UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 6, 2008
GARTNER, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 1-14443 | 04-3099750 | ||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
P.O. Box 10212
56 Top Gallant Road
Stamford, CT 06902-7747
(Address of Principal Executive Offices, including Zip Code)
56 Top Gallant Road
Stamford, CT 06902-7747
(Address of Principal Executive Offices, including Zip Code)
(203) 316-1111
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 7.01. REGULATION FD DISCLOSURE.
On
March 6, 2008, Gartner, Inc. (the “Company”) made
investor presentations that included the slides filed as Exhibit 99.1 to this Current Report on Form 8-K, which are incorporated by
reference herein. At the presentations, the Company updated previously issued guidance for 2008
to reflect the sale of its Vision Events business, which was completed on February 29, 2008.
The slides contained in Exhibit 99.1 are posted on the Company’s website at www.gartner.com.
Additionally, on March 6, 2008, the Company issued a press
release relating to the investor presentations and updated guidence. A copy of this press release is furnished as Exhibit 99.2.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01 and in
Exhibits 99.1 and 99.2 of this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liability of that section, and shall not be incorporated by reference into any
registration statement or other document filed under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
| (d) | Exhibits |
| EXHIBIT NO. | DESCRIPTION | |||
| 99.1 | Gartner, Inc. Investor Presentation dated March 6, 2008. |
|||
| 99.2 | Press Release issued March 6, 2008. |
|||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Gartner, Inc. |
||||
| Date: March 6, 2008 | By: | /s/ Christopher J. Lafond | ||
| Christopher J. Lafond | ||||
| Executive Vice President, Chief Financial Officer | ||||
EXHIBIT INDEX
| EXHIBIT NO. | DESCRIPTION | |||
| 99.1 | Gartner, Inc. Investor Presentation dated March 6, 2008. |
|||
| 99.2 | Press Release issued March 6, 2008. |
|||
EXHIBIT 99.1
INVESTOR
PRESENTATION DATED MARCH 6, 2008
| Forward-Looking Statements Statements contained in this presentation regarding the growth and prospects of the business, the Company's projected 2008 financial results, Roadmap Objectives and all other statements in this presentation other than recitation of historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual results to differ materially include, but are not limited to ability to expand or even retain the Company's customer base; ability to grow or even sustain revenue from individual customers; ability to attract and retain professional staff of research analysts and consultants upon whom the Company is dependent; ability to achieve and effectively manage growth; ability to pay the Company's debt obligations; ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; ability to carry out the Company's strategic initiatives and manage associated costs; substantial competition from existing competitors and potential new competitors; additional risks associated with international operations including foreign currency fluctuations; the impact of restructuring and other charges on the Company's businesses and operations; and other risks listed from time to time in the Company's reports filed with the Securities and Exchange Commission. The Company's SEC filings can be found on Gartner's Web site at www.gartner.com and on the SEC's Web site at www.sec.gov. Forward-looking statements included herein speak only as of March 6, 2008 and the Company disclaims any obligation to revise or update such statements to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events or circumstances. |
| Gene Hall Chief Executive Officer |
| Gartner CIO IT FUNCTIONAL LEADERS TECHNOLOGY COPMPANIES + RESEARCH ANALYSTS EVENTS CONSULTING SALES |
| Untapped Market Opportunity Non- Headquarter Locations Unassigned Prospects Insufficient Coverage New Buying Centers |
| Market Opportunity 3 7 $21 Billion Technology Companies + CIOs IT Functional Leaders 11 |
| Strategy and Programs Increase Sales Capability Innovative, Highly Differentiated Offerings World Class Service Extraordinary Research |
