What changed in this filing

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Item 1. Financial Statements

2022-11-01 compared with 2022-08-02 · 139 added, 118 removed, 661 unchanged (28% of the section changed)

4 unchanged sentences

in thousands, except share data)

June 30, December 31,

September 30, December 31,

Current assets:

38 unchanged sentences

in thousands, except per share data)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

13 unchanged sentences

Gain on event cancellation insurance claims — — — 135,545

Other income (expense), net 8,548 ( 3,682 ) 37,754 11,808

Other income, net 8,930 211 46,684 12,019

Income before income taxes 232,062 198,833 723,072 792,773

12 unchanged sentences

in thousands)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

11 unchanged sentences

in thousands)

Three and Six Months Ended June 30, 2022

Three and Nine Months Ended September 30, 2022

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss, Net Accumulated Earnings Treasury Stock Total

12 unchanged sentences

Balance at June 30, 2022 $ 82 $ 2,136,684 $ ( 104,516 ) $ 3,426,467 $ ( 5,601,584 ) $ ( 142,867 )

Three and Six Months Ended June 30, 2021

Net income — — — 173,545 — 173,545

Other comprehensive loss — — ( 26,032 ) — — ( 26,032 )

Issuances under stock plans — 4,288 — — 706 4,994

Common share repurchases — — — — ( 95,534 ) ( 95,534 )

Stock-based compensation expense — 20,968 — — — 20,968

Balance at September 30, 2022 $ 82 $ 2,161,940 $ ( 130,548 ) $ 3,600,012 $ ( 5,696,412 ) $ ( 64,926 )

Three and Nine Months Ended September 30, 2021

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss, Net Accumulated Earnings Treasury Stock Total

12 unchanged sentences

Balance at June 30, 2021 $ 82 $ 2,031,726 $ ( 82,978 ) $ 2,690,803 $ ( 4,111,995 ) $ 527,638

Net income — — — 148,865 — 148,865

Other comprehensive loss — — ( 859 ) — — ( 859 )

Issuances under stock plans — 3,411 — — 720 4,131

Common share repurchases — — — — ( 364,694 ) ( 364,694 )

Stock-based compensation expense — 19,426 — — — 19,426

Balance at September 30, 2021 $ 82 $ 2,054,563 $ ( 83,837 ) $ 2,839,668 $ ( 4,475,969 ) $ 334,507

See the accompanying notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

in thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

49 unchanged sentences

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 and six months ended June 30, 2022 may not be indicative of the results of operations for the remainder of 2022 or beyond.

The results of operations for the three and nine months ended September 30, 2022 may not be indicative of the results of operations for the remainder of 2022 or beyond.

When used in these notes, the terms “Gartner,” the “Company,” “we,” “us,” or “our” refer to Gartner, Inc.

16 unchanged sentences

Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company’s Condensed Consolidated Balance Sheets and the total cash amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands).

June 30, December 31,

September 30, December 31,

Cash and cash equivalents $ 528,687 $ 756,493

2 unchanged sentences

Cash and cash equivalents and restricted cash $ 528,687 $ 760,602

(1) Restricted cash consists of escrow accounts established in connection with certain of the Company’s business acquisitions.

(1) Restricted cash consisted of an escrow account established in connection with the Company’s 2021 business acquisition.

Generally, such cash is restricted to use due to provisions contained in the underlying stock or asset purchase agreement.

The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims).

During the three months ended September 30, 2022, the Company paid $ 4.1 million of restricted cash for deferred

consideration related to a 2021 acquisition.

Note 2 - Acquisition provides additional information regarding the 2021 acquisition.

Revenue recognition.

8 unchanged sentences

Adoption of new accounting standards.

The Company adopted the accounting standard described below during the six months ended June 30, 2022.

The Company adopted the accounting standard described below during the nine months ended September 30, 2022.

Business Combinations — In October 2021, the FASB issued ASU No.

30 unchanged sentences

Pulse is a technology-enabled community platform.

During 2021, the Company paid $ 22.9 million in cash for Pulse after considering the cash acquired with the business, amounts held in escrow and certain other purchase price adjustments at closing.

During 2021, the Company paid $ 22.9 million in cash for Pulse after considering the cash acquired with the business, amounts held in escrow and certain other purchase price adjustments.

