View:
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 5, 2003
FORRESTER RESEARCH, INC.
(Exact Name of Registrant Specified in Charter)
Delaware 000-21433 04-2797789
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
400 Technology Square, Cambridge, Massachusetts 02139
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 613-6000
N/A
- ------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 5
Exhibit Index appears on Page 4
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release dated August 5, 2003.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The information contained in this current report on Form 8-K is furnished
pursuant to Item 12 of Form 8-K "Results of Operations and Financial Condition."
This information and the exhibits hereto are being furnished and shall not be
deemed to be "filed" for the purposes of Section 18 of, or otherwise regarded as
filed under, the Securities Exchange Act of 1934, as amended. The information
contained in this report shall not be incorporated by reference into any filing
of Forrester Research, Inc. with the SEC, whether made before or after the date
hereof, regardless of any general incorporation language in such filings.
On August 5, 2003, Forrester Research, Inc. issued a press release
announcing its financial results for the quarter ended June 30, 2003, the full
text of which is attached hereto as Exhibit 99.1.
Forrester believes that pro forma financial results provide investors with
consistent and comparable information to aid in the understanding of Forrester's
ongoing business. Our pro forma presentation excludes the following:
Amortization of intangible assets - We exclude the non-cash effect of the
amortization of acquisition-related intangibles from our pro forma results in
order to present a consistent basis for quarterly comparisons.
Integration costs - We exclude the costs related to our acquisition of
Giga, which are primarily related to orientation events and data migration, in
order to present a consistent basis for quarterly comparisons.
Impairments of non-marketable securities - We have consistently excluded
both one-time gains and one-time write-offs related to our investments in
non-marketable securities from our pro forma results in order to present a
consistent basis for quarterly comparisons of our results of operations.
Reorganization costs - We exclude restructuring charges from our first
quarter 2002 pro forma results because our failure to do so would present a
misleading improvement in our pro forma results in the six months ended June 30,
2003 as compared to the same period in 2002.
However, these measures should be considered in addition to, not as a
substitute for, or superior to, operating income or other measures of financial
performance prepared in accordance with generally accepted accounting principles
as more fully discussed in the Forrester's financial statements and filings with
the Securities and Exchange Commission.
-2-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FORRESTER RESEARCH, INC.
By: /s/ WARREN HADLEY
-----------------
Name: Warren Hadley
Title: Treasurer and Chief Financial Officer
Dated: August 5, 2003
-3-
Exhibit Index
Exhibit Description Page
- ------- -----------
99.1 Press Release dated August 5, 2003. 5
-4-
Exhibit 99.1
Forrester Research Announces Second-Quarter 2003 Financial Results;
Integration Of Giga Information Group Is Ahead Of Schedule
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Aug. 5, 2003--Forrester
Research, Inc. (Nasdaq: FORR) today announced financial results for
the second quarter ended June 30, 2003, in line with its previous
financial guidance.
Second-Quarter Financial Performance
-- Total revenues were $34.7 million, compared with $25.4 million
for the second quarter of last year.
-- On a GAAP-reported basis, which reflects an effective tax rate
of 31 percent, Forrester reported second-quarter net income of
$141,000, or $0.01 per diluted share compared to net income of
$3.5 million, or $0.15 per diluted share for the same period
last year.
-- On a pro forma basis, which excludes amortization of
acquisition-related intangible assets of $2.6 million, costs
of $740,000 related to the integration of Giga Information
Group, Inc., and a net write-down of $272,000 related to
impairments of certain non-marketable securities, and which
reflects a pro forma effective tax rate of 35 percent, net
income was $2.5 million, or $0.11 per diluted share, for the
second quarter of 2003. This compares with pro forma net
income of $3.1 million, or $0.13 per diluted share for the
same period last year, which excludes amortization of
acquisition-related intangible assets of $82,000 and
impairments of certain non-marketable securities of $486,000.
Six-Month Period Ended June 30, 2003 Financial Performance
-- Total revenues were $59.5 million, compared with $51.5 million
for the same period last year.
-- On a GAAP-reported basis, which reflects an effective tax rate
of 31 percent, Forrester reported net income of $1.9 million,
or $0.08 per diluted share for the six months ended 2003,
compared to net loss of $2.6 million or ($0.11) per diluted
share for the same period last year.
