Acquisition

9 Months Ended

Sep. 30, 2012

Business Combination Disclosure [Text Block]

Note 2 — Acquisition

On May 31, 2012, the Company acquired Ideas International Limited (“Ideas International”), a publicly-owned Australian corporation (ASX: IDE) headquartered outside of Sydney with 40 employees that provides intelligence on IT infrastructure configurations and pricing data to IT professionals. The Company paid aggregate cash consideration of $18.8 million for 100% of the outstanding shares of Ideas International. The Company’s strategic objectives in acquiring Ideas International are to leverage Gartner’s scale and worldwide distribution capability and introduce Ideas International’s products and services to Gartner’s much larger end user client base and to further penetrate the technology vendor market. Ideas International’s business operations have been integrated into the Company’s Research segment.

Gartner’s financial statements include the operating results of Ideas International beginning with the date of acquisition. These operating results were not material to the Company’s consolidated or segment operating results for the three and nine months ended September 30, 2012. The Company recorded $0.9 million and $2.1 million of pre-tax acquisition and integration charges related to the acquisition in the three and nine months ended September 30, 2012, respectively, which are classified in Acquisition and integration charges in the Condensed Consolidated Statements of Operations. Included in these charges are legal, consulting, and severance costs, all of which were direct and incremental charges from the acquisition. Had the Company acquired Ideas International on January 1, 2010, the impact to the Company’s operating results for 2011 and 2010 would not have been material, and as a result pro forma financial information for those periods has not been presented.

The acquisition was accounted for under the acquisition method of accounting as prescribed by FASB ASC Topic 805, Business Combinations. The acquisition method of accounting requires the consideration paid to be allocated to the net assets and liabilities acquired based on their estimated fair values as of the acquisition date, and any excess of the purchase price over the estimated fair value of the net assets acquired, including identifiable intangible assets, must be allocated to goodwill. The Company considers its allocation of the respective purchase price to be preliminary, particularly with respect to the valuation of certain tax related items. In accordance with FASB ASC Topic 805, a final determination of the purchase price allocation and resulting goodwill must be made within one year of the acquisition date. The Company anticipates that none of the recorded goodwill arising from the acquisition will be deductible for tax purposes. All of the recorded goodwill was included in the Company’s Research segment. The Company believes the recorded goodwill is supported by the anticipated revenues related to the acquisition.

The following table summarizes the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed in the acquisition (dollars in thousands):

Assets:
Cash	$	8,502
Fees receivable		1,310
Prepaid expenses and other current assets		560
Goodwill and amortizable intangible assets (1)		15,990
Total assets	$	26,362
Liabilities:
Accounts payable and accrued liabilities	$	2,203
Deferred revenues (2)		5,321
Total liabilities	$	7,524

(1)	Includes $7.5 million allocated to goodwill and $8.5 million allocated to amortizable intangible assets. See Note 6—Goodwill and Intangible Assets below for additional information.
(2)	The fair value of the cost to fulfill the deferred revenue obligations was determined by estimating the costs to provide the services plus a normal profit margin, and did not include costs associated with selling efforts.