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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission File Number 1-14443
Gartner, Inc.
(Exact name of Registrant as specified in its charter)
Delaware04-3099750
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification Number)
  
P.O. Box 1021206902-7700
56 Top Gallant Road(Zip Code)
Stamford, 
Connecticut
(Address of principal executive offices) 
Registrant’s telephone number, including area code: (203) 316-1111
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $.0005 par value per shareITNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerNon-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of April 30, 2021, 86,076,529 shares of the registrant’s common shares were outstanding.
1


Table of Contents


 Page
 
 
PART II. OTHER INFORMATION
 

2


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited; in thousands, except share data)
 March 31,December 31,
20212020
Assets  
Current assets:  
Cash and cash equivalents$445,995 $712,583 
Fees receivable, net of allowances of $9,000 and $10,000, respectively
1,175,426 1,241,508 
Deferred commissions257,956 259,755 
Prepaid expenses and other current assets118,479 109,212 
Total current assets1,997,856 2,323,058 
Property, equipment and leasehold improvements, net322,610 336,765 
Operating lease right-of-use assets633,796 647,283 
Goodwill2,943,500 2,945,547 
Intangible assets, net777,441 806,998 
Other assets262,655 256,316 
Total Assets$6,937,858 $7,315,967 
Liabilities and Stockholders’ Equity   
Current liabilities:  
Accounts payable and accrued liabilities$703,439 $952,431 
Deferred revenues2,088,463 1,974,548 
Current portion of long-term debt20,519 20,515 
Total current liabilities2,812,421 2,947,494 
Long-term debt, net of deferred financing fees 1,949,078 1,958,286 
Operating lease liabilities765,125 780,166 
Other liabilities519,640 539,593 
Total Liabilities6,046,264 6,225,539 
Stockholders’ Equity   
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none issued or outstanding
  
Common stock, $0.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods
82 82 
Additional paid-in capital2,003,473 1,968,930 
Accumulated other comprehensive loss, net(93,178)(99,228)
Accumulated earnings2,419,567 2,255,467 
Treasury stock, at cost, 76,519,765 and 74,759,985 common shares, respectively
(3,438,350)(3,034,823)
Total Stockholders’ Equity 891,594 1,090,428 
Total Liabilities and Stockholders’ Equity $6,937,858 $7,315,967 
 

See the accompanying notes to Condensed Consolidated Financial Statements.
3


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

Three Months Ended
 March 31,
 20212020
Revenues:
Research$979,732 $909,291 
Conferences24,802 13,870 
Consulting99,504 95,730 
Total revenues1,104,038 1,018,891 
Costs and expenses:
Cost of services and product development334,467 341,278 
Selling, general and administrative487,255 496,639 
Depreciation25,750 22,517 
Amortization of intangibles30,514 32,179 
Acquisition and integration charges640 1,560 
Total costs and expenses878,626 894,173 
Operating income 225,412 124,718 
Interest expense, net(26,149)(26,349)
Other income (expense), net15,490 (1,515)
Income before income taxes214,753 96,854 
Provision for income taxes50,653 21,757 
Net income $164,100 $75,097 
Net income per share:
Basic$1.86 $0.84 
Diluted$1.84 $0.83 
Weighted average shares outstanding:
Basic88,352 89,219 
Diluted89,139 90,066 

See the accompanying notes to Condensed Consolidated Financial Statements.
4


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited; in thousands)

Three Months Ended
 March 31,
 20212020
Net income $164,100 $75,097 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments677 (46,381)
Interest rate swaps – net change in deferred gain or loss5,270 (44,732)
Pension plans – net change in deferred actuarial loss103 79 
Other comprehensive income (loss), net of tax6,050 (91,034)
Comprehensive income (loss)$170,150 $(15,937)

See the accompanying notes to Condensed Consolidated Financial Statements.
5


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited; in thousands)

Three Months Ended March 31, 2021
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss, NetAccumulated EarningsTreasury StockTotal
Balance at December 31, 2020$82 $1,968,930 $(99,228)$2,255,467 $(3,034,823)$1,090,428 
Net income— — — 164,100 — 164,100 
Other comprehensive income— — 6,050 — — 6,050 
Issuances under stock plans— (1,543)— — 6,923 5,380 
Common share repurchases— — — — (410,450)(410,450)
Stock-based compensation expense — 36,086 — — — 36,086 
Balance at March 31, 2021$82 $2,003,473 $(93,178)$2,419,567 $(3,438,350)$891,594 
Three Months Ended March 31, 2020
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss, NetAccumulated EarningsTreasury StockTotal
Balance at December 31, 2019$82 $1,899,273 $(77,938)$1,988,722 $(2,871,546)$938,593 
Net income— — — 75,097 — 75,097 
Other comprehensive loss— — (91,034)— — (91,034)
Issuances under stock plans— (1,794)— — 7,448 5,654 
Common share repurchases— — — — (63,164)(63,164)
Stock-based compensation expense — 25,129 — — — 25,129 
Balance at March 31, 2020$82 $1,922,608 $(168,972)$2,063,819 $(2,927,262)$890,275 

