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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): October 22, 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
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release dated October 22, 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 October 22, 2003, Forrester Research, Inc. issued a press release
announcing its financial results for the quarter ended September 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 acquisition-related intangibles - we exclude the
non-cash effect of the amortization of acquisition-related intangibles from our
pro forma results in order to more consistently present our ongoing results of
operations.
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 keep quarter
over quarter comparisons consistent.
Reorganization costs - we exclude reorganization costs 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 nine months ended
September 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.
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: October 22, 2003
Exhibit Index
Exhibit Description Page
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99.1 Press Release dated October 22, 2003. 5
Exhibit 99.1
Forrester Research Announces Third-Quarter 2003 Financial Results
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 22, 2003--Forrester
Research, Inc. (Nasdaq: FORR) today announced financial results for
the third quarter ended September 30, 2003, in line with its previous
financial guidance.
Third-Quarter Financial Performance
-- Total revenues were $32.2 million, compared with $21.9 million
for the third quarter of last year.
-- On a GAAP-reported basis, which reflects an effective tax rate
of 31 percent, Forrester reported third-quarter net income of
$186,000, or $0.01 per diluted share compared to a net loss of
$307,000, or ($0.01) 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 $167,000 related to the integration of Giga Information
Group, Inc., and reorganization costs of $1.2 million, and
which reflects a pro forma effective tax rate of 35 percent,
net income was $2.8 million, or $0.12 per diluted share, for
the third quarter of 2003. This compares with pro forma net
income of $2.6 million, or $0.11 per diluted share for the
same period last year, which excludes amortization of
acquisition-related intangible assets of $82,000, impairments
of certain non-marketable securities of $859,000, and
reorganization costs of $3.1 million.
Nine-Month Period Ended September 30, 2003 Financial Performance
-- Total revenues were $90.7 million, compared with $73.4 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 $2.1 million,
or $0.09 per diluted share for the nine months ended 2003,
compared to a net loss of $2.9 million or ($0.12) per diluted
share for the same period last year.
-- On a pro forma basis, which excludes amortization of
acquisition-related intangible assets of $6.1 million, costs
of $938,000 related to the integration of Giga Information
Group, Inc., reorganization costs of $1.2 million, 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 $7.8 million,
or $0.34 per diluted share, for the nine months ended 2003.
This compares with pro forma net income of $9.0 million, or
$0.38 per diluted share for the same period last year, which
excludes a reorganization charge of $12.2 million,
amortization of acquisition-related intangible assets of
$246,000, and impairments of certain non-marketable securities
of $3.6 million.
A reconciliation of GAAP results to pro forma results may be found
in the attached financial tables.
"The third quarter showed modest improvement in Forrester's
business," said George F. Colony, chairman of the board and chief
executive officer. "New business as well as cross-sell business
between legacy Forrester and Giga accounts increased. Companies began
to emerge from their hibernation to become more engaged in technology
projects and technology spending. I'm cautiously optimistic about our
business based on the slight improvement we saw in the third quarter."
Forrester also continued to make major progress toward finalizing
the integration of Giga. "During the third quarter, we completed the
final steps in the organizational integration of the two companies,"
said Colony. "We are one team across Forrester. Now early in the
fourth quarter, we are rolling out a significantly enhanced research
offering called WholeView 2(TM) that combines the best of Forrester
and Giga. Whole View 2 is a comprehensive, collaborative view of
technology from deep IT issues to broad business issues. WholeView 2,
developed after extensive research and planning that included input
from numerous clients, is being marketed and sold during the fourth
quarter."
The Forrester Oval Program(TM), comprising five technology boards,
continued to gain traction during the third quarter. The CIO Group
added 18 new CIOs from large corporations. The four technology
Councils -- boards for non-CIO technology professionals -- gained 17
new members for a total Oval membership of 190.
Forrester is providing financial guidance as follows:
Fourth-Quarter 2003 (GAAP):
-- Total revenues of approximately $32.0 million to $35.0
million.
-- Operating margin of approximately 5 percent to 8 percent,
which assumes that no charges related to the San Francisco
office lease are incurred during 2003.
-- Other income of approximately $700,000 to $800,000.
-- An effective tax rate of 31 percent.
-- Diluted earnings per share of approximately $0.06 to $0.10,
which assumes that no charges related to the San Francisco
office lease are incurred during 2003.
