35 6.82 na Outstanding at December 31, 2012 (1), (2) 2.0 $ 24.59 $ 9.04 4.10 years Vested and exercisable at December 31, 2012 (2) 0.8 $ 18.74 $ 7.14 3.12 years Outstanding at December 31, 2014 1.4 $ 44.44 $ 13.26 4.34 years Granted 0.3 77.92 17.56 6.11 years Forfeited — — — — Exercised (0.4 ) 32.53 11.35 na Outstanding at December 31, 2015 (1), (2) 1.3 $ 56.47 $ 14.92 4.46 years Vested and exercisable at December 31, 2015 (2) 0.5 $ 43.51 $ 13.49 3.38 years (1) At December 31, 2012, 1.22015, 0.8 million of these SARs were unvested. The Company expects that substantially all of these unvested awards will vest in future periods.(2) At December 31, 2012,2015, SARs outstanding had an intrinsic value of $42.9$45.8 million. SARs vested and exercisable had an intrinsic value of $23.1$23.7 million. 2012 2011 2010 Expected dividend yield (1) 0 % 0 % 0 % Expected stock price volatility (2) 40 % 38 % 40 % Risk-free interest rate (3) 0.8 % 2.2 % 2.4 % Expected life in years (4) 4.61 4.75 4.75 2015 2014 2013 Expected dividend yield (1) — % — % — % Expected stock price volatility (2) 24 % 25 % 35 % Risk-free interest rate (3) 1.5 % 1.3 % 0.8 % Expected life in years (4) 4.41 4.43 4.49 50 (1) The dividend yield assumption is based on both the history and expectation of the Company’s dividend payouts. Historically the Company has not paid cash dividends on its Common Stock. (2) The determination of expected stock price volatility was based on both historical Common Stock prices and the implied volatility from publicly traded options in Common Stock. (3) The risk-free interest rate is based on the yield of a U.S. Treasury security with a maturity similar to the expected life of the award. (4) The expected life represents the Company’s weighted-average estimate of the period of time the SARs are expected to be outstanding (that is, the period between the service inception date and the expected exercise date). Beginning January 1, 2012, the expected life has been calculated based on the Company’s historical exercise data. Previously, the Company determined the expected life based on a simplified calculation permitted by SEC SAB No. 107 and SAB No. 110 since the necessary historical exercise data was not available. The change in methodology had an insignificant impact on the calculation of the expected life.years.years. Performance-based RSUs are subject to both performance and service conditions, vest ratably over four years, and are expensed on an accelerated basis.2012: Restricted
Stock Units
(RSUs)
(in millions) Per Share
Weighted
Average
Grant Date
Fair Value Outstanding at December 31, 2011 3.1 $ 21.53 Granted (1) 0.7 37.98 Vested and released (1.3 ) 19.53 Forfeited — — Outstanding at December 31, 2012 (2), (3) 2.5 $ 27.95 Outstanding at December 31, 2014 1.4 $ 50.76 Granted (1) 0.6 79.22 Vested and released (0.6 ) 47.82 Forfeited — — Outstanding at December 31, 2015 (2), (3) 1.4 $ 62.80 (1) 0.70.6 million RSUs granted in 20122015 consisted of 0.3 million performance-based RSUs awarded to executives and 0.40.3 million service-based RSUs awarded to non-executive employees and certainnon-management board members. The 0.3 million performance-based RSUs awarded to executive personnel represented theaggregate target amount of the RSU award for the year, which was tied to an increase in the Company’s subscription-based Research contract value (“CV”) for 2012. The final number of performance-based RSUs granted could rangeawarded in 2015 was 0.2 million but the final award was subject to the adjustment from 0% to 200% of the target amount, withnumber depending upon the final amount dependent on the actual increase in CV for the year as measured on December 31, 2012. The actual CV increaselevel achieved for 2012 was 104.3% of the targeted amount, which resulted in the grant of 0.3 million performance-based RSUs to executives.Company's subscription-based research contract value(2) The Company expects that substantially all of the outstanding awards at December 31, 20122015 will vest in future periods.(3) The weighted-average remaining contractual term of the outstanding RSUs is approximately 0.9 years.1 year.512012: Common Stock
Equivalents
(CSEs) Per Share
Weighted
Average
Grant Date
Fair Value Outstanding at December 31, 2011 97,268 $ 15.93 Granted 11,373 45.30 Converted to common shares (8,096 ) 45.27 Outstanding at December 31, 2012 100,545 $ 16.89 Stock OptionsHistorically, the Company granted stock options to employees that allowed them to purchase shares of Common Stock at a certain price. The Company has not made any stock option grants since 2006. All outstanding options are fully vested and there is no remaining unamortized cost. The Company received $8.6 million, $16.6 million, and $20.7 million in cash from stock option exercises in 2012, 2011, and 2010, respectively.The following table summarizes the changes in stock options outstanding during the year ended December 31, 2012: Options in
millions Per Share
Weighted-
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Term Aggregate
Intrinsic
Value