6


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited; in thousands)

Three Months Ended
 March 31,
 20212020
Operating activities:  
Net income $164,100 $75,097 
Adjustments to reconcile net income to cash provided by operating activities:  
Depreciation and amortization 56,264 54,696 
Stock-based compensation expense36,086 25,129 
Deferred taxes3,883 25,537 
Reduction in the carrying amount of operating lease right-of-use assets18,575 22,862 
Amortization and write-off of deferred financing fees923 1,637 
Gain on de-designated swaps(15,765) 
Changes in assets and liabilities:  
Fees receivable, net54,192 135,661 
Deferred commissions(237)17,520 
Prepaid expenses and other current assets(9,933)(12,656)
Other assets(10,081)5,961 
Deferred revenues131,786 (26,228)
Accounts payable and accrued and other liabilities(272,495)(269,467)
Cash provided by operating activities157,298 55,749 
Investing activities:  
Additions to property, equipment and leasehold improvements(12,521)(24,536)
Cash used in investing activities(12,521)(24,536)
Financing activities:  
Proceeds from employee stock purchase plan5,357 5,641 
Proceeds from revolving credit facility 27,000 
Payments on revolving credit facility(5,000) 
Payments on borrowings(5,127)(27,967)
Purchases of treasury stock(398,450)(73,164)
Cash used in financing activities(403,220)(68,490)
Net decrease in cash and cash equivalents (258,443)(37,277)
Effects of exchange rates on cash and cash equivalents (8,145)(15,709)
Cash and cash equivalents, beginning of period 712,583 280,836 
Cash and cash equivalents, end of period $445,995 $227,850 

See the accompanying notes to Condensed Consolidated Financial Statements.
7


GARTNER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
Note 1 — Business and Basis of Presentation

Business. Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission–critical priorities today and build the successful organizations of tomorrow. We believe our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and an objective resource for more than 14,000 enterprises in more than 100 countries — across all major functions, in every industry and enterprise size.

Segments. Gartner delivers its products and services globally through three business segments: Research, Conferences and Consulting. Revenues and other financial information for our segments are discussed in Note 5 — Segment Information.

Basis of presentation. The accompanying interim Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270 for interim financial information and with the applicable instructions of U.S. Securities and Exchange Commission (“SEC”) Rule 10-01 of Regulation S-X on Form 10-Q, and should be read in conjunction with the consolidated financial statements and related notes of the Company in its Annual Report on Form 10-K for the year ended December 31, 2020.

The fiscal year of Gartner is the twelve-month period from January 1 through December 31. In the opinion of management, all normal recurring accruals and adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented herein have been included. The results of operations for the three months ended March 31, 2021 may not be indicative of the results of operations for the remainder of 2021 or beyond. When used in these notes, the terms “Gartner,” the “Company,” “we,” “us,” or “our” refer to Gartner, Inc. and its consolidated subsidiaries.

Principles of consolidation. The accompanying interim Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

Use of estimates. The preparation of the accompanying interim Condensed Consolidated Financial Statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of fees 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 or benefit, performance-based compensation charges, depreciation and amortization. Management believes its use of estimates in these interim Condensed Consolidated Financial Statements to be reasonable.

Management continually evaluates and revises its estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. Management adjusts these estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time. As a result, differences between estimates and actual results could be material and would be reflected in the Company’s consolidated financial statements in future periods.

Revenue recognition. Revenue is recognized in accordance with the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). Revenue is only recognized when all of the required criteria for revenue recognition have been met. The accompanying Condensed Consolidated Statements of Operations present revenue net of any sales or value-added taxes that we collect from customers and remit to government authorities. ASC Topic 270 requires certain disclosures in interim financial statements around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Note 2 — Revenue and Related Matters provides additional information regarding the Company’s revenues.


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Adoption of new accounting standards. The Company adopted the accounting standard described below during the three months ended March 31, 2021.

Simplifying the Accounting for Income Taxes — In December 2019, the FASB issued ASU No. 2019-12, Income Taxes—Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU No. 2019-12 provides new guidance to simplify the accounting for income taxes in certain areas, changes the accounting for select income tax transactions and makes minor ASC improvements. Gartner adopted ASU No. 2019-12 on January 1, 2021. The adoption of ASU No. 2019-12 did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Accounting standards issued but not yet adopted. The FASB has issued accounting standards that have not yet become effective and may impact the Company’s consolidated financial statements or related disclosures in future periods. Those standards and their potential impact are discussed below.

Accounting standard effective immediately upon voluntary election by Gartner

Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). ASU No. 2020-04 provides that an entity can elect not to apply certain required modification accounting in U.S. GAAP to contracts where all changes to the critical terms relate to reference rate reform (e.g., the expected discontinuance of LIBOR and the transition to an alternative reference interest rate, etc.). In addition, the rule provides optional expedients and exceptions that enable entities to continue to apply hedge accounting for hedging relationships where one or more of the critical terms change due to reference rate reform. The rule became effective for all entities as of March 12, 2020 and will generally no longer be available to apply after December 31, 2022. The Company is currently evaluating the potential impact of ASU No. 2020-04 on its consolidated financial statements, including the rule’s potential impact on any debt modifications or other contractual changes in the future that may result from reference rate reform.

