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

Date of Report (Date of earliest event reported)

November 3, 2010

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 November 3, 2010, Gartner, Inc. (the “Company”) announced financial results for the three and nine months ended September 30, 2010. 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 November 3, 2010 with respect to financial results for Gartner, Inc. for the three and nine months ended September 30, 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.

EXHIBIT INDEX

EXHIBIT NO.		DESCRIPTION
99.1		Press Release issued November 3, 2010 with respect to financial results for Gartner, Inc. for the three and nine months ended September 30, 2010.

EXHIBIT 99.1

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 Third Quarter 2010

Research Contract Value Increased 22% Year-Over-Year to $905.5 Million

Company Increased Its Financial Outlook for Full Year 2010

STAMFORD, Conn., November 3, 2010 — Gartner, Inc. (NYSE: IT), the leading provider of research and analysis on the global information technology industry, today reported results for third quarter 2010 and increased its financial outlook for the full year. Specifically, the Company increased both the low and high-end of its outlook range for total revenue and cash flow, and increased the low-end of its outlook range for earnings.

For third quarter 2010, total revenue was $296.1 million, up 12% year-over-year excluding the impact of foreign exchange and 11% as reported. Normalized EBITDA increased 25% year-over-year to $51.1 million. Net income was $20.1 million, unchanged versus the prior year’s third quarter, and diluted income per share was $0.20 as compared to $0.21 for the prior year’s third quarter. As previously reported, net income and diluted income per share during third quarter 2009 were positively impacted by tax benefits totaling $4.7 million, or $0.05 per share, which are not expected to recur (the “Third Quarter 2009 Tax Benefits”).

Third quarter 2010 net income and diluted income per share were negatively impacted by Acquisition Adjustments totaling $2.8 million after tax, or $0.03 per share. Diluted Income Per Share Excluding Acquisition Adjustments was $0.23 for third quarter 2010, up 44% year-over-year excluding the impact of the Third Quarter 2009 Tax Benefits. See “Non-GAAP Financial Measures” for a discussion of Normalized EBITDA and Income Per Share Excluding Acquisition Adjustments.

Gene Hall, Gartner’s chief executive officer, commented, “We achieved record new business in Research, higher client and wallet retention, and continued acceleration in many of our other key business metrics during the third quarter. As a result of these better than expected results and strong current business trends, we have again increased our financial outlook for the full year 2010. Gartner is solidly on track to deliver double-digit revenue and earnings growth over the long-term.”

Business Segment Highlights

Revenue for third quarter 2010 was $214.7 million. Year-over-year, revenue was up 17% excluding the impact of foreign exchange and 16% as reported. Gross contribution margin was 65%.

Contract value was $905.5 million at September 30, 2010. Year-over-year, contract value was up 22% as reported and 18% excluding the impact of foreign exchange.

Client and wallet retention rates for third quarter 2010 increased to 82% and 95%, respectively, versus 77% and 85%, respectively, for third quarter 2009. Wallet retention excludes the impact of foreign exchange.

Revenue for third quarter 2010 was $65.4 million versus $65.7 million for third quarter 2009. Year-over-year, revenue was up 2% excluding the impact of foreign exchange. Gross contribution margin increased 1 percentage point year-over-year to 37%.

Third quarter 2010 utilization increased to 65% versus 64% for third quarter 2009. Billable headcount was 453 at September 30, 2010 versus 449 at September 30, 2009. Backlog at September 30, 2010 was $94.0 million, up 11% year-over-year.

Revenue for third quarter 2010 was $16.0 million. Year-over-year, revenue was up 3% excluding the impact of foreign exchange and unchanged as reported. Gross contribution margin was 37%, unchanged year-over year.

The Company held 14 events during third quarter 2010 as compared to 15 events during third quarter 2009. Despite holding fewer events, total attendees increased 10% year-over-year to 5,954. For the 12 events held in third quarter 2010 that were also held at any time during 2009, revenue per event increased 17% year-over-year.

Cash Flow and Balance Sheet Highlights

During third quarter 2010, cash provided by operating activities increased 18% year-over-year to $64.8 million, including the negative impact of $0.8 million in Cash Acquisition and Integration Charges. Additions to property, equipment and leasehold improvements (“Capital Expenditures”) were $4.5 million. See “Non-GAAP Financial Measures” for a discussion of Cash Acquisition and Integration Charges.

