forr-10q_20180630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

FOR THE QUARTERLY PERIOD ENDED June 30, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

COMMISSION FILE NUMBER: 000-21433

 

FORRESTER RESEARCH, INC.

(Exact name of registrant as specified in its charter)

 

 

DELAWARE

 

04-2797789

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

 

 

60 Acorn Park Drive

CAMBRIDGE, MASSACHUSETTS

 

02140

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (617) 613-6000

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

 (Do not check if a smaller reporting company)

  

Smaller reporting company

 

 

Emerging growth company

 

  

 

 

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

As of August 3, 2018 18,074,000 shares of the registrant’s common stock were outstanding.

 

 

 


 

FORRESTER RESEARCH, INC.

INDEX TO FORM 10-Q

 

 

  

PAGE

 

PART I. FINANCIAL INFORMATION

  

3

 

ITEM 1. Financial Statements (Unaudited)

  

3

 

Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017

  

3

 

Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and 2017

  

4

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and 2017

  

5

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017

  

6

 

Notes to Consolidated Financial Statements

  

7

 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

23

 

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

  

33

 

ITEM 4. Controls and Procedures

  

33

 

PART II. OTHER INFORMATION

  

34

 

ITEM 1A. Risk Factors

  

34

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

34

 

ITEM 6. Exhibits

  

35

 

  

 

 

 

 

 

 

2


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FORRESTER RESEARCH, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data, unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

92,997

 

 

$

79,790

 

Marketable investments (Note 4)

 

 

50,090

 

 

 

54,333

 

Accounts receivable, net

 

 

49,486

 

 

 

70,023

 

Deferred commissions

 

 

12,514

 

 

 

13,731

 

Prepaid expenses and other current assets

 

 

12,789

 

 

 

18,942

 

Total current assets

 

 

217,876

 

 

 

236,819

 

Property and equipment, net

 

 

23,342

 

 

 

25,249

 

Goodwill

 

 

76,551

 

 

 

76,169

 

Intangible assets, net

 

 

617

 

 

 

732

 

Other assets

 

 

7,756

 

 

 

6,231

 

Total assets

 

$

326,142

 

 

$

345,200

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

614

 

 

$

217

 

Accrued expenses and other current liabilities

 

 

34,300

 

 

 

49,629

 

Deferred revenue

 

 

143,023

 

 

 

145,207

 

Total current liabilities

 

 

177,937

 

 

 

195,053

 

Non-current liabilities

 

 

8,094

 

 

 

8,958

 

Total liabilities

 

 

186,031

 

 

 

204,011

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Note 9):

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value

 

 

 

 

 

 

 

 

Authorized - 500 shares; issued and outstanding - none

 

 

 

 

 

 

Common stock, $0.01 par value

 

 

 

 

 

 

 

 

Authorized - 125,000 shares

 

 

 

 

 

 

 

 

Issued - 22,564 and 22,432 shares as of June 30, 2018 and December 31, 2017, respectively

 

 

 

 

 

 

 

 

Outstanding - 17,940 and 18,041 shares as of June 30, 2018 and December 31, 2017, respectively

 

 

226

 

 

 

224

 

Additional paid-in capital

 

 

189,554

 

 

 

181,910

 

Retained earnings

 

 

125,698

 

 

 

123,010

 

Treasury stock - 4,624 and 4,391 shares as of June 30, 2018 and December 31, 2017, respectively, at cost

 

 

(171,585

)

 

 

(161,943

)

Accumulated other comprehensive loss

 

 

(3,782

)

 

 

(2,012

)

Total stockholders’ equity

 

 

140,111

 

 

 

141,189

 

Total liabilities and stockholders’ equity

 

$

326,142

 

 

$

345,200

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

3


 

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data, unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research services

 

$

58,300

 

 

$

54,575

 

 

$

110,000

 

 

$

106,318

 

Advisory services and events

 

 

38,053

 

 

 

35,158

 

 

 

64,102

 

 

 

60,609

 

