Debt - Interest Rate Swaps (Details)

3 Months Ended

6 Months Ended

Jun. 30, 2020

USD ($)

outstanding_contract

derivative_instrument

Jun. 30, 2020

USD ($)

outstanding_contract

derivative_instrument

Jun. 30, 2020

USD ($)

outstanding_contract

derivative_instrument

Jun. 30, 2019

USD ($)

Jun. 22, 2020

USD ($)

Dec. 31, 2019

USD ($)

outstanding_contract

Derivative [Line Items]

Number of contracts | outstanding_contract

180

Interest rate swap contracts total notional value

$ 1,582,734,000

$ 2,004,858,000

Repayments of Long-term Debt

853,094,000

$ 46,647,000

Variable rate debt

200,000,000.0

$ 200,000,000.0

Debt

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 “Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee (the “Trustee”). The 2028 Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers (as defined in the Securities Act of 1933, as amended (the “Securities Act”)) pursuant to Rule 144A under the Securities Act and outside the United States only to non-U.S. persons in accordance with Regulation S under the Securities Act.

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 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 with the proceeds of certain equity offerings at a redemption price of 104.5% plus accrued and unpaid interest to, but excluding, the redemption date. In addition, the Company may redeem some or all of the 2028 Notes prior to July 1, 2023, at a redemption price of 100.0% of the principal amount of the 2028 Notes plus accrued and unpaid interest to, but excluding, the redemption date, plus a “make-whole” premium. If the Company experiences specific kinds of change of control and a ratings decline, it will be required to offer to repurchase the 2028 Notes at a price equal to 101.0% of the principal amount thereof plus accrued and unpaid interest to, but excluding, the repurchase date.

The 2028 Notes are the Company’s general unsecured senior obligations, and are effectively subordinated to all of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s non-guarantor subsidiaries, equal in right of payment to all of the Company’s and Company’s guarantor subsidiaries’ existing and future senior indebtedness and senior in right of payment to all of the Company’s future subordinated indebtedness, if any. The 2028 Notes are jointly and severally guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries that have outstanding indebtedness or guarantee other specified indebtedness.

The Indenture contains covenants that limit, among other things, the Company’s ability and the ability of some of the Company’s subsidiaries to:

•create liens; and

•merge or consolidate with other entities.

These covenants are subject to a number of exceptions and qualifications. The Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, and interest on all the then outstanding 2028 Notes issued under the Indenture to be due and payable.

2016 Credit Agreement

The Company has a credit facility that currently provides for a $1.5 billion Term loan A facility and a $1.2 billion revolving credit facility (the "2016 Credit Agreement"). The 2016 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 full compliance with all covenants as of June 30, 2020.

The Term loan A facility is being repaid in 16 consecutive quarterly installments that commenced on June 30, 2017, plus a final payment to be made on March 20, 2022. On June 30, 2020, the Company used proceeds from the Notes offering to prepay $787.9 million outstanding under the Term loan A facility. The revolving credit facility may be borrowed, repaid and re-borrowed through March 20, 2022, at which time all then-outstanding amounts must be repaid.

On May 6, 2020, the 2016 Credit Agreement was amended with the consent of the required lenders to, among other things, modify certain financial maintenance covenants to provide additional flexibility to Gartner through December 31, 2021. The amendment increases the maximum consolidated leverage ratio to 5.00 to 1.00 and the maximum consolidated secured leverage ratio to 3.75 to 1.00 (each as determined in accordance with the 2016 Credit Agreement), in each case for fiscal quarters ending on June 30, 2020 through and including December 31, 2021. The amendment only increases the applicable margin for all outstanding Revolving Loans and Tranche A Term Loans (each as defined in the 2016 Credit Agreement) to the extent the consolidated leverage ratio (as determined in accordance with the Credit Agreement) exceeds 4.50 to 1.00.

2025 Notes

The Company has $800.0 million aggregate principal amount of 5.125% Senior Notes due 2025 (the “2025 Notes”). The 2025 Notes were issued at an issue price of 100.0% and bear interest at a fixed rate of 5.125% per annum. Interest on the Senior Notes is payable on April 1 and October 1 of each year. The Senior Notes mature on April 1, 2025.

