<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED].
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED].
For the transition period from to
Commission file number 1-14443
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below: Gartner Group, Inc. Savings and Investment
Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: Gartner Group, Inc., 56 Top Gallant
Road, Stamford, CT 06902
<PAGE> 2
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statement of net assets available for benefits as of December 31, 1999 and 1998 2
Statement of changes in net assets available for benefits
for the year ended December 31, 1999 3
Notes to the financial statements for the years ended December 31, 1999 and 1998 4
SUPPLEMENTAL SCHEDULES:
Schedule of assets held for investment purposes as of December 31, 1999 11
</TABLE>
<PAGE> 3
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Financial Statements and Schedules
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
To the Participants and Administrator of the
Gartner Group, Inc. Savings and Investment Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Gartner Group, Inc. Savings and Investment Plan (the "Plan") as
of December 31, 1999 and 1998, and the related statements of changes in net
assets available for Plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for Plan benefits as of December
31, 1999 and 1998 and the changes in the net assets available for Plan benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year is presented for the purpose of
additional analysis and is not required parts of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This schedule is the responsibility of Plan management.
The supplemental schedule of assets held for investment purposes at end of year
has been subject to auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
May 19, 2000
<PAGE> 5
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Investments, at fair value (note 3) $146,185,563 98,670,281
Employees' contribution receivable -- 296,361
Employer's contribution receivable 3,712,557 3,359,390
Other receivables 11,636 --
------------ ------------
Total assets 149,909,756 102,326,032
Accrued administrative expenses 57,074 24,394
Distributions payable 7,072 --
------------ ------------
Net assets available for Plan benefits $149,845,610 102,301,638
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 6
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Statements of Net Assets Available for Plan Benefits
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Additions to net assets attributed to:
Net appreciation in fair value of
investments $ 22,546,041 10,282,295
Interest 142,402 677,452
Dividends 10,399,374 4,834,089
------------ ------------
33,087,817 15,793,836
Transfer from other plans, net 1,431,421 --
Employees' contributions 16,673,190 13,451,774
Employer's contributions 6,626,916 5,826,843
------------ ------------
Total additions 57,819,344 35,072,453
------------ ------------
Deductions from net assets attributed to:
Benefits paid to participants (10,171,399) (7,667,408)
Administrative expenses (103,973) (64,976)
------------ ------------
Total deductions (10,275,372) (7,732,384)
------------ ------------
Increase in net assets
available for Plan benefits 47,543,972 27,340,069
------------ ------------
Net assets available for Plan benefits:
Beginning of year 102,301,638 74,961,569
------------ ------------
End of year $149,845,610 102,301,638
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 7
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(1) DESCRIPTION OF THE PLAN
The following description of the Gartner Group, Inc. Savings and
Investment Plan (the "Plan") provides only general information.
Participants should refer to the plan agreement for a more complete
description of the Plan provisions.
(a) GENERAL
The Plan is a defined contribution plan subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA").
The Plan has been amended and restated at various times in order
to comply with regulatory guidance, most recently as of October
12, 1999.
The Plan covers substantially all domestic full time employees of
Gartner Group, Inc. and its wholly owned subsidiaries
(collectively the "Company" or "Employer"). Any employee who
customarily works at least 20 hours per week (minimum of 1,000
hours per year) and is at least 21 years of age is eligible to
participate in the Plan.
(b) ADMINISTRATION
The Plan is administered by the Administrative Committee (the
"Plan Committee") which is appointed by the Company's Board of
Directors. The Plan Committee is responsible for all
administrative aspects of the Plan, including selection of
trustees and investment managers, establishment of investment
alternatives, determination of benefit eligibility and benefit
calculations and interpretation of Plan provisions. The Plan
Committee has appointed officers of the Company to act as trustees
(the "Trustees") to administer the Plan. Administrative expenses
are to be paid by the Plan through the use of participant
forfeitures. Any administrative expenses in excess of participant
forfeitures will be paid by the Company. For the plan years ended
December 31, 1999 and 1998, expenses totaled $103,973 and
$108,402, respectively; the Company paid $0 and $43,426 of these
expenses in 1999 and 1998 respectively.