| Recent Performance Demonstrates Success (1) See the attached Glossary for the definition of Normalized EBITDA, a reconciliation to Net Income and cautionary statement regarding this non-GAAP financial measure." GAAP EPS 36% $0.13 $0.50 $0.68 - -$0.02 - -$0.20 $0.00 $0.20 $0.40 $0.60 $0.80 2004 2005 2006 2007 Normalized EBITDA (1) $ in Millions 25% 109 105 156 194 0 50 100 150 200 250 2004 2005 2006 2007 Operating Cash Flow $ in Millions 40% 48 27 106 148 0 50 100 150 200 2004 2005 2006 2007 Revenue 1189 $ in Millions 12% 894 989 1060 0 200 400 600 800 1000 1200 2004 2005 2006 2007 |
| Why Invest in Gartner? Strong value proposition Vast, untapped opportunity Attractive business model Strategy, programs and leadership team in place to deliver sustained profitable growth Track record of sustained growth |
| Chris Lafond Chief Financial Officer |
| GAAP EPS 36% $0.13 $0.50 $0.68 - -$0.02 - -$0.20 $0.00 $0.20 $0.40 $0.60 $0.80 2004 2005 2006 2007 Normalized EBITDA (1) $ in Millions 25% 109 105 156 194 0 50 100 150 200 250 2004 2005 2006 2007 Operating Cash Flow $ in Millions 40% 48 27 106 148 0 50 100 150 200 2004 2005 2006 2007 Revenue 1189 $ in Millions 12% 894 989 1060 0 200 400 600 800 1000 1200 2004 2005 2006 2007 Recent Performance Demonstrates Success (1) See the attached Glossary for the definition of Normalized EBITDA, a reconciliation to Net Income and cautionary statement regarding this non-GAAP financial measure." |
| Recent Performance - Key Metrics Research Contract Value $ in Millions 18% 509 593 640 753 0 200 400 600 800 2004 2005 2006 2007 Event Attendees 8% 31k 41k 44k 36k 0k 10k 20k 30k 40k 50k 2004 2005 2006 2007 Consulting Utilization 63% 62% 64% 69% 0% 20% 40% 60% 80% 2004 2005 2006 2007 Research Retention 95% 93% 96% 101% 82% 81% 81% 80% 0% 20% 40% 60% 80% 100% 120% 2004 2005 2006 2007 Wallet Client |
| Attractive Business Model Three segments - Research, Consulting & Events High incremental margins in all three businesses Recurring, predictable Research revenue with annual subscription model Strong operating cash flow Diverse, global customer base |
| Contract Value to Revenue Conversion On October 1, we sell a 2 year contract worth $240K On December 31, we would report the following: Contract Value $120K Revenue Recognized $30K Deferred Revenue $90K YR1 $120K Oct $10 Nov $10 Dec $10 YR2 $120K Oct Sep $240K $30K |
| Business Model Notes: 2004 figures re-stated to reflect impact of Equity Compensation expense - impact as follows: Research 1 pt, Events 0 pt, Consulting 1 pt, Sales & Marketing 0 pt, G&A 1 pt Gross Contribution Margin 64% 60% 70% Research 49% 50% 50% Events 39% 35% 40% Consulting 2007 2004 Incremental Margin % of Revenue 24% 22% 16% 18% G&A Sales & Mktg. 40% 40% Total SG&A |
| Salesforce Growth Drives CV Growth Average Salesforce and Total Contract Value Salesforce Contract Value ($ in millions) 735 634 516 512 457 438 418 $753 $640 $593 $509 $482 $489 $534 2001 2002 2003 2004 2005 2006 2007 |
| Sales Force Economics Individual Territory Level Average Territory $900k $(162)k $288k $1,027k Average Territory Beginning CV 900 NCVI 127 Ending CV 1,027 Revenue 945 Sales Rep Cost 200 % Cost of Sale 21% 0 $0.2 $0.4 $0.6 $0.8 $1 $1.2 Base CV Loss New Business Ending CV |
| Sales Productivity - Drivers Retention Retain existing client (client retention) Penetrate existing clients deeper (wallet retention) New Business Launch new products Further penetrate existing clients Obtain new clients Pricing Annual price increases Migrate to new products Reduce discounting |
| Sales Productivity Increasing ($20) $0 $150 2003 2004 2005 2006 2007 Average NCVI per Sales Executive $(K) $75 $50 $25 $125 $100 Notes: NCVI = Net Contract Value Increase, or ending CV minus beginning CV Average NCVI per Sales Person calculated as the NCVI divided by average number of sales reps for the year All figures presented at FX neutral rates 2005 excludes impact of META acquisition |
| Long-Term Financial Objectives Note: See the attached Glossary for the definition of Normalized EBITDA, and cautionary statement regarding this non-GAAP financial measure Total Revenue Growth 11 - 16% Research 15 - 20% Consulting 3 - 8% Events 5 - 10% Normalized EBITDA* margin improvement 0 - 100 bps per year Tax Rate 32 - 33% Capital Spending $30 - 35 * Excludes equity compensation expense Annual |