Fourth-Quarter 2003 (Pro Forma):
Pro forma financial guidance for the fourth quarter 2003 excludes
amortization of acquisition-related intangible assets of approximately
$2.6 million and any impairment charges related to non-marketable
investments.
-- Pro forma operating margin of approximately 14 percent to 16
percent.
-- Pro forma effective tax rate of 35 percent, which varies from
our actual effective tax rate of 31 percent because of our
tax-free interest income decreasing as a percentage of our pro
forma pre-tax income.
-- Pro forma diluted earnings per share of approximately $0.15 to
$0.17.
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 that no charges related to the San Francisco
office lease are incurred during 2003.
-- Other 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 that no charges related to the San Francisco
office lease are 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
investments, and reorganization and integration charges of
approximately $2.2 million.
-- 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 because of 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.
Separately, Forrester General Counsel Timothy J. Moynihan is
leaving the company at the end of 2003.
A search for a new general counsel is under way.
Forrester is an independent technology research company that
provides both pragmatic and forward-thinking advice about technology's
impact on business. Business, marketing, and IT professionals
worldwide collaborate with Forrester to align their technology
investments with their business goals. Forrester offers products and
services in four major areas: Research, Data, Consulting, and
Community. In February 2003, Forrester acquired Giga Information
Group. 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 fourth quarter of and full-year 2003,
statements about the potential success of WholeView(TM) and other
product offerings, 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, 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.
Kimberly Maxwell Karyl Levinson
Director, Investor Relations Director, Corporate Communications
Forrester Research, Inc. Forrester Research, Inc.
+1 617/613-6234 +1 617/613-6262
kmaxwell@forrester.com press@forrester.com
(C) 2003, Forrester Research, Inc. All rights reserved. Forrester,
WholeView, WholeView 2, and Forrester Oval Program are trademarks of
Forrester Research, Inc.
Forrester Research, Inc.
Consolidated Statements Of Income
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(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2003 2002 2003 (2) 2002
-------------------- --------------------
(Unaudited) (Unaudited)
Revenues
Research services $23,798 $16,984 $68,169 $54,802
Advisory services and
other 8,410 4,954 22,499 18,625
----------- -------- ----------- --------
Total revenues 32,208 21,938 90,668 73,427
Operating expenses
Cost of services and
fulfillment 12,525 7,540 36,380 25,394
Selling and marketing 10,749 7,094 29,523 23,820
General and
administrative 3,927 2,889 10,985 9,590
Depreciation and
amortization 1,520 1,947 5,052 6,001
Amortization of
intangible assets 2,608 82 6,140 246
Integration costs 167 - 938 -
Reorganization costs 1,230 3,082 1,230 12,170
----------- -------- ----------- --------
Total operating expenses 32,726 22,634 90,248 77,221
(Loss) income from
operations (518) (696) 420 (3,794)
Other income, net 787 1,221 3,201 4,262
Impairments of non-
marketable investments - (859) (572) (3,593)
----------- -------- ----------- --------
Income (loss) before
income taxes 269 (334) 3,049 (3,125)
Income tax provision
(benefit) 83 (27) 945 (250)
----------- -------- ----------- --------
Net income (loss) $186 $(307) $2,104 $(2,875)
=========== ======== =========== ========
Diluted earnings (loss)
per share $0.01 $(0.01) $0.09 $(0.12)
=========== ======== =========== ========
Diluted weighted average
shares outstanding 22,741 23,263 22,793 23,254
=========== ======== =========== ========
Basic earnings (loss)
per share $0.01 $(0.01) $0.09 $(0.12)
=========== ======== =========== ========
Basic weighted average
shares outstanding 22,462 23,263 22,572 23,254
=========== ======== =========== ========
Pro forma data (1):
(Loss) income from
operations (518) (696) 420 (3,794)
Amortization of
intangible assets 2,608 82 6,140 246
Integration costs 167 - 938 -
Reorganization costs 1,230 3,082 1,230 12,170
----------- -------- ----------- --------
Pro forma income from
operations 3,487 2,468 8,728 8,622
Other income, net 787 1,221 3,201 4,262
----------- -------- ----------- --------
Pro forma income before
income taxes 4,274 3,689 11,929 12,884
Pro forma income tax
provision 1,496 1,107 4,175 3,865
----------- -------- ----------- --------
Pro forma net income $2,778 $2,582 $7,754 $9,019
=========== ======== =========== ========
Pro forma diluted
earnings per share $0.12 $0.11 $0.34 $0.38
=========== ======== =========== ========
Diluted weighted average
shares outstanding 22,741 23,562 22,793 23,801
=========== ======== =========== ========
(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. Due to
the significance of these items, management believes that the pro
forma presentation aids in the comparability of results.