Note 2 — Revenue and Related Matters

Disaggregated Revenue — The Company’s disaggregated revenue by reportable segment is presented in the tables below for the periods indicated (in thousands).

By Primary Geographic Market (1)

Three Months Ended March 31, 2021
Primary Geographic MarketResearchConferencesConsultingTotal
United States and Canada$631,333 $19,599 $57,486 $708,418 
Europe, Middle East and Africa230,201 2,713 30,362 263,276 
Other International118,198 2,490 11,656 132,344 
Total revenues $979,732 $24,802 $99,504 $1,104,038 

Three Months Ended March 31, 2020
Primary Geographic MarketResearchConferencesConsultingTotal
United States and Canada$590,156 $5,980 $54,163 $650,299 
Europe, Middle East and Africa205,939 2,147 30,082 238,168 
Other International113,196 5,743 11,485 130,424 
Total revenues $909,291 $13,870 $95,730 $1,018,891 

(1)Revenue is reported based on where the sale is fulfilled.

The Company’s revenue is generated primarily through direct sales to clients by domestic and international sales forces and a network of independent international sales agents. Most of the Company’s products and services are provided on an integrated worldwide basis and, because of this integrated delivery approach, it is not practical to precisely separate the Company's
9


revenue by geographic location. Accordingly, revenue information presented in the above tables is based on internal allocations, which involve certain management estimates and judgments.

By Timing of Revenue Recognition

Three Months Ended March 31, 2021
Timing of Revenue RecognitionResearchConferencesConsultingTotal
Transferred over time (1)$894,087 $ $84,342 $978,429 
Transferred at a point in time (2)85,645 24,802 15,162 125,609 
Total revenues $979,732 $24,802 $99,504 $1,104,038 

Three Months Ended March 31, 2020
Timing of Revenue RecognitionResearchConferencesConsultingTotal
Transferred over time (1)$829,212 $ $81,408 $910,620 
Transferred at a point in time (2)80,079 13,870 14,322 108,271 
Total revenues $909,291 $13,870 $95,730 $1,018,891 

(1)Research revenues were recognized in connection with performance obligations that were satisfied over time using a time-elapsed output method to measure progress. Consulting revenues were recognized over time using labor hours as an input measurement basis.
(2)The revenues in this category were recognized in connection with performance obligations that were satisfied at the point in time that the contractual deliverables were provided to the customer.

Performance Obligations — For customer contracts that are greater than one year in duration, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2021 was approximately $3.6 billion. The Company expects to recognize $1,705.5 million, $1,443.1 million and $424.5 million of this revenue (most of which pertains to Research) during the remainder of 2021, the year ending December 31, 2022 and thereafter, respectively. The Company applies a practical expedient that is permitted under ASC Topic 606 and, accordingly, it does not disclose such performance obligation information for customer contracts that have original durations of one year or less. The Company’s performance obligations for contracts meeting this ASC Topic 606 disclosure exclusion primarily include: (i) stand-ready services under Research subscription contracts; (ii) holding conferences and meetings where attendees and exhibitors can participate; and (iii) providing customized Consulting solutions for clients under fixed fee and time and materials engagements. The remaining duration of these performance obligations is generally less than one year, which aligns with the period that the parties have enforceable rights and obligations under the affected contracts.

Customer Contract Assets and Liabilities — The timing of the recognition of revenue and the amount and timing of the Company’s billings and cash collections, including upfront customer payments, result in the recognition of both assets and liabilities on the Company’s consolidated balance sheet. The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers (in thousands).

March 31,December 31,
20212020
Assets:
Fees receivable, gross (1)$1,184,426 $1,251,508 
Contract assets recorded in Prepaid expenses and other current assets (2)$19,883 $14,440 
Contract liabilities:
Deferred revenues (current liability) (3)$2,088,463 $1,974,548 
Non-current deferred revenues recorded in Other liabilities (3)25,852 26,754 
Total contract liabilities$2,114,315 $2,001,302 

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(1)Fees receivable represent an unconditional right to payment from the Company’s customers and include both billed and unbilled amounts.
(2)Contract assets represent recognized revenue for which the Company does not have an unconditional right to payment as of the balance sheet date because the project may be subject to a progress billing milestone or some other billing restriction.
(3)Deferred revenues represent amounts (i) for which the Company has received an upfront customer payment or (ii) that pertain to recognized fees receivable. Both situations occur before the completion of the Company’s performance obligation(s).

The Company recognized revenue of $726.7 million and $658.4 million during the three months ended March 31, 2021 and 2020, respectively, that was attributable to deferred revenues that were recorded at the beginning of each such period. Those amounts primarily consisted of (i) Research revenues that were recognized ratably as control of the goods or services passed to the customer and (ii) Conferences revenue pertaining to conferences and meetings that occurred during the reporting periods. During each of the three months ended March 31, 2021 and 2020, the Company did not record any material impairments related to its contract assets. The Company does not typically recognize revenue from performance obligations satisfied in prior periods.

