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 11, 2010
GARTNER, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 1-14443 | 04-3099750 | ||
| (State or Other Jurisdiction of | (Commission File Number) | (IRS Employer | ||
| Incorporation) | Identification No.) |
P.O. Box 10212
56 Top Gallant Road
Stamford, CT 06902-7747
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 11, 2010, Gartner, Inc. (the “Company”) will make investor presentations that will include
the slides furnished as Exhibit 99.1 to this Current Report on Form 8-K. The slides contained in
Exhibit 99.1 are also posted on the Company’s website at www.gartner.com.
During this presentation, the Company will reiterate its financial outlook for 2010, which was
first announced in the Company’s earnings release dated February 9, 2010, contained in
Exhibit 99.1 to the Company’s Form 8-K filed on February 9, 2010, which is available on the
Company’s website at www.gartner.com.
Additionally, on March 11, 2010, the Company issued a press release relating to the investor
presentations. 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
Exhibit 99.1 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 11, 2010. | |
99.2
|
Gartner, Inc. Press Release issued March 11, 2010. |
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 11, 2010 | 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 11, 2010. | |
99.2
|
Gartner, Inc. Press Release issued March 11, 2010. |
Exhibit 99.1
| Chris Lafond Chief Financial Officer |
| Our Business RESEARCH EVENTS CONSULTING SALES PROPRIETARY ANALYTICS AND DATA ANALYSTS |
| Attractive Business Model Gartner's Financial Strength Target double-digit revenue and EPS growth over the long-term Vast, untapped market opportunity High incremental gross contribution margins Recurring, predictable Research revenue with annual subscription model and high retention rates Strong cash flow and balance sheet Diverse, global customer base with 47% of revenues outside of U.S. Track record of success |
| 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, EBITDA 2 pt Gross Contribution Margin 65% 60% 70% Research 41% 52% 50% Events 39% 35% 40% Consulting 2009 2004 Incremental Margin % of Revenue SG&A 42% 40% Normalized EBITDA 17% 10% |
| Strong Cash Flow Profile and Balance Sheet Up-front billing for majority of research contracts Improved cash collection efficiency Non-capital intensive business Cash used for share repurchase and acquisitions Low debt level |
| Consistent Growth Strategy The Goals We Set in 2005 Focus on growing the Research business Effectively manage the Events portfolio Improve the productivity and profitability of the Consulting business while investing for future growth Leverage G&A infrastructure Drive shareholder value through the evolution of our capital structure |
| Consistent Growth Strategy Extraordinary Research Insight Strong Sales Capability High Value Differentiated Offerings Performance-driven Leadership Team Continuous Improvement and Innovation World-Class Service |
| Consistent Growth Strategy The Goals We Set in 2005 Focus on growing the Research business Effectively manage the Events portfolio Improve the productivity and profitability of the Consulting business while investing for future growth Leverage G&A infrastructure Drive shareholder value through the evolution of our capital structure |
| Proven Sales Strategy Delivering Results 2004 2004 2004 2004 $509M 58K 8,720 Contract Value Quota Bearing Headcount Research Client Organizations Average Contract Value per Organization 443 $784M 75K 10,492 942 2009 2009 2009 2009 Note: 2009 data does not include AMR Research and Burton Group |
| Consistent Growth Strategy The Results We Delivered: Revenue Growth (a) Restated to exclude results of Vision Events 2004 2005 2006 2007 2008 868.73 964.14 1037.299 1168.475 1279.065 Total Revenue (a) $ in millions CAGR = 10% (a) Restated to exclude results of Vision Events 2004 2005 2006 2007 2008 113.302 126.475 146.4119621 160.065 150.08 2004 2005 2006 2007 2008 259.4188 301.074 305.231 325.03 347.404 Consulting Revenue $ millions Events Revenue (a) $ millions CAGR = 8% CAGR = 7% 2004 2005 2006 2007 2008 480.4856 523.033 571.217 673.335 773.257 Research Revenue $ millions CAGR = 13% |
