Gartner Reports 12% Growth in Revenue and 36% Growth in EBITDA; Board of Directors Authorizes Stock Repurchase Program.Business Editors STAMFORD Stamford, town, England Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles. , Conn.--(BUSINESS WIRE)--July 19, 2001 Gartner (Gartner, Inc., Stamford, CT, www.gartner.com) The largest information technology consulting firm that specializes in research and analysis. Founded in 1979 by Gideon Gartner, it has grown through acquisitions, including Dataquest in 1995 and Techrepublic in 2000. , Inc. (NYSE NYSE See: New York Stock Exchange : IT and ITB ITB Invitation To Bid ITB In The Beginning ITB Internationale Tourismusbörse (German) ITB In The Business (aka in the business service industry) ITB Intrathecal Baclofen Therapy ), the world's leading research and advisory firm, today reported results for the third fiscal quarter ending June June: see month. 30, 2001. The Company also announced that the Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program of its Class A and Class B common stock. Total revenue from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the third quarter of fiscal 2001 grew 12% to $247.6 million from $220.8 million in the third quarter of fiscal 2000. Net income from continuing operations, excluding other charges, net loss on sale of investments, loss from minority-owned investments, and certain tax benefits was $14.1 million, or normalized earnings Normalized Earnings 1. Earnings adjusted for cyclical ups and downs in the economy. 2. On the balance sheet, earnings adjusted to remove unusual or one-time influences. Notes: An example would be removing a land sale in which a large capital gain was realized. of $0.16 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Reported net loss from continuing operations, including these items, was $10.2 million, or a loss of $0.12 per fully diluted share. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
For the first nine months of the fiscal year, Gartner's total revenue from continuing operations increased 14% to $727.9 million from $637.0 million for the first nine months of fiscal 2000. Net income from continuing operations, excluding other charges, net loss on the sale of investments, loss from minority-owned investments, and certain tax benefits was $30.6 million, or normalized earnings of $0.35 per fully diluted share. Reported net income from continuing operations, including these items, was $6.1 million, or $0.07 per fully diluted share. EBITDA for the nine-month period totaled $104.5 million. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. D. Fleisher, Gartner's Chief Executive Officer, said, "Several months ago, we committed to a strategy to generate profitable revenue growth and drive efficiency. This quarter's performance demonstrates our ability to deliver on that promise. We not only achieved continued revenue growth but at the same time dramatically changed our cost structure. We reduced spending through adjustments to our workforce and by leveraging our existing global infrastructure. We improved contribution margins for all three of our core businesses - research, consulting, and events - both year-over-year and sequentially. As a result, we've we've Contraction of we have. we've have witnessed impressive quarterly EBITDA growth, up 91% sequentially and 36% year-over-year." Business Review Research Research revenue increased 6% to $133.2 million in the third quarter and rose 6% to $405.1 million in the first nine months of fiscal 2001. Ratable That which can be appraised, assessed, or adjusted through the application of a formula or percentage. Ratable property is that which is taxable or capable of being appraised or assessed. ratable adj. contract value was $550.3 million. Normalized for currency exchange, contract value would have been 3% higher. Fleisher said, "In our research business, revenue growth and key indicators - contract value, multi-year contracts, renewals and average contract size - are holding relatively steady, even in the current climate of tightening budgets. This is in large part due to the successful selling of our research on a seat-based model and the increased penetration of new buying centers A buying center (also known as a decision making unit), in marketing, procurement, and organizational studies, is a group of employees responsible for purchasing an item for the organization. within existing clients. "Just last month, we introduced GartnerG2, a research service for business strategists. GartnerG2 provides clients with research and advice on strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. and business growth, leveraging our rock-solid understanding of technology and its impact on the business environment. We believe this will be an important growth driver for Gartner over the next several years." Consulting Consulting revenue grew 35% to $71.6 million in the third quarter and increased 35% to $190.1 million in the first nine months of fiscal 2001. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the end of the third quarter totaled $98.0 million. "In the current economy, clients must deliver ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot). on the projects they undertake," said Fleisher. "The customization of Gartner's research for our consulting clients has been a positive differentiator in the marketplace." Events Events revenue rose 12% to $39.1 million in the third quarter and grew 25% to $119.0 million in the first nine months of fiscal 2001. Deferred revenue was $51.0 million, up 12% from a year ago. Said Fleisher, "Despite overall economic pressures and travel constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. , our events business met its targets, supported by growth in exhibitor revenue. Our strategy - which will continue into fiscal 2002 - is to identify existing events that can best meet our revenue and margin objectives while introducing events like our first Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. and South African Symposia sym·po·si·a n. A plural of symposium. ." Stock Repurchase Program The Company also announced today that the Board of Directors has approved a stock repurchase program. Under the program, the Company is authorized to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to $75 million of Gartner Class A and Class B common stock. Repurchases will be made from time to time over the next two years through open market purchases, subject to the availability of stock, prevailing market conditions, the trading price Trading price The price at which a security is currently selling. of the stock, and the Company's financial performance. Repurchases will be funded from cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and possible borrowings under the Company's existing credit facility. Repurchases will be made proportionately pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. between shares of the two classes of common stock. As of June 30, 2001, there are 53.3 million shares of Gartner Class A common stock and 32.6 million shares of Gartner Class B common stock outstanding. Regina Regina (rĭjī`nə), city (1991 pop. 179,178), provincial capital, S Sask., Canada, on Wascana Creek. The city is the distribution and service center for one of the world's largest wheat-growing areas. M. Paolillo, Chief Financial Officer of Gartner, said, "We remain highly focused on shareholder value. This share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, combined with our strategy for profitable revenue growth and a rigorous focus on costs, is an excellent investment of available funds." Other On July July: see month. 