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Leases | 12 Months Ended
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Dec. 31, 2020
Leases [Abstract] |
Leases | Leases The Company’s leasing activities are primarily for facilities under cancelable and non-cancelable lease agreements expiring during 2021 and through 2038. These facilities support our executive and administrative activities, research and consulting, sales, systems support, operations, and other functions. The Company also has leases for office equipment and other assets, which are not significant. Certain of the Company’s lease agreements include (i) renewal options to extend the lease term for up to ten 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. Lease Accounting under ASC 842 Under ASC 842, a lease is a contract or an agreement, or a part of another arrangement, between two or more parties that, at its inception, creates enforceable rights and obligations that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Right-of-use assets represent a right to use an underlying asset for the lease term and the related lease liability represents an obligation to make lease payments pursuant to the contractual terms of the lease agreement. Right-of-use assets and lease liabilities are initially recognized on the lease commencement date based on the present value of the lease payments over the lease term. For all of our facilities leases, we account for both lease components and nonlease components (e.g., common area maintenance charges, etc.) as a single lease component when determining the present value of our lease payments. Variable lease payments that are not dependent on an index or a rate are excluded from the determination of our right-of-use assets and lease liabilities and such payments are recognized as expense in the period when the related obligation is incurred. The Company’s lease agreements do not provide implicit interest rates. Instead, the Company uses an incremental borrowing rate determined on the lease commencement date to calculate the present value of future lease payments. The incremental borrowing rate is calculated for each individual lease and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis (in the currency that the lease is denominated) over a similar term an amount equal to the lease payments in a similar economic environment. Right-of-use assets also include any initial direct costs incurred by the Company and lease payments made to a lessor on or before the related lease commencement date, less any lease incentives received directly from the lessor. Certain of the Company’s facility lease agreements include options to extend or terminate the lease. When it is reasonably certain that the Company will exercise a renewal or termination option, the present value of the lease payments for the affected lease is adjusted accordingly. Leases with a term of twelve months or less are accounted for in the same manner as long-term lease arrangements, including any related disclosures. Lease expense for operating leases is generally recognized on a straight-line basis over the lease term, unless the related right-of-use asset was previously impaired. All of our existing sublease arrangements have been classified as operating leases with sublease income recognized on a straight-line basis over the term of the sublease arrangement. To measure the Company’s periodic sublease income, we elected to use a practical expedient under ASC 842 to aggregate nonlease components with the related lease components when (i) the timing and pattern of transfer for the nonlease components and the related lease components are the same and (ii) the lease components, if accounted for separately, would be classified as an operating lease. This practical expedient applies to all of our existing sublease arrangements. When our projected lease cost for the term of a sublease exceeds our anticipated sublease income for that same period, we treat that circumstance as an indicator that the carrying amount of the related right-of-use asset may not be fully recoverable. In those situations, we perform an impairment analysis and, if indicated, we record a charge against earnings to reduce the right-of-use asset to the amount deemed to be recoverable in the future. On the Consolidated Balance Sheet as of December 31, 2020 and 2019, right-of-use assets are classified and reported in Operating lease right-of-use assets, and the related lease liabilities are included in Accounts payable and accrued liabilities (current) and Operating lease liabilities (long-term). On the Consolidated Statement of Cash Flows for 2020 and 2019, the reduction in the carrying amount of right-of-use assets is presented separately and the change in operating lease liabilities is included under Accounts payable and accrued and other liabilities in the reconciliation of net income to cash provided by operating activities. All of the Company’s leasing and subleasing activity for 2020 and 2019 was recognized in Selling, general and administrative expense in the Consolidated Statements of Operations. The table below presents the Company’s net lease cost and certain other information related to our leasing activities as of and for the years ended December 31, 2020 and 2019 (dollars in thousands).