During the three months ended September 30, 2022, the Company paid $ 4.1 million of deferred consideration held in escrow.

In addition to the purchase price, the Company may also be required to pay up to $ 4.5 million in cash based on the continuing employment of certain key employees.

Such amount will be recognized as compensation expense over three years and reported in Acquisition and integration charges in the Condensed Consolidated Statements of Operations.

Such amounts are recognized as compensation expense over three years post-acquisition and reported in Acquisition and integration charges in the Condensed Consolidated Statements of Operations.

The Company recorded $ 31.0 million of goodwill and finite-lived intangible assets and $ 1.1 million of liabilities on a net basis for the Pulse acquisition.

9 unchanged sentences

Subsequent to completing the 2022 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 six months ended June 30, 2022 (in thousands).

The table below presents changes to the carrying amount of goodwill by segment during the nine months ended September 30, 2022 (in thousands).

Research Conferences Consulting Total

1 unchanged sentence

Foreign currency translation impact ( 12,751 ) ( 148 ) ( 2,278 ) ( 15,177 )

Balance at June 30, 2022 (1) $ 2,664,139 $ 183,942 $ 95,176 $ 2,943,257

Balance at September 30, 2022 (1) $ 2,658,183 $ 183,873 $ 94,084 $ 2,936,140

(1) The Company does no t have any accumulated goodwill impairment losses.

1 unchanged sentence

The tables below present reconciliations of the carrying amounts of the Company’s finite-lived intangible assets as of the dates indicated (in thousands).

June 30, 2022 Customer

September 30, 2022 Customer

Relationships Technology-related Other Total

3 unchanged sentences

Accumulated amortization (1) ( 454,382 ) ( 43,189 ) ( 5,352 ) ( 502,923 )

Balance at June 30, 2022 $ 620,098 $ 19,935 $ 5,335 $ 645,368

Balance at September 30, 2022 $ 581,610 $ 17,139 $ 5,084 $ 603,833

December 31, 2021 Customer

7 unchanged sentences

and Other— 4 to 11 years.

Amortization expense related to finite-lived intangible assets was $ 24.8 million and $ 26.2 million during the three months ended June 30, 2022 and 2021, respectively, and $ 49.9 million and $ 56.7 million during the six months ended June 30, 2022 and 2021, respectively.

Amortization expense related to finite-lived intangible assets was $ 24.4 million and $ 27.1 million during the three months ended September 30, 2022 and 2021, respectively, and $ 74.3 million and $ 83.8 million during the nine months ended September 30, 2022 and 2021, respectively.

The estimated future amortization expense by year for finite-lived intangible assets is presented in the table below (in thousands).

2022 (remaining six months) $ 49,113

2022 (remaining three months) $ 23,979

Thereafter 241,221

2 unchanged sentences

By Primary Geographic Market (1)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Primary Geographic Market Research Conferences Consulting Total

3 unchanged sentences

Total revenues $ 1,147,823 $ 77,031 $ 107,014 $ 1,331,868

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Primary Geographic Market Research Conferences Consulting Total

3 unchanged sentences

Total revenues $ 1,037,124 $ 24,415 $ 94,743 $ 1,156,282

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Primary Geographic Market Research Conferences Consulting Total

3 unchanged sentences

Total revenues $ 3,426,532 $ 200,910 $ 343,687 $ 3,971,129

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Primary Geographic Market Research Conferences Consulting Total

8 unchanged sentences

By Timing of Revenue Recognition

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Timing of Revenue Recognition Research Conferences Consulting Total

2 unchanged sentences

Total revenues $ 1,147,823 $ 77,031 $ 107,014 $ 1,331,868

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Timing of Revenue Recognition Research Conferences Consulting Total

2 unchanged sentences

Total revenues $ 1,037,124 $ 24,415 $ 94,743 $ 1,156,282

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Timing of Revenue Recognition Research Conferences Consulting Total

2 unchanged sentences

Total revenues $ 3,426,532 $ 200,910 $ 343,687 $ 3,971,129

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Timing of Revenue Recognition Research Conferences Consulting Total

5 unchanged sentences

(2) The revenues in this category are recognized in connection with performance obligations that are satisfied at the point in time that the contractual deliverables are 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 were unsatisfied (or partially unsatisfied) as of June 30, 2022 was approximately $ 4.7 billion.