2, 2001, the Company completed the sale of its subsidiary TechRepublic TechRepublic is a technology news site run by CNET Networks, and is led by Stephen Howard-Sarin, vice-president of CNET.[1] TechRepublic's news articles are targeted towards professionals in the IT sector.[2] References 1. to CNET (body) CNET - Centre national d'Etudes des Telecommunications. The French national telecommunications research centre at Lannion. Networks for $23.0 million in cash and common stock. On June 29, 2001, the Company re-acquired 1.2 million shares of Class A common stock for approximately $9.7 million through the early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of a previously existing forward purchase agreement. Also during the quarter, the Company recorded other charges of $31.1 million, of which $25.5 million relates to the reduction in workforce and $5.6 million relates primarily to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of a discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: business and other restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and advisory costs. Business Outlook The following is the Company's guidance for fiscal 2001, which is unchanged from previous guidance. These business outlook statements are based on current expectations and should be considered forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. ; actual results may differ materially. These statements do not include the potential impact of any business risks, opportunities or developments that may occur after June 30, 2001. See the discussion below. Readers are also strongly encouraged to read the full cautionary statements included in this release and in the Company's SEC filings. -- The Company is targeting total revenue to increase to approximately $950 to $975 million in fiscal 2001. -- Research revenue is targeted to increase approximately 5% to 7%, consulting revenue is targeted to increase approximately 25% to 30%, and events is targeted to be up approximately 20% to 25%. -- Diluted EPS (exclusive of non-recurring items and the "as if" effect of the Silver Lake convertible bond) is targeted to be in the range of $0.42 to $0.50. -- EBITDA is targeted to be approximately $135 to $145 million. Fleisher concluded, "The power of Gartner's diversified diversified (di·verˑ·s portfolio is even more evident as decisions get more difficult. We believe the intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: scrutiny on IT spending plays right to Gartner's strengths: scale, market leadership, strong brand franchise, global presence, independence and objectivity. The sustainability of our results is due in no small part to the strong, long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. relationships we've cultivated cultivated, n in herbal medicine, used to describe plants that are commercially farmed rather than collected from the wild. with our clients. And our clients, whether technology professionals or business executives, continue to rely upon Gartner." Conference Call Information The Company has scheduled a conference call with investors at 10:00 a.m. ET on Thursday, July 19, 2001, to discuss the Company's financial results. The conference call will also be available via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by accessing the "About Gartner" section of Gartner's web site at www.gartner.com. A replay of the webcast will be available for 30 days following the call. About Gartner Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients understand technology and drive business growth. Gartner's divisions consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut Stamford is a city in Fairfield County, Connecticut, United States. According to 2006 Census Bureau estimates, the population of the city is 119,261, making it the fourth largest city in the state. , and has 4,600 associates, including 1,400 research analysts and consultants, in more than 80 locations worldwide. The Company achieved fiscal 2000 revenue of $859 million. For more information, visit www.gartner.com. Certain statements contained herein, including statements regarding the Company's business outlook, the development of the Company's services, markets and future demand for the Company's services and other statements regarding matters that are not historical facts, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. (as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995). Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual results to differ materially include, but are not limited to, ability to attract and retain professional staff of research analysts and consultants upon whom the Company is dependent; ability to achieve and effectively manage growth, particularly as the Company seeks to reduce its overall workforce; ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of adverse economic conditions and competitive pressures; ability to integrate operations of possible acquisitions; ability to carry out the Company's strategic initiatives and manage associated costs; ability to manage the Company's strategic partnerships; rapid technological advances which may provide increased indirect competition to the Company from a variety of sources; substantial competition from existing competitors and potential new competitors; risks associated with intellectual property rights important to the Company's products and services; additional risks associated with international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. including foreign currency fluctuations; and other risks listed from time to time in the Company's reports filed with the Securities and Exchange Commission. Forward-looking statements included herein speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" and the Company undertakes no obligation to revise or update such statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events or circumstances.