| Updated 2008 Guidance Update for sale of Vision Events Reduce 2007 actuals by $21M in revenue, $4M in EBITDA and $0.02 EPS 2008 guidance excludes Vision Events Excludes impact of gain on sale and discontinued operations Research 770 - - 780 14% - - 16% Consulting 335 - - 345 3% - - 6% Events 168 - - 172 5% - - 7% Other 5 - - 6 - -50% - - - -40% Total Revenue 1,278 - - 1,303 9% - - 12% Normalized EBITDA 209 - - 219 10% - - 15% EPS from Continuing Operations 0.88 $ - - 0.98 $ 33% - - 48% Operating Cash Flow 155 - - 170 5% - - 15% Low High Low High *See the attached Glossary for the definition of Normalized EBITDA and cautionary statement regarding this non-GAAP financial measure |
| Quarterly Phasing-Revenue Research revenue growth lags Contract Value growth due to annual subscription model Events revenue recognized when conferences delivered Symposia in Q2 and Q4 Consulting revenue is seasonal, with Q2 and Q4 higher volume quarters |
| Quarterly Phasing-Revenue Approximate revenue phasing in 2008 is as follows: Above based on midpoint of revenue guidance Research Consulting Events Q1 Q2 Q3 Q4 24% 26% 25% 25% 23% 26% 24% 27% 12% 32% 11% 45% |
| Quarterly Phasing-Expense Quarterly fluctuations in cost of services driven by the conference schedule in our Events business Annual worldwide merit increase of 3% effective April 1 Higher Research and Sales expenses in Q4 related to Symposia and year-end sales support activities Growth in sales force expected as follows: Q1 ~ 30 Q3/Q4 ~ 50 G&A is less seasonal |
| Quarterly Phasing-Earnings Approximate EPS from continuing operations phasing in 2008 is as follows: Above based on the midpoint of guidance Based upon business conditions the Company may accelerate or postpone investments throughout the year which could shift earnings between quarters Q1 Q2 Q3 Q4 10% 50% 25% 15% |
| Capital Structure Initiatives Delivering Shareholder Value Re-purchased 8.4M shares at a cost of $169M in 2007 Announced new $250 million share repurchase program Significantly reduced shares outstanding Significantly reduced equity compensation shares |
| Shares Outstanding and Share Repurchases Total Shares Outstanding Share Repurchases Shares in millions 2002 2003 2004 2005 2006 104 114 112 130 131 0 20 40 60 80 100 120 140 0 50 100 150 200 250 300 350 400 2002 2003 2004 2005 2006 100 2007 2007 $ in millions 60 43 352 10 271 169 |
| Gartner's Financial Strength Attractive business model Operational and cost focus Strong cash flow Solid balance sheet Annual double digit revenue and earnings growth Long-term value focus |
| Glossary Non-GAAP Financial Measure Investors are cautioned that Normalized EBITDA contained in this presentation is not a financial measure under generally accepted accounting principles. In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with generally accepted accounting principles. This non-GAAP financial measure is provided to enhance the user's overall understanding of the Company's current financial performance and the Company's prospects for the future. We believe Normalized EBITDA is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results. Normalized EBITDA is based on operating income, excluding depreciation, accretion on obligations related to excess facilities, amortization, META integration charges, SFAS 123 (R), goodwill impairments, and other charges. Reconciliation of Normalized EBITDA to GAAP ($ in millions) 2004 2005 2006 2007 Net income (loss) $17 ($2) $58 $74 Loss on investments, net 3 6 - - Interest expense, net 1 11 17 22 Other (income) expense, net 4 3 1 (3) Tax provision 18 7 27 41 Operating income $43 $25 $103 $133 Normalizing adjustments: Depreciation, accretion and amortization 30 36 34 28 META integration charges - 15 2 - Other charges 36 29 - 9 SFAS No. 123(R) stock compensation expense - - 17 24 Normalized EBITDA $109 $105 $156 $194 |
Exhibit 99.2
CONTACT:
Henry A. Diamond
Group Vice President
Investor Relations and Corporate Finance
+1 203 316 3399
henry.diamond@gartner.com
Henry A. Diamond
Group Vice President
Investor Relations and Corporate Finance
+1 203 316 3399
henry.diamond@gartner.com
Gartner Holds Annual Investor Day
Updates 2008 Outlook to Reflect the Sale of Vision Events
STAMFORD, Conn., March 6, 2008 — Gartner, Inc. (NYSE: IT), the leading provider of research and
analysis on the global information technology industry, today held its annual Investor Day in New
York City. At the Investor Day, the Company updated its financial outlook for 2008 to reflect the
sale of its Vision Events portfolio, which was completed on February 29, 2008. Aside from the
impact of this sale, Gartner’s 2008 outlook remains unchanged.
