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): April 30, 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)
ITEM 7. Financial Statements and Exhibits. (c) Exhibits 99.1 Press Release dated April 30, 2003. ITEM 9. (Information Provided Under Item 12, DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION). The information contained in this Item 9 is furnished pursuant to Item 12 of Form 8-K "Results of Operations and Financial Condition," in accordance with SEC Release No. 33-8216. 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 April 30, 2003, Forrester Research, Inc. issued a press release announcing its financial results for the quarter ended March 31, 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. 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. Restructuring charges - we excluded 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 first quarter of 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: April 30, 2003 -3-
Exhibit Index Exhibit Description Page - ------- ----------- ---- 99.1 Press Release dated April 30, 2003. 5 -4-
Exhibit 99.1 FOR IMMEDIATE RELEASE FORRESTER RESEARCH ANNOUNCES FIRST-QUARTER 2003 FINANCIAL RESULTS CAMBRIDGE, Mass., April 30, 2003... Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the first quarter ended March 31, 2003, in line with its previous financial guidance. FIRST-QUARTER FINANCIAL PERFORMANCE - - Total revenues were $24.8 million, compared with $26.1 million for the first quarter of last year. - - On a GAAP-reported basis, which reflects an effective tax rate of 31 percent, Forrester reported first-quarter net income of $1.8 million, or $0.08 per diluted share compared to a net loss of $6.1 million, or $0.26 per diluted share for the same period last year. - - On a pro forma basis, which excludes amortization of acquisition-related intangible assets of $924,000 and a write-down of $300,000 related to impairments of certain non-marketable securities, and which reflects a pro forma effective tax rate of 35 percent, pro forma net income was $2.5 million, or $0.11 per diluted share, for the first quarter of 2003. The pro forma effective tax rate of 35 percent 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. This compares with pro forma net income of $3.3 million, or $0.14 per diluted share for the same period last year, which excludes the reorganization costs of $9.1 million, amortization of acquisition-related intangible assets of $82,000, and impairment charges of $2.2 million. A reconciliation of GAAP results to pro forma results may be found in the attached financial tables. GIGA INTEGRATION "Although Forrester's first quarter was extremely busy with the acquisition and integration of Giga Information Group, we remained focused on our clients and were pleased to meet our financial guidance," said George F. Colony, chairman of the board and chief executive officer. "Client satisfaction remains the top priority throughout this integration and clients will continue to be served by the same research and account teams in 2003. We are selling two distinct but complementary research brands -- Forrester and Giga. Behind the scenes, integration is ahead of schedule, and we are already achieving economies of scale in our general and administrative functions." Additionally, Forrester integrated Giga's ForSITE(TM) offering into the Forrester Oval Program(TM)'s CIO Group during the first quarter. The combined board, which consists of 80 members, provides CIOs with a peer network, client-directed research, benchmark data, best practices, and short projects. Along with the CIO Group, three other technology councils from Giga now constitute the Forrester Oval Program: Applications and Development, Security, and Enterprise Architecture. "We strongly believe the new Forrester value proposition is differentiated in the marketplace," said Colony. "Forrester helps companies plan while Giga helps them act. Aligning these two powerful offerings will create amazing value for our clients." CUSTOM CONSUMER RESEARCH - More -
Forrester First-Quarter Fiscal 2003 Results / Page 2 In addition to the enhanced services from the Giga acquisition, Forrester also launched a new research offering called Custom Consumer Research (CCR) in the first quarter. CCR helps consumer businesses develop, market, and measure the success of their products. CCR leverages Consumer Technographics(R), the most comprehensive quantitative research program available for determining how technology is considered, bought, and used by consumers. FINANCIAL GUIDANCE Forrester's guidance for the second quarter of and full year 2003 is as follows: Second-Quarter 2003 (GAAP): - - Total revenues of approximately $33.0 million to $35.0 million. - - Operating margin of approximately (5) percent to 1 percent. - - Interest income of approximately $800,000 to $900,000. - - An effective tax rate of 31 percent. - - Diluted earnings per share of approximately ($0.03) to $0.02. Second-Quarter 2003 (Pro Forma): Pro forma financial guidance excludes amortization of acquisition-related intangible assets of approximately $2.6 million, impairment charges related to non-marketable securities, and second-quarter 2003 integration-related expenses estimated at $1.0 million to $2.0 million. - - Pro forma operating margin of approximately 8 percent to 10 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. Full-Year 2003 (GAAP): - - Total revenues of approximately $125.0 million to $130.0 million. - - Operating margin of approximately 1 percent to 6 percent. - - Interest income of approximately $3.8 million to $4.2 million. - - An effective tax rate of 31 percent. - - Diluted earnings per share of approximately $0.20 to $0.28. Full-Year 2003 (Pro Forma): Pro forma financial guidance excludes amortization of acquisition-related intangible assets of approximately $8.7 million, impairment charges related to non-marketable securities, and integration-related expenses estimated at $1.0 million to $2.0 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 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 - More -