GARTNER, INC.
CONSOLIDATED INCOME STATEMENT
(Unaudited, dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
------------------ -----------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
--------- --------- --------- ---------
REVENUES:
Research $ 133,203 $ 125,531 6% $ 405,130 $ 381,134 6%
Consulting 71,644 53,087 35% 190,136 140,700 35%
Events 39,126 34,940 12% 118,961 95,188 25%
Other 3,593 7,267 -51% 13,710 20,018 -32%
--------- --------- --------- ---------
Total
revenues 247,566 220,825 12% 727,937 637,040 14%
--------- --------- --------- ---------
OPERATING
EXPENSES: (1)
Cost of
services &
product
development 112,701 102,965 9% 344,669 292,426 18%
Selling,
general &
administrative 93,180 87,182 7% 278,788 248,589 12%
Amortization
of intangibles 3,052 3,333 -8% 9,531 9,642 -1%
Depreciation 11,008 7,259 52% 29,122 19,843 47%
Other charges 31,084 - U 31,084 - U
--------- --------- --------- ---------
Total operating
expenses 251,025 200,739 25% 693,194 570,500 22%
--------- --------- --------- ---------
Operating income
(loss) (3,459) 20,086 -117% 34,743 66,540 -48%
Net gain (loss)
on sale of
investments (5,451) 5,111 U (640) 18,179 U
Gain (loss) from
minority-owned
investments (6,618) 1,151 U (11,691) (227) U
Interest income
(expense), net (5,262) (6,084) 14% (15,705) (16,791) 6%
Other income
(expense) 16 (482) F (1,584) (1,927) 18%
--------- --------- --------- ---------
Income (loss)
before
provision for
income taxes (20,774) 19,782 U 5,123 65,774 -92%
Provision
(benefit) for
income taxes (10,555) 7,912 U (973) 26,236 -104%
--------- --------- --------- ---------
Income (loss)
from continuing
operations (10,219) 11,870 U 6,096 39,538 -85%
Discontinued
operations
(TechRepublic):
Loss from
discontinued
operations - (9,488) F (26,059) (17,905) U
Loss on
disposal of
discontinued
operations 1,765 - U (38,174) - U
--------- --------- --------- ---------
Loss from
discontinued
operations 1,765 (9,488) F (64,233) (17,905) U
--------- --------- --------- ---------
Net income
(loss) $ (8,454) $ 2,382 U $ (58,137) $ 21,633 U
========= ========= ========= =========
Basic earnings
per common share:
Income (loss)
from
continuing
operations $ (0.12) $ 0.14 U $ 0.07 $ 0.45 -84%
Loss from
discontinued
operations - $ (0.11) F (0.30) (0.21) 43%
Loss on
disposal of
discontinued
operations 0.02 - U (0.44) - U
--------- --------- --------- ---------
Total $ (0.10) $ 0.03 U $ (0.67) $ 0.25 U
========= ========= ========= =========
Diluted earnings
per common share:
Income (loss)
from continuing
operations $ (0.12) $ 0.13 U $ 0.07 $ 0.44 -84%
Loss from
discontinued
operations - (0.11) F (0.30) (0.20) 50%
Loss on
disposal of
discontinued
operations 0.02 - U (0.44) - U
--------- --------- --------- ---------
Total $ (0.10) $ 0.03 U $ (0.67) $ 0.24 U
========= ========= ========= =========
Weighted avg.
common shares
outstanding
Basic 86,341 86,291 - 86,313 87,289 -1%
Diluted 86,341 88,757 -3% 86,933 89,984 -3%
SUPPLEMENTAL
INFORMATION
EBITDA
(excluding
other charges) $ 41,685 $ 30,678 36% $ 104,480 $ 96,025 9%
Normalized EPS (2) $ 0.16 $ 0.09 78% $ 0.35 $ 0.32 9%
FOOTNOTES
(1) Operating expenses in the first and second quarters of fiscal 2000
have been restated to reflect the reclassification of the one-time
retention payments as components of cost of services & product
development and selling, general & administrative expenses.