(in millions) Vested and outstanding at December 31, 2011 1.2 $ 10.93 1.47 years $ 27.7 Expired — — na na Exercised (0.9 ) 10.59 na 25.9 Vested and outstanding at December 31, 2012 0.3 $ 11.73 1.28 years $ 11.7 Outstanding at December 31, 2014 104,203 $ 18.65 Granted 7,443 85.15 Converted to common shares (5,982 ) 85.12 Outstanding at December 31, 2015 105,664 $ 19.57 na=not applicable2012,2015, the Company had approximately 1.31.0 million shares available for purchase under the ESP Plan. The ESP Plan is considered non-compensatory under FASB ASC Topic No. 718, and as a result the Company does not record stock-based compensation expense for employee share purchases. The Company received $3.8$7.5 million, $3.4$7.8 million, and $2.8$6.0 million in cash from share purchases under the ESP Plan and exercises of stock options during 2012, 2011,2015, 2014, and 2010,2013, respectively.antidilutive,anti-dilutive, they are excluded from the calculation. for the years ended December 31: 2012 2011 2010 Numerator: Net income used for calculating basic and diluted earnings per common share $ 165,903 $ 136,902 $ 96,285 Denominator:(1) Weighted average number of common shares used in the calculation of basic earnings per share 93,444 96,019 95,747 Common share equivalents associated with stock-based compensation plans 2,398 2,827 4,087 Shares used in the calculation of diluted earnings per share 95,842 98,846 99,834 Earnings per share: Basic $ 1.78 $ 1.43 $ 1.01 Diluted $ 1.73 $ 1.39 $ 0.96 2015 2014 2013 Numerator: Net income used for calculating basic and diluted earnings per common share $ 175,635 $ 183,766 $ 182,801 Weighted average number of common shares used in the calculation of basic earnings per share 83,852 89,337 93,015 Common share equivalents associated with stock-based compensation plans 1,204 1,382 1,815 Shares used in the calculation of diluted earnings per share 85,056 90,719 94,830 Earnings per share: Basic $ 2.09 $ 2.06 $ 1.97 Diluted $ 2.06 $ 2.03 $ 1.93 (1) During 2012, 2011 and 2010, theThe Company repurchased 2.76.2 million, 5.9 million, and 3.93.4 million shares of its Common Stock in 2015, 2014, and 2013, respectively.52antidilutive.anti-dilutive. During periods with net income, these common share equivalents were antidilutiveanti-dilutive because their exercise price was greater than the average market value of a share of Common Stock during the period. 2012 2011 2010 Antidilutive common share equivalents as of December 31 (in millions): 0.7 0.5 0.5 Average market price per share of Common Stock during the year $ 43.80 $ 37.53 $ 26.35 2015 2014 2013 Anti-dilutive common share equivalents as of December 31 (in millions): 0.3 0.3 0.3 Average market price per share of Common Stock during the year $ 86.02 $ 73.27 $ 57.50 2012 2011 2010 U.S. $ 150,023 $ 124,915 $ 78,933 Non-U.S. 85,573 77,269 55,152 Income before income taxes $ 235,596 $ 202,184 $ 134,085 2015 2014 2013 U.S. $ 165,848 $ 188,963 $ 186,330 Non-U.S. 106,363 85,720 80,109 Income before income taxes $ 272,211 $ 274,683 $ 266,439 2012 2011 2010 Current tax expense: U.S. federal $ 25,290 $ 23,327 $ 9,078 State and local 2,508 4,236 2,645 Foreign 18,889 13,845 10,341 Total current 46,687 41,408 22,064 Deferred tax (benefit) expense: U.S. federal 8,494 (5,192 ) 4,263 State and local (753 ) 1,269 72 Foreign (8,080 ) (1,434 ) (6,013 ) Total deferred (339 ) (5,357 ) (1,678 ) Total current and deferred 46,348 36,051 20,386 Benefit (expense) relating to interest rate swap used to increase (decrease) equity 51 3,134 (2,523 ) Benefit from stock transactions with employees used to increase equity 21,304 25,812 18,559 Benefit (expense) relating to defined-benefit pension adjustments used to increase (decrease) equity 1,926 285 375 Benefit (expense) of acquired tax assets (liabilities) used to decrease (increase) goodwill 64 — 1,003 Total tax expense $ 69,693 $ 65,282 $ 37,800 2015 2014 2013 Current tax expense: U.S. federal $ 48,801 $ 49,281 $ 20,215 State and local 10,300 5,135 4,928 Foreign 23,225 16,653 17,167 Total current 82,326 71,069 42,310 Deferred tax (benefit) expense: U.S. federal (884 ) (6,670 ) 18,824 State and local (702 ) 6,477 2,742 Foreign 1,550 779 (4,688 ) Total deferred (36 ) 586 16,878 Total current and deferred 82,290 71,655 59,188 Benefit (expense) relating to interest rate swaps used to increase (decrease) equity 893 (1,442 ) (1,405 ) Benefit from stock transactions with employees used to increase equity 13,960 18,704 25,373 Benefit (expense) relating to defined-benefit pension adjustments used to increase (decrease) equity (567 ) 2,000 482 Total tax expense $ 96,576 $ 90,917 $ 83,638 December 31, 2012 2011 Expense accruals $ 49,404 $ 40,438 Loss and credit carryforwards 22,433 24,282 Assets relating to equity compensation 18,878 18,226 Other assets 7,613 8,949 Gross deferred tax asset 98,328 91,895 Depreciation (8,995 ) (9,199 ) Intangible assets (23,129 ) (17,024 ) Prepaid expenses (10,500 ) (10,183 ) Gross deferred tax liability (42,624 ) (36,406 ) Valuation allowance (1,943 ) (1,869 ) Net deferred tax asset $ 53,761 $ 