Note 3 — Computation of Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS reflects the potential dilution of securities that could share in earnings. Potential shares of common stock are excluded from the computation of diluted earnings per share when their effect would be anti-dilutive.

The table below sets forth the calculation of basic and diluted income per share for the periods indicated (in thousands, except per share data).
Three Months Ended
 March 31,
 20212020
Numerator:  
Net income used for calculating basic and diluted income per share$164,100 $75,097 
Denominator:  
Weighted average common shares used in the calculation of basic income per share 88,352 89,219 
Dilutive effect of outstanding awards associated with stock-based compensation plans (1)787 847 
Shares used in the calculation of diluted income per share 89,139 90,066 
Basic income per share$1.86 $0.84 
Diluted income per share $1.84 $0.83 

(1)Certain potential shares of common stock were not included in the computation of diluted income per share because the effect would have been anti-dilutive. These potential shares of common stock totaled approximately 0.4 million and 0.7 million for the three months ended March 31, 2021, and 2020, respectively.

Note 4 — Stock-Based Compensation

The Company grants stock-based compensation awards as an incentive for employees and directors to contribute to the Company’s long-term success. The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents. As of March 31, 2021, the Company had 4.0 million shares of its common stock, par value $0.0005 per share, (the “Common Stock”) available for stock-based compensation awards under its current Long-Term Incentive Plan as amended and restated in January 2019 (the “Plan”).


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The tables below summarize the Company’s stock-based compensation expense by award type and expense category line item during the periods indicated (in millions).
Three Months Ended
 March 31,
Award type20212020
Stock appreciation rights$2.0 $1.7 
Restricted stock units (2)33.9 23.2 
Common stock equivalents0.2 0.2 
Total (1)$36.1 $25.1 

Three Months Ended
 March 31,
Expense category line item20212020
Cost of services and product development$13.7 $12.1 
Selling, general and administrative22.4 13.0 
Total (1) (2)$36.1 $25.1 

(1) Includes charges of $21.5 million and $11.6 million during the three months ended March 31, 2021 and 2020, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis.
(2) On February 5, 2020, prior to the COVID-19 related shutdown in the U.S., the Compensation Committee (“Committee”) of the Board of Directors of the Company established performance measures for the performance-based restricted stock units (the “PSUs”) awarded to the Company’s executive officers in 2020 under the Plan. Based on preliminary corporate performance results for the 2020 performance measures, the 2020 PSUs would have been earned at 50% of target. However, on February 3, 2021, the Committee determined to use its discretion under the Plan to approve a payout at 95% of target. In deciding to exercise this discretion to adjust the performance-based RSU payout, the Committee considered the Company’s strong overall performance in 2020 despite the significant negative impact of the COVID-19 pandemic. As a result of the modification, the Company recognized $6.5 million of incremental compensation cost during the three months ended March 31, 2021.

Note 5 — Segment Information

The Company’s products and services are delivered through three segments – Research, Conferences and Consulting, as described below.

Research provides trusted, objective insights and advice on the mission-critical priorities of leaders across all functional areas of an enterprise through reports, briefings, proprietary tools, access to our research experts, peer networking services and membership programs that enable our clients to drive organizational performance.

Conferences provides business professionals across an organization the opportunity to learn, share and network. From our Gartner Symposium/Xpo series, to industry-leading conferences focused on specific business roles and topics, to peer-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice.

Consulting combines the power of Gartner market-leading research with custom analysis and on-the-ground support to help chief information officers and other senior executives driving technology-related strategic initiatives move confidently from insight to action.

The Company evaluates segment performance and allocates resources based on gross contribution margin. Gross contribution, as presented in the tables below, is defined as operating income or loss excluding certain Cost of services and product development expenses, Selling, general and administrative expenses, Depreciation, Amortization of intangibles, and Acquisition and integration charges. Certain bonus and fringe benefit costs included in consolidated Cost of services and product development 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. The Company does not identify or allocate assets, including capital expenditures, by reportable segment. Accordingly, assets are not reported by segment because the information is not available by segment and is not reviewed in the evaluation of segment performance or in making decisions regarding the
12


allocation of resources.

The tables below present information about the Company’s reportable segments for the periods indicated (in thousands).

Three Months Ended March 31, 2021ResearchConferencesConsultingConsolidated
Revenues$979,732 $24,802 $99,504 $1,104,038 
Gross contribution724,372 13,896 39,098 777,366 
Corporate and other expenses   (551,954)
Operating income   $225,412 

Three Months Ended March 31, 2020ResearchConferencesConsultingConsolidated
Revenues $909,291 $13,870 $95,730 $1,018,891 
Gross contribution 653,469 (6,060)29,382 676,791 
Corporate and other expenses   (552,073)
Operating income   $124,718 

The table below provides a reconciliation of total segment gross contribution to net income for the periods indicated (in thousands).
Three Months Ended
March 31,
20212020
Total segment gross contribution$777,366 $676,791 
Costs and expenses:
Cost of services and product development - unallocated (1)7,795 (822)
Selling, general and administrative 487,255 496,639 
Depreciation and amortization56,264 54,696 
Acquisition and integration charges640 1,560 
Operating income 225,412 124,718 
Interest expense and other, net(10,659)(27,864)
Less: Provision for income taxes50,653 21,757 
Net income $164,100 $75,097 

(1)The unallocated amounts consist of certain bonus and fringe costs recorded in consolidated Cost of services and product development that are not allocated to segment expense. The Company’s policy is to allocate bonuses to segments at 100% of a segment employee’s target bonus. Amounts above or below 100% are absorbed by corporate.