(2) Results for the nine months ended September 30, 2003 reflect a
$1.1 million reclassification related to the fair value assessment
of deferred revenue with regard to our purchase of Giga
Information Group, Inc., that reduces research services revenues
and reduces selling and marketing expenses in order to be
consistent with the presentation for the three months ended
September 30, 2003.
Forrester Research, Inc.
Consolidated Balance Sheets
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(In thousands)
September December
30, 31,
2003 2002
----------- ---------
(unaudited)
Assets
Cash and cash equivalents $11,342 $11,479
Marketable securities 117,539 183,152
Accounts receivable, net 19,655 17,791
Deferred commissions 4,008 3,524
Prepaid expenses and other current assets 6,962 5,902
----------- ---------
Total current assets 159,506 221,848
Property and equipment, net 9,045 10,674
Goodwill, net 55,096 13,244
Intangibles assets, net 14,104 760
Deferred income taxes 37,538 21,630
Non-marketable investments and other assets 14,688 10,117
----------- ---------
Total assets $289,977 $278,273
=========== =========
Liabilities and stockholders' equity
Accounts payable $1,757 $1,601
Accrued expenses 27,650 20,681
Deferred revenue 51,606 42,123
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Total liabilities 81,013 64,405
Preferred stock - -
Common stock 242 240
Additional paid-in capital 170,447 167,935
Retained earnings 66,858 64,754
Treasury stock, at cost (28,881) (20,085)
Accumulated other comprehensive income 298 1,024
----------- ---------
Total stockholders' equity 208,964 213,868
----------- ---------
Total liabilities and stockholders' equity $289,977 $278,273
=========== =========
Forrester Research, Inc.
Consolidated Statements Cash Flows
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(In thousands)
Nine months ended
September 30,
2003 2002
---------------------
(Unaudited)
Cash flows from operations
Net income (loss) 2,104 (2,875)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities -
Depreciation and amortization 5,052 6,001
Amortization of intangible assets 6,140 246
Impairments of non-marketable investments 572 3,593
Realized gain on sale of marketable
securities (509) -
Tax benefit from stock options 239 2,179
Deferred income taxes 747 437
Non-cash reorganization costs - 3,629
Increase in provision for doubtful
accounts - 196
Loss on disposal of property and
equipment - 92
Amortization of premiums on marketable
securities 618 868
Changes in assets and liabilities, net of
acquisition -
Accounts receivable 9,088 13,541
Deferred commissions (434) 1,642
Prepaid expenses and other 2,401 (1,923)
Accounts payable (1,395) (711)
Accrued expenses (4,714) (2,369)
Deferred revenue (16,914) (20,659)
----------- ---------
Net cash provided by operating activities 2,995 3,887
Cash flows from investing activities
Acquisition of Giga Information Group, Inc.,
net of cash acquired (57,027) -
Purchases of property and equipment (1,122) (1,028)
Purchase of non-marketable investment (3,150) (3,825)
(Decrease) Increase in other assets (1,439) 411
Purchases of marketable securities (164,338) (148,237)
Proceeds from sales and maturities of
marketable securities 230,641 157,722
----------- ---------
Net cash provided by investing activities 3,565 5,043
Cash flows from financing activities
Proceeds from exercises of employee stock
options 2,070 9,293
Acquisition of treasury shares (6,796) (14,830)
Structured stock repurchases (1,793) (2,000)
----------- ---------
Net cash used in financing activities (6,519) (7,537)
Effect of exchange rate changes on cash and cash
equivalents (178) 73
----------- ---------
Net (decrease) increase in cash and cash
equivalents (137) 1,466
Cash and cash equivalents, beginning of period 11,479 17,747
----------- ---------
Cash and cash equivalents, end of period 11,342 19,213
=========== =========
CONTACT: Forrester Research, Inc.
Kimberly Maxwell, 617-613-6234
kmaxwell@forrester.com
Karyl Levinson, 617-613-6262
press@forrester.com