53,620 December 31, 2015 2014 Accrued liabilities $ 67,888 $ 67,066 Loss and credit carryforwards 8,522 13,350 Assets relating to equity compensation 22,686 19,920 Other assets 6,712 3,420 Gross deferred tax assets 105,808 103,756 Property, equipment, and leasehold improvements (9,904 ) (10,817 ) Intangible assets (55,275 ) (29,400 ) Prepaid expenses (28,535 ) (26,584 ) Other liabilities (7,244 ) (3,591 ) Gross deferred tax liabilities (100,958 ) (70,392 ) Valuation allowance (1,828 ) (570 ) Net deferred tax assets (1) $ 3,022 $ 32,794 53 Current(1) The reduction in net deferred tax assets year-over-year is primarily attributable to the recognition of deferred tax liabilities for purchased intangibles in conjunction with the Company's 2015 acquisitions. $32.6$17.5 million and $1.3$2.1 million, as of December 31, 2012 and $31.4 million and $0.6 million as of December 31, 2011, respectively, and are includedreported in Prepaid expenses and other current assets and Accounts payable and accrued liabilities in the Consolidated Balance Sheets. Long-term net deferred tax assets and long-term net deferred tax liabilities were $22.5$26.4 million and $0.1$23.4 million as of December 31, 20122015 and $22.8$18.0 million and zero$0.6 million as of December 31, 2011,2014, respectively, and are includedreported in Other assets and Other liabilities in the Consolidated Balance Sheets. ItManagement has concluded it is more likely than not that the reversal of deferred tax liabilities and results of future operations will generate sufficient taxable income to realize the deferred tax assets.$1.9$1.8 million as of December 31, 20122015 and $1.9$0.6 million as of December 31, 2011, respectively, largely relates2014, primarily relate to net operating losses.2012,2015, the Company had state and local tax net operating loss carryforwards of $108.8$5.5 million, of which $3.3$0.4 million expire within one to five years, $99.7$3.1 million expire within six to fifteen years, and $5.8$2.0 million expire within sixteen to twenty years. In addition,The Company also had state tax credits of $1.2 million which will largely expire within two to five years. As of December 31, 2015, the Company had non-U.S. net operating loss carryforwards of $30.6$23.9 million, of which $2.1$0.3 million expire over the next 20 years and $28.5$23.6 million can be carried forward indefinitely. As of December 31, 2012In addition, the Company also had foreign tax credit carryforwards of $6.7$0.3 million, the majority of which will expire in 2018. 2012 2011 2010 Statutory tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 1.8 3.8 3.3 Foreign income taxed at different rates (6.4 ) (5.9 ) (6.2 ) Subpart F/repatriation of foreign earnings 1.0 (0.4 ) 8.5 Record (release) valuation allowance — (0.4 ) (12.7 ) Foreign tax credits (1.0 ) (2.3 ) (0.8 ) Record (release) reserve for tax contingencies 0.7 3.1 2.0 Other items, net (1.5 ) (0.6 ) (0.9 ) Effective tax rate 29.6 % 32.3 % 28.2 % 2015 2014 2013 Statutory tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 3.4 3.1 3.2 Effect of non-U.S. operations (7.7 ) (7.0 ) (6.1 ) Record (release) reserve for tax contingencies 3.0 2.6 0.9 Record (release) valuation allowance 0.5 — (0.5 ) Other items, net 1.3 (0.6 ) (1.1 ) Effective tax rate 35.5 % 33.1 % 31.4 % 20122015 the Company decided to sell certain tax credits that would otherwise expire as a result of an audit settlement and the enactment of tax legislation in Connecticut favorable to the Company. The provision for income taxes includes a benefit for the audit settlement offset by an expense for the reduction of tax credits sold or to be sold. Other income includes a gain of $6.8 million for the sale of tax credits.$2.6$1.6 million and $1.3 million, respectively, of benefit relating to economic development tax credits associated with the renovation of the Company’s Stamford headquarters facility.20122015 and December 31, 2011,2014, the Company had gross unrecognized tax benefits of $17.6$25.9 million and $18.3$20.6 million, respectively. The decreaseincrease is primarily attributable to reductions for tax positions taken with respect to the exclusion of prior years and settlements resultingstock-based compensation expense from closure of tax audits, partially offset by additions inthe Company's cost-sharing arrangement. The unrecognized tax benefits attributableas of December 31, 2015 related primarily to 2012.the utilization of certain tax attributes, state income tax positions, the ability to realize certain refund claims, and intercompany transactions. It is reasonably possible that the gross unrecognized tax benefits will be decreased by $4.5$1.3 million within the next 12 months due to anticipated closure of audits and the expiration of certain statutes of limitation. Therelateat December 31, 2015 are potential benefits of $20.8 million that if recognized would reduce the effective tax rate on income from continuing operations. Also included in the balance of unrecognized tax benefits as of December 31, 2015 are potential benefits of $5.1 million