-- On a pro forma basis, which excludes amortization of
acquisition-related intangible assets of $3.5 million, costs
of $771,000 related to the integration of Giga Information
Group, Inc., and a write-down of $572,000 related to
impairments of certain non-marketable securities, and which
reflects a pro forma effective tax rate of 35 percent, net
income was $5.0 million, or $0.22 per diluted share, for the
six months ended 2003. This compares with pro forma net income
of $6.4 million, or $0.27 per diluted share for the same
period last year, which excludes a reorganization charge of
$9.1 million, amortization of acquisition-related intangible
assets of $164,000, and impairments of certain non-marketable
securities of $2.7 million.
A reconciliation of GAAP results to pro forma results may be found
in the attached financial tables.
"Our top priorities during the second quarter were to maintain
high client satisfaction while ensuring the ongoing progress of
integrating Giga Information Group, which we acquired in February,"
said George F. Colony, chairman of the board and chief executive
officer. "The integration efforts are ahead of schedule and will
strengthen Forrester's position in the marketplace. The sales teams
recently have been integrated into one cohesive sales force, and this
month the research staff -- already collaborating on research content
- -- will be united. Our conversations with clients continue to play a
big role in developing and integrating the Forrester and Giga brands."
In addition to the accelerated integration, the Forrester Oval
Progam(TM)'s CIO Group and Councils gained momentum during the second
quarter. The CIO Group, which provides CIOs with exclusive access to a
peer network, client-directed research, benchmark data, best
practices, and short projects, now has 93 members including new CIO
clients from Liberty Mutual, Hitachi Metals, and Lafarge North
America. Furthermore, the program's Application Development Council,
Security & Risk Management Council, Enterprise Architecture Council,
and the new Analyst Relations & Marketing Council added members,
including Washington Mutual, Acapella, and Remedy, a BMC Software
Company.
Financial Guidance
The integration of sales and research has resulted in a reduction
in force of 30 employees, or approximately 5 percent of the company's
work force. For the third quarter of 2003, the company expects to
record a charge in the range of $1.0 million to $2.0 million related
to the reorganization and work force reduction. On an annualized
basis, associated savings are estimated to be approximately $4.0
million to $5.0 million. In addition, Forrester is currently in the
process of evaluating its San Francisco office lease, and as a result,
may record future lease-related charges.
The company also announced today that as part of the integration,
Forrester has combined its North American and Global operating groups.
As a result, Emily Nagle Green, managing director of Forrester North
America, has resigned to pursue other opportunities consistent with
her long-term career goals. Neil Bradford, managing director of the
Forrester Global operating group, has been named head of the expanded
North American unit.
Forrester is providing third-quarter 2003 guidance as follows:
Third-Quarter 2003 (GAAP):
-- Total revenues of approximately $30.0 million to $32.0
million.
-- Operating margin of approximately (5) percent to 1 percent.
-- Interest income of approximately $700,000 to $850,000.
-- An effective tax rate of 31 percent.
-- Diluted earnings per share of approximately ($0.03) to $0.01.
Third-Quarter 2003 (Pro Forma):
Pro forma financial guidance for the third quarter 2003 excludes
amortization of acquisition-related intangible assets of approximately
$2.6 million, impairment charges related to non-marketable securities,
and third-quarter reorganization and integration charges estimated at
$1.0 million to $2.0 million.
-- Pro forma operating margin of approximately 9 percent to 11
percent.
-- Pro forma effective tax rate of 35 percent, which varies from
our actual effective tax rate of 31 percent due to our
tax-free interest income decreasing as a percentage of our pro
forma pre-tax income.
-- Pro forma diluted earnings per share of approximately $0.10 to
$0.12.
Forrester is revising its full-year 2003 GAAP guidance and
reaffirming full-year 2003 pro forma guidance as follows:
Full-Year 2003 (GAAP):
-- Total revenues of approximately $120.0 million to $125.0
million.
-- Operating margin of approximately (1) percent to 4 percent,
which assumes any charges related to the San Francisco office
lease are not incurred during 2003.
-- Interest income of approximately $3.8 million to $4.2 million.
-- An effective tax rate of 31 percent.
-- Diluted earnings per share of approximately $0.12 to $0.20,
which assumes any charges related to the San Francisco office
lease are not incurred during 2003.