The Company may redeem some or all of the Senior Notes at any time on or after April 1, 2020 for cash at the redemption prices set forth in the Note Indenture, plus accrued and unpaid interest to, but not including, the redemption date.

Outstanding Borrowings

The table below summarizes the Company’s total outstanding borrowings as of the dates indicated (in thousands).


	June 30,		December 31,
Description:	2020		2019
2016 Credit Agreement - Term loan A facility (1)	$	400,125	$	1,252,969
2016 Credit Agreement - Revolving credit facility (1), (2)	—		148,000
2025 Notes (3)	800,000		800,000
2028 Notes (4)	800,000		—
Other (5)	$	6,297	$	6,545
Principal amount outstanding (6)	2,006,422		2,207,514
Less: deferred financing fees (7)	$	(31,171)	$	(23,908)
Net balance sheet carrying amount	$	1,975,251	$	2,183,606

(1)The contractual annualized interest rate as of June 30, 2020 on the Term loan A facility and the revolving credit facility was 1.68%, which consisted of a floating Eurodollar base rate of 0.18% plus a margin of 1.50%. 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 $1.2 billion of available borrowing capacity on the revolver (not including the expansion feature) as of June 30, 2020.

(3)Consists of $800.0 million principal amount of 2025 Notes outstanding. The Senior Notes bear interest at a fixed rate of 5.125% and mature on April 1, 2025.

(4)Consists of $800.0 million principal amount of 2028 Notes outstanding. The Senior Notes bear interest at a fixed rate of 4.50% and mature on July 1, 2028.

(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 $1.3 million as of June 30, 2020 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 and six months ended June 30, 2020, including the effects of its interest rate swaps discussed below, was 4.28% and 4.35%, respectively.

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

Interest Rate Swaps

As of June 30, 2020, the Company had four fixed-for-floating interest rate swap contracts with a total notional value of $1.4 billion that mature through 2025. Prior to June 30, 2020, the Company designated the swaps as accounting hedges of the forecasted interest payments on its variable-rate borrowings. 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.

Prior to the prepayment of $787.9 million under the Term Loan A facility and repayment of all amounts outstanding under the Revolving credit facility on June 30, 2020, the Company accounted for its interest rate swap contracts as cash flow hedges in accordance with FASB ASC Topic 815. Because the swaps hedged forecasted interest payments, changes in the fair values of the swaps were recorded in accumulated other comprehensive income (loss), a component of stockholders' equity, as long as the swaps continued to be highly effective hedges of the designated interest rate risk. Any ineffective portion of a change in the fair value of a hedge was recorded in earnings. Upon the prepayment of $787.9 million under the Company's Term Loan A credit facility and repayment of all amounts outstanding under the Revolving credit facility, the Company determined that it was probable that forecasted interest payments on $200.0 million of variable rate debt would not occur. Additionally, as the variable rate debt under the Term A loan credit facility was replaced by $800.0 million of fixed rate debt under the 2028 Notes, the Company de-designated all of its interest rate swaps. As a result, the Company accelerated the release of $10.3 million from Accumulated other comprehensive loss, net related to the forecasted interest payments that were no longer probable. The loss was recorded in Other expense, net on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2020. The remaining $118.4 million is classified within Accumulated other comprehensive loss and will be amortized into Interest expense, net over the terms of the hedged forecasted interest payments. Subsequent changes to fair value of the interest rate swaps will be recorded in Other expense, net. The interest rate swaps had negative unrealized fair values (liabilities) of $128.7 million and $64.8 million as of June 30, 2020 and December 31, 2019, respectively, of which $89.0 million and $47.2 million were recorded in Accumulated other comprehensive loss, net of tax effect, as of June 30, 2020 and December 31, 2019, respectively. See Note 11 — Fair Value Disclosures for the determination of the fair values of Company's interest rate swaps.

Senior Notes Due 2028 | Senior Notes