| Consistent Growth Strategy The Results We Delivered: Earnings Growth 2004 2005 2006 2007 2008 102.728 100.334 150.3464695 190.387 213.464 Normalized EBITDA (a) $ in millions CAGR = 20% 2004 2005 2006 2007 2008 0.09 -0.05 0.47 0.65 0.98 EPS from Continuing Operations (a) CAGR = 82% (a) Restated to exclude results of Vision Events. See the attached Glossary for the definition of Normalized EBITDA, and cautionary statement regarding this non-GAAP financial measure |
| Consistent Growth Strategy The Results We Delivered: Cash Flow Growth 2004 2005 2006 2007 2008 48.2007 27.122 106.264 148.335 184.35 2004 2005 2006 2007 2008 23.0967 4.766 85.151 124.163 160.018 2004 2005 2006 2007 2008 25.104 22.356 21.113 24.172 24.332 Cash From Operations $ in millions Free Cash Flow $ in millions Capital Expenditures $ millions CAGR = 40% CAGR = 62% CAGR = -1% Note: See the attached Glossary for the definition of Free Cash Flow, and cautionary statement regarding this non-GAAP financial measure |
| Consistent Growth Strategy The Results We Delivered: Shares Reduced 2003 2004 2005 2006 2007 2008 129.9 111.2 113.8 102.6 98.8 93.7 Basic Shares Outstanding In millions - at Year End 2003 2004 2005 2006 2007 2008 31.7 25.9 18.3 16.2 14.1 11.2 Equity Plan Shares Outstanding In millions - at Year End Shares Outstanding reduced by 28% Equity Plan shares reduced by 65% |
| 2009: Successfully Managed Business Through Challenging Macro Environment Quickly executed cost reduction actions Reduced costs and expenses by over $70 million (FX neutral) Discontinued 18 less profitable and non-strategic events Reduced capital spending Continued focused investment for long-term growth Selectively invested in sales force growth Maintained analyst headcount Continued product development efforts Acquired AMR Research and Burton Group in December |
| 2009: Successfully Managed Business Through Challenging Macro Environment Business trends improved in second half Fourth quarter trends accelerated Research new business up 53% sequentially and 23% YoY New enterprises up 61% sequentially and 36% YoY Client and wallet retention improved significantly Total contract value grew 6% sequentially Attendance at ongoing events increased YoY Consulting backlog grew 7% sequentially |
| 2004 2005 2006 2007 2008 2009 0.09 -0.05 0.47 0.65 0.98 0.85 Financial Results Demonstrate Success Total Revenue (1) $ in millions 2005 - 2008 data is restated to exclude results of Vision Events See the attached Glossary for a discussion of Normalized EBITDA Contract Value $ in millions Normalized EBITDA (1)(2) $ in millions EPS from Continuing Operations(1) 2004 2005 2006 2007 2008 2009 509 593 640 753 834 784 103 100 150 190 213 191 0 50 100 150 200 250 2004 2005 2006 2007 2008 2009 869 964 1,037 1,168 1,279 1,140 700 875 1,050 1,225 1,400 2004 2005 2006 2007 2008 2009 |
| Financial Results Demonstrate Success Cash Flow Growth Cash From Operations $ in millions Free Cash Flow $ in millions Note: See the attached Glossary for the definition of Free Cash Flow, and cautionary statement regarding this non-GAAP financial measure 48 27 106 148 184 162 0 50 100 150 200 2004 2005 2006 2007 2008 2009 23 5 85 124 160 147 0 50 100 150 200 2004 2005 2006 2007 2008 2009 |
| (1) Includes $58 - 62 million in projected revenue from the acquisitions of AMR Research and Burton Group, net of fair value adjustments on pre-acquisition deferred revenue totaling $4 million. 2010: Return to Growth ($ in millions) Research $ 845 - - 865 12% - - 15% 10% - - 13% Consulting 300 - - 315 5% - - 10% 3% - - 8% Events 104 - - 109 4% - - 9% 2% - - 7% Total Revenue (1) $1,249 - - 1,289 10% - - 13% 8% - - 11% 2010 Projection FX Neutral Reported |
| Includes $0.00 - $0.02 per share in projected income from the acquisitions of AMR Research and Burton Group. Reflects year-over-year comparisons excluding the impact of the $0.05 per share non-recurring tax benefit recorded in 2009. See the attached Glossary for a discussion of Normalized EBITDA, Acquisition and Integration Charges, Income Per Share, Excluding Acquisition and Integration Charges, Cash Acquisition and Integration Charges, and Free Cash Flow. Includes $2 - 4 million in projected Normalized EBITDA from the acquisitions of AMR Research and Burton Group and excludes a projected $29 - 30 million in pre-tax stock based compensation expense. 2010: Return to Growth ($ in millions, except per share amounts) $208 - - 223 Normalized EBITDA (3)(4) 9% - - 17% $0.91 - - $1.03 Income Per Share, Excluding Acquisition & Integration Charges (1)(3) 5% - - 18% 11% - - 26% Income Per Share (1) $0.74 - - $0.87 Acquisition & Integration Charges (3) (13%) - - 2% (8%) - - 9% $0.17 - - $0.16 Cash provided by operating activities Capital Expenditures Cash Acquisition & Integration Charges (3) Free Cash Flow (3) $162 - - 182 0% - - 12% 8 - - 8 (15) - - (20) $155 - - 170 6% - - 16% 2010 Projection Adjusted (2) Reported |