Total revenues

 

 

96,353

 

 

 

89,733

 

 

 

174,102

 

 

 

166,927

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and fulfillment

 

 

39,071

 

 

 

36,910

 

 

 

73,176

 

 

 

68,306

 

Selling and marketing

 

 

32,709

 

 

 

30,508

 

 

 

65,720

 

 

 

61,130

 

General and administrative

 

 

10,940

 

 

 

10,419

 

 

 

21,679

 

 

 

20,589

 

Depreciation

 

 

2,095

 

 

 

1,489

 

 

 

4,091

 

 

 

3,168

 

Amortization of intangible assets

 

 

182

 

 

 

194

 

 

 

368

 

 

 

385

 

Acquisition and integration costs

 

 

329

 

 

 

 

 

 

329

 

 

 

 

Total operating expenses

 

 

85,326

 

 

 

79,520

 

 

 

165,363

 

 

 

153,578

 

Income from operations

 

 

11,027

 

 

 

10,213

 

 

 

8,739

 

 

 

13,349

 

Other income, net

 

 

271

 

 

 

93

 

 

 

153

 

 

 

102

 

Losses on investments, net

 

 

(20

)

 

 

(22

)

 

 

(45

)

 

 

(225

)

Income before income taxes

 

 

11,278

 

 

 

10,284

 

 

 

8,847

 

 

 

13,226

 

Income tax expense

 

 

3,490

 

 

 

4,220

 

 

 

2,792

 

 

 

4,132

 

Net income

 

$

7,788

 

 

$

6,064

 

 

$

6,055

 

 

$

9,094

 

Basic income per common share

 

$

0.43

 

 

$

0.34

 

 

$

0.34

 

 

$

0.51

 

Diluted income per common share

 

$

0.43

 

 

$

0.34

 

 

$

0.33

 

 

$

0.50

 

Basic weighted average common shares outstanding

 

 

17,965

 

 

 

17,715

 

 

 

18,001

 

 

 

17,973

 

Diluted weighted average common shares outstanding

 

 

18,290

 

 

 

18,050

 

 

 

18,313

 

 

 

18,293

 

Cash dividends declared per common share

 

$

0.20

 

 

$

0.19

 

 

$

0.40

 

 

$

0.38

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

4


 

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

$

7,788

 

 

$

6,064

 

 

$

6,055

 

 

$

9,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

(3,394

)

 

 

2,514

 

 

 

(1,691

)

 

 

3,304

 

Net change in market value of investments

 

62

 

 

 

7

 

 

 

(53

)

 

 

24

 

Other comprehensive income (loss)

 

(3,332

)

 

 

2,521

 

 

 

(1,744

)

 

 

3,328

 

Comprehensive income

$

4,456

 

 

$

8,585

 

 

$

4,311

 

 

$

12,422

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

5


 

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 

 

Six Months Ended

 

 

June 30,

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

6,055

 

 

$

9,094

 

Adjustments to reconcile net income to net cash provided by operating

   activities:

 

 

 

 

 

 

 

Depreciation

 

4,091

 

 

 

3,168

 

Amortization of intangible assets

 

368

 

 

 

385

 

Net losses from investments

 

45

 

 

 

225

 

Deferred income taxes

 

(831

)

 

 

(691

)

Stock-based compensation

 

4,071

 

 

 

4,245

 

Amortization of premium on investments

 

18

 

 

 

128

 

Foreign currency losses

 

437

 

 

 

360

 

Changes in assets and liabilities

 

 

 

 

 

 

 

Accounts receivable

 

20,020

 

 

 

8,457

 

Deferred commissions

 

2,086

 

 

 

1,475

 

Prepaid expenses and other current assets

 

280

 

 

 

1,470

 

Accounts payable

 

423

 

 

 

(730

)

Accrued expenses and other liabilities

 

(15,310

)

 

 

(10,304

)

Deferred revenue

 

6,533

 

 

 

9,611

 

Net cash provided by operating activities

 