The Company expects to recognize $ 1.5 billion, $ 2.2 billion and $ 942.2 million of this revenue (most of which pertains to Research) during the remainder of 2022, the year ending December 31, 2023 and thereafter, respectively.

The Company expects to recognize $ 0.8 billion, $ 2.6 billion and $ 1.5 billion of this revenue (most of which pertains to Research) during the remainder of 2022, the year ending December 31, 2023 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.

6 unchanged sentences

The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers (in thousands).

June 30, December 31,

September 30, December 31,

Fees receivable, gross (1) $ 1,054,640 $ 1,371,680

8 unchanged sentences

Both situations occur before the completion of the Company’s performance obligation(s).

The Company recognized revenue of $ 956.4 million and $ 817.3 million during the three months ended June 30, 2022 and 2021, respectively, and $ 1.4 billion and $ 1.3 billion during the six months ended June 30, 2022 and 2021, respectively, that was attributable to deferred revenues that were recorded at the beginning of each such period.

The Company recognized revenue of $ 931.6 million and $ 818.4 million during the three months ended September 30, 2022 and 2021, respectively, and $ 1.8 billion and $ 1.5 billion during the nine months ended September 30, 2022 and 2021, respectively, that was attributable to deferred revenues that were recorded at the beginning of each such period.

Those amounts primarily consisted of Research revenues that were recognized ratably as control of the goods or services passed to the customer during the reporting periods.

During each of the three and six months ended June 30, 2022 and 2021, the Company did not record any material impairments related to its contract assets.

During each of the three and nine months ended September 30, 2022 and 2021, the Company did not record any material impairments related to its contract assets.

Note 5 — Computation of Earnings Per Share

3 unchanged sentences

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

6 unchanged sentences

(1) Certain outstanding awards associated with stock-based compensation plans were not included in the computation of diluted income per share because the effect would have been anti-dilutive.

These anti-dilutive outstanding awards associated with stock-based compensation plans totaled approximately 0.4 million and 0.1 million for the three months ended June 30, 2022 and 2021, respectively, and 0.3 million and 0.1 million for the six months ended June 30, 2022 and 2021, respectively.

These anti-dilutive outstanding awards associated with stock-based compensation plans totaled approximately 0.1 million for both of the three and nine months ended September 30, 2022.

For both of the three and nine months ended September 30, 2021, the number of anti-dilutive shares was de minimis.

Note 6 — Stock-Based Compensation

1 unchanged sentence

The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents.

As of June 30, 2022, the Company had 3.9 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”).

As of September 30, 2022, the Company had 3.9 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”).

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

Award type 2022 2021 2022 2021

3 unchanged sentences

Total (1) $ 21.0 $ 19.4 $ 77.6 $ 81.7

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

Expense category line item 2022 2021 2022 2021

2 unchanged sentences

Total (1) (2) $ 21.0 $ 19.4 $ 77.6 $ 81.7

(1) Includes costs of $ 8.1 million and $ 11.3 million during the three months ended June 30, 2022 and 2021, respectively, and $ 27.3 million and $ 32.8 million during the six months ended June 30, 2022 and 2021, respectively, for awards to retirement-eligible employees.

(1) Includes costs of $ 5.4 million and $ 5.5 million during the three months ended September 30, 2022 and 2021, respectively, and $ 32.7 million and $ 38.3 million during the nine months ended September 30, 2022 and 2021, respectively, for awards to retirement-eligible employees.

Those awards vest on an accelerated basis.

3 unchanged sentences

In deciding to exercise this discretion to adjust the PSU 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 six months ended June 30, 2021.

As a result of the modification, the Company recognized $ 6.5 million of incremental compensation cost during the nine months ended September 30, 2021.

