UNITED STATES
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

February 5, 2009

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)

(203) 316-1111
(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 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On February 5, 2009, Gartner, Inc. (the “Company”) announced financial results for the three and twelve months ended December 31, 2008. A copy of the Company’s press release is furnished as Exhibit 99.1.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 and in Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed “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		Press Release issued February 5, 2009 with respect to financial results for Gartner, Inc. for the three and twelve months ended December 31, 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.

EXHIBIT INDEX

EXHIBIT NO.		DESCRIPTION
99.1		Press Release issued February 5, 2009 with respect to financial results for Gartner, Inc. for the three and twelve months ended December 31, 2008.

Exhibit 99.1

		Press Release

CONTACT:
Henry A. Diamond
Group Vice President
Investor Relations and Corporate Finance
+1 203 316 3399
henry.diamond@gartner.com

Gartner Reports Financial Results for Fourth Quarter and Full Year 2008
Contract Value Increased 11% to $834.3 Million
2008 Revenue increased 9% to $1.279 Billion
2008 EPS from Continuing Operations Increased 51% to $0.98
2008 Operating Cash Flow Increased 24% to $184.4 Million

STAMFORD, Conn., February 5, 2009 — Gartner, Inc. (NYSE: IT), the leading provider of research and analysis on the global information technology industry, today reported results for fourth quarter and full year 2008, and provided its preliminary financial outlook for 2009.

Fourth Quarter 2008 Results

Contract value, a key leading indicator for Gartner’s Research segment, increased 11% year-over-year to a record level of $834.3 million. Excluding the impact of foreign exchange, contract value increased 8% year-over-year.

Total revenue increased 1% year-over-year to $347.3 million. Excluding the impact of foreign exchange, total revenue grew 6% year-over-year, driven by growth in the Company’s Research and Consulting businesses.

EPS from continuing operations was $0.35 versus $0.36 in fourth quarter 2007, net income was $33.6 million versus $38.8 million in fourth quarter 2007 and Normalized EBITDA was $65.6 million versus $79.1 million in fourth quarter 2007. See “Non-GAAP Financial Measures” for a discussion of Normalized EBITDA.

Full Year 2008 Results

Total revenue grew 9% to $1.279 billion. Excluding the impact of foreign exchange, total revenue increased 8%, driven by growth in the Company’s Research and Consulting businesses. EPS from continuing operations increased 51% to $0.98, net income increased 41% to $103.9 million and Normalized EBITDA increased 12% to $213.5 million.

Gene Hall, Gartner’s chief executive officer, commented, “During 2008 we generated 9% revenue growth, expanded our margins and ended the year with record contract value. Our performance demonstrates the tremendous value that our services contribute to the effective management of IT programs and

-more-

investments, which remains a critical business function even in the most challenging economic environments.”

Business Segment Highlights

Research

Revenue for fourth quarter 2008 was $190.2 million, up 5% year-over-year as reported and 11% excluding the impact of foreign exchange. Gross contribution margin was 64%.

For full year 2008, revenue was $773.3 million, an increase of 15% year-over-year as reported and 14% excluding the impact of foreign exchange. Gross contribution margin improved approximately 2 percentage points to 66%.

At December 31, 2008, research contract value was a record $834.3 million, up 11% year-over-year as reported and 8% excluding the impact of foreign exchange.

Client and wallet retention rates for fourth quarter 2008 were 82% and 98%, respectively, versus 82% and 101%, respectively, for fourth quarter 2007.

Consulting

Revenue for fourth quarter 2008 was $94.3 million, an increase of 3% year-over-year as reported and 8% excluding the impact of foreign exchange. Gross contribution margin was 39%.

For full year 2008, revenue was $347.4 million, up 7% as reported and 6% excluding the impact of foreign exchange. Gross contribution margin improved 2 percentage points to 41%.

Fourth quarter 2008 utilization was 70% and backlog was $97.2 million at December 31, 2008, down 20% year-over-year. Billable headcount was 499 as of December 31, 2008, up 6% year-over-year.

Events

Revenue for fourth quarter 2008 was $60.9 million, down 12% as reported and 7% excluding the impact of foreign exchange. Gross contribution margin was 46%.

For full year 2008, revenue was $150.1 million, a decrease of 6% as reported and 7% excluding the impact of foreign exchange. Gross contribution margin was 43%.