(c) CONTRIBUTIONS
Participating employees may make annual contributions to the Plan
in percentages of not less than 1 percent or more than 25 percent
of total annual compensation (15 percent pre-tax, 10 percent
post-tax), as defined in the Plan agreement, subject to Internal
Revenue Service ("IRS") limitations.
The Company is required to match pre-tax participant contributions
up to a maximum of 2 percent of a participant's total
compensation, or $2,000, which is 20 percent of the IRS pre-tax
contribution limitation for the years ended December 31, 1999 and
1998.
4 (Continued)
<PAGE> 8
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1999 and 1998
The Plan also provides for an additional discretionary match of up
to 2 percent of an employee's annual compensation solely at the
discretion of the Company's Board of Directors based on the
financial results of the Company. This contribution is limited to
20 percent of the IRS pre-tax contribution limitation.
The Plan also provides for a profit sharing contribution
comprised of the following elements:
- Fixed amount - an amount equal to 1 percent of a
participant's base compensation, subject to an IRS
limitation.
- Discretionary amount - an amount in excess of the fixed
amount solely at the discretion of the Company's Board of
Directors based on the financial results of the Company.
A Company match contribution of $0 and $73,148, an additional
Employer discretionary match contribution of $2,314,382 and
$2,085,058 and fixed profit sharing contribution of $1,398,175 and
$1,201,184 have been presented as an Employer contribution
receivable in the Plan financial statements as of December 31,
1999 and 1998, respectively.
(d) PARTICIPANTS ACCOUNTS
Separate accounts are maintained for each participant of the Plan
through the Fidelity Management Trust Company ("Fidelity"). The
participants' accounts are adjusted to reflect contributions and
investment earnings such as interest, dividends, and realized and
unrealized investment gains and losses.
Cash in the amount of $78,608 at December 31, 1999 and $23,884 at
December 31, 1998, although a component of the Plan's net assets,
is not specifically allocated to participants' accounts and is
non-participant directed. This unallocated cash held by the Plan
was primarily the result of participants' forfeitures.
(e) INVESTMENTS
Participants may elect to invest in a variety of specialized
investment funds and may make transfers among investment funds at
their discretion in whole percentages. The Company's Board of
Directors has authorized Fidelity to execute transactions upon
direction from the participant within the framework of the trust
instrument.
(f) VESTING
Participants are immediately vested in their own contributions and
in the Employer's matching contributions. Participants vest in the
profit sharing contribution ratably over a five-year period based
on date of hire. The date of hire for the employees of acquired
companies continues to be their historical date of hire for
vesting purposes.
5 (Continued)
<PAGE> 9
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(g) LOANS TO PARTICIPANTS
Loans to the participants are permitted, with the Trustees'
consent, in accordance with the limits provided by the Internal
Revenue Code. Loans bear interest at a rate equal to prime plus 1
percent which ranged between 8.75 percent and 9.25 percent for
loans made during the years ended December 31, 1999 and December
31, 1998. Participants receiving loans from the Plan must execute
an interest bearing promissory note in the amount of the loan. The
terms of the promissory note require that all participants repay
their loans based upon a fixed repayment schedule not to exceed a
five-year period, except in the case of a primary residence loan
whose repayment period is extended to 15 years. Participant loans
are subject to a $1,000 minimum amount and limited to 50 percent
of a Participant's vested account balance, not to exceed $50,000.
(h) PAYMENT OF BENEFITS
Benefits are paid upon retirement (on or after age 65),
disability, death or termination of employment, and may also be
distributed prior to termination of employment upon reaching age
59-1/2 or because of immediate and severe financial needs.
Participants may elect to receive their benefits in a lump sum
equal to the vested value of their account or in equal
installments over a fixed period of time. Participants may also
elect to purchase an individual or joint and survivor annuity.
(i) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company
reserves the right to fully or partially terminate the Plan at any
time by action of the Board of Directors or its designee. In such
an event, the interest of all participants will become fully
vested in their account balance as of the date of full or partial
termination.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The financial statements have been prepared using the accrual
basis of accounting.
(b) VALUATION OF INVESTMENTS
The Plan's investments are valued at fair value based upon market
prices quoted for the respective funds.