that, if recognized, would result in adjustments to other tax accounts, primarily to the utilization of certain tax attributes.20122015 and December 31, 2011,2014, the Company had $13.1$24.6 million and $15.4$15.7 million, respectively, related to long term uncertain tax positions included in Other Liabilities.The Company accrues interest and penalties related to unrecognized tax benefits in its income tax provision. As of December 31, 2012 and December 31, 2011, the Company had $4.6 million and $4.8 million of accrued interest and penalties respectively, related to unrecognized tax benefits. These amounts are in addition to the gross unrecognized tax benefits noted above. The total amount of interest and penalties recognized in the Consolidated Statements of Operations for years ending December 31, 2012 and December 31, 2011 was $0.4 million and $1.5 million, respectively. 2012 2011 Beginning balance $ 18,345 $ 15,824 Additions based on tax positions related to the current year 4,301 2,269 Additions for tax positions of prior years 105 4,375 Reductions for tax positions of prior years (3,427 ) (746 ) Reductions for expiration of statutes (296 ) (269 ) Settlements (1,372 ) (2,661 ) Change in foreign currency exchange rates (104 ) (447 ) Ending balance $ 17,552 $ 18,345 54Included in the balance of 2015 2014 Beginning balance $ 20,645 $ 14,488 Additions based on tax positions related to the current year 5,150 6,351 Additions for tax positions of prior years 7,839 4,112 Reductions for tax positions of prior years (3,880 ) (2,317 ) Reductions for expiration of statutes (2,287 ) (1,027 ) Settlements (960 ) (143 ) Change in foreign currency exchange rates (596 ) (819 ) Ending balance $ 25,911 $ 20,645 atin its income tax provision. As of December 31, 20122015 and December 31, 2014, the Company had $3.7 million and $3.3 million, respectively, of accrued interest and penalties related to unrecognized tax benefits. These amounts are potentialin addition to the unrecognized tax benefits disclosed above. The total amount of $12.6interest and penalties recognized in the Consolidated Statements of Operations for the years ending December 31, 2015 and December 31, 2014 was $0.9 million that if recognized would reduce the effective tax rate on income from continuing operations.Generally, theThe Company’s statutes are open with respect to the U.S. federal jurisdiction for tax years ended December 31, 20072011 and forward, with the exception ofand India which is open for tax years 2003 and forward. MajorFor other major taxing jurisdictions includeincluding the U.S. (federal and state),states, the United Kingdom, Canada, Japan, India,France, and Ireland.During 2012,Ireland, the Company closedCompany's statutes vary and are open as far back as 2009.Internal Revenue Service (“IRS”) auditremittance of its 2007 federal income tax return. The resolution ofearnings held overseas is required if the audit did not have a material adverse effect on the consolidated financial position, cash flows, or results of operations of the Company.In 2011 the IRS commenced an audit of the Company’s federal income tax returns for the 2008 and 2009 tax years. The IRS has proposed adjustments for both 2008 and 2009 and the Company expects to settle the audit in early 2013. Although the audit has not been fully resolved, the Company believes that the ultimate disposition will not have a material adverse effect on its consolidated financial position, cash flows, or results of operations.Earnings of non-U.S. subsidiaries are generally subject to U.S. taxation when repatriated. The Company intends to reinvest such funds overseas. Our current plans do not demonstrate a need to repatriate these undistributed earnings to fund our U.S. operations or otherwise satisfy the liquidity needs of our U.S operations. We intend to reinvest these earnings outside the U.S.in our non-U.S. operations, except in instances where repatriating suchin which the repatriation of these earnings would result in minimal additional tax. The Company currently has no plan to remit earnings which willAs a result, in a material tax cost. Accordingly, the Company has not recognized additional income tax expense that may result from the remittance of suchthese earnings. The accumulated undistributed earnings of non-U.S. subsidiaries approximated $85.0were approximately $270.0 million as of December 31, 2012. An estimate of the2015. The income tax liability that would be payable if such earnings were not indefinitely invested is $17.0estimated at $60.0 million.December 31, 2012Derivative Contract Type Number of
Outstanding
Contracts Contract
Notional
Amount Fair Value
Asset
(Liability)(3) Balance Sheet
Line Item OCI
Unrealized
(Loss), Net
Of Tax Interest rate swap (1) 1 $ 200,000 $ (10,000 ) Other liabilities $ (6,010 ) Foreign currency forwards (2) 68 76,100 4 Other current assets — Total 69 $ 276,100 $ (9,996 ) $ (6,010 ) December 31, 2011Derivative Contract Type Number of
Outstanding
Contracts Contract
Notional
Amount Fair Value
Asset
(Liability)(3) Balance Sheet