Forrester First-Quarter Fiscal 2003 Results / Page 3 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 second quarter of and full-year 2003, statements about the potential success of WholeView and other product offerings, 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 Director, Investor Relations Forrester Research, Inc. +1 617/613-6234 (C) 2003, Forrester Research, Inc. All rights reserved. Forrester, WholeView, Technographics, and Forrester Oval Program are trademarks of Forrester Research, Inc. Giga Advisory, Giga Consulting, and ForSITE are trademarks of Giga Information Group, Inc. - More -
FORRESTER RESEARCH, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three months ended March 31, 2003 2002 ---- ---- (Unaudited) REVENUES Research services $ 18,821 $ 19,810 Advisory services and other 5,976 6,246 -------- -------- TOTAL REVENUES 24,797 26,056 OPERATING EXPENSES Cost of services and fulfillment 9,525 8,981 Selling and marketing 8,067 8,472 General and administrative 3,308 3,326 Depreciation 1,693 2,066 Amortization of intangible assets 924 82 Reorganization costs -- 9,088 -------- -------- TOTAL OPERATING EXPENSES 23,517 32,015 INCOME (LOSS) FROM OPERATIONS 1,280 (5,959) Other income, net 1,595 1,560 Impairments of non-marketable investments (300) (2,248) -------- -------- INCOME (LOSS) BEFORE INCOME TAXES 2,575 (6,647) Income tax provision (benefit) 798 (532) -------- -------- NET INCOME (LOSS) $ 1,777 $ (6,115) ======== ======== Diluted earnings per share $ 0.08 $ (0.26) ======== ======== Diluted weighted average shares outstanding 22,920 23,146 ======== ======== Basic earnings per share $ 0.08 $ (0.26) ======== ======== Basic weighted average shares outstanding 22,739 23,146 ======== ======== PRO FORMA DATA (1): Income (loss) from operations $ 1,280 $ (5,959) Amortization of intangible assets 924 82 Reorganization costs -- 9,088 -------- -------- PRO FORMA INCOME FROM OPERATIONS 2,204 3,211 Other income, net 1,595 1,560 -------- -------- Pro forma income before income taxes 3,799 4,771 Pro forma income tax provision 1,330 1,431 -------- -------- PRO FORMA NET INCOME $ 2,469 $ 3,340 ======== ======== Pro forma diluted earnings per share $ 0.11 $ 0.14 ======== ======== Diluted weighted average shares outstanding 22,920 23,146 ======== ======== (1) The pro forma data excludes amortization of acquisition-related intangible assets, 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. - More -
FORRESTER RESEARCH, INC. CONSOLIDATED BALANCE SHEETS (In thousands) March 31, December 31, 2003 2002 ---- ---- ASSETS Cash and cash equivalents $ 23,916 $ 11,479 Marketable securities 116,708 183,152 Accounts receivable, net 22,624 17,791 Deferred commissions 4,732 3,524 Prepaid expenses and other current assets 8,144 5,902 --------- --------- Total current assets 176,124 221,848 Property and equipment, net 12,002 10,674 Goodwill, net 69,251 13,244 Intangibles assets, net 19,320 760 Deferred income taxes 20,902 21,630 Non-marketable investments and other assets 12,313 10,117 --------- --------- TOTAL ASSETS $ 309,912 $ 278,273 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 2,299 $ 1,601 Capital lease obligations 208 -- Accrued expenses 29,384 20,681 Deferred revenue 67,392 42,123 --------- --------- Total liabilities 99,283 64,405 Preferred stock -- -- Common stock 241 240 Additional paid-in capital 168,538 167,935 Retained earnings 66,531 64,754 Treasury stock, at cost (25,330) (20,085) Accumulated other comprehensive income 649 1,024 --------- --------- Total stockholders' equity 210,629 213,868 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 309,912 $ 278,273 ========= ========= - More -
FORRESTER RESEARCH, INC. CONSOLIDATED STATEMENTS CASH FLOWS (In thousands) Three months ended March 31, 2003 2002 ---- ---- CASH FLOWS FROM OPERATIONS: Net income (loss) $ 1,777 $ (6,115) Adjustments to reconcile net income (loss) to net cash provided by operating activities - Depreciation 1,693 2,066 Amortization of intangible assets 924 82 Write-downs of non-marketable investments 300 2,248 Loss on disposal of property and equipment -- 92 Tax benefit from stock options 81 -- Deferred income taxes 728 (532) Non-cash reorganization costs -- 2,772 Realized gain on sale of marketable securities (509) -- Amortization of premiums on marketable securities 207 158 Changes in assets and liabilities, net of acquisition - Accounts receivable 5,803 9,579 Deferred commissions 192 621 Prepaid expenses and other (169) (740) Accounts payable (807) (611) Accrued expenses (5,657) (1,291) Deferred revenue (925) (6,519) --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 3,638 1,810 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Giga Information Group, Inc., net of cash acquired (51,549) -- Purchases of property and equipment (69) (244) Purchase of non-marketable investments (1,250) (1,675) Decrease in other assets 123 139 Purchase of marketable securities (77,884) (21,782) Proceeds from sales and maturities of marketable securities 144,196 18,202 --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 13,567 (5,360) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercises of employee stock options 523 2,421 Acquisition of treasury shares (3,245) (3,547) Structured stock repurchase (2,000) -- --------- --------- NET CASH USED IN FINANCING ACTIVITIES (4,722) (1,126) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (46) 23 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,437 (4,653) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,479 17,747 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 23,916 $ 13,094 ========= ========= - ### -