During the nine months ended September 30, 2010, the Company deployed its cash principally to repurchase 3.19 million shares of its common stock for a total cost of $76.5 million and to reduce its total debt net of cash by $60.8 million. As of September 30, 2010, the Company had total debt of $300.0 million and cash of $148.4 million.

Financial Outlook for 2010

Based on its strong results year-to-date and outlook for the remainder of the year, Gartner increased both the low and high-end of its projected range for full year 2010 total revenue, cash provided by operating activities and Free Cash Flow, and increased the low-end of its projected range for diluted income per share, Diluted Income Per Share Excluding Acquisition Adjustments and Normalized EBITDA.

On a segment basis, Gartner increased both the low and high-end of its projected range for Events segment revenue, increased the low-end of its projected range for Research segment revenue and reiterated its projected range for Consulting segment revenue.

Gartner, Inc.		page 2

For revenue, growth is presented both as reported and excluding the impact of foreign exchange (“FX Neutral”):

($ in millions)		2010 Projected				% Growth FX Neutral				% Growth Reported
Research		$	855 — 865				13% — 14	%			14% — 15	%
Consulting			300 — 315				5% — 10	%			5% — 10	%
Events			116 — 121				14% — 19	%			15% — 20	%
Total Revenue		$	1,271 — 1,301				11% — 13	%			12% — 14	%
Projected Earnings and Cash Flow
						% Growth				% Growth
($ in millions, except per share data)		2010 Projected				Reported				Adjusted (1)
Diluted Income Per Share		$	0.89 — $0.98				5% — 15	%			11% — 23	%
Acquisition Adjustments (2)		$	0.13 — $0.13
Income Per Share, Excluding Acquisition Adjustments (2)		$	1.02 — $1.11				17% — 28	%			24% — 35	%
Normalized EBITDA (2) (3)		$	225 — 235				18% — 23	%
Cash provided by operating activities		$	180 — 195				11% — 20	%
Cash Acquisition and Integration Charges (2)			8 —     8
Capital Expenditures			(18) — (20)
Free Cash Flow (2)		$	170 — 183				16% — 25	%

Conference Call Information

Gartner has scheduled a conference call at 8:30 a.m. eastern time tomorrow, Thursday, November 4, 2010, 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.

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 60,000 clients in 11,000 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 4,400 associates, including

Gartner, Inc.		page 3

1,200 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.

Non-GAAP Financial Measures

Investors are cautioned that Income Per Share Excluding Acquisition Adjustments, 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 Adjustments: 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 legal, consulting, severance and other exit costs (“Acquisition Adjustments”). We believe Income Per Share Excluding Acquisition Adjustments 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 Adjustments, 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.

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.

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 and expand 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; 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 all other risks described from time to time in Gartner’s reports filed with the Securities and Exchange Commission,

Gartner, Inc.		page 4

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 5

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

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
		2010 (a)				2009								2010 (a)				2009
Revenues:
Research		$	214,680			$	185,718				16	%		$	634,448			$	557,325				14	%
Consulting			65,397				65,708				0	%			212,796				205,341				4	%
Events			16,045				16,043				0	%			58,906				48,307				22	%
Total revenues			296,122				267,469				11	%			906,150				810,973				12	%
Costs and expenses:
Cost of services and product development			125,897				118,120				7	%			387,279				351,864				10	%
Selling, general and administrative			127,488				115,049				11	%			388,378				345,980				12	%
Depreciation			6,194				6,363				-3	%			19,218				19,176				0	%
Amortization of intangibles			2,531				416				>100	%			7,994				1,220				>100	%
Acquisition and integration charges			1,249				—				100	%			7,090				—				100	%
Total costs and expenses			263,359				239,948				10	%			809,959				718,240				13	%
Operating income			32,763				27,521				19	%			96,191				92,733				4	%
Interest expense, net			(3,005	)			(4,914	)			-39	%			(9,569	)			(13,105	)			-27	%
Other (expense) income, net			(373	)			(127	)			>100	%			736				(2,505	)			>100	%
Income before income taxes			29,385				22,480				31	%			87,358				77,123				13	%
Provision for income taxes			9,310				2,413				>100	%			27,767				19,875				40	%
Net income		$	20,075			$	20,067				0	%		$	59,591			$	57,248				4	%
Income per common share:
Basic:		$	0.21			$	0.21				0	%		$	0.62			$	0.61				2	%
Diluted:		$	0.20			$	0.21				-5	%		$	0.60			$	0.59				2	%
Weighted average shares outstanding:
Basic			95,473				94,872				1	%			95,698				94,380				1	%
Diluted			98,797				97,657				1	%			99,584				96,885				3	%