Line Item OCI
Unrealized
(Loss), Net
Of Tax Interest rate swap (1) 1 $ 200,000 $ (9,891 ) Other liabilities $ (5,934 ) Interest rate swaps (4) 2 30,750 (98 ) Accrued liabilities — Foreign currency forwards (2) 60 99,585 272 Other current assets — Total 63 $ 330,335 $ (9,717 ) $ (5,934 ) Derivative Contract Type Interest rate swaps (1) 3 $ 700,000 $ (5,132 ) Other liabilities $ (3,079 ) Foreign currency forwards (2) 102 193,610 235 Other current assets — Total 105 $ 893,610 $ (4,897 ) $ (3,079 ) Derivative Contract Type Interest rate swap (1) 1 $ 200,000 $ (2,900 ) Other liabilities $ (1,740 ) Foreign currency forwards (2) 77 45,650 238 Other current assets — Total 78 $ 245,650 $ (2,662 ) $ (1,740 ) (1) The swap is designated as a cash flow hedge of the forecasted interest payments on borrowings. As a result, changes in the fair value of this swap are deferred and are recorded in OCI, net of tax effect (see Note 5 — Debt for additional information). 55(2) The Company has foreign exchange transaction risk since it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to offsetmitigate the economic effects of some of these foreign currency transaction risks. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income (expense),expense, net since the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding contracts at December 31, 20122015 matured by the end of February 2013.January 2016.(3) See Note 12 — Fair Value Disclosures below for the determination of the fair value of these instruments.(4)Changes in the fair value of these swaps were recognized in earnings. Both swaps matured in January 2012.2012,2015, the Company’s derivative counterparties were all large investment grade financial institutions. The Company did not have any collateral arrangements with its derivative counterparties, and none of the derivative contracts contained credit-risk related contingent features.Amount recorded in: 2012 2011 2010 Interest expense (1) $ 3.6 $ 4.1 $ 10.7 Other (income) expense, net (2) (0.6 ) 1.2 (2.8 ) Total expense $ 3.0 $ 5.3 $ 7.9 Amount recorded in: 2015 2014 2013 Interest expense (1) $ 8.5 $ 4.1 $ 4.0 Other expense (income), net (2) 0.1 (0.5 ) 0.1 Total expense $ 8.6 $ 3.6 $ 4.1 (1) Consists of interest expense from interest rate swap contracts. (2) Consists of realized and unrealized gains and losses on foreign currency forward contracts. 20102014 Credit Agreement, and at December 31, 2012,2015, the Company had $200.0$820.0 million of floating rate debt outstanding under this arrangement, which is carried at amortized cost. The Company believes the carrying amount of the outstanding borrowings reasonably approximates fair value since the rate of interest on the borrowings reflect current market rates of interest for similar instruments with comparable maturities.On January 1, 2012, the Company adopted ASU No. 2011-04,Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,which updates FASB ASC Topic 820 with new requirements. These include: (1) a prohibition on grouping financial instruments for purposes of determining fair value, except when an entity manages market and credit risks on the basis of the entity’s net exposure to the group; (2) an extension of the prohibition against the use of a blockage factor to all fair value measurements (that prohibition currently applies only to financial instruments with quoted prices in active markets); and (3) a requirement that for recurring Level 3 fair value measurements, entities disclose additional quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements and their potential impact on operating results. The Company has a limited number of assets and liabilities recorded in its Consolidated Balance Sheets that are remeasured to fair value on a recurring basis, and the Company does not currently utilize Level 3 valuation inputs to remeasure any of its assets or liabilities. In addition, the Company typically does not transfer assets or liabilities between different levels of the fair value hierarchy. Asthe adoption of ASU No. 2011-04 did not resultfrom derivatives transactions are recorded gross in any changes to the Company’s processes for determining fair values or require additional fair value disclosures.56Description: Fair Value
December 31,
2012 Fair Value
December 31,
2011 Assets: Deferred compensation plan assets (1) $ 27,795 $ 25,050 Foreign currency forward contracts (2) 4 272 $ 27,799 $ 25,322 Liabilities: Deferred compensation plan liabilities (1) $ 31,260 $ 28,100 Interest rate swap contracts (3) 10,000 9,989 $ 41,260 $ 38,089 Fair Value Fair Value Description: December 31,
2015 December 31,