28,286

 

 

 

26,893

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Acquisitions

 

(1,289

)

 

 

 

Purchases of property and equipment

 

(2,544

)

 

 

(3,240

)

Purchases of marketable investments

 

(14,673

)

 

 

(25,685

)

Proceeds from sales and maturities of marketable investments

 

18,828

 

 

 

28,612

 

Other investing activity

 

 

 

 

224

 

Net cash provided by (used in) investing activities

 

322

 

 

 

(89

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid on common stock

 

(7,196

)

 

 

(6,815

)

Repurchases of common stock

 

(9,642

)

 

 

(36,426

)

Proceeds from issuance of common stock under employee equity

   incentive plans

 

3,678

 

 

 

4,872

 

Taxes paid related to net share settlements of stock-based compensation awards

 

(102

)

 

 

(537

)

Net cash used in financing activities

 

(13,262

)

 

 

(38,906

)

Effect of exchange rate changes on cash and cash equivalents

 

(2,139

)

 

 

2,250

 

Net increase (decrease) in cash and cash equivalents

 

13,207

 

 

 

(9,852

)

Cash and cash equivalents, beginning of period

 

79,790

 

 

 

76,958

 

Cash and cash equivalents, end of period

$

92,997

 

 

$

67,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid for income taxes

$

2,102

 

 

$

4,705

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

6


 

FORRESTER RESEARCH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 1 — Interim Consolidated Financial Statements

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. It is recommended that these financial statements be read in conjunction with the consolidated financial statements and related notes that appear in the Forrester Research, Inc. (“Forrester”) Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the financial position, results of operations, comprehensive income and cash flows as of the dates and for the periods presented have been included. The results of operations for the three and six months ended June 30, 2018 may not be indicative of the results for the year ending December 31, 2018, or any other period.

 

Out of Period Adjustment

During the quarter ended June 30, 2018, the Company recorded $1.0 million of revenue ($0.7 million after tax) for an out-of-period correction within research services in the Consolidated Statements of Income. The error resulted from an understatement of revenue from the reprint product line of $0.8 million ($0.5 million after tax) during the three months ended March 31, 2018 and $0.2 million ($0.1 million after tax) from the year ended December 31, 2017. The Company has concluded that the errors are not material to the current period and all prior period financial statements.

Fair Value Measurements

The carrying amounts reflected in the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. See Note 4 – Marketable Investments - for the fair value of the Company’s marketable investments.

 

 

Adoption of New Accounting Pronouncements

 

The Company adopted the guidance in Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, on January 1, 2018. The new standard clarifies certain aspects of the statement of cash flows, including contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and distributions received from equity method investees, among others. The adoption of this standard did not have a material impact on the Company’s statements of cash flows.

 

The Company adopted the guidance in ASU No. 2016-18, Statement of Cash Flows: Restricted Cash, on January 1, 2018. The new standard requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. The adoption of this standard did not have an impact on the Company’s statements of cash flows.

 

The Company elected to adopt the guidance in ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, on January 1, 2018. The new standard allows but does not require, a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Act”) enacted on December 22, 2017. The Company elected to make the reclassification adjustment as of the beginning of the period of adoption in the amount of $26,000 using the aggregate portfolio approach. The reclassification amount includes the effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts at the date of enactment of the Act related to items remaining in accumulated other comprehensive income.

 

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers, and has since issued several additional amendments thereto (collectively known as ASC 606).  ASC 606 supersedes all existing

 

7


 

revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. ASC 606 also includes subtopic ASC 340-40, Other Assets and Deferred Costs-Contracts with Customers, which provides guidance on accounting for certain revenue related costs including costs associated with obtaining and fulfilling a contract.

 

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Under this method, the reported results for 2018 reflect the application of ASC 606, while the reported results for 2017 were prepared under the guidance of ASC 605, Revenue Recognition, which is referred to herein as the “previous guidance”. The modified retrospective method requires the cumulative effect of applying the new guidance to all contracts with customers that were not completed as of January 1, 2018 to be recorded as an adjustment to retained earnings as of the adoption date. Forrester considered a contract to be complete if all the revenue was recognized in accordance with the previous guidance that was in effect before the adoption date.