| Year Ended December 31,
Description | 2020 | 2019
Operating lease cost (1) | $ | 140,829 |  | $ | 144,727 |
Variable lease cost (2) | 17,463 |  | 16,404 |
Sublease income | (38,925) |  | (38,901) |
Total lease cost, net (3) | $ | 119,367 |  | $ | 122,230 |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 137,790 |  | $ | 135,799 |
Cash receipts from sublease arrangements | $ | 38,565 |  | $ | 34,441 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 27,258 |  | $ | 136,997 |
As of December 31, | 2020 | 2019
Weighted average remaining lease term for operating leases (in years) | 9.6 | 10.2
Weighted average discount rate for operating leases | 6.6 | % | 6.7 | %
(1)Included in operating lease cost was $42.2 million and $43.2 million of costs for subleasing activities during 2020 and 2019, respectively. (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 2020 or 2019. As of December 31, 2020, the (i) maturities of operating lease liabilities under non-cancelable arrangements and (ii) estimated future sublease cash receipts from non-cancelable arrangements were as follows (in thousands):
|  | Operating |  | Sublease
|  | Lease |  | Cash
Period ending December 31, |  | Payments |  | Receipts
2021 |  | $ | 138,403 |  |  | $ | 44,446 |
2022 |  | 133,854 |  |  | 47,965 |
2023 |  | 130,627 |  |  | 48,909 |
2024 |  | 120,092 |  |  | 40,629 |
2025 |  | 115,279 |  |  | 40,989 |
Thereafter |  | 549,496 |  |  | 102,510 |
Total future minimum operating lease payments and estimated sublease cash receipts (1) |  | 1,187,751 |  |  | $ | 325,448 |
Imputed interest |  | (323,590) |  |  |
Total operating lease liabilities per the Consolidated Balance Sheet |  | $ | 864,161 |  |  |
(1)Approximately 80% of the operating lease payments pertain to properties in the United States. The table below indicates where the discounted operating lease payments from the above table are classified in the Consolidated Balance Sheet (in thousands).
|  | December 31,
Description |  | 2020 |  | 2019
Accounts payable and accrued liabilities |  | $ | 83,995 |  |  | $ | 76,516 |
Operating lease liabilities |  | 780,166 |  |  | 832,533 |
Total operating lease liabilities per the Consolidated Balance Sheet |  | $ | 864,161 |  |  | $ | 909,049 |
As of December 31, 2020, the Company had additional operating leases for facilities that have not yet commenced. These operating leases, which aggregated $29.1 million of undiscounted lease payments, are scheduled to commence during 2021 with lease terms of up to thirteen years. Lease Disclosures Under ASC Topic 840 The Company’s operating lease expense under ASC Topic 840 for its facilities, office equipment and other assets was $93.5 million in 2018. The cost of such operating leases, including any contractual rent increases, rent concessions and landlord incentives, was recognized ratably over the life of the related lease agreement.
Leases | Leases The Company’s leasing activities are primarily for facilities under cancelable and non-cancelable lease agreements expiring during 2021 and through 2038. These facilities support our executive and administrative activities, research and consulting, sales, systems support, operations, and other functions. The Company also has leases for office equipment and other assets, which are not significant. Certain of the Company’s lease agreements include (i) renewal options to extend the lease term for up to ten 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. Lease Accounting under ASC 842 Under ASC 842, a lease is a contract or an agreement, or a part of another arrangement, between two or more parties that, at its inception, creates enforceable rights and obligations that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Right-of-use assets represent a right to use an underlying asset for the lease term and the related lease liability represents an obligation to make lease payments pursuant to the contractual terms of the lease agreement. Right-of-use assets and lease liabilities are initially recognized on the lease commencement date based on the present value of the lease payments over the lease term. For all of our facilities leases, we account for both lease components and nonlease components (e.g., common area maintenance charges, etc.) as a single lease component when determining the present value of our lease payments. Variable lease payments that are not dependent on an index or a rate are excluded from the determination of our right-of-use assets and lease liabilities and such payments are recognized as expense in the period when the related obligation is incurred. The Company’s lease agreements do not provide implicit interest rates. Instead, the Company uses an incremental borrowing rate determined on the lease commencement date to calculate the present value of future lease payments. The incremental borrowing rate is calculated for each individual lease and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis (in the currency that the lease is denominated) over a similar term an amount equal to the lease payments in a similar economic environment. Right-of-use assets also include any initial direct costs incurred by the Company and lease payments made to a lessor on or before the related lease commencement date, less any lease incentives received directly from the lessor. Certain of the Company’s facility lease agreements include options to extend or terminate the lease. When it is reasonably certain that the Company will exercise a