As a result of the sale of Vision Events, which will be reported as a discontinued operation
beginning in first quarter 2008, Gartner is now targeting total revenue of $1.278 to $1.303
billion, an increase of 9% to 12% versus 2007. By segment, the Company is targeting Research
revenue of $770 to $780 million, an increase of 14% to 16% versus 2007, Consulting revenue of $335
to $345 million, an increase of 3% to 6% versus 2007, Events revenue of $168 to $172 million, an
increase of 5% to 7% versus 2007, and other revenue of $5 to $6 million.
Based on the above revenue outlook, the Company is targeting Normalized EBITDA for the full year
2008 of $209 to $219 million, an increase of 10% to 15% versus 2007, EPS from continuing operations
of $0.88 to $0.98, an increase of 33% to 48% versus 2007, cash flow from operations of $155 to $170
million and capital expenditures of $25 to $27 million. Normalized EBITDA excludes a projected $26
to $28 million of pre-tax expense related to SFAS 123(R). All projections exclude any gain on sale
of Vision Events and results of discontinued operations.
About Gartner
Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory
company. Gartner delivers the technology-related insight necessary for its clients to make the
right decisions, every day. From CIOs and senior IT leaders in corporations and government
agencies, to business leaders in high-tech and telecom enterprises and professional services firms,
to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct
organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events,
Gartner works with every client to research, analyze and interpret the business of IT within the
context of their individual role. Founded in 1979, Gartner is headquartered in Stamford,
Connecticut, U.S.A., and has 3,900 associates, including 1,200 research analysts and consultants in
75 countries. For more information, visit www.gartner.com.
Non-GAAP Financial Measures
Investors are cautioned that normalized EBITDA contained in this press release is not a financial
measure under generally accepted accounting
principles. In addition, it should not be construed as
an alternative to any other measures of performance determined in accordance with generally
accepted accounting
-more-
principles. This non-GAAP financial measure is provided to enhance the user’s
overall understanding of the Company’s current financial performance and the Company’s prospects
for the future. We believe normalized EBITDA is an important measure of our recurring operations as
it excludes items that may not be indicative of our core operating results. Normalized EBITDA is
based on operating income, excluding depreciation, accretion on obligations related to excess
facilities, amortization, META integration charges, SFAS 123 (R), goodwill impairments, and other
charges.
Safe Harbor Statement
Statements contained in this press release regarding the growth and prospects of the business, the
Company’s 2007 and 2008 financial results and all other statements in this release other than
recitation of historical facts are forward-looking statements (as defined in the Private Securities
Litigation Reform Act of 1995). Such forward-looking statements include risks and uncertainties;
consequently, actual results may differ materially from those expressed or implied thereby. Factors
that could cause actual results to differ materially include, but are not limited to ability to
expand or even retain the Company’s customer base; ability to grow or even sustain revenue from
individual customers; ability to attract and retain professional staff of research analysts and
consultants upon whom the Company is dependent; ability to achieve and effectively manage growth;
ability to pay the Company’s debt obligations; ability to achieve continued customer renewals and
achieve new contract value, backlog and deferred revenue growth in light of competitive pressures;
ability to carry out the Company’s strategic initiatives and manage associated costs; substantial
competition from existing competitors and potential new competitors; additional risks associated
with international operations including foreign currency fluctuations; the impact of restructuring
and other charges on the Company’s businesses and operations; and other risks listed from time to
time in the Company’s reports filed with the Securities and Exchange Commission. These filings can
be found on Gartner’s Web site at www.gartner.com/investors and the SEC’s Web site at www.sec.gov.
Forward-looking statements included herein speak only as of the date hereof and the Company
disclaims any obligation to revise or update such statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events or circumstances.
# # #
| Gartner, Inc. | page 2 |