During fourth quarter 2008, the Company held 17 events with 16,071 attendees versus 12 events with 16,675 attendees during fourth quarter 2007. During full year 2008, the Company held 70 events with 41,352 attendees versus 62 events with 44,216 attendees in 2007.

Cash Flow and Balance Sheet Highlights

Gartner generated cash from operations of $46.9 million during fourth quarter 2008 and $184.4 million during full year 2008. Cash from operations for full year 2008 increased 24% year-over-year. Capital expenditures were $6.1 million for fourth quarter 2008 and $24.3 million for full year 2008.

The Company deployed its cash principally to repurchase its common stock. During fourth quarter 2008, Gartner repurchased 1.3 million shares of its common stock at a total cost of $23.0 million. During full year 2008, it repurchased a total of 9.7 million shares at a total cost of $198.6 million.

Gartner, Inc.		page 2

As of December 31, 2008, the Company had total debt of $416.3 million and cash of $140.9 million.

Preliminary Financial Outlook for 2009

Gartner also provided its preliminary outlook for 2009. This outlook assumes that the current challenging economic environment persists throughout 2009.

Below is the Company’s 2009 outlook for revenue by segment and total revenue. The year-over-year change is presented both as reported and excluding the impact of foreign exchange (FX Neutral):

($in millions)		2009 Projected Revenue				% Change as Reported				% Change FX Neutral
Research		$	730-750				(6%)-(3	%)			(1%)-1	%
Consulting			265-295				(24%)-(15	%)			(21%)-(12	%)
Events			98-108				(35%)-(28	%)			(33%)-(26	%)
Other			7-7
Total Revenue		$	1,100-1,160				(14%)-(9	%)			(10%)-(6	%)

Based on the above revenue outlook, the Company is targeting Normalized EBITDA for full year 2009 of $165 to $200 million, EPS from continuing operations of $0.63 to $0.87, cash flow from operations of $100 to $125 million and capital expenditures of $15 to $20 million. Normalized EBITDA excludes a projected $26 to $28 million of pre-tax expense related to SFAS 123(R).

Conference Call Information

Gartner has scheduled a conference call at 10:00 a.m. ET today, Thursday, February 5, 2009, to discuss the Company’s financial results. The conference call will be available via the Internet by accessing the Company’s web site at http://investor.gartner.com. A replay of the webcast will be available for 90 days following the call.

Annual Meeting of Stockholders

Gartner also announced that its 2009 Annual Meeting of Stockholders will be held at 10:00 a.m. ET on Thursday, June 4, 2009, at the Company’s offices in Stamford, Connecticut.

About Gartner

Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. We deliver the technology-related insight necessary for our 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, we are the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, we work with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in

Gartner, Inc.		page 3

1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 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 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, SFAS 123 (R) expense, and Other charges.

Safe Harbor Statement

Statements contained in this press release regarding the growth and prospects of the business, the Company’s projected 2009 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 t hose 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 continu ed 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; general economic condi tions; 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 4

GARTNER, INC.
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)