2014Assets: Values based on Level 1 inputs: Deferred compensation plan assets (1) $ 8,671 $ 7,650 Total Level 1 inputs $ 8,671 $ 7,650 Values based on Level 2 inputs: Deferred compensation plan assets (1) $ 25,474 $ 27,000 Foreign currency forward contracts (2) 610 458 Total Level 2 inputs $ 26,084 $ 27,458 Total Assets $ 34,755 $ 35,108 Liabilities: Values based on level 2 inputs: Deferred compensation plan liabilities (1) $ 39,071 $ 39,100 Foreign currency forward contracts (2) 375 220 Interest rate swap contracts (3) 5,132 2,900 Total Level 2 inputs $ 44,578 $ 42,220 Total Liabilities $ 44,578 $ 42,220 (1) The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees (see Note 13 — Employee Benefits). The plan’s assets consist of investments in money market and mutual funds, and company-owned life insurance contracts. The money market funds consist of cash equivalents while the mutual fund investments consist of publicly-traded and quoted equity shares. The Company considers the fair value of these assets to be based on Level 1 inputs, and these assets had a fair value of $8.2 million and $8.0 million as of December 31, 2012 and 2011, respectively. The carrying amount of the life insurance contracts equals their cash surrender value, which approximates fair value. Cash surrender value represents the estimated amount that the Company would receive upon termination of the contract. The Company considers the life insurance contracts to be valued based on a Level 2 input, and these assets had a fair value of $19.6 million and $17.0 million at December 31, 2012 and 2011, respectively. The related deferred compensation plan liabilities are recorded at the amount needed to settle the liability, which approximates fair value, and is based on a Level 2 input.(2) The Company enters into foreign currency forward exchange contracts to hedge the effects of adverse fluctuations in foreign currency exchange rates (see Note 11 — Derivatives and Hedging). Valuation of the foreign currency forward contracts is based on foreign currency exchange rates in active markets, which the Company considers a Level 2 input. (3) The Company enters intohas interest rate swap contracts towhich hedge the risk fromof variability in cash flows associated with changes in floating rates of interest rates on its borrowings (see Note 11 — Derivatives and Hedging). To determineThe fair values of the fair value of these financial instruments, the Company reliesswaps are based on mark-to-market valuations preparedprovided by a third-party broker. Valuation is based on observable interest rates from recently executed market transactions and other observable market data, which the Company considers Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker through the use of an electronic quotation service.2012,2015, the maximum match was $6,800. In addition, the Company, in its discretion, may also contribute at least 1% of an employee’s base compensation, subject to an IRS annual limitation, which was $2,500 for 2012.$7,200. Amounts expensed in connection with the 401k Plan totaled $14.2$20.0 million, $15.9$17.4 million, and $14.6$15.8 million, in 2012, 2011,2015, 2014, and 2010,2013, respectively.$27.8$34.1 million and $25.1$34.7 million at December 31, 20122015 and 2011,2014, respectively (see Note 12 — Fair Value Disclosures for detailed fair value information). The corresponding deferred compensation liability, of $31.3 million and $28.1which was $39.1 million at both December 31, 20122015 and 2011, respectively,2014, is carried at fair value, and is adjusted with a corresponding charge or credit to compensation costexpense to reflect the fair value of the amount owed to the employees whichand is classified in Other liabilities on the Consolidated Balance Sheets. Total compensation expense recognized for the plan was $0.5 million, $0.6 million, and $0.4 million, in 2012, $0.3 million in 2011,2015, 2014, and zero in 2010. 2012 2011 2010 Service cost $ 1,775 $ 1,890 $ 1,875 Interest cost 980 1,010 840 Expected return on plan assets (115 ) (125 ) — Recognition of actuarial gain (215 ) (135 ) (350 ) Recognition of termination benefits 175 65 65 Total defined benefit pension expense (1) $ 2,600 $ 2,705 $ 2,430 2015 2014 2013 Service cost $ 2,620 $ 2,630 $ 2,545 Interest cost 790 1,190 1,075 Expected return on plan assets (345 ) (540 ) (340 ) Recognition of actuarial loss 300 75 30 Recognition of termination benefits 85 30 455 Total defined benefit pension plan expense (1) $ 3,450 $ 3,385 $ 3,765 (1) Pension expense is classified in SG&A in the Consolidated Statements of Operations. 57 2012 2011 2010 Weighted-average discount rate(1) 3.20 % 4.40 % 3.95 % Average compensation increase 2.70 % 2.65 % 2.80 % 2015 2014 2013 Weighted-average discount rate (1) 2.19 % 2.15 % 3.35 % Average compensation increase 2.66 % 2.65 % 2.70 % (1) Discount rates are typically determined by utilizing the yields on long-term corporate or government bonds in the relevant country with a duration consistent with the expected term of the underlying pension obligations. 