renewal or termination option, the present value of the lease payments for the affected lease is adjusted accordingly. Leases with a term of twelve months or less are accounted for in the same manner as long-term lease arrangements, including any related disclosures. Lease expense for operating leases is generally recognized on a straight-line basis over the lease term, unless the related right-of-use asset was previously impaired. All of our existing sublease arrangements have been classified as operating leases with sublease income recognized on a straight-line basis over the term of the sublease arrangement. To measure the Company’s periodic sublease income, we elected to use a practical expedient under ASC 842 to aggregate nonlease components with the related lease components when (i) the timing and pattern of transfer for the nonlease components and the related lease components are the same and (ii) the lease components, if accounted for separately, would be classified as an operating lease. This practical expedient applies to all of our existing sublease arrangements. When our projected lease cost for the term of a sublease exceeds our anticipated sublease income for that same period, we treat that circumstance as an indicator that the carrying amount of the related right-of-use asset may not be fully recoverable. In those situations, we perform an impairment analysis and, if indicated, we record a charge against earnings to reduce the right-of-use asset to the amount deemed to be recoverable in the future. On the Consolidated Balance Sheet as of December 31, 2020 and 2019, right-of-use assets are classified and reported in Operating lease right-of-use assets, and the related lease liabilities are included in Accounts payable and accrued liabilities (current) and Operating lease liabilities (long-term). On the Consolidated Statement of Cash Flows for 2020 and 2019, the reduction in the carrying amount of right-of-use assets is presented separately and the change in operating lease liabilities is included under Accounts payable and accrued and other liabilities in the reconciliation of net income to cash provided by operating activities. All of the Company’s leasing and subleasing activity for 2020 and 2019 was recognized in Selling, general and administrative expense in the Consolidated Statements of Operations. The table below presents the Company’s net lease cost and certain other information related to our leasing activities as of and for the years ended December 31, 2020 and 2019 (dollars in thousands).
| Year Ended December 31,
Description | 2020 | 2019
Operating lease cost (1) | $ | 140,829 |  | $ | 144,727 |
Variable lease cost (2) | 17,463 |  | 16,404 |
Sublease income | (38,925) |  | (38,901) |
Total lease cost, net (3) | $ | 119,367 |  | $ | 122,230 |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 137,790 |  | $ | 135,799 |
Cash receipts from sublease arrangements | $ | 38,565 |  | $ | 34,441 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 27,258 |  | $ | 136,997 |
As of December 31, | 2020 | 2019
Weighted average remaining lease term for operating leases (in years) | 9.6 | 10.2
Weighted average discount rate for operating leases | 6.6 | % | 6.7 | %
(1)Included in operating lease cost was $42.2 million and $43.2 million of costs for subleasing activities during 2020 and 2019, respectively. (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 2020 or 2019. As of December 31, 2020, the (i) maturities of operating lease liabilities under non-cancelable arrangements and (ii) estimated future sublease cash receipts from non-cancelable arrangements were as follows (in thousands):
|  | Operating |  | Sublease
|  | Lease |  | Cash
Period ending December 31, |  | Payments |  | Receipts
2021 |  | $ | 138,403 |  |  | $ | 44,446 |
2022 |  | 133,854 |  |  | 47,965 |
2023 |  | 130,627 |  |  | 48,909 |
2024 |  | 120,092 |  |  | 40,629 |
2025 |  | 115,279 |  |  | 40,989 |
Thereafter |  | 549,496 |  |  | 102,510 |
Total future minimum operating lease payments and estimated sublease cash receipts (1) |  | 1,187,751 |  |  | $ | 325,448 |
Imputed interest |  | (323,590) |  |  |
Total operating lease liabilities per the Consolidated Balance Sheet |  | $ | 864,161 |  |  |
(1)Approximately 80% of the operating lease payments pertain to properties in the United States. The table below indicates where the discounted operating lease payments from the above table are classified in the Consolidated Balance Sheet (in thousands).
|  | December 31,
Description |  | 2020 |  | 2019
Accounts payable and accrued liabilities |  | $ | 83,995 |  |  | $ | 76,516 |
Operating lease liabilities |  | 780,166 |  |  | 832,533 |
Total operating lease liabilities per the Consolidated Balance Sheet |  | $ | 864,161 |  |  | $ | 909,049 |
As of December 31, 2020, the Company had additional operating leases for facilities that have not yet commenced. These operating leases, which aggregated $29.1 million of undiscounted lease payments, are scheduled to commence during 2021 with lease terms of up to thirteen years. Lease Disclosures Under ASC Topic 840 The Company’s operating lease expense under ASC Topic 840 for its facilities, office equipment and other assets was $93.5 million in 2018. The cost of such operating leases, including any contractual rent increases, rent concessions and landlord incentives, was recognized ratably over the life of the related lease agreement.

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