| AMR and Burton: Financial Impact We expect the acquisitions of AMR and Burton to be highly accretive over time (1) 2011 projections are as of December 31, 2009. Note: See the attached Glossary for a discussion of Acquisition and Integration Charges and Income Per Share, Excluding Acquisition and Integration Charges 2010 Projected 2011 Projected (1) Impact on Income Per Share ($0.17) - ($0.14) $0.01 - $0.07 Acquisition and Integration Charges $0.17 - $0.16 $0.07 - $0.05 Impact on Income Per Share, Excluding Acquisition and Integration Charges $0.00 - $0.02 $0.08 - $0.12 |
| 2010 Quarterly Phasing - Revenue Research revenue driven by retention rates and timing of new business Balanced renewals with 26% in Q1 Fourth quarter is historically the largest for new business Events revenue recognized when conferences delivered Symposium Series in Q4 drives phasing 9 events in Q1 2010 vs. 12 in Q1 2009 Consulting revenue is seasonal Q2 and Q4 slightly higher volume quarters Q1 expected to be 22% of full year revenue |
| 2010 Quarterly Phasing - Revenue Approximate revenue phasing in 2010: Research Consulting Events Q1 Q2 Q3 Q4 23% 27% 25% 25% 22% 25% 24% 29% 12% 24% 14% 50% Above based on midpoint of revenue guidance |
| 2010 Quarterly Phasing - Expense Quarterly fluctuations in cost of services driven primarily by the conference schedule in our Events business Higher Research and Sales expenses in Q4 related to Symposia and year-end sales support activities G&A is less seasonal |
| Sales, G&A and Other Expenses Depreciation driven by capital spending of $15 million in '09 and $24 million in '08 Interest expense reduced with lower debt levels Other income/expense is primarily transaction FX gains/losses Tax rates expected to remain between 32 and 33% |
| 2010 Quarterly Phasing - Earnings Approximate income per share excluding acquisition and integration charges: Q1 Q2 Q3 Q4 20% 40% 20% 20% Above based on the midpoint of guidance Based upon business conditions the Company may accelerate or postpone expenses throughout the year which could shift earnings between quarters |
| 2010: Return to Growth CV at 1/1/10 Expect double-digit growth in 2010 AMR and Burton CV at 1/1/10 $855M 2010 FX Revaluation Reported CV at 12/31/09: $784M |
| 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 |
| Gartner's Financial Strength Vast, untapped market opportunity High incremental contribution margins Recurring, predictable Research revenue with annual subscription model and high retention rates Strong cash flow and balance sheet Diverse, global customer base with 47% of revenues outside of U.S. Track record of success Target double-digit revenue and EPS growth over the long-term |
| Q&A |
| Why Invest in Gartner? Strong value proposition Vast, untapped opportunity Attractive business model Double-Digit Long Term Growth Strategy, programs and leadership team in place |
| Glossary (1) Data reflects the reclassification of the Company's former Vision Events business as a discontinued operation. Non-GAAP Financial Measures Investors are cautioned that Income Per Share Excluding Acquisition and Integration Charges, Normalized EBITDA and Free Cash Flow are not financial measures under generally accepted accounting principles. In addition, they should not be construed as alternatives to any other measures of performance determined in accordance with generally accepted accounting principles. These non-GAAP financial measures are provided to enhance the user's overall understanding of the Company's current financial performance and the Company's prospects for the future. Income Per Share Excluding Acquisition and Integration Charges: Represents diluted income per share excluding charges related to the acquisitions of AMR Research and Burton Group, which primarily consist of amortization for identifiable intangibles, fair value adjustments on pre-acquisition deferred revenue and certain non-recurring costs such as severance and other exit costs ("Acquisition and Integration Charges"). We believe Income Per Share Excluding Acquisition and Integration Charges is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results. Normalized EBITDA: Represents operating income excluding depreciation, accretion on obligations related to excess facilities, amortization, stock based compensation expense, Acquisition and Integration Charges, and Other charges. 