Note 6 — Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired. Evaluations of the recoverability of goodwill are performed in accordance with FASB ASC Topic 350, which requires an annual assessment of potential goodwill impairment at the reporting unit level and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

When performing the annual assessment of the recoverability of goodwill, the Company initially performs a qualitative analysis evaluating whether any events or circumstances occurred or exist that provide evidence that it is more likely than not that the fair value of any of the Company’s reporting units is less than the related carrying amount. If the Company does not believe that it is more likely than not that the fair value of any of the Company’s reporting units is less than the related carrying amount, then no quantitative impairment test is performed. However, if the results of the qualitative assessment indicate that it is more likely than not that the fair value of a reporting unit is less than its respective carrying amount, then a quantitative impairment
13


test is performed. Evaluating the recoverability of goodwill requires judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the estimates are subject to uncertainty.

The Company’s most recent annual impairment test of goodwill was a qualitative analysis conducted during the quarter ended September 30, 2020 that indicated no impairment. Subsequent to completing the 2020 annual impairment test, there were no events or changes in circumstances noted that required an interim impairment test.

The table below presents changes to the carrying amount of goodwill by segment during the three months ended March 31, 2021 (in thousands).
 ResearchConferencesConsultingTotal
Balance at December 31, 2020 (1)$2,664,732 $184,091 $96,724 $2,945,547 
Foreign currency translation impact (1,917)(38)(92)(2,047)
Balance at March 31, 2021$2,662,815 $184,053 $96,632 $2,943,500 

(1)The Company does not have any accumulated goodwill impairment losses.

Finite-Lived Intangible Assets

The tables below present reconciliations of the carrying amounts of the Company’s finite-lived intangible assets as of the dates indicated (in thousands).
March 31, 2021Customer
Relationships
SoftwareContentOtherTotal
Gross cost at December 31, 2020$1,154,210 $110,597 $3,965 $10,614 $1,279,386 
Foreign currency translation impact 948 53   1,001 
Gross cost1,155,158 110,650 3,965 10,614 1,280,387 
Accumulated amortization (1)(406,074)(88,933)(3,965)(3,974)(502,946)
Balance at March 31, 2021$749,084 $21,717 $ $6,640 $777,441 

December 31, 2020Customer
Relationships
SoftwareContentOther Total
Gross cost $1,154,210 $110,597 $3,965 $10,614 $1,279,386 
Accumulated amortization (1)(381,776)(83,320)(3,595)(3,697)(472,388)
Balance at December 31, 2020$772,434 $27,277 $370 $6,917 $806,998 

(1) Finite-lived intangible assets are amortized using the straight-line method over the following periods: Customer relationships—6 to 13 years; Software—3 to 7 years; Content—2 to 3 years; and Other—2 to 11 years.

Amortization expense related to finite-lived intangible assets was $30.5 million and $32.2 million during the three months ended March 31, 2021 and 2020, respectively. The estimated future amortization expense by year for finite-lived intangible assets is presented in the table below (in thousands).

2021 (remaining nine months)$75,546 
202296,169 
202396,154 
202490,819 
202582,150 
Thereafter336,603 
$777,441 

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Note 7 — Debt

The Company’s total outstanding borrowings are summarized in the table below (in thousands).
March 31,December 31,
Description20212020
2020 Credit Agreement - Term loan facility (1)$390,000 $395,000 
2020 Credit Agreement - Revolving credit facility (1), (2) 5,000 
2028 Notes (3)800,000 800,000 
2030 Notes (4)800,000 800,000 
Other (5)5,919 6,046 
Principal amount outstanding (6)1,995,919 2,006,046 
Less: deferred financing fees (7)(26,322)(27,245)
Net balance sheet carrying amount$1,969,597 $1,978,801 

(1)The contractual annualized interest rate as of March 31, 2021 on the 2020 Credit Agreement Term loan facility and the revolving credit facility was 1.50%, which consisted of a floating Eurodollar base rate of 0.125% plus a margin of 1.375%. However, the Company has interest rate swap contracts that effectively convert the floating Eurodollar base rates on outstanding amounts to a fixed base rate.
(2)The Company had approximately $1.0 billion of available borrowing capacity on the 2020 Credit Agreement revolver (not including the expansion feature) as of March 31, 2021.
(3)Consists of $800.0 million principal amount of 2028 Notes outstanding. The 2028 Notes bear interest at a fixed rate of 4.50% and mature on July 1, 2028.
(4)Consists of $800.0 million principal amount of 2030 Notes outstanding. The 2030 Notes bear interest at a fixed rate of 3.75% and mature on October 1, 2030.
(5)Consists of two State of Connecticut economic development loans. One of the loans originated in 2012, has a 10-year maturity and the outstanding balance of $0.9 million as of March 31, 2021 bears interest at a fixed rate of 3.00%. The second loan, originated in 2019, has a 10-year maturity and bears interest at a fixed rate of 1.75%. Both of these loans may be repaid at any time by the Company without penalty.
(6)The weighted average annual effective rate on the Company’s outstanding debt for the three months ended March 31, 2021, including the effects of its interest rate swaps discussed below, was 5.02%.
(7)Deferred financing fees are being amortized to Interest expense, net over the term of the related debt obligation.