 

The effect of adopting ASC 606 included a $7.8 million reduction in deferred revenue, primarily related to prepaid performance obligations that are expected to expire in 2018 and 2019 that would have been recognized in 2017 under the new guidance; a decrease of $5.5 million in prepaid expenses and other current assets related to deferred survey costs that would have been expensed as incurred in 2017 under the new guidance and the current tax impact of the cumulative effect; an increase of $0.9 million in deferred commissions related to the capitalization of fringe benefits as incremental costs to obtain customer contracts under the new guidance; and an increase of $0.6 million in other assets for the deferred tax effect of the cumulative effect. Retained earnings increased by $3.8 million as a net result of these adjustments.

 

Refer to Note 6, Revenue and Contract Costs, for additional disclosures and a discussion of the Company's updated policies related to revenue recognition, related balance sheet accounts, and accounting for costs to obtain and fulfill a customer contract.

 

The following tables summarize the effect of adopting ASC 606 on the Company’s financial statements during and as of the three and six months ended June 30, 2018 (in thousands):

 

Consolidated Balance Sheet

 

 

 

 

 

 

 

 

As of June 30, 2018

 

 

 

 

 

 

Amounts as

 

 

 

 

 

 

if Previous

 

 

 

 

 

 

Guidance in

 

 

As Reported

 

 

Effect

 

Accounts receivable, net

$

49,486

 

 

$

53,040

 

Deferred commissions

 

12,514

 

 

 

11,734

 

Prepaid expenses and other current assets

 

12,789

 

 

 

17,573

 

Total current assets

 

217,876

 

 

 

225,434

 

Other assets

 

7,756

 

 

 

7,194

 

Total assets

 

326,142

 

 

 

333,138

 

 

 

 

 

 

 

 

 

Deferred revenue

$

143,023

 

 

$

152,033

 

Total current liabilities

 

177,937

 

 

 

186,947

 

Total liabilities

 

186,031

 

 

 

195,041

 

Retained earnings

 

125,698

 

 

 

123,684

 

Total stockholders’ equity

 

140,111

 

 

 

138,097

 

Total liabilities and stockholders’ equity

 

326,142

 

 

 

333,138

 

 

Total assets were $7.0 million less than if the previous guidance remained in effect, largely due to the following changes required by the adoption of ASC 606:

 

 

Accounts receivable, net was lower due to the Company excluding invoices issued on cancellable contracts in excess of revenue recognized.

 

Deferred commissions was higher due to the capitalization of fringe benefits costs.

 

Prepaid expenses and other current assets were lower due to expensing survey costs as incurred and the current period tax effect of the adjustments.

 

 

8


 

Deferred revenue was $9.0 million less due to the accelerated recognition of revenue for estimated unexercised rights, which would have been deferred under the previous guidance until the right expired, and the exclusion of invoices issued on cancellable contracts in excess of revenue recognized.

 

Consolidated Statement of Income

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

 

 

 

 

 

 

Amounts as

 

 

 

 

 

 

if Previous

 

 

 

 

 

 

Guidance in

 

 

As Reported

 

 

Effect

 

Revenues:

 

 

 

 

 

 

 

Research services

$

58,300

 

 

$

58,323

 

Advisory services and events

 

38,053

 

 

 

38,146

 

Total revenues

 

96,353

 

 

 

96,469

 

Operating expenses:

 

 

 

 

 

 

 

Cost of services and fulfillment

 

39,071

 

 

 

38,913

 

Selling and marketing

 

32,709

 

 

 

32,558

 

Total operating expenses

 

85,326

 

 

 

85,017

 

Income from operations

 

11,027

 

 

 

11,452

 

Income before income taxes

 

11,278

 

 

 

11,703

 