6 (Continued)
<PAGE> 10
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(c) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make significant estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of additions to and
deductions from net assets during the reporting period. Actual
results could differ from those estimates.
(d) RISKS AND UNCERTAINTIES
The Plan provides for various investment options. Investment
securities are exposed to various risks such as interest rate,
market and credit. Due to the risk associated with investment
securities and the uncertainty related to changes in the value of
such securities, it is at least reasonably possible that changes
in risks in the near term could materially affect participant's
account balances and the amounts reported in the statements of net
assets available for plan benefits and the statements of changes
in net assets available for plan benefits.
(e) INVESTMENT TRANSACTIONS AND RELATED INCOME
Purchases and sales of interests in the investment funds, along
with realized gains and losses, are accounted for on the trade
date. Realized gains and losses on the sale of investments are
calculated based upon the difference between the net sale proceeds
and the quoted market value of the fund shares at the beginning of
the year or the purchase date, if later. Unrealized gains and
losses on investments held by the Plan at December 31, 1999 and
1998, respectively, are calculated based upon the difference
between the quoted market value of fund shares held at the end of
the year less their quoted market value at the beginning of the
year or acquisition date if acquired during the year. Realized and
unrealized gains and losses are included in net appreciation in
fair value of investments in the accompanying statement of changes
in net assets available for plan benefits.
Dividend income represents the Plan's share in dividend income of
the investment funds in which the Plan participates. Income from
other investments is recorded as earned on an accrual basis.
(f) ACCOUNTING CHANGE
In September 1999, the American Institute of Certified Public
Accountants issued Statement of Position 99-3, "Accounting for and
Reporting of Certain Defined Contribution Plan Investments and
Other Disclosure Matters" (SOP 99-3). SOP 99-3 simplifies the
disclosure for certain investments and is effective for plan years
ending after December 15, 1999. The Plan adopted SOP 99-3 during
the year ending December 31, 1999. Accordingly, information
previously required to be disclosed about participant-directed
fund investment programs is not presented in the Plan's 1999
financial statements. The Plan's 1998 financial statements have
been reclassified to conform with the current year's presentation.
7 (Continued)
<PAGE> 11
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(3) INVESTMENTS
Substantially all of the Plan's assets are invested in commingled
investment funds managed by Fidelity. A brief description of the funds
and investments is as follows:
(a) GARTNER GROUP INC. STOCK FUND
The assets of this fund are substantially invested in Gartner
Group Inc. Class A Common Stock. This Fund also maintains interest
bearing cash, $99,658 and $22,549 at December 31, 1999 and 1998,
respectively, to meet liquidity needs from participant withdrawals
or transfers.
(b) FIDELITY RETIREMENT MONEY MARKET FUND
Investments are held in a diversified portfolio of domestic and
international short term fixed income securities such as corporate
commercial paper, certificates of deposit, Treasury notes and
bills and bankers acceptances.
(c) OTHER FUNDS
The Magellan, Growth Company, OTC Portfolio and Overseas Funds
invest in debt and equity securities of companies of varying sizes
with above average growth potential to achieve long-term capital
appreciation. The Equity Index Fund seeks to match the total
return of the Standard & Poor 500 Index. The Puritan, Equity
Income and Intermediate Bond Funds seek current income and capital
preservation as well as the potential for capital appreciation by
investing in a diversified portfolio of common and preferred
stocks and bonds.
Investments exceeding 5 percent of Plan assets as of December 31, 1999
and 1998 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
<S> <C> <C>
Allocated Retirement Money Market Fund $ 15,073,218 11,185,364
Magellan Fund 36,486,211 26,243,359
Growth Company Fund 40,416,536 20,121,725
Puritan Fund 11,143,442 10,782,818
Equity Income Fund 15,201,572 14,253,677
OTC Portfolio Fund 12,172,522 5,692,247
</TABLE>
8 (Continued)
<PAGE> 12
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1999 and 1998
During 1999, the Plan's investments (including investments bought, sold,
and held during the year) appreciated in value by $22,546,041 as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-------------------
Investments at fair value was determined by quoted at market
price:
<S> <C>
Mutual funds $ 22,707,156
Common stock (161,115)
-------------------
$ 22,546,041
===================
</TABLE>
(4) PLAN TAX STATUS
The Plan obtained its latest determination letter on July 24, 1995, in
which the IRS stated that the Plan, as then designed, was in compliance
with the applicable requirements of the Internal Revenue Code. The Plan
has been amended since receiving the determination letter. The Plan
administrator believes that the Plan is designed and operated in
compliance with the applicable requirements of the Internal Revenue Code.