2012 2011 2010 Projected benefit obligation at beginning of year $ 21,160 $ 19,730 $ 14,358 Service cost 1,775 1,890 1,875 Interest cost 980 1,010 840 Actuarial loss (gain) due to assumption changes(1) 6,265 (948 ) 1,100 Additions 1,925 — 1,961 Benefits paid(2) (680 ) (390 ) (220 ) Foreign currency impact 180 (132 ) (184 ) Projected benefit obligation at end of year(3) $ 31,605 $ 21,160 $ 19,730 2015 2014 2013 Projected benefit obligation at beginning of year $ 38,115 $ 34,585 $ 31,605 Service cost 2,620 2,630 2,545 Interest cost 790 1,190 1,075 Actuarial (gain) loss due to assumption changes and plan experience (1,190 ) 6,300 625 Additions and contractual termination benefits 85 30 460 Benefits paid (1) (775 ) (1,350 ) (1,255 ) Foreign currency impact (3,775 ) (5,270 ) (470 ) Projected benefit obligation at end of year (2) $ 35,870 $ 38,115 $ 34,585 (1) The 2012 actuarial loss was primarily due to a decline in the weighted-average discount rate.(2)The Company projectsestimates the following amountsbenefit payments will be paidmade in future years to plan participants: $0.5 million in 2013; $2.0 million in 2014; $0.8 million in 2015; $0.9 million in 2016; $2.0 million in 2017; $1.1 million in 2018, $1.2 million in 2017;2019, $1.4 million in 2020; and $7.0$9.0 million in total in the five years thereafter.(3)(2)Measured as of December 31. Funded status of the plans: 2012 2011 2010 Projected benefit obligation $ 31,605 $ 21,160 $ 19,730 Plan assets at fair value (1) (8,885 ) (2,480 ) (2,130 ) Funded status – shortfall (2) $ 22,720 $ 18,680 $ 17,600 Amounts recorded in the Consolidated Balance Sheets for the plans: Other liabilities — accrued pension obligation (2) $ 22,720 $ 18,680 $ 17,600 Stockholders’ equity — deferred actuarial (loss) gain (3) $ (1,578 ) $ 2,488 $ 2,205 Funded status of the plans: 2015 2014 2013 Projected benefit obligation $ 35,870 $ 38,115 $ 34,585 Pension plan assets at fair value (1) (13,190 ) (13,220 ) (13,870 ) Funded status – shortfall (2) $ 22,680 $ 24,895 $ 20,715 Amounts recorded in the Consolidated Balance Sheets for the plans: Other liabilities — accrued pension obligation (2) $ 22,680 $ 24,895 $ 20,715 Stockholders’ equity — deferred actuarial loss (3) $ (4,832 ) $ (6,028 ) $ (1,811 ) (1) andwith the Company considersmajority of the overall portfolio of theseinvested assets considered to be of low-to-medium investment risk. For the year-ended December 31, 2012, the Company contributed $6.4 million to these plans, and benefits paid to participants was $0.7 million. While the actual return on plan assets for these plans was effectively zero in 2012, theThe Company projects a future long-term rate of return on these plan assets of 3.6%2.7%, which it believes is reasonable based on the composition of the assets and both current and projected market conditions. For the year-ended December 31, 2015, the Company contributed $1.3 million to these plans, and benefits paid to participants were $0.8 million.In addition to the plan assets held with third-party trustees, the Company also maintains a reinsurance asset arrangement with a large international insurance company. The reinsurance asset is an asset of the Company whose purpose is to provide funding for benefit payments for one of the plans. At December 31, 2012, the reinsurance asset was carried on the Company’s Consolidated Balance Sheets at its cash surrender value of $8.8 million and is classified in Other Assets. The Company believes the cash58surrender value approximates fair value and is equivalent to aLevel 2 input under the FASB’s fair value framework in ASC Topic 820.(2) The Funded status — shortfall represents the amount of the projected benefit obligation that the Company has not funded with a third-party trustee. This amount is a liability of the Company and is recorded in Other Liabilities on the Company’s Consolidated Balance Sheets. (3) The deferred actuarial loss as of December 31, 2012,2015 is recorded in Accumulated Other Comprehensive Income (“AOCI”)AOCL/I and will be reclassified out of AOCIAOCL/I and recognized as pension expense over approximately 1413 years, subject to certain limitations set forth in FASB ASC Topic No. 715. The impact of this amortization on the periodic pension expense in 2013 will be immaterial. For 2012, 2011, and 2010,2016 is projected to result in approximately $0.2 million $0.1 million, and $0.2 million, respectively, of deferred actuarial pension gains were reclassified from AOCI to pension expense. The Company considers the impact of the reclassifications for those years to be immaterial.andexpenses, SG&A expenses,expense, depreciation, acquisition and integration charges, and amortization of intangibles. Certain bonus and fringe benefit costs included in consolidated COS are not allocated to segment expense. The accounting policies used by the reportable segments are the same as those used by the Company. There are no intersegment revenues. Research Consulting Events Consolidated 2012 Revenues $ 1,137,147 $ 304,893 $ 173,768 $ 1,615,808 Gross contribution 774,342 109,253 80,119 963,714 Corporate and other expenses (718,007 ) Operating income $ 245,707 Research Consulting Events Consolidated 2011 Revenues $ 1,012,062 $ 308,047 $ 148,479 $ 1,468,588 Gross contribution 682,136 114,838 66,265 863,239 Corporate and other expenses (649,177 ) Operating income $ 214,062 Research Consulting Events Consolidated 2010 Revenues $ 865,000 $ 302,117 $ 121,337 $ 1,288,454 Gross contribution 564,527 121,885 55,884 742,296 Corporate and other expenses (593,031 ) Operating income $ 149,265 Research Consulting Events Consolidated 2015 Revenues $ 1,583,486 $ 327,735 $ 251,835 $ 2,163,056 Gross contribution 1,096,827 107,193 130,527 1,334,547 Corporate and other expenses (1,046,550 ) Operating income $ 287,997 Research Consulting Events Consolidated 2014 Revenues $ 1,445,338 $ 348,396 $ 227,707 $ 2,021,441 Gross contribution 1,001,914 119,931 112,384 1,234,229 Corporate and other expenses (948,067 ) Operating income $ 286,162 Research Consulting Events Consolidated 2013 Revenues $ 1,271,011 $ 314,257 $ 198,945 $ 1,784,213 Gross contribution 879,384 107,565 91,216 1,078,165 Corporate and other expenses (802,673 ) Operating income $ 275,492 Twelve months ended December 31, 2015 2014 2013 Total segment gross contribution $ 1,334,547 $ 1,234,229 $ 1,078,165 Costs and expenses: Cost of services and product development - unallocated (1) 10,567 10,721 7,436 Selling, general and administrative 962,677 876,067 760,458 Depreciation and amortization 47,131 39,412 34,442 Acquisition and integration charges 26,175 21,867 337 Operating income 287,997 286,162 275,492 Interest expense and other 15,786 11,479 9,053 Provision for income taxes 96,576 90,917 83,638 Net income $ 175,635 $ 183,766 $ 182,801 (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. 59andas well as Europe, Middle East, and Africa. 2012 2011 2010 Revenues: United States and Canada $ 947,075 $ 861,481 $ 765,793 Europe, Middle East and Africa 458,675 437,194 380,771 Other International 210,058 169,913 141,890 Total revenues $ 1,615,808 $ 1,468,588 $ 1,288,454 Long-lived assets:(1) United States and Canada(2) $ 114,557 $ 85,194 $ 69,163 Europe, Middle East and Africa 30,967 23,673 21,856 Other International 16,956 10,754 6,175 Total long-lived assets $ 162,480 $ 119,621 $ 97,194 2015 2014 2013 Revenues: United States and Canada $ 1,347,676 $ 1,204,476 $ 1,049,734 Europe, Middle East and Africa 557,165 570,334 508,755 Other International 258,215 246,631 225,724 Total revenues $ 2,163,056 $ 2,021,441 $ 1,784,213 Long-lived assets: (1) United States and Canada $ 163,933 $ 142,963 $ 123,877 Europe, Middle East and Africa 31,130 34,093 34,363 Other International 16,050 13,282 13,936 Total long-lived assets $ 211,113 $ 190,338 $ 172,176 (1) Excludes goodwill and other intangible assets. (2)The 2012 balance for the United States and Canada includes approximately $17.0 million of additional costs capitalized in 2012 in connection with the renovation of the Company’s Stamford headquarters facility (see Note 1 — Business and Significant Accounting Policies for additional description).31(in31 (in thousands): Balance at
Beginning
of Year Additions
Charged to
Expense Additions
Charged
Against
Revenues Deductions
from
Reserve Balance
at End
of Year 2012: Allowance for doubtful accounts and returns and allowances $ 7,260 $ 1,930 $ 1,860 $ (4,650 ) $ 6,400 2011: Allowance for doubtful accounts and returns and allowances $ 7,200 $ 930 $ 4,390 $ (5,260 ) $ 7,260 2010: Allowance for doubtful accounts and returns and allowances $ 8,100 $ 800 $ 2,000 $ (3,700 ) $ 7,200 60 2015: Allowance for doubtful accounts and returns and allowances $ 6,700 $ 3,480 $ 5,420 $ (8,700 ) $ 6,900 2014: Allowance for doubtful accounts and returns and allowances $ 7,000 $ 2,950 $ 3,240 $ (6,490 ) $ 6,700 2013: Allowance for doubtful accounts and returns and allowances $ 6,400 $ 2,350 $ 5,050 $ (6,800 ) $ 7,000 22, 2013.24, 2016. Gartner, Inc. Date: February 22, 201324, 2016By: /s/ Eugene A. Hall Eugene A. Hall Chief Executive Officer Christopher J. LafondCraig W. Safian and each of them, acting individually, as his or her attorney-in-fact, each with full power of substitution, for him or her in all capacities, to sign all amendments to this Report on Form 10-K, and to file the same, with appropriate exhibits and other related documents, with the Securities and Exchange Commission. Each of the undersigned ratifies and confirms his or her signatures as they may be signed by his or her attorney-in-fact to any amendments to this Report. Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:Name Title Date /s/ Eugene A. Hall Director and Chief Executive Officer February 22, 201324, 2016Eugene A. Hall (Principal Executive Officer) /s/ Christopher J. LafondCraig W. Safian ExecutiveSenior Vice President and Chief Financial Officer February 22, 201324, 2016Christopher J. LafondCraig W. Safian (Principal Financial and Accounting Officer) /s/ Michael J. Bingle Director February 22, 201324, 2016Michael J. Bingle �� /s/ Richard J. Bressler Director February 22, 201324, 2016Richard J. Bressler /s/ Raul E. Cesan Director February 22, 201324, 2016Raul E. Cesan /s/ Karen E. Dykstra Director February 22, 201324, 2016Karen E. Dykstra /s/ Anne Sutherland Fuchs Director February 22, 201324, 2016Anne Sutherland Fuchs /s/ William O. Grabe Director February 22, 201324, 2016William O. Grabe /s/ Stephen G. Pagliuca Director February 22, 201324, 2016Stephen G. Pagliuca /s/ James C. Smith Director February 22, 201324, 2016James C. Smith 61