Income tax provision

 

3,490

 

 

 

3,650

 

Net income

 

7,788

 

 

 

8,053

 

Basic income per common share

$

0.43

 

 

$

0.45

 

Diluted income per common share

$

0.43

 

 

$

0.44

 

 

 

Consolidated Statement of Income

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

 

 

 

 

 

 

Amounts as

 

 

 

 

 

 

if Previous

 

 

 

 

 

 

Guidance in

 

 

As Reported

 

 

Effect

 

Revenues:

 

 

 

 

 

 

 

Research services

$

110,000

 

 

$

111,710

 

Advisory services and events

 

64,102

 

 

 

64,764

 

Total revenues

 

174,102

 

 

 

176,474

 

Operating expenses:

 

 

 

 

 

 

 

Cost of services and fulfillment

 

73,176

 

 

 

73,003

 

Selling and marketing

 

65,720

 

 

 

65,631

 

Total operating expenses

 

165,363

 

 

 

165,101

 

Income from operations

 

8,739

 

 

 

11,373

 

Income before income taxes

 

8,847

 

 

 

11,481

 

Income tax provision

 

2,792

 

 

 

3,637

 

Net income

 

6,055

 

 

 

7,844

 

Basic income per common share

$

0.34

 

 

$

0.44

 

Diluted income per common share

$

0.33

 

 

$

0.43

 

 

 

The $0.1 million and $2.4 million reduction to total revenues for three and six months ended June 30, 2018, respectively, is related to ASC 606’s requirement to recognize revenue for estimated future unexercised customer rights rather than recognize unexercised rights when they occur. The Company currently expects this change to primarily affect the timing of revenue within the quarters of 2018 but does not expect it to have a material effect on the Company’s results of operations for the full year of 2018. The net impact, including the tax effect, of accounting for revenue and costs to obtain and fulfill customer contracts under the new guidance decreased net income and diluted net income per share for the three months ended June 30, 2018 by $0.3 million and $0.01, respectively. For the six months ended June 30, 2018, the net impact of the new guidance decreased net income and diluted net income per share by $1.8 million and $0.10, respectively.

 

9


 

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

 

 

 

 

 

 

Amounts as

 

 

 

 

 

 

if Previous

 

 

 

 

 

 

Guidance in

 

 

As Reported

 

 

Effect

 

Net income

$

7,788

 

 

$

8,053

 

Comprehensive income

 

4,456

 

 

 

4,721

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

 

 

 

 

 

 

Amounts as

 

 

 

 

 

 

if Previous

 

 

 

 

 

 

Guidance in

 

 

As Reported

 

 

Effect

 

Net income

$

6,055

 

 

$

7,844

 

Comprehensive income

 

4,311

 

 

 

6,100

 

 

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

 

 

 

 

 

 

Amounts as

 

 

 

 

 

 

if Previous

 

 

 

 

 

 

Guidance in

 

 

As Reported

 

 

Effect

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

6,055

 

 

$

7,844

 

Accounts receivable

 

20,020

 

 

 

16,466

 

Deferred commissions

 

2,086

 

 

 

1,824

 

Prepaid expenses and other current assets

 

280

 

 

 

1,125

 

Deferred revenue

 

6,533

 

 

 

7,715

 

 

The impact to comprehensive income and cash flows from operating activities are driven by the consolidated balance sheet and income statement changes previously discussed.

 

Note 2  —  Acquisitions

 

The Company accounts for business acquisitions in accordance with the acquisition method of accounting as prescribed by ASC 805, Business Combinations. The acquisition method of accounting requires the Company to record the net assets and liabilities acquired based on their estimated fair values as of the acquisition date, with any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to be recorded to goodwill.

