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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): April 28, 2004
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)
Page 1 of 5
Exhibit Index appears on Page 4
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release dated April 28, 2004.
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 April 28, 2004, Forrester Research, Inc. issued a press release
announcing its financial results for the quarter ended March 31, 2004, 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.
Reorganization costs - we exclude reorganization costs in order to
present a consistent basis for quarterly comparisons and to more consistently
present our results of operations.
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.
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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
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Name: Warren Hadley
Title: Treasurer and Chief Financial Officer
Dated: April 28, 2004
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Exhibit Index
Exhibit Description Page
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99.1 Press Release dated April 28, 2004. 5
Exhibit 99.1
Forrester Research Announces First-Quarter 2004 Financial Results
CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 28, 2004--Forrester
Research, Inc. (Nasdaq: FORR) today announced its first-quarter ended
March 31, 2004 financial results, in line with its previous financial
guidance.
First-Quarter Financial Performance
-- Total revenues were $31.7 million, compared with $24.5 million
for the first quarter of last year.
-- On a GAAP-reported basis, which reflects an effective tax rate
of 33.5 percent, Forrester reported a first-quarter net loss
of $257,000 or $0.01 per diluted share, compared with net
income of $1.8 million, or $0.08 per diluted share, for the
same period last year.
-- On a pro forma basis, which excludes amortization of $2.3
million of acquisition-related intangible assets,
reorganization costs of $2.0 million, 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 first quarter of
2004. This compares with pro forma net income of $2.5 million,
or $0.11 per diluted share, for the same period in 2003, which
excludes amortization of $924,000 of acquisition-related
intangible assets and impairments to certain non-marketable
investments of $300,000, and a pro forma effective tax rate of
35 percent.
A reconciliation of GAAP results to pro forma results may be found
in the attached financial tables.
"The first quarter showed continued stabilization in Forrester's
business," said George F. Colony, chairman of the board and chief
executive officer. "Our dollar retention rate improved to 83%, meeting
our target range of 80% to 85% for the first time in three years. Also
during the quarter, our clients began using WholeView 2(TM), our
integrated research product. Our newly designed site offers
Forrester's clients quick access to a unique and valuable database of
research services combining the former WholeView and Giga Advisory.
WholeView 2 now serves as the foundation for all of Forrester's
products and services moving forward."
Forrester is providing financial guidance as follows:
Second-Quarter 2004 (GAAP):
-- Total revenues of approximately $32.0 million to $34.0
million.
-- Operating margin of approximately (1) percent to 3 percent.
-- Other income of approximately $650,000 to $750,000.
-- An effective tax rate of 33.5 percent.
-- Diluted earnings per share of approximately $0.00 to $0.04.
Second-Quarter 2004 (Pro Forma):
Pro forma financial guidance for the second quarter of 2004
excludes amortization of acquisition-related intangible assets of
approximately $1.4 million, a reorganization charge of approximately
$1.5 million to $2.0 million related to the relocation of Forrester's
San Francisco office, and any gains or impairment charges related to
non-marketable investments.
-- Pro forma operating margin of approximately 10 percent to 12
percent.
-- Pro forma effective tax rate of 35 percent, which varies from
our estimated GAAP effective tax rate of 33.5 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 $0.11 to
$0.13.
Full-Year 2004 (GAAP):
-- Total revenues of approximately $133.0 million to $138.0
million.
-- Operating margin of approximately 3 percent to 7 percent.
-- Other income of approximately $2.7 million to $2.9 million.
-- An effective tax rate of 33.5 percent.
-- Diluted earnings per share of approximately $0.22 to $0.27.
Full-Year 2004 (Pro Forma):
Pro forma financial guidance for full-year 2004 excludes
amortization of acquisition-related intangible assets of approximately
$6.5 million, any impairment gains or impairment charges related to
non-marketable investments, and reorganization charges of
approximately $4.0 million to $5.0 million.
-- Pro forma operating margin of approximately 11 percent to 13
percent.
-- Pro forma effective tax rate of 35 percent, which varies from
our estimated GAAP effective tax rate of 33.5 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 $0.52 to
$0.57.
