Leases

9 Months Ended

Sep. 30, 2020

The Company’s leasing activities are primarily for facilities under cancelable and non-cancelable lease agreements expiring during 2020 and through 2038. These facilities support our executive and administrative activities, sales, systems support, operations, and other functions. The Company also has leases for office equipment and other assets, which are not significant. Certain of these lease agreements include (i) renewal options to extend the lease term for up to five years and/or (ii) options to terminate the agreement within one year. Additionally, certain of the Company’s lease agreements provide standard recurring escalations of lease payments for, among other things, increases in a lessor’s maintenance costs and taxes. Under some lease agreements, the Company may be entitled to allowances, free rent, lessor-financed tenant improvements and other incentives. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company subleases certain office space that it does not intend to occupy. Such sublease arrangements expire during 2021 and through 2032 and primarily relate to facilities in Arlington, Virginia. Certain of the Company’s sublease agreements: (i) include renewal and termination options; (ii) provide for customary escalations of lease payments in the normal course of business; and (iii) grant the subtenant certain allowances, free rent, Gartner-financed tenant improvements and other incentives.

All of the Company’s leasing and subleasing activity is recognized in Selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations. 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				Nine Months Ended
	September 30,				September 30,
Description:	2020		2019		2020		2019
Operating lease cost (1)	$	34,290	$	35,443	$	107,424	$	106,958
Variable lease cost (2)	4,006		3,902		12,382		11,517
Sublease income	(6,777)		(10,205)		(28,587)		(30,767)
Total lease cost, net (3)	$	31,519	$	29,140	$	91,219	$	87,708
Cash paid for amounts included in the measurement of operating lease liabilities	$	34,763	$	32,294	$	103,725	$	100,172
Cash receipts from sublease arrangements	$	9,592	$	9,000	$	28,512	$	25,131
Right-of-use assets obtained in exchange for new operating lease liabilities	$	527	$	38,571	$	19,061	$	67,756

(1)Included in operating lease cost was $10.5 million and $10.8 million for the three months ended September 30, 2020 and 2019, respectively, and $31.7 million and $32.5 million during the nine months ended September 30, 2020, and 2019, respectively, for costs related to subleasing activities.

(2)These amounts are primarily variable lease and nonlease costs that were 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 the three and nine months ended September 30, 2020.

The table below indicates where the discounted operating lease payments from the above table are classified in the accompanying Condensed Consolidated Balance Sheet as of September 30, 2020 (in thousands).


Description:
Accounts payable and accrued liabilities	$	82,391
Operating leases - liabilities	785,705
Total operating lease liabilities per the Condensed Consolidated Balance Sheet	$	868,096

Leases


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Description:	2020		2019		2020		2019
Operating lease cost (1)	$	34,290	$	35,443	$	107,424	$	106,958
Variable lease cost (2)	4,006		3,902		12,382		11,517
Sublease income	(6,777)		(10,205)		(28,587)		(30,767)
Total lease cost, net (3)	$	31,519	$	29,140	$	91,219	$	87,708
Cash paid for amounts included in the measurement of operating lease liabilities	$	34,763	$	32,294	$	103,725	$	100,172
Cash receipts from sublease arrangements	$	9,592	$	9,000	$	28,512	$	25,131
Right-of-use assets obtained in exchange for new operating lease liabilities	$	527	$	38,571	$	19,061	$	67,756

(2)These amounts are primarily variable lease and nonlease costs that were 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 the three and nine months ended September 30, 2020.


Description:
Accounts payable and accrued liabilities	$	82,391
Operating leases - liabilities	785,705
Total operating lease liabilities per the Condensed Consolidated Balance Sheet	$	868,096