 

On June 22, 2018, Forrester acquired substantially all of the assets of SocialGlimpz Inc. (“GlimpzIt”), an artificial intelligence and machine-learning provider based in San Francisco. The acquisition is part of Forrester's plan to build a real-time customer experience or CX cloud solution, integrating a range of inputs to help companies monitor and improve customer experience. Forrester intends to deploy the GlimpzIt technology to extend the analytics engine in Forrester’s planned real-time CX cloud. The acquisition of GlimpzIt was determined to be an acquisition of a business under the provisions of ASC 805. The total purchase price was approximately $1.3 million, which was paid in cash on the acquisition date, and is allocated, subject to completion of a valuation study, as $1.0 million of goodwill and $0.3 million of intangible assets. The acquired working capital was insignificant. Goodwill has been allocated to the Product segment and is expected to be deductible for income tax purposes. Pro forma financial information for prior periods is not provided as it is insignificant.

 

 

10


 

Note 3 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Net Unrealized

 

 

Cumulative

 

 

Accumulated

 

 

 

Loss on Marketable

 

 

Translation

 

 

Other Comprehensive

 

 

 

Investments

 

 

Adjustment

 

 

Loss

 

Balance at January 1, 2018

 

$

(115

)

 

$

(1,897

)

 

$

(2,012

)

Reclassification of stranded tax effects from tax reform

 

 

(26

)

 

 

 

 

 

(26

)

Foreign currency translation

 

 

 

 

 

(1,691

)

 

 

(1,691

)

Unrealized loss on investments, net of tax of $(17)

 

 

(53

)

 

 

 

 

 

(53

)

Balance at June 30, 2018

 

$

(194

)

 

$

(3,588

)

 

$

(3,782

)

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Net Unrealized

 

 

Cumulative

 

 

Accumulated

 

 

 

Loss on Marketable

 

 

Translation

 

 

Other Comprehensive

 

 

 

Investments

 

 

Adjustment

 

 

Loss

 

Balance at January 1, 2017

 

$

(83

)

 

$

(7,490

)

 

$

(7,573

)

Foreign currency translation

 

 

 

 

 

3,304

 

 

 

3,304

 

Unrealized gain on investments, net of tax of $15

 

 

24

 

 

 

 

 

 

24

 

Balance at June 30, 2017

 

$

(59

)

 

$

(4,186

)

 

$

(4,245

)

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Net Unrealized

 

 

Cumulative

 

 

Accumulated

 

 

 

Loss on Marketable

 

 

Translation

 

 

Other Comprehensive

 

 

 

Investments

 

 

Adjustment

 

 

Loss

 

Balance at April 1, 2018

 

$

(256

)

 

$

(194

)

 

$

(450

)

Foreign currency translation

 

 

 

 

 

(3,394

)

 

 

(3,394

)

Unrealized gain on investments, net of tax of $21

 

 

62

 

 

 

 

 

 

62

 

Balance at June 30, 2018

 

$

(194

)

 

$

(3,588

)

 

$

(3,782

)

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Net Unrealized

 

 

Cumulative

 

 

Accumulated

 

 

 

Loss on Marketable

 

 

Translation

 

 

Other Comprehensive

 

 

 

Investments

 

 

Adjustment

 

 

Loss

 

Balance at April 1, 2017

 

$

(66

)

 

$

(6,700

)

 

$

(6,766

)

Foreign currency translation

 

 

 

 

 

2,514

 

 

 

2,514

 

Unrealized gain on investments, net of tax of $4

 

 

7

 

 

 

 

 

 

7

 

Balance at June 30, 2017

 

$

(59

)

 

$

(4,186

)

 

$

(4,245

)

 

 

Note 4 — Marketable Investments

The following table summarizes the Company’s marketable investments (in thousands):

 

 

 

As of June 30, 2018

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Market

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Federal agency obligations

 

$

1,800

 

 

$

 

 

$

(2

)

 

$

1,798

 

Corporate obligations

 

 

48,548

 

 

 

 

 

 

(256

)

 

 

48,292

 

Total

 

$

50,348

 

 

$

 

 

$

(258

)

 

$

50,090

 

 

 

11


 

 

 

As of December 31, 2017

 

 

 

 

 

 

 

Gross