Note 7 — Segment Information

14 unchanged sentences

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

Three Months Ended June 30, 2022 Research Conferences Consulting Consolidated

Three Months Ended September 30, 2022 Research Conferences Consulting Consolidated

Revenues $ 1,147,823 $ 77,031 $ 107,014 $ 1,331,868

2 unchanged sentences

Operating income $ 253,418

Three Months Ended June 30, 2021 Research Conferences Consulting Consolidated

Three Months Ended September 30, 2021 Research Conferences Consulting Consolidated

Revenues $ 1,037,124 $ 24,415 $ 94,743 $ 1,156,282

2 unchanged sentences

Operating income $ 230,221

Six Months Ended June 30, 2022 Research Conferences Consulting Consolidated

Nine Months Ended September 30, 2022 Research Conferences Consulting Consolidated

Revenues $ 3,426,532 $ 200,910 $ 343,687 $ 3,971,129

2 unchanged sentences

Operating income $ 767,787

Six Months Ended June 30, 2021 Research Conferences Consulting Consolidated

Nine Months Ended September 30, 2021 Research Conferences Consulting Consolidated

Revenues $ 3,020,094 $ 107,396 $ 300,149 $ 3,427,639

3 unchanged sentences

The table below provides a reconciliation of total segment gross contribution to net income for the periods indicated (in thousands).

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

15 unchanged sentences

The Company’s total outstanding borrowings are summarized in the table below (in thousands).

June 30, December 31,

September 30, December 31,

Description 2022 2021

11 unchanged sentences

Net balance sheet carrying amount $ 2,462,188 $ 2,462,764

(1) The contractual annualized interest rate as of June 30, 2022 on the 2020 Credit Agreement Term loan facility and the Revolving credit facility was 3.06 %, which consisted of a floating Eurodollar base rate of 1.688 % plus a margin of 1.375 %.

(1) The contractual annualized interest rate as of September 30, 2022 on the 2020 Credit Agreement Term loan facility and the Revolving credit facility was 4.50 %, which consisted of a floating Eurodollar base rate of 3.125 % 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 June 30, 2022.

(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 September 30, 2022.

(3) Consists of $ 800.0 million principal amount of 2028 Notes outstanding.

5 unchanged sentences

(6) 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 $ 0.3 million as of June 30, 2022 bears interest at a fixed rate of 3.00 %.

One of the loans originated in 2012, has a 10 -year maturity and the outstanding balance of $ 0.1 million as of September 30, 2022 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.

(7) The weighted average annual effective rate on the Company’s outstanding debt for the three and six months ended June 30, 2022, including the effects of its interest rate swaps discussed below, was 4.55 % and 4.70 %, respectively.

(7) The weighted average annual effective rate on the Company’s outstanding debt for the three and nine months ended September 30, 2022, including the effects of its interest rate swaps discussed below, was 4.68 % and 4.69 %, respectively.

(8) Deferred financing fees are being amortized to Interest expense, net over the term of the related debt obligation.

26 unchanged sentences

The 2020 Credit Agreement contains certain customary restrictive loan covenants, including, among others, financial covenants that apply a maximum consolidated leverage ratio and a minimum consolidated interest expense coverage ratio.

The Company was in compliance with all financial covenants as of June 30, 2022.

The Company was in compliance with all financial covenants as of September 30, 2022.

The Term loan is being repaid in consecutive quarterly installments that commenced on December 31, 2020, plus a final payment to be made on September 28, 2025.

1 unchanged sentence

Interest Rate Swaps

As of June 30, 2022, the Company had one fixed-for-floating interest rate swap contract with a notional value of $ 350.0 million that matures in 2025.

As of September 30, 2022, the Company had one fixed-for-floating interest rate swap contract with a notional value of $ 350.0 million that matures in 2025.

The Company pays a base fixed rate of 3.04 % and in return receives a floating Eurodollar base rate on 30 -day notional borrowings.

2 unchanged sentences

Effective June 30, 2020, the Company de-designated all of its interest rate swaps and discontinued hedge accounting.

Accordingly, subsequent changes to the fair value of the interest rate swaps are recorded in Other income (expense), net.

Accordingly, subsequent changes to the fair value of the interest rate swaps are recorded in Other income, 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 June 30, 2022, $ 62.6 million is remaining in Accumulated other comprehensive loss, net.

The interest rate swaps had negative unrealized fair values (liabilities) of $ 1.7 million and $ 53.7 million as of June 30, 2022 and December 31, 2021, respectively, of which $ 47.1 million and $ 56.3 million were recorded in Accumulated other comprehensive loss, net of tax effect, as of June 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022, $ 57.5 million is remaining in Accumulated other comprehensive loss, net.