Full-Year 2003 (Pro Forma):
Pro forma financial guidance for the full-year 2003 excludes
amortization of acquisition-related intangible assets of approximately
$8.7 million, impairment charges related to non-marketable securities,
and reorganization and integration charges of approximately $2.0
million to $3.0 million, as well as charges related to terminating the
San Francisco office lease.
-- Pro forma operating margin of approximately 10 percent to 12
percent.
-- Pro forma effective tax rate of 35 percent, which varies from
our actual effective tax rate of 31 percent due to our
tax-free interest income decreasing as a percentage of our pro
forma pre-tax income.
-- Pro forma diluted earnings per share of approximately $0.47 to
$0.53.
Forrester Research enables companies to understand the impact of
technology on business. Forrester's WholeView(TM) Research, Strategic
Services, and Events help clients understand how technology change
affects their customers, strategy, and technology investment. In
February 2003, Giga Information Group, Inc. became a wholly owned
subsidiary of Forrester Research, Inc. Giga, through its Giga
Advisory(R), Giga Consulting(TM), and Events, provides objective
research, pragmatic advice, and personalized consulting to global IT
professionals. Established in 1983, Forrester is headquartered in
Cambridge, Mass. For additional information, visit www.forrester.com.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements include, but are not limited to, Forrester's financial and
operating targets for the third quarter of and full-year 2003,
statements about the potential success of WholeView and other product
offerings, the anticipated cost savings related to the reorganization
and work force reduction, Forrester's ability to successfully
integrate Giga, and the ability of Forrester to achieve success as the
economy improves. These statements are based on Forrester's current
plans and expectations and involve risks and uncertainties that could
cause actual future activities and results of operations to be
materially different from those set forth in the forward-looking
statements. Important factors that could cause actual future
activities and results to differ include, among others, Forrester's
ability to successfully integrate Giga into Forrester's operations,
Forrester's ability to anticipate business and economic conditions,
market trends, competition, the ability to attract and retain
professional staff, possible variations in Forrester's quarterly
operating results, risks associated with Forrester's ability to offer
new products and services, the actual amount of the charge related to
the reorganization and work force reduction, and Forrester's
dependence on renewals of its membership-based research services and
on key personnel. Forrester Research undertakes no obligation to
update publicly any forward-looking statements, whether as a result of
new information, future events, or otherwise. For further information,
please refer to Forrester's reports and filings with the Securities
and Exchange Commission.
The consolidated statements of income, consolidated balance
sheets, and consolidated statements of cash flows are attached.
(C) 2003, Forrester Research, Inc. All rights reserved. Forrester,
WholeView, Technographics, and Forrester Oval Program are trademarks
of Forrester Research, Inc. Giga Advisory and Giga Consulting are
trademarks of Giga Information Group, Inc.
Forrester Research, Inc.
Consolidated Statements Of Income
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
(Unaudited) (Unaudited)
Revenues
Research services $26,611 $18,008 $45,432 $37,818
Advisory services and
other 8,113 7,425 14,089 13,671
Total revenues 34,724 25,433 59,521 51,489
Operating expenses
Cost of services and
fulfillment 14,330 8,873 23,855 17,854
Selling and marketing 11,768 8,254 19,835 16,726
General and
administrative 3,781 3,375 7,058 6,701
Depreciation and
amortization 1,839 1,988 3,532 4,054
Amortization of
intangible assets 2,608 82 3,532 164
Integration costs 740 - 771 -
Reorganization costs - - - 9,088
Total operating expenses 35,066 22,572 58,583 54,587
(Loss) income from
operations (342) 2,861 938 (3,098)
Other income, net 819 1,481 2,414 3,041
Impairments of non-
marketable investments (272) (486) (572) (2,734)
Income (loss) before
income taxes 205 3,856 2,780 (2,791)
Income tax provision
(benefit) 64 309 862 (223)
Net income (loss) $141 $3,547 $1,918 $(2,568)
Diluted earnings (loss)
per share $0.01 $0.15 $0.08 $(0.11)
Diluted weighted
average shares
outstanding 22,718 23,989 22,819 23,250
Basic earnings (loss)
per share $0.01 $0.15 $0.08 $(0.11)
Basic weighted average
shares outstanding 22,515 23,354 22,627 23,250
Pro forma data (1):
(Loss) income from
operations (342) 2,861 938 (3,098)
Amortization of
intangible assets 2,608 82 3,532 164
Integration costs 740 - 771 -
Reorganization costs - - - 9,088
Pro forma income from
operations 3,006 2,943 5,241 6,154
Other income, net 819 1,481 2,414 3,041
Pro forma income before
income taxes 3,825 4,424 7,655 9,195
Pro forma income tax
provision 1,339 1,327 2,679 2,758
Pro forma net income $2,486 $3,097 $4,976 $6,437
Pro forma diluted
earnings per share $0.11 $0.13 $0.22 $0.27
Diluted weighted
average shares
outstanding 22,718 23,989 22,819 23,920
(1) The pro forma data excludes amortization of intangibles and
other integration costs related to acquisitions, reorganization costs,
and impairments of non-marketable investments, as well as their
related tax effects. This does not purport to be prepared in
accordance with Generally Accepted Accounting Principles.