2030 Notes

On September 28, 2020, the Company issued $800.0 million aggregate principal amount of 3.75% Senior Notes due 2030 (the “2030 Notes”). The 2030 Notes were issued pursuant to an indenture, dated as of September 28, 2020 (the “2030 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee.

The 2030 Notes were issued at an issue price of 100.0% and bear interest at a rate of 3.75% per annum. Interest on the 2030 Notes is payable on April 1 and October 1 of each year, beginning on April 1, 2021. The 2030 Notes will mature on October 1, 2030.

The Company may redeem some or all of the 2030 Notes at any time on or after October 1, 2025 for cash at the redemption prices set forth in the 2030 Note Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to October 1, 2025, the Company may redeem up to 40% of the aggregate principal amount of the 2030 Notes in connection with certain equity offerings, or some or all of the 2030 Notes with a “make-whole” premium, in each case subject to the terms set forth in the 2030 Indenture.

2028 Notes

On June 22, 2020, the Company issued $800.0 million aggregate principal amount of 4.50% Senior Notes due 2028 (the “2028 Notes”). The 2028 Notes were issued pursuant to an indenture, dated as of June 22, 2020 (the “2028 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee.

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The 2028 Notes were issued at an issue price of 100.0% and bear interest at a rate of 4.50% per annum. Interest on the 2028 Notes is payable on January 1 and July 1 of each year, beginning on January 1, 2021. The Notes will mature on July 1, 2028.

The Company may redeem some or all of the 2028 Notes at any time on or after July 1, 2023 for cash at the redemption prices set forth in the 2028 Note Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to July 1, 2023, the Company may redeem up to 40% of the aggregate principal amount of the 2028 Notes in connection with certain equity offerings, or some or all of the 2028 Notes with a “make-whole” premium, in each case subject to the terms set forth in the 2028 Indenture.

2020 Credit Agreement

On September 28, 2020, the Company entered into an agreement among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent,” and such agreement, the “2020 Credit Agreement”), which amended and restated the Company’s existing credit facility, dated as of June 17, 2016 (as amended, supplemented or otherwise modified from time to time, the “2016 Credit Agreement”).

The 2020 Credit Agreement provides for a $400.0 million senior secured five-year term loan facility and a $1.0 billion senior secured five-year revolving facility. The term and revolving facilities may be increased, at the Company’s option and under certain conditions, by up to an additional $1.0 billion in the aggregate plus additional amounts subject to the satisfaction of certain conditions, including a maximum secured leverage ratio. The term loan will be repaid in consecutive quarterly installments commencing December 31, 2020, plus a final payment due on September 28, 2025, and may be prepaid at any time without penalty or premium (other than applicable breakage costs) at the option of the Company. The revolving credit facility may be used for loans, and up to $75.0 million may be used for letters of credit. The revolving loans may be borrowed, repaid and re-borrowed until September 28, 2025, at which time all amounts borrowed must be repaid.

On September 28, 2020, the Company drew down $400.0 million in term loans. The initial drawdown was used to refinance the outstanding amounts under the 2016 Credit Agreement. Additional amounts drawn down under the 2020 Credit Agreement will be used for general corporate purposes, including the funding of acquisitions, payment of capital expenditures and the repurchase of shares.

The Company’s obligations under the 2020 Credit Agreement are guaranteed, on a secured basis, by certain existing and future direct and indirect U.S. subsidiaries. The Company’s obligations under the 2020 Credit Agreement and the guarantees of the subsidiary guarantors are secured by first priority security interests in substantially all of the assets of the Company and the subsidiary guarantors. The security and pledges are subject to certain exceptions.

Loans under the 2020 Credit Agreement bear interest at a rate equal to, at the Company’s option, either (i) the greatest of: (x) the Wall Street Journal prime rate; (y) the average rate on Federal Reserve Board of New York rate plus 1/2 of 1%; and (z) and the adjusted LIBO rate (adjusted for statutory reserves) for a one-month interest period plus 1%, in each case plus a margin equal to between 0.125% and 1.25% depending on the Company’s consolidated leverage ratio as of the end of the four consecutive fiscal quarters most recently ended, or (ii) the adjusted LIBO rate (adjusted for statutory reserves) plus a margin equal to between 1.125% and 2.25%, depending on the Company’s leverage ratio as of the end of the four consecutive fiscal quarters most recently ended. The commitment fee payable on the unused portion of the revolving credit facility is equal to between 0.175% and 0.40% based on utilization of the revolving credit facility. The Company has also agreed to pay customary letter of credit fees.

Interest Rate Swaps

As of March 31, 2021, the Company had four fixed-for-floating interest rate swap contracts with a total notional value of $1.4 billion that mature through 2025. The Company pays base fixed rates on these swaps ranging from 2.13% to 3.04% and in return receives a floating Eurodollar base rate on 30-day notional borrowings.

As a result of the payment under the then outstanding 2016 Credit Agreement term loan and revolving credit facility, the Company de-designated all of its interest rate swaps effective June 30, 2020. Accordingly, hedge accounting is not applicable, and subsequent changes to the fair value of the interest rate swaps are recorded in Other income (expense), net. The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments. As of March 31, 2021, $97.0 million is remaining in Accumulated other comprehensive loss, net. The interest rate swaps had negative unrealized fair values (liabilities) of $84.8 million and $109.2 million as of March 31, 2021 and December 31, 2020, respectively, of which $72.8 million and $78.1 million were recorded in Accumulated other comprehensive loss, net of tax effect, as of March 31, 2021 and December 31, 2020, respectively. See Note 11 — Fair Value Disclosures for the determination of the fair values of Company’s interest rate swaps.
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Note 8 — Equity

Share Repurchase Authorization

In 2015, the Company’s Board of Directors (the “Board”) authorized a share repurchase program to repurchase up to $1.2 billion of the Company’s common stock. On February 4, 2021, the Board authorized incremental share repurchases of up to an additional $300 million of the Company’s common stock. $0.5 billion remained available under the share repurchase program as of March 31, 2021. The Company may repurchase its common stock from time-to-time in amounts, at prices and in the manner that 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 (which may include repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended), accelerated share repurchases, private transactions or other transactions and will be funded by cash on hand and borrowings. Repurchases may also be made from time-to-time in connection with the settlement of the Company’s stock-based compensation awards. See Note 14 — Subsequent Event for a discussion regarding an increase in the Company’s share repurchase authorization.
The Company’s share repurchase activity is presented in the table below for the periods indicated.
Three Months Ended
 March 31,
 20212020
Number of shares repurchased (1) 2,274,710 417,707 
Cash paid for repurchased shares (in thousands) (2)$398,450 $73,164 

(1) The average purchase price for repurchased shares was $180.44 and $151.22 for the three months ended March 31, 2021 and 2020, respectively. The repurchased shares during the three months ended March 31, 2021 and 2020 included purchases for both stock-based compensation awards and open market purchases.
(2) The cash paid for repurchased shares during the three months ended March 31, 2021 included $8.0 million of open market purchases with trade dates in December 2020 that settled in January 2021. There were $20.0 million of open market purchases with trade dates in March 2021 that settled in April 2021. The cash paid for repurchased shares during the three months ended March 31, 2020 included open market purchases with trade dates in December 2019 that settled in January 2020.

Accumulated Other Comprehensive Income (Loss), net (“AOCI/L”)

The tables below provide information about the changes in AOCI/L by component and the related amounts reclassified out of AOCI/L to income during the periods indicated (net of tax, in thousands) (1).

Three Months Ended March 31, 2021
 Interest Rate
Swaps
Defined
Benefit
Pension Plans
Foreign
Currency
Translation
Adjustments
Total
Balance – December 31, 2020$(78,104)$(9,309)$(11,815)$(99,228)
Other comprehensive income (loss) activity during the period:  
  Change in AOCI/L before reclassifications to income  677 677 
  Reclassifications from AOCI/L to income (2), (3)5,270 103  5,373 
Other comprehensive income (loss) for the period5,270 103 677 6,050 
Balance – March 31, 2021$(72,834)$(9,206)$(11,138)$(93,178)

Three Months Ended March 31, 2020
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 Interest Rate
Swaps
Defined
Benefit
Pension Plans
Foreign
Currency
Translation
Adjustments
Total
Balance – December 31, 2019$(47,164)$(8,584)$(22,190)$(77,938)
Other comprehensive income (loss) activity during the period:
  Change in AOCI/L before reclassifications to income(47,054) (46,381)(93,435)
  Reclassifications from AOCI/L to income (2), (3)2,322 79  2,401 
Other comprehensive income (loss) for the period(44,732)79 (46,381)(91,034)
Balance – March 31, 2020$(91,896)$(8,505)$(68,571)$(168,972)

(1)Amounts in parentheses represent debits (deferred losses).
(2)$7.0 million and $3.2 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the three months ended March 31, 2021 and 2020, respectively. See Note 7 — Debt and Note 10 — Derivatives and Hedging for information regarding the cash flow hedges.
(3)The reclassifications related to defined benefit pension plans were recorded in Other income (expense), net.
The estimated net amount of the existing losses on the Company’s interest rate swaps that are reported in Accumulated other comprehensive loss, net at March 31, 2021 that is expected to be reclassified into earnings within the next 12 months is $29.2 million.