(2) Normalized EPS is based on net income from continuing operations,
excluding other charges, net loss on sale of investments, loss
from minority-owned investments, and certain tax benefits.
GARTNER, INC.
CONSOLIDATED BALANCE SHEET DATA
(Unaudited, dollars in thousands)
June 30, September 30,
2001 2000
---------- ------------
ASSETS
Cash $ 39,291 $ 61,698 -36%
Marketable equity securities 8 35,404 -100%
Fees receivable, net 279,862 323,849 -14%
Deferred commissions 32,061 46,756 -31%
Prepaid expenses and other
current assets 35,171 34,738 1%
Net assets of discontinued operations 22,888 76,329 -70%
---------- ------------
TOTAL CURRENT ASSETS 409,281 578,774 -29%
Property & equipment, net 103,401 88,402 17%
Intangible assets, net 230,111 237,105 -3%
Other assets 51,046 68,080 -25%
---------- ------------
TOTAL ASSETS $ 793,839 $ 972,361 -18%
========== ============
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable & accrued expenses $ 124,768 $ 191,465 -35%
Deferred revenue 332,047 384,966 -14%
Short-term debt 5,000 - U
---------- ------------
TOTAL CURRENT LIABILITIES 461,815 576,431 -20%
Other liabilities 15,877 13,856 15%
Long-term debt 321,381 307,254 5%
---------- ------------
TOTAL LIABILITIES 799,073 897,541 -11%
Total shareholders' (deficit) equity (5,234) 74,820 U
---------- ------------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 793,839 $ 972,361 -18%
========== ============
SELECTED STATISTICAL DATA June 30, 2001 June 30, 2000
(Dollars in thousands)
Research contract value $ 550,300 $ 555,983 -1%
Consulting backlog $ 97,959 $ 82,222 19%
Deferred revenue - Events $ 51,000 $ 45,396 12%
Research client organizations 9,612 9,598 --
--
BUSINESS SEGMENT DATA
(Dollars in thousands)
Direct Gross Contrib.
Revenue Expense Contribution Margin
--------- -------- ---------- ------
Three Months Ended 6/30/01
Research $ 133,203 $ 43,302 $ 89,901 67%
Consulting 71,644 42,928 28,716 40%
Events 39,126 20,852 18,274 47%
Other 3,593 3,631 (38) (1%)
--------- ---------- --------- ----
TOTAL $ 247,566 $ 110,713 $ 136,853 55%
========= ========== ========= ====
Direct Gross Contrib.
Revenue Expense Contribution Margin
--------- ---------- --------- ------
Three Months Ended 6/30/00
Research $ 125,531 $ 43,043 $ 82,488 66%
Consulting 53,087 35,656 17,431 33%
Events 34,940 19,892 15,048 43%
Other 7,267 4,279 2,988 41%
--------- ---------- --------- ----
TOTAL $ 220,825 $ 102,870 $ 117,955 53%
========= ========== ========= ====
Direct Gross Contrib.
Revenue Expense Contribution Margin
--------- ---------- -------- ------
Nine Months Ended 6/30/01
Research $ 405,130 $ 139,980 $ 265,150 65%
Consulting 190,136 133,978 56,158 30%
Events 118,961 60,993 57,968 49%
Other 13,710 12,515 1,195 9%
--------- ---------- --------- ----
TOTAL $ 727,937 $ 347,466 $ 380,471 52%
========= ========== ========= ====
Direct Gross Contrib.
Revenue Expense Contribution Margin
--------- ---------- -------- ------
Nine Months Ended 6/30/00
Research $ 381,134 $ 124,806 $ 256,328 67%
Consulting 140,700 93,018 47,682 34%
Events 95,188 49,652 45,536 48%
Other 20,018 11,267 8,751 44%
--------- ---------- --------- ----
TOTAL $ 637,040 $ 278,743 $ 358,297 56%
========= ========== ========= ====
(Note: segment expenses include cost of services, depreciation and
select G&A expenses.)
|
|
Printer friendly
Cite/link
Email
Feedback
Reader Opinion