The interest rate swaps had an unrealized fair value of $ 10.3 million and a negative unrealized fair value (liability) of $ 53.7 million as of September 30, 2022 and December 31, 2021, respectively, of which $ 43.2 million and $ 56.3 million were recorded in Accumulated other comprehensive loss, net of tax effect, as of September 30, 2022 and December 31, 2021, respectively.

See Note 12 — Fair Value Disclosures for the determination of the fair values of Company’s interest rate swaps.

3 unchanged sentences

The Board authorized incremental share repurchases of up to an additional $ 1.6 billion and $ 1.0 billion of the Company’s common stock during 2021 and the first half of 2022, respectively.

As of June 30, 2022, $ 704.4 million remained available under the share repurchase program.

As of September 30, 2022, $ 612.8 million remained available under the share repurchase program.

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.

2 unchanged sentences

The Company’s share repurchase activity is presented in the table below for the periods indicated.

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

1 unchanged sentence

Cash paid for repurchased shares (in thousands) (2) $ 96,534 $ 355,458 $ 1,026,414 $ 1,438,808

(1) The average purchase price for repurchased shares was $ 265.98 and $ 218.33 for the three months ended June 30, 2022 and 2021, respectively, and $ 274.84 and $ 202.28 for the six months ended June 30, 2022 and 2021, respectively.

The repurchased shares during the three and six months ended June 30, 2022 and 2021 included purchases for both open market purchases and stock-based compensation award settlements.

(2) The cash paid for repurchased shares during the six months ended June 30, 2022 excluded $ 7.0 million of open market purchases with trade dates in June 2022 that settled in July 2022.

The cash paid for repurchased shares during the six months ended June 30, 2021 included $ 8.0 million of open market purchases with trade dates in December 2020 that settled in January 2021 and excluded $ 10.8 million of open market purchases with trade dates in June 2021 that settled in July 2021.

The cash paid for repurchased shares during the three months ended June 30, 2022 included $ 12.1 million of open market purchases with trade dates in March 2022 that settled in April 2022, and excluded $ 7.0 million of open market purchases with trade dates in June 2022 that settled in July 2022.

The cash paid for repurchased shares during the three months ended

June 30, 2021 included $ 20.0 million of open market purchases with trade dates in March 2021 that settled in April 2021, and excluded $ 10.8 million of open market purchases with trade dates in June 2021 that settled in July 2021.

(1) The average purchase price for repurchased shares was $ 254.71 and $ 290.54 for the three months ended September 30, 2022 and 2021, respectively, and $ 272.84 and $ 219.00 for the nine months ended September 30, 2022 and 2021, respectively.

The repurchased shares during the three and nine months ended September 30, 2022 and 2021 included purchases for both open market purchases and stock-based compensation award settlements.

(2) The cash paid for repurchased shares during the nine months ended September 30, 2022 excluded $ 6.0 million of open market purchases with trade dates in September 2022 that settled in October 2022.

The cash paid for repurchased shares during the nine months ended September 30, 2021 included $ 8.0 million of open market purchases with trade dates in December 2020 that settled in January 2021 and excluded $ 20.0 million of open market purchases with trade dates in September 2021 that settled in October 2021.

The cash paid for repurchased shares during the three months ended September 30, 2022 included $ 7.0 million of open market purchases with trade dates in June 2022 that settled in July 2022, and excluded $ 6.0 million of open market purchases with trade dates in September 2022 that settled in October 2022.

The cash paid for repurchased shares during the three months ended September 30, 2021 included $ 10.8 million of open market purchases with trade dates in June 2021 that settled in July 2021, and excluded $ 20.0 million of open market purchases with trade dates in September 2021 that settled in October 2021.