		Three Months Ended												Twelve Months Ended
		December 31,												December 31,
		2008				2007								2008				2007
Revenues:
Research		$	190,164			$	180,564				5	%		$	773,257			$	673,335				15	%
Consulting			94,275				91,370				3	%			347,404				325,030				7	%
Events			60,880				68,908				-12	%			150,080				160,065				-6	%
Other			2,002				2,314				-13	%			8,324				10,045				-17	%
Total revenues			347,321				343,156				1	%			1,279,065				1,168,475				9	%
Costs and expenses:
Cost of services and product development			152,381				146,538				4	%			554,837				530,807				5	%
Selling, general and administrative			131,879				122,842				7	%			532,365				472,737				13	%
Depreciation			6,880				6,296				9	%			25,880				24,298				7	%
Amortization of intangibles			400				457				-12	%			1,615				2,091				-23	%
Other charges			—				—				0	%			—				9,084				-100	%
Total costs and expenses			291,540				276,133				6	%			1,114,697				1,039,017				7	%
Operating income			55,781				67,023				-17	%			164,368				129,458				27	%
Interest expense, net			(4,597	)			(5,270	)			13	%			(19,269	)			(22,154	)			13	%
Other income (expense), net			129				1,114				>100	%			(358	)			3,193				>100	%
Income before income taxes			51,313				62,867				-18	%			144,741				110,497				31	%
Provision for income taxes			17,667				24,820				-29	%			47,593				39,831				19	%
Income from continuing operations			33,646				38,047				-12	%			97,148				70,666				37	%
Income from discontinued operations, net of taxes (a)			—				772				-100	%			6,723				2,887				>100	%
Net income		$	33,646			$	38,819				-13	%		$	103,871			$	73,553				41	%
Income per common share:
Basic:
Income from continuing operations		$	0.36			$	0.37				-3	%		$	1.02			$	0.68				50	%
Income from discontinued operations			—				0.01				-100	%			0.07				0.03				>100	%
Income per share		$	0.36			$	0.38				-5	%		$	1.09			$	0.71				54	%
Diluted:
Income from continuing operations		$	0.35			$	0.36				-3	%		$	0.98			$	0.65				51	%
Income from discontinued operations			—				0.01				-100	%			0.07				0.03				>100	%
Income per share		$	0.35			$	0.37				-5	%		$	1.05			$	0.68				54	%
Weighted average shares outstanding:
Basic			93,811				101,709				-8	%			95,246				103,613				-8	%
Diluted			96,599				105,915				-9	%			99,028				108,328				-9	%

BUSINESS SEGMENT DATA (a)
(Dollars in thousands)

						Direct				Gross				Contribution
		Revenue				Expense				Contribution				Margin
Three Months Ended 12/31/08
Research		$	190,164			$	68,829			$	121,335				64	%
Consulting			94,275				57,636				36,639				39	%
Events			60,880				33,001				27,879				46	%
Other			2,002				386				1,616				81	%
TOTAL		$	347,321			$	159,852			$	187,469				54	%
Three Months Ended 12/31/07
Research		$	180,564			$	64,171			$	116,393				64	%
Consulting			91,370				53,319				38,051				42	%
Events			68,908				28,656				40,252				58	%
Other			2,314				440				1,874				81	%
TOTAL		$	343,156			$	146,586			$	196,570				57	%
Twelve Months Ended 12/31/08
Research		$	773,257			$	265,552			$	507,705				66	%
Consulting			347,404				206,009				141,395				41	%
Events			150,080				85,126				64,954				43	%
Other			8,324				1,685				6,639				80	%
TOTAL		$	1,279,065			$	558,372			$	720,693				56	%
Twelve Months Ended 12/31/07
Research		$	673,335			$	244,271			$	429,064				64	%
Consulting			325,030				196,815				128,215				39	%
Events			160,065				78,157				81,908				51	%
Other			10,045				2,307				7,738				77	%
TOTAL		$	1,168,475			$	521,550			$	646,925				55	%

SELECTED STATISTICAL DATA (a)

		December 31,				December 31,
		2008				2007
Research contract value		$	834,321	(b)		$	752,533	(b)
Research client retention			82	%			82	%
Research wallet retention			98	%			101	%
Research client organizations			10,579				10,189
Consulting backlog		$	97,169	(b)		$	121,400	(b)
Consulting—quarterly utilization			70	%			73	%
Consulting billable headcount			499				472
Consulting—average annualized revenue per billable headcount		$	445	(b)		$	470	(b)
Events—number of events for the quarter			17				12
Events—attendees for the quarter			16,071				16,675

SUPPLEMENTAL INFORMATION
GAAP to Normalized EBITDA Reconciliation
(in thousands)

Reconciliation — GAAP to Normalized EBITDA (1):

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2008				2007				2008				2007
Net income		$	33,646			$	38,819			$	103,871			$	73,553
Interest expense, net			4,597				5,270				19,269				22,154
Other expense (income), net			(129	)			(1,114	)			358				(3,193	)
Income from discontinued operations (2)			—				(772	)			(6,723	)			(2,887	)
Tax provision			17,667				24,820				47,593				39,831
Operating income		$	55,781			$	67,023			$	164,368			$	129,458
Normalizing adjustments:
Depreciation, accretion, and amortization			7,470				7,030				28,399				27,604
Other charges (3)			—				—				—				9,084
SFAS No. 123® stock compensation expense (4)			2,381				5,016				20,696				24,241
Normalized EBITDA		$	65,632			$	79,069			$	213,463			$	190,387

Footnotes