Note 9 — Income Taxes

The provision for income taxes for the three months ended March 31, 2021 and 2020 was an expense of $50.7 million and $21.8 million, respectively. The effective income tax rate was 23.6% and of 22.5% for the three months ended March 31, 2021 and 2020, respectively. The quarter-over-quarter increase in the effective income tax rate was primarily due to the shifts in estimated geographical mix of earnings as well as the relative impact of tax benefits from stock-based compensation.

The Company had gross unrecognized tax benefits of $125.0 million on March 31, 2021 and $127.1 million on December 31, 2020. It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $8.9 million within the next twelve months due to the anticipated closure of audits and the expiration of certain statutes of limitation.

Note 10 — Derivatives and Hedging

The Company enters into a limited number of derivative contracts to mitigate the cash flow risk associated with changes in interest rates on variable-rate debt and changes in foreign exchange rates on forecasted foreign currency transactions. The Company accounts for its outstanding derivative contracts in accordance with FASB ASC Topic 815, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value. The tables below provide information regarding the Company’s outstanding derivative contracts as of the dates indicated (in thousands, except for number of contracts).

March 31, 2021
Derivative Contract TypeNumber of
Contracts
Notional
Amounts
Fair Value
Asset
(Liability), Net (3)
Balance
Sheet
Line Item
Unrealized
Loss Recorded
in AOCI/L, net of tax
Interest rate swaps (1)4 $1,400,000 $(50,096)Other liabilities$(72,834)
(34,710)Accrued liabilities
Foreign currency forwards (2)33 196,038 (220)Accrued liabilities 
Total37 $1,596,038 $(85,026) $(72,834)

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December 31, 2020
Derivative Contract TypeNumber of ContractsNotional
Amounts
Fair Value
Asset
(Liability), Net (3)
Balance
Sheet
Line Item
Unrealized
Loss Recorded
in AOCI/L, net of tax
Interest rate swaps (1)4 $1,400,000 $(74,289)Other liabilities$(78,104)
(34,886)Accrued liabilities
Foreign currency forwards (2)163 430,063 (1,514)Accrued liabilities 
Total167 $1,830,063 $(110,689) $(78,104)

(1)As a result of the payment under the then outstanding 2016 Credit Agreement term loan and revolving credit facility, the Company de-designated all of its interest rate swaps effective June 30, 2020. Accordingly, hedge accounting is not applicable, and subsequent changes to fair value of the interest rate swaps are recorded in Other income (expense), net. The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments. See Note 7 — Debt provides additional information regarding the Company’s interest rate swap contracts.
(2)The Company has foreign exchange transaction risk because 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 mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income (expense), net because the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding foreign currency forward exchange contracts at March 31, 2021 matured before April 30, 2021.
(3)See Note 11 — Fair Value Disclosures for the determination of the fair values of these instruments.

At March 31, 2021, all of the Company’s derivative counterparties were 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. The table below provides information regarding amounts recognized in the accompanying Condensed Consolidated Statements of Operations for derivative contracts for the periods indicated (in thousands).

Three Months Ended
 March 31,
Amount recorded in:20212020
Interest expense, net (1)$7,032 $3,192 
Other (income) expense, net (2)(15,823)12,599 
Total (income) expense, net$(8,791)$15,791 

(1)Consists of interest expense from interest rate swap contracts.
(2)Consists of net realized and unrealized gains and losses on foreign currency forward contracts, and gains and losses on de-designated interest rate swaps.

Note 11 — Fair Value Disclosures
 
The Company’s financial instruments include cash equivalents, fees receivable from customers, accounts payable and accrued liabilities, all of which are normally short-term in nature. The Company believes that the carrying amounts of these financial instruments reasonably approximate their fair values due to their short-term nature. The Company’s financial instruments also include its outstanding variable-rate borrowings under the 2020 Credit Agreement. The Company believes that the carrying amounts of its variable-rate borrowings reasonably approximate their fair values because the rates of interest on those borrowings reflect current market rates of interest for similar instruments with comparable maturities.

The Company enters into a limited number of derivatives transactions but does not enter into repurchase agreements, securities lending transactions or master netting arrangements. Receivables or payables that result from derivatives transactions are recorded gross in the Company’s consolidated balance sheets.

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FASB ASC Topic 820 provides a framework for the measurement of fair value and a valuation hierarchy based on the transparency of inputs used in the valuation of assets and liabilities. Classification within the valuation hierarchy is based on the lowest level of input that is significant to the resulting fair value measurement. The valuation hierarchy contains three levels. Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs such as internally-created valuation models. The Company does not currently utilize Level 3 valuation inputs to remeasure any of its assets or liabilities. However, Level 3 inputs may be used by the Company in its required annual impairment review of goodwill. Information regarding the periodic assessment of the Company’s goodwill is included in Note 6 — Goodwill and Intangible Assets. The Company does not typically transfer assets or liabilities between different levels of the valuation hierarchy.

The table below presents the fair values of certain financial assets and liabilities (in thousands).
DescriptionMarch 31,
2021
December 31,
2020
Assets:  
Values based on Level 1 inputs:
Deferred compensation plan assets (1)$