Accumulated Other Comprehensive Loss, net (“AOCL”)

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

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Interest Rate

2 unchanged sentences

Adjustments Total

Balance – March 31, 2022 $ ( 50,953 ) $ ( 6,624 ) $ ( 25,234 ) $ ( 82,811 )

Balance – June 30, 2022 $ ( 47,084 ) $ ( 6,767 ) $ ( 50,665 ) $ ( 104,516 )

Other comprehensive income (loss) activity during the period:

2 unchanged sentences

Other comprehensive income (loss), net 3,886 43 ( 29,961 ) ( 26,032 )

Balance – June 30, 2022 $ ( 47,084 ) $ ( 6,767 ) $ ( 50,665 ) $ ( 104,516 )

Three Months Ended June 30, 2021

Balance – September 30, 2022 $ ( 43,198 ) $ ( 6,724 ) $ ( 80,626 ) $ ( 130,548 )

Three Months Ended September 30, 2021

Interest Rate

2 unchanged sentences

Adjustments Total

Balance – March 31, 2021 $ ( 72,834 ) $ ( 9,206 ) $ ( 11,138 ) $ ( 93,178 )

Other comprehensive income activity during the period:

Balance – June 30, 2021 $ ( 67,377 ) $ ( 9,102 ) $ ( 6,499 ) $ ( 82,978 )

Other comprehensive income (loss) activity during the period:

Change in AOCL before reclassifications to income — — ( 6,488 ) ( 6,488 )

Reclassifications from AOCL to income (2), (3) 5,529 100 — 5,629

Other comprehensive income, net 5,457 104 4,639 10,200

Balance – June 30, 2021 $ ( 67,377 ) $ ( 9,102 ) $ ( 6,499 ) $ ( 82,978 )

Six Months Ended June 30, 2022

Other comprehensive income (loss), net 5,529 100 ( 6,488 ) ( 859 )

Balance – September 30, 2021 $ ( 61,848 ) $ ( 9,002 ) $ ( 12,987 ) $ ( 83,837 )

Nine Months Ended September 30, 2022

Interest Rate

7 unchanged sentences

Other comprehensive income (loss), net 13,125 ( 52 ) ( 62,190 ) ( 49,117 )

Balance – June 30, 2022 $ ( 47,084 ) $ ( 6,767 ) $ ( 50,665 ) $ ( 104,516 )

Six Months Ended June 30, 2021

Balance – September 30, 2022 $ ( 43,198 ) $ ( 6,724 ) $ ( 80,626 ) $ ( 130,548 )

Nine Months Ended September 30, 2021

Interest Rate

3 unchanged sentences

Balance – December 31, 2020 $ ( 78,104 ) $ ( 9,309 ) $ ( 11,815 ) $ ( 99,228 )

Other comprehensive income activity during the period:

Other comprehensive income (loss) activity during the period:

Change in AOCL before reclassifications to income — — ( 1,172 ) ( 1,172 )

Reclassifications from AOCL to income (2), (3) 16,256 307 — 16,563

Other comprehensive income, net 10,727 207 5,316 16,250

Balance – June 30, 2021 $ ( 67,377 ) $ ( 9,102 ) $ ( 6,499 ) $ ( 82,978 )

Other comprehensive income (loss), net 16,256 307 ( 1,172 ) 15,391

Balance – September 30, 2021 $ ( 61,848 ) $ ( 9,002 ) $ ( 12,987 ) $ ( 83,837 )

(1) Amounts in parentheses represent debits (deferred losses).

(2) $ 5.1 million and $ 7.3 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the three months ended June 30, 2022 and 2021, respectively.

$ 12.3 million and $ 14.3 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the six months ended June 30, 2022 and 2021, respectively.

(2) $ 5.2 million and $ 7.4 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the three months ended September 30, 2022 and 2021, respectively.

$ 17.5 million and $ 21.7 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the nine months ended September 30, 2022 and 2021, respectively.

See Note 8 — Debt and Note 11 — 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 June 30, 2022 that is expected to be reclassified into earnings within the next 12 months is $ 20.5 million.

(3) The reclassifications related to defined benefit pension plans were recorded in Other income, 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 September 30, 2022 that is expected to be reclassified into earnings within the next 12 months is $ 20.3 million.

Note 10 — Income Taxes

The provision for income taxes was $ 71.0 million and $ 108.0 million for the three months ended June 30, 2022 and 2021, respectively, and $ 113.6 million and $ 158.6 million for the six months ended June 30, 2022 and 2021, respectively.

The effective income tax rate was 25.7 % and 28.5 % for the three months ended June 30, 2022 and 2021, respectively, and 23.1 % and 26.7 % for the six months ended June 30, 2022 and 2021, respectively.