(5) PLAN TRANSFER AND MERGERS
On August 31, 1998, Gartner Group, Inc. entered into an Agreement and
Plan of Consolidation among Harcourt Brace & Company and several
affiliated companies to form a new company to combine their
computer-based interactive learning businesses. Gartner Group
subsequently transferred certain assets and approximately 185 U.S.
employees to the new company. The former Gartner employees then joined
the 401k plan offered by Harcourt General, the parent of Harcourt Brace &
Company. On February 1, 1999, the Plan transferred $745,009 representing
the vested balances from these former employees to the Harcourt 401 (k)
plan.
The December 1, 1999, the 401(k) Retirement Plan maintained by Inteco
Corporation, an affiliated company and the 401(k) Retirement Plan
maintained by The Warner Group, Inc., an affiliated company, were merged
into the Plan and the net assets of the Inteco and Warner plans were
transferred to the Plan trustee. The total amount transferred was
$2,172,539.
9 (Continued)
<PAGE> 13
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(6) SUBSEQUENT PLAN CHANGES
On October 12, 1999 the Plan was amended effective January 1, 2000 to
increase the employer matching contribution, eliminate the discretionary
employer supplemental match, allow for investments in the Fidelity
Freedom Funds, lower the normal retirement age to 55, provide an annual
limit of $12,500 for after-tax employee saving contributions and raise
the limit for diminimus payouts from $3,500 to $5,000 or the applicable
dollar limit under section 411(a)(11)(A) of the IRC in effect for the
plan year. On the same date, the Plan also amended and restated the Plan
Loan Program, effective January 1, 2000 to allow a participant to have
two loans outstanding at any time, and to provide for a one-time set-up
and recordkeeping fee of $100 for each new loan.
10
<PAGE> 14
SCHEDULE 1
GARTNER GROUP, INC.
SAVINGS AND INVESTMENT PLAN
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
HISTORICAL CURRENT
Description SHARES COST VALUE
-------------------------------------------------------- --------------- ---------------- ----------------
<S> <C> <C> <C>
Cash -- $ 99,658 $ 99,658
Fidelity Retirement Money Market Fund* 15,073,218 15,073,218 15,073,218
Fidelity Magellan Fund* 267,043 26,516,021 36,486,211
Fidelity Growth Company Fund* 479,437 23,042,997 40,416,536
Fidelity Puritan Fund* 585,572 10,792,998 11,143,442
Fidelity Equity Income Fund* 284,248 13,759,559 15,201,572
Fidelity Intermediate Bond Fund* 318,421 3,204,309 3,107,791
Fidelity Overseas Fund* 106,501 7,435,488 5,113,094
Fidelity OTC Fund* 179,087 3,857,708 12,172,522
Fidelity U.S. Equity Index Fund* 61,616 2,740,214 3,209,567
Loans to Plan participants (interest rates
ranging from 7 percent to 11 percent) -- 1,956,421 1,956,421
Gartner Group, Inc. Class A Common Stock** 144,625 2,675,824 2,205,531
================ ----------------
$ 146,185,563
================
</TABLE>
* Party-in-interest - affiliate of Plan custodian
** Party-in-interest - Sponsor of the Plan
11
<PAGE> 15
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
Gartner Group, Inc. Savings and Investment Plan
Date: June 28, 2000 By: /s/ Regina M. Paolillo
Name: Regina M. Paolillo
Title: Committee Chairman
Executive Vice President &
Chief Financial Officer
Gartner Group, Inc.
EXHIBITS
Exhibit Number Description of Exhibits
1* Independent Auditors' Consent, KPMG LLP.
-------------
* Filed herewith.