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. Reconciliation of Normalized EBITDA to GAAP ($ in millions) 2004 2005 2006 2007 2008 2009 Net income (loss) $17 ($2) $58 $74 $104 $83 Interest expense, net 1 11 17 22 19 16 Other (income) expense, net 7 9 1 (3) 1 3 Discontinued operations (1) (5) (4) (4) (3) (7) - Tax provision 16 7 26 40 48 33 Operating income (1) $36 $20 $ 98 $129 $164 $134 Normalizing adjustments: Depreciation, accretion and amortization 31 36 34 28 28 28 META integration charges - 15 1 - - - Other charges 36 29 - 9 - - SFAS No. 123(R) stock compensation expense - - 17 24 21 26 Acquisition and Integration Charges 3 Normalized EBITDA (1) $103 $100 $150 $190 $213 $191 |
| Glossary Non-GAAP Financial Measures Free Cash Flow: Represents cash provided by operating activities excluding cash charges related to the acquisitions of AMR Research and Burton Group, which primarily consist of certain non-recurring costs such as severance and other exit costs ("Cash Acquisition and Integration Charges"), less additions to property, equipment and leasehold improvements ("Capital Expenditures"). We believe that Free Cash Flow is an important measure of the recurring cash generated by the Company's core operations that is available to be used to repurchase stock, repay debt obligations and invest in future growth through new business development activities or acquisitions. Reconciliation of Free Cash Flow to GAAP ($ in millions) 2004 2005 2006 2007 2008 2009 Cash provided by operating activities $48 $27 $106 $148 $184 $162 Acquisition and Integration Costs - - - - - - Additions to property, equipment and leasehold improvements (25) (22) (21) (24) (24) (15) Free Cash Flow $23 $5 $85 $124 $160 $147 |
Exhibit 99.2
|
Press Release |
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
Reiterates Financial Outlook for 2010
STAMFORD, Conn., March 11, 2010 — Gartner, Inc. (NYSE: IT), the leading provider of research and
analysis on the global information technology industry, is hosting its annual Investor Day for
institutional investors and sell-side analysts in Greenwich, Connecticut, at 9:00 a.m. eastern time
today. At the Investor Day, members of the Company’s senior leadership team will review Gartner’s
business portfolio, strategy for growth and financial performance. The Investor Day will be
webcast live via the Internet and a replay will be available on the Company’s web site at
http://investor.gartner.com.
In addition, the Company reiterated its financial outlook for 2010, which was previously announced
in its fourth quarter and full year 2009 earnings press release dated February 9, 2010.
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 valuable partner to approximately 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 1979, Gartner is
headquartered in Stamford, Connecticut, U.S.A., and has approximately 4,300 associates, including
approximately 1,200 research analysts and consultants, and clients in 80 countries. For more
information, visit www.gartner.com.
Safe Harbor Statement
Statements contained in this press release regarding the growth and prospects of the business, the
Company’s projected 2010 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, the ability to expand or retain Gartner’s
customer base; the ability to grow or sustain revenue from individual customers; the ability to
retain the professional staff of research analysts and consultants upon whom Gartner is dependent;
the ability to achieve and effectively manage growth; the ability to pay Gartner’s debt
obligations; the ability to achieve continued customer renewals and achieve new contract value,
backlog and deferred revenue growth in light of competitive pressures;
-more-
the ability to carry out
Gartner’s strategic initiatives and manage associated costs; the ability to effectively integrate
the businesses of AMR Research and Burton Group; 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 Gartner’s
businesses and operations; general economic conditions; and other risks listed from time to time in
Gartner’s reports filed with the Securities and Exchange Commission, including Gartner’s most
recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. 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 Gartner 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 |