During the second quarter of 2021, the United Kingdom enacted legislation raising its corporate tax rate from 19% to 25% effective April 2023, which led to a higher effective income tax rate for the three and six months ended June 30, 2021 as compared to the same periods in 2022.

The Company had gross unrecognized tax benefits of $ 155.8 million on June 30, 2022 and $ 150.0 million on December 31, 2021.

The provision for income taxes was $ 58.5 million and $ 50.0 million for the three months ended September 30, 2022 and 2021, respectively, and $ 172.1 million and $ 208.6 million for the nine months ended September 30, 2022 and 2021, respectively.

The effective income tax rate was 25.2 % and 25.1 % for the three months ended September 30, 2022 and 2021, respectively, and 23.8 % and 26.3 % for the nine months ended September 30, 2022 and 2021, respectively.

During the second quarter of 2021, the United Kingdom enacted legislation raising its corporate tax rate from 19% to 25% effective April 2023, which led to a higher effective income tax rate for the nine months ended September 30, 2021 as compared to the same period in 2022.

The Company had gross unrecognized tax benefits of $ 158.2 million on September 30, 2022 and $ 150.0 million on December 31, 2021.

It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $ 30.9 million within the next twelve months due to the anticipated closure of audits and the expiration of certain statutes of limitation.

3 unchanged sentences

The tables below provide information regarding the Company’s outstanding derivative contracts as of the dates indicated (in thousands, except for number of contracts).

June 30, 2022

September 30, 2022

Derivative Contract Type Number of

5 unchanged sentences

in AOCL, net of tax

Interest rate swaps (1) 1 $ 350,000 $ ( 1,684 ) Other liabilities $ ( 47,084 )

Interest rate swaps (1) 1 $ 350,000 $ 5,915 Other assets $ ( 43,198 )

4,351 Other current assets

Foreign currency forwards (2) 34 220,831 ( 259 ) Accrued liabilities —

12 unchanged sentences

(1) Effective June 30, 2020, the Company de-designated all of its interest rate swaps and discontinued hedge accounting.

Accordingly, subsequent changes to fair value of the interest rate swaps are recorded in Other income (expense), net.

Accordingly, subsequent changes to fair value of the interest rate swaps are recorded in Other income, 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.

2 unchanged sentences

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 June 30, 2022 matured before July 31, 2022.

These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income, net because the Company does not designate these contracts as hedges for accounting purposes.

All of the outstanding foreign currency forward exchange contracts at September 30, 2022 matured before October 31, 2022.

(3) See Note 12 — Fair Value Disclosures for the determination of the fair values of these instruments.

At June 30, 2022, all of the Company’s derivative counterparties were investment grade financial institutions.

At September 30, 2022, 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

Amount recorded in:

2 unchanged sentences

Other expense (income), net (2) 1,295 2,558 ( 17,456 ) ( 11,771 )

Total expense (income), net $ 13,313 $ 8,777 $ ( 6,421 ) $ ( 14 )

Total expense, net $ 6,480 $ 9,938 $ 59 $ 9,924

(1) Consists of interest expense from interest rate swap contracts.

2 unchanged sentences

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 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 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.

15 unchanged sentences

The table below presents the fair values of certain financial assets and liabilities that are measured at fair value on a recurring basis in the Company's financial statements (in thousands).

Description June 30,

Description September 30,

2022 December 31,

5 unchanged sentences

Foreign currency forward contracts (2) 48 1,122

Interest rate swap contracts (3) 10,266 —

Total Level 2 inputs 85,705 97,749

18 unchanged sentences

Carrying Amount Fair Value

June 30, December 31, June 30, December 31,

September 30, December 31, September 30, December 31,

Description 2022 2021 2022 2021

5 unchanged sentences

The Company’s certain long-lived assets, including identifiable intangible assets, goodwill, right-of-use assets and other long-lived assets, are measured at fair value on a nonrecurring basis when there are indicators of impairment.

During the three and six months ended June 30, 2022, the Company recorded impairment charges of $ 11.6 million and $ 35.5 million, respectively, on right-of-use assets and other long-lived assets primarily related to certain office leases that the Company determined will no longer be used.