Forrester Research, Inc.
Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2003 2002
Assets
Cash and cash equivalents $13,881 $11,479
Marketable securities 121,749 183,152
Accounts receivable, net 18,028 17,791
Deferred commissions 4,784 3,524
Prepaid expenses and other current assets 7,733 5,902
Total current assets 166,175 221,848
Property and equipment, net 10,427 10,674
Goodwill, net 56,126 13,244
Intangibles assets, net 16,712 760
Deferred income taxes 35,367 21,630
Non-marketable investments and other
assets 12,176 10,117
Total assets $296,983 $278,273
Liabilities and stockholders' equity
Accounts payable $2,956 $1,601
Accrued expenses 24,272 20,681
Deferred revenue 59,487 42,123
Total liabilities 86,715 64,405
Preferred stock - -
Common stock 242 240
Additional paid-in capital 169,651 167,935
Retained earnings 66,672 64,754
Treasury stock, at cost (27,380) (20,085)
Accumulated other comprehensive income 1,083 1,024
Total stockholders' equity 210,268 213,868
Total liabilities and stockholders' equity $296,983 $278,273
Forrester Research, Inc.
Consolidated Statements Of Cash Flows
(In thousands)
Six months ended
June 30,
2003 2002
Cash flows from operations:
Net income (loss) $1,918 $(2,568)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities-
Depreciation 3,532 4,054
Amortization of intangible assets 3,532 164
Write-downs of non-marketable investments 572 2,734
Loss on disposal of property and equipment - 92
Realized gain on sale of securities (509) -
Tax benefit from stock options 155 1,996
Deferred income taxes 793 (2,222)
Non-cash reorganization costs - 2,772
Increase in provision for doubtful
accounts - 196
Accretion of premiums on marketable
securities 413 376
Changes in assets and liabilities, net of
acquisition -
Accounts receivable 10,534 12,176
Deferred commissions (1,260) 1,023
Prepaid expenses and other 1,758 (932)
Accounts payable (207) (433)
Accrued expenses (7,649) (2,911)
Deferred revenue (8,710) (14,206)
Net cash provided by operating activities 4,872 2,311
Cash flows from investing activities:
Acquisition of Giga Information Group, Inc.,
net of cash acquired (56,066) -
Purchases of property and equipment (1,017) (966)
Purchase of non-marketable investments (2,150) (2,625)
Decrease in other assets 75 259
Purchase of marketable securities (126,158) (92,995)
Proceeds from sales and maturities of
marketable securities 188,766 94,017
Net cash provided by (used in) investing activities 3,450 (2,310)
Cash flows from financing activities:
Proceeds from issuance of common stock under
employee stock option plans and employee
stock purchase plan 1,457 7,912
Acquisition of treasury shares (5,295) (7,920)
Structured stock repurchase (1,892) -
Net cash used in financing activities (5,730) (8)
Effect of exchange rate changes on cash and cash
equivalents (190) (37)
Net increase (decrease) in cash and cash equivalents 2,402 (44)
Cash and cash equivalents, beginning of period 11,479 17,747
Cash and cash equivalents, end of period $13,881 $17,703
CONTACT: Forrester Research, Inc.
Kimberly Maxwell, 617/613-6234
kmaxwell@forrester.com
or
Forrester Research, Inc.
Karyl Levinson, 617/613-6262
press@forrester.com