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| GartnerGroup Reports Second Quarter Results |
| Company Outlines Strategic Investments |
| Stamford, Conn. — October 29, 1999 — Gartner Group, Inc. (NYSE: IT, IT/B), the world's leading authority on information technology (IT), today announced results for the fourth quarter and fiscal year ended September 30, 1999. |
| For the year, ongoing revenues were up 18 percent to $734.2 million compared with $623.9 million for the corresponding period a year earlier. Net income for the period, normalized to exclude charges in both periods and a tax credit in 1999, increased 9 percent to $107.4 million from $98.2 million in the corresponding year-earlier period. Diluted earnings per share for the year ended September 30, 1999, also normalized, rose 10 percent to $1.02 from 93 cents per diluted share a year ago. |
| For the quarter, ongoing revenue was up 13 percent to $186.9 million compared with $165.8 million for the corresponding quarter a year ago. On a year-over-year basis, research revenue was up 8 percent to $122.6 million, services revenue was up 34 percent to $46.3 million, events revenue was up 35 percent to $9.4 million, and other revenue declined 24 percent during the quarter. Net income, before charges, decreased 14 percent to $20.5 million, or 20 cents per diluted share, compared with $23.9 million, or 23 cents per diluted share, in the fourth quarter of fiscal 1998. |
| The company reported charges of $24.2 million during the quarter that were related to a workforce reduction announced in August 1999, recapitalization charges related to the IMS Health spin-off, and the first of several charges related to a special incentive plan designed to enhance retention of key personnel. As a result of these and other charges taken during both comparable periods, reported net income for the quarter was $2.9 million, or 3 cents per diluted share, and for the year ended September 30, 1999, reported net income was 88.3 million, or 84 cents per diluted share. |
| GartnerGroup indicated that it plans to undertake significant additional investments in its strategic imperatives. First, the company plans to increase its investment in thought leadership by recruiting and hiring additional e-business experts to its current base of 245 e-business analysts and consultants. Second, the company will continue to aggressively invest in and grow its services business to further leverage its knowledge base and assist clients in using technology to achieve their business objectives. Third, the company will invest heavily in rearchitecting its Web delivery capability. |
| Michael Fleisher, president and chief executive officer, stated, "For 20 years, GartnerGroup has led the way in the industry it created - subscription-based IT research and advice. Today, we are building upon that strong foundation and announcing GartnerGroup Services, our world-class consulting organization. One of our clients put it best when he said, 'Advice is good. Help is better.' GartnerGroup is here to help our clients use technology to achieve their business objectives." |
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Regina Paolillo, chief financial officer, commented, "We are focusing our investments on building
our e-business capabilities and assets through people, systems and deliverables, and on
aggressively growing our services organization in response to changing client demand. This is the
time for us to invest in GartnerGroup's vast e-business and consulting opportunities." Paolillo
continued, "We believe that this strategy, appropriately funded in the range of $50 million to $60
million, will drive enhanced revenue growth in the future, but it will have a significant impact on the
EPS outlook in fiscal 2000, which we anticipate to be, excluding one-time charges, in the range of
$0.80 to $0.90." |
| Fourth Quarter Business Summary |
| — During the quarter the company concluded the IMS Health spin-off, and created a new Class B stock. Both the Class A and Class B stock are traded on the New York Stock Exchange under the ticker symbols IT and IT/B, respectively. A one-time cash dividend of $1.1945 was paid to Class A shareholders just prior to the spin-off and a stock repurchase was effected via a Dutch tender offer at a cost of $344 million. The company repurchased 15,759,279 shares. |
| — The company launched GartnerE, 33 new products for business and IT executives focused on e-business initiatives. |
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— GartnerGroup acquired The Warner Group, a management consulting firm specializing in helping
public sector clients understand and apply IT. |
| Conference Call Information |
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Institutional investors and analysts are invited to participate in a conference call hosted by
management at 8:30 a.m. EDT on Friday, October 29, 1999. The call-in number is 212-676-5225. |
| Webcast Information |
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GartnerGroup's earnings conference call will also be available via the Internet by accessing
GartnerGroup's home page at www.gartner.com, or www.vcall.com. The Webcast will be available
for a limited time. |
| New Financial Presentation Information |
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GartnerGroup has introduced a new revenue presentation beginning with the fiscal year ended
September 30, 1999. For an investor package with comparable historical information on both
revenue and new metrics, please e-mail Kendrea Smith at kendrea.smith@gartner.com |
| About GartnerGroup |
| As the world's leading authority on IT, GartnerGroup provides clients with a wide range of products and services in the areas of IT advisory services, measurement, research, decision support, analysis and consulting. Founded in 1979, with headquarters in Stamford, Conn., GartnerGroup is at the center of a global community serving Fortune 1000 companies from 80 locations worldwide. GartnerGroup's unique capabilities and resources help bring clarity to the direction of the world's hottest and most volatile industry. Additional information about the company is available on the World Wide Web at www.gartner.com. |
| Certain statements contained herein, including statements regarding 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 (as defined in the Private Securities Litigation Reform Act 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 upon whom the company is dependent, ability to effectively manage growth, the ability to achieve continued customer renewals and achieve new contract growth in light of potentially adverse economic conditions and competitive pressures, ability to integrate operations of possible acquisitions, ability to manage the company's strategic partnerships, rapid technological advances, 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 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 and the company undertakes no obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances. |
| Financial Table to Follow (pdf) |
| CONTACT: |
|
Heather McConnell Vice President, Investor Relations 203 316 6768 Email: heather.mcconnell@gartner.com |