Forrester is an independent technology research company that
provides 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. 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 2004,
statements about the potential success of WholeView 2 and other
product offerings, the ability to achieve all of the anticipated
benefits from the acquisition of Giga Information Group, the amount of
the charge and any cost savings related to reductions in force and
associated actions, 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 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 and any cost savings related
to reductions in force and associated actions, and Forrester's
dependence on renewals of its membership-based research services and
on key personnel. Forrester 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) 2004, Forrester Research, Inc. All rights reserved. Forrester
and WholeView 2 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
March 31,
2004 2003(2)
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(Unaudited)
Revenues
Research services $22,989 $18,506
Advisory services and other 8,740 5,976
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Total revenues 31,729 24,482
Operating expenses
Cost of services and fulfillment 13,139 9,525
Selling and marketing 11,060 7,752
General and administrative 3,411 3,308
Depreciation 1,031 1,693
Amortization of intangible assets 2,344 924
Reorganization costs 1,957 -
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Total operating expenses 32,942 23,202
(Loss) income from operations (1,213) 1,280
Other income, net 826 1,595
Impairments of non-marketable investments - (300)
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(Loss) income before income taxes (387) 2,575
Income tax (benefit) provision (130) 798
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Net (loss) income $(257) $1,777
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Diluted (loss) income per share $(0.01) $0.08
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Diluted weighted average shares outstanding 22,255 22,920
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Basic (loss) income per share $(0.01) $0.08
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Basic weighted average shares outstanding 22,255 22,739
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Pro forma data (1):
(Loss) income from operations $(1,213) $1,280
Amortization of intangible assets 2,344 924
Reorganization costs 1,957 -
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Pro forma income from operations 3,088 2,204
Other income, net 826 1,595
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Pro forma income before income taxes 3,914 3,799
Pro forma income tax provision 1,370 1,330
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Pro forma net income $2,544 $2,469
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Pro forma diluted earnings per share $0.11 $0.11
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Diluted weighted average shares outstanding 22,771 22,920
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(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 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.
(2) Results for the three months ended March 31, 2003 reflect a
$315,000 reclassification related to the fair value assessment of
deferred revenue with regard to our purchase of Giga Information
Group, Inc., which reduces research services revenues and reduces
selling and marketing expenses in order to be consistent with the
presentation for the year ended December 31, 2003.
Forrester Research, Inc.
Consolidated Balance Sheets
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(In thousands)
March 31, Dec. 31,
2004 2003
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(Unaudited)
Assets:
Cash and cash equivalents $38,431 $22,385
Marketable securities 89,331 104,348
Accounts receivable, net 25,342 40,013
Deferred commissions 5,799 5,999
Prepaid expenses and other current assets 8,277 7,079
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Total current assets 167,180 179,824
Property and equipment, net 7,769 8,266
Goodwill, net 56,858 57,006
Intangible assets, net 11,112 13,456
Deferred income taxes 40,097 40,159
Non-marketable investments and other assets 13,050 12,264
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Total assets $296,066 $310,975
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Liabilities and stockholders' equity:
Accounts payable $2,013 $2,566
Accrued expenses 25,535 31,457
Deferred revenue 67,233 68,630
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Total liabilities 94,781 102,653
Preferred stock - -
Common stock 244 243
Additional paid-in capital 174,000 172,523
Retained earnings 66,688 66,945
Treasury stock, at cost (38,487) (30,300)
Accumulated other comprehensive loss (1,160) (1,089)
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Total stockholders' equity 201,285 208,322
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Total liabilities and stockholders' equity $296,066 $310,975
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Forrester Research, Inc.
Consolidated Statements Of Cash Flows
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(In thousands)
Three months ended
March 31,
2004 2003
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(Unaudited)
Cash flows from operations:
Net (loss) income $(257) $1,777
Adjustments to reconcile net (loss) income
to net cash provided by operating activities -
Depreciation 1,031 1,693
Amortization of intangible assets 2,344 924
Write-down of non-marketable investment - 300
Tax benefit from stock options 90 81
Deferred income taxes (1) 728
Realized gain on sale of marketable securities - (509)
Amortization of premiums on marketable
securities 173 207
Changes in assets and liabilities, net of
acquisition -
Accounts receivable 15,586 5,803
Deferred commissions 200 192
Prepaid expenses and other current assets (872) (169)
Accounts payable (658) (807)
Accrued expenses (5,862) (5,657)
Deferred revenue (2,295) (925)
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Net cash provided by operating activities 9,479 3,638
Cash flows from investing activities:
Acquisition of Giga Information Group, Inc.,
net of cash acquired - (51,549)
Purchases of property and equipment (530) (69)
Purchases of non-marketable investments (963) (1,250)
Decrease in other assets 269 123
Purchase of marketable securities (34,060) (77,884)
Proceeds from sales and maturities of
marketable securities 49,150 144,196
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Net cash provided by investing activities 13,866 13,567
Cash flows from financing activities:
Proceeds from exercises of employee stock
options 512 523
Acquisition of treasury shares (6,187) (3,245)
Structured stock repurchases (1,500) (2,000)
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Net cash used in financing activities (7,175) (4,722)
Effect of exchange rate changes on cash and cash
equivalents (124) (46)
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Net increase in cash and cash equivalents 16,046 12,437
Cash and cash equivalents, beginning of period 22,385 11,479
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Cash and cash equivalents, end of period $38,431 $23,916
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CONTACT: Forrester Research, Inc.
Kimberly Maxwell, 617-613-6234
Director, Investor Relations
kmaxwell@forrester.com
or
Forrester Research, Inc.
Karyl Levinson, 617-613-6262
Director, Corporate Communications
press@forrester.com