BUSINESS SEGMENT DATA
(Dollars in thousands)

						Direct				Gross				Contribution
		Revenue				Expense				Contribution				Margin
Three Months Ended 9/30/10 (a)
Research		$	214,680			$	74,075			$	140,605				65	%
Consulting			65,397				41,416				23,981				37	%
Events			16,045				10,071				5,974				37	%
TOTAL		$	296,122			$	125,562			$	170,560				58	%
Three Months Ended 9/30/09
Research		$	185,718			$	63,107			$	122,611				66	%
Consulting			65,708				42,050				23,658				36	%
Events			16,043				10,109				5,934				37	%
TOTAL		$	267,469			$	115,266			$	152,203				57	%
Nine Months Ended 9/30/10 (a)
Research		$	634,448			$	219,137			$	415,311				65	%
Consulting			212,796				128,574				84,222				40	%
Events			58,906				36,218				22,688				39	%
TOTAL		$	906,150			$	383,929			$	522,221				58	%
Nine Months Ended 9/30/09
Research		$	557,325			$	190,518			$	366,807				66	%
Consulting			205,341				127,027				78,314				38	%
Events			48,307				32,007				16,300				34	%
TOTAL		$	810,973			$	349,552			$	461,421				57	%

SELECTED STATISTICAL DATA

		September 30,				September 30,
		2010 (a)				2009
Research contract value		$	905,506	(b)		$	742,885	(b)
Research client retention			82	%			77	%
Research wallet retention			95	%			85	%
Research client organizations			11,053				9,998
Consulting backlog		$	93,991	(b)		$	84,747	(b)
Consulting—quarterly utilization			65	%			64	%
Consulting billable headcount			453				449
Consulting—average annualized revenue per billable headcount		$	408	(b)		$	389	(b)
Events—number of events for the quarter			14				15
Events—attendees for the quarter			5,954				5,413

Reconciliation — Operating income to Normalized EBITDA (a):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Net income		$	20,075			$	20,067			$	59,591			$	57,248
Interest expense, net			3,005				4,914				9,569				13,105
Other expense (income), net			373				127				(736	)			2,505
Tax provision			9,310				2,413				27,767				19,875
Operating income		$	32,763			$	27,521			$	96,191			$	92,733
Normalizing adjustments:
Depreciation, accretion, and amortization (b)			8,870				6,941				27,698				20,935
Stock-based compensation expense (c)			7,264				6,352				23,298				19,477
Pre-acquisition deferred revenue (d)			947				—				3,573				—
Acquisition and integration charges (e)			1,249				—				7,090				—
Normalized EBITDA		$	51,093			$	40,814			$	157,850			$	133,145

Reconciliation — Diluted income per share to Diluted Income Per Share Excluding
Acquisition Adjustments (a):

		Three Months Ended September 30,
		2010								2009
		After-tax								After-tax
		Amount				EPS				Amount				EPS
Diluted income per share		$	20,075			$	0.20			$	20,067			$	0.21
Acquisition adjustments, net of tax effect (b):
Amortization of intangibles (c)			1,519				0.02				—				—
Pre-acquisition deferred revenue (d)			573				—				—				—
Acquisition and integration charges (e)			756				0.01				—				—
Diluted Income Per Share Excluding Acquisition Adjustments (f)		$	22,923			$	0.23			$	20,067			$	0.21

		Nine Months Ended September 30,
		2010								2009
		After-tax								After-tax
		Amount				EPS				Amount				EPS
Diluted income per share		$	59,591			$	0.60			$	57,248			$	0.59
Acquisition adjustments, net of tax effect (b):
Amortization of intangibles (c)			4,557				0.05				—				—
Pre-acquisition deferred revenue (d)			2,161				0.02				—				—
Acquisition and integration charges (e)			4,289				0.04				—				—
Diluted Income Per Share Excluding Acquisition Adjustments (g)		$	70,598			$	0.71			$	57,248			$	0.59