During the three and nine months ended September 30, 2022, the Company recorded impairment charges of $ 2.0 million and $ 37.5 million, respectively, on right-of-use assets and other long-lived assets primarily related to certain office leases that the Company determined will no longer be used.

The impairments were derived by comparing the fair value of the impacted assets to the carrying value of those assets as of the impairment measurement date, as required under ASC Topic 360 using Level 3 inputs.

10 unchanged sentences

Historically, payments made by the Company under these agreements have not been material.

As of June 30, 2022, the Company did not have any material payment obligations under any such indemnification agreements.

As of September 30, 2022, the Company did not have any material payment obligations under any such indemnification agreements.

Note 14 — Leases

14 unchanged sentences

The table below presents the Company’s net lease cost and certain other information related to the Company’s leasing activities as of and for the periods indicated (dollars in thousands).

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

September 30,

2022 2021 2022 2021

6 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities $ 7,438 $ 18,787 $ 19,120 $ 28,081

(1) Included in operating lease cost was $ 10.4 million and $ 10.7 million for the three months ended June 30, 2022 and 2021, respectively, and $ 20.9 million and $ 21.1 million for the six months ended June 30, 2022 and 2021, respectively for costs related to subleasing activities.

(1) Included in operating lease cost was $ 10.4 million and $ 10.6 million for the three months ended September 30, 2022 and 2021, respectively, and $ 31.3 million and $ 31.8 million for the nine months ended September 30, 2022 and 2021, respectively, for costs related to subleasing activities.

(2) These amounts are primarily variable lease and nonlease costs that are not fixed at the lease commencement date or are dependent on something other than an index or a rate.

(3) The Company did not capitalize any operating lease costs during any of the periods presented.

(4) Amount excludes an impairment charge of lease related assets totaling $ 11.6 million and $ 35.5 million, for the three and six months ended June 30, 2022, as discussed below.

(4) Amount excludes impairment charges on lease related assets totaling $ 2.0 million and $ 37.5 million, for the three and nine months ended September 30, 2022, respectively, as discussed below.

The table below indicates where the discounted operating lease payments from the above table are classified in the accompanying Condensed Consolidated Balance Sheets (in thousands).

June 30, December 31,

September 30, December 31,

Accounts payable and accrued liabilities $ 97,370 $ 89,754

1 unchanged sentence

Total operating lease liabilities included in the Condensed Consolidated Balance Sheets $ 711,812 $ 787,520

During the six months ended June 30, 2022, as a result and in consideration of the changing nature of the Company’s use of office space for its workforce and the impacts of the COVID-19 pandemic, the Company continued to evaluate its existing real estate lease portfolio.

During the nine months ended September 30, 2022, as a result and in consideration of the changing nature of the Company’s use of office space for its workforce and the impacts of the COVID-19 pandemic, the Company continued to evaluate its existing real estate lease portfolio.

This evaluation included the decision to abandon a portion of one leased office space and the cease-use of certain other leased office spaces that the Company intends to sublease.

In connection with this evaluation, the Company reviewed certain of its right-of-use assets and related other long-lived assets for impairment under ASC 360.

As a result of the evaluation, the Company recognized impairment losses during the three and six months ended June 30, 2022 of $ 11.6 million and $ 35.5 million, respectively, which is included as a component of Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

The impairment losses recorded include $ 7.6 million and $ 25.3 million related to right-of-use assets for the three and six months ended June 30, 2022, respectively.

The impairment losses also include $ 4.0 million and $ 10.2 million related to other long-lived assets, primarily leasehold improvements, for the three and six months ended June 30, 2022, respectively.

As a result of the evaluation, the Company recognized impairment losses during the three and nine months ended September 30, 2022 of $ 2.0 million and $ 37.5 million, respectively, which is included as a component of Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

The impairment losses recorded include $ 1.7 million and $ 27.0 million related to right-of-use assets for the three and nine months ended September 30, 2022, respectively.

The impairment losses also include $ 0.3 million and $ 10.5 million related to other long-lived assets, primarily leasehold improvements, for the three and nine months ended September 30, 2022, respectively.

The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs.

The significant assumptions used in estimating fair values include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates that reflect the level of risk associated with receiving future cash flows.

The significant assumptions used in estimating fair values include the

expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates that reflect the level of risk associated with receiving future cash flows.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements