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

FORRESTER RESEARCH, INC.

(Exact name of registrant as specified in its charter)

Delaware		000-21433		04-2797789
(State or other jurisdiction		(Commission File Number)		(I.R.S. Employer
of incorporation)				Identification Number)

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changes since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

     The information contained in this current report on Form 8-K is furnished pursuant to Item 2.02 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 February 11, 2009, Forrester Research, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 2008.

     Forrester believes that pro forma financial results provide investors with consistent and comparable information to aid in the understanding of Forrester’s ongoing business. Forrester uses pro forma financial information to manage its business, including use of pro forma financial results as the basis for setting targets for various compensation programs. Our pro forma presentation excludes the following, as well as their related tax effects:

     Amortization of intangibles—we exclude the effect of the amortization of intangibles from our pro forma results in order to more consistently present our ongoing results of operations.

     Impairments of and gains related to non-marketable securities and gains from sales of marketable securities—we have consistently excluded both one-time gains and one-time write-offs related to our investments in non-marketable securities and sales of marketable securities from our pro forma results in order to keep quarter-over-quarter and year-over-year comparisons consistent.

     Stock-based compensation expense—we exclude the stock-based compensation impact of SFAS 123R from our pro forma results in order to keep quarter-over-quarter and year-over-year comparisons consistent.

     Expenses related to the Company’s stock option investigation and the restatement of the Company’s historical financial statements are also not included in our pro forma results in order to keep quarter-over-quarter and year-over year comparisons consistent.

     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 our financial statements and filings with the Securities and Exchange Commission.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

     (d) Exhibits

99.1 Press Release dated February 11, 2009 with respect to financial results for the quarter and year ended December 31, 2008.

SIGNATURES

     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.

Date: February 11, 2009

Exhibit Index

Exhibit		Description		Page
99.1		Press Release dated February 11, 2009		5

Exhibit 99.1

FOR IMMEDIATE RELEASE

Forrester Research Reports Fourth-Quarter And Full-Year 2008 Financial
Results

Cambridge, Mass., February 11, 2009 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its financial results for the fourth quarter ended December 31, 2008 and full-year 2008.

Fourth-Quarter Financial Performance

•		Total revenues were $62.9 million, compared with $58.4 million for the fourth quarter of last year.
•		On a GAAP-reported basis, which reflects an effective tax rate of 23 percent, Forrester reported net income of $9.2 million or $0.39 per diluted share, compared with net income of $5.6 million, which reflects an effective tax rate of 50 percent or $0.24 per diluted share, for the same period last year.
•		On a pro forma basis, which reflects a pro forma effective tax rate of 39 percent, net income was $9.0 million or $0.38 per diluted share for the fourth quarter of 2008. Pro forma net income excludes stock-based compensation of $1.4 million, amortization of acquisition-related intangibles of approximately $1.0 million, net impairments of non-marketable investments of $663,000, and a net reimbursement of professional fees related to the stock option investigation and restatement of the Company’s historical financial statements of $208,000. For the fourth quarter of 2007, pro forma net income was $8.7 million or $0.37 per diluted share, which excludes stock-based compensation of $2.6 million, amortization of acquisition-related intangible assets of $254,000, gains from short-term investments and non-marketable investments of $671,000, and expenses related to the stock option investigation and restatement of the Company’s historical financial statements of $954,000 and which reflects a pro forma effective tax rate of 39 percent.

Year Ended December 31, 2008 Financial Performance

•		Total revenues were $240.9 million, compared with $212.1 million last year.
•		On a GAAP-reported basis, which reflects an effective tax rate of 35 percent, Forrester reported net income of $29.2 million or $1.24 per diluted share for 2008, compared with net income of $18.9 million or $0.80 per diluted share for the same period last year, which reflects an effective tax rate of 37 percent.
•		On a pro forma basis, net income was $31.1 million or $1.32 per diluted share for 2008, which reflects a pro forma effective tax rate of 39 percent and which also excludes stock-based compensation of $5.4 million, amortization of acquisition-related intangible assets of $1.4 million, a net gain of $1.5 million on the sale of short-term investments, and expenses related to the stock option investigation and restatement of the Company’s financial statements of $877,000. For 2007, pro forma net income was

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Forrester Fourth-Quarter And Full-Year 2008 Information / Page 2

$27.6 million or $1.16 per diluted share, which reflects a pro forma effective tax rate of 39 percent and which excludes stock-based compensation of $8.3 million, amortization of acquisition-related intangible assets of $1.2 million, net impairments from non-marketable investments of $1.0 million, and expenses related to the stock option investigation and restatement of the Company’s historical financial statements of $4.6 million.

“The recession caused a slowdown in our business toward the end of 2008,” said George F. Colony, Forrester’s chairman of the board and chief executive officer. “The market conditions, however, did not prevent us from remaining profitable and achieving our EPS targets for the year. This is due in part to our role-based strategy, which resulted in a relatively strong retention of clients despite the tough economy.”

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.

Fiscal Year 2009

Forrester recently announced a reduction of approximately 50 jobs or an estimated 5 percent of its workforce worldwide in response to the ailing economy. The company anticipates that it will incur pretax expenses of approximately $2.5 to $3 million in the first quarter of 2009, related principally to cash severance and related benefits costs. The company is also evaluating associated facilities-related costs.

“We are grateful for the contributions of all of our employees over the past year,” said George F. Colony, Forrester’s chairman of the board and chief executive officer. “We have made this difficult decision in response to challenging global economic conditions. Forrester has lived through tough economic times before. We are confident that with our role-based strategy and our current offerings, we are well poised to successfully deliver what our clients need today and in the long term.”

Forrester is providing first quarter 2009 financial guidance as follows:

First-Quarter 2009 (GAAP)

•		Total revenues of approximately $52 million to $56 million.
•		Operating margin of approximately 0 percent to 5 percent.
•		Other income of approximately $800,000.
•		An effective tax rate of approximately 40 percent.
•		Diluted weighted average shares outstanding of approximately 23.4 million.
•		Diluted earnings per share of approximately $0.02 to $0.06.

First-Quarter 2009 (Pro Forma):

Pro forma financial guidance for the first quarter of 2009 excludes stock-based compensation expense of approximately $1.0 million to $1.3 million, amortization of acquisition-related intangible assets of approximately $600,000, costs associated with the reduction in workforce of $2.5 million to $3.0 million and any associated facilities-related

Forrester Fourth-Quarter And Full-Year 2008 Information / Page 3

costs, costs related to the stock option investigation and restatement of the Company’s historical financial statements, and any gains or impairment charges related to marketable and non-marketable investments.

•		Pro forma operating margin of approximately 10 percent to 13 percent.
•		Pro forma effective tax rate of 40 percent.
•		Pro forma diluted earnings per share of approximately $0.15 to $0.19.

Forrester is providing full-year 2009 guidance as follows:

Full-Year 2009 (GAAP):

•		Total revenues of approximately $215 million to $235 million.
•		Operating margin of approximately 10 percent to 13 percent.
•		Other income of approximately $3.0 million.
•		An effective tax rate of 40 percent.
•		Diluted earnings per share of approximately $0.64 to $0.84.

Full-Year 2009 (Pro Forma):

Pro forma financial guidance for full-year 2009 excludes stock-based compensation expense of $4.5 million to $5.5 million, amortization of acquisition-related intangible assets of approximately $1.7 million, costs associated with the reduction in workforce of $2.5 million to $3.0 million and any associated facilities-related costs, costs related to the stock option investigation and restatement of the Company’s historical financial statements, and any gains or impairment charges related to marketable and non-marketable investments.

•		Pro forma operating margin of approximately 15 percent to 17 percent.
•		Pro forma diluted earnings per share of approximately $0.88 to $1.11.
•		An effective tax rate of 40 percent.

About Forrester Research

Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, consumer insight, consulting, events, and peer-to-peer executive programs. For more than 25 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more 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 first quarter of and full-year 2009. These statements are based on Forrester’s current plans and expectations and involve risks and

Forrester Fourth-Quarter And Full-Year 2008 Information / Page 4

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 respond to business and economic conditions, particularly in light of the continuing global economic downturn, technology spending, market trends, competition, industry consolidation, 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 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.

© 2009, Forrester Research, Inc. All rights reserved.

Karyl Levinson		Michael A. Doyle
Vice President, Corporate Communications		Chief Financial Officer
Forrester Research, Inc.		Forrester Research, Inc
+ 1 617.613.6262		+ 1 617.613.6234
press@forrester.com		investor@forrester.com

Forrester Fourth-Quarter and Full Year Fiscal 2008 Results/Page 5

Forrester Research, Inc.

Consolidated Statements of Income
(In thousands, except per share data)

		Three months ended								Year ended
		Dec 31,				Dec 31,				Dec 31,				Dec 31,
		2008				2007				2008				2007
		(Unaudited)								(Unaudited)
Revenues
Research services		$	41,203			$	34,851			$	155,339			$	131,163
Advisory services and other			21,718				23,568				85,536				80,893
Total revenues			62,921				58,419				240,875				212,056
Operating expenses
Cost of services and fulfillment			21,954				21,501				87,802				81,608
Selling and marketing			19,825				19,017				79,944				71,830
General and administrative			6,778				8,216				29,723				30,749
Depreciation			1,009				1,105				4,007				3,986
Amortization of intangible assets			959				254				1,435				1,232
Total operating expenses			50,525				50,093				202,911				189,405
Income from operations			12,396				8,326				37,964				22,651
Other income, net (1)			152				2,219				5,373				8,372
(Impairments) gains from marketable and non-marketable investments, net			(663	)			671				1,473				(1,019	)
Income before income taxes			11,885				11,216				44,810				30,004
Income tax provision			2,731				5,601				15,595				11,061
Net Income		$	9,154			$	5,615			$	29,215			$	18,943
Diluted income per share from net income		$	0.39			$	0.24			$	1.24			$	0.80
Diluted weighted average shares outstanding			23,377				23,670				23,585				23,729
Basic income per share from net income		$	0.40			$	0.24			$	1.27			$	0.82
Basic weighted average shares outstanding			23,079				23,096				23,062				23,074
Pro forma data (2):
Income from operations		$	12,396			$	8,326			$	37,964			$	22,651
Amortization of intangible assets			959				254				1,435				1,232
Investigation related expenses			(208	)			954				877				4,583
Non-cash stock-based compensation included in the following expense categories:
Cost of services and fulfillment			682				1,127				2,776				4,245
Selling and marketing			266				206				988				1,730
General and administrative			438				1,231				1,594				2,351
Pro forma income from operations			14,533				12,098				45,634				36,792
Other income, net (1)			152				2,219				5,373				8,372
Pro forma income before income taxes			14,685				14,317				51,007				45,164
Pro forma income tax provision			5,727				5,584				19,893				17,614
Pro forma net income		$	8,958			$	8,733			$	31,114			$	27,550
Pro forma diluted earnings per share		$	0.38			$	0.37			$	1.32			$	1.16
Diluted weighted average shares outstanding			23,377				23,670				23,585				23,729

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Forrester Fourth-Quarter and Full Year Fiscal 2008 Results/Page 6

Forrester Research, Inc.

Condensed Consolidated Balance Sheets
(In thousands)

		December 31,				December 31,
		2008				2007
		(Unaudited)
Assets:
Cash and cash equivalents		$	129,478			$	53,163
Short-term investments			90,838				195,811
Accounts receivable, net			64,226				69,865
Deferred commissions			9,749				10,631
Deferred income taxes			7,947				13,236
Prepaid expenses and other current assets			15,553				11,304
Total current assets			317,791				354,010
Long-term investments			39,613				—
Property and equipment, net			6,759				6,834
Deferred income taxes			8,523				2,274
Goodwill and intangible assets, net			74,563				53,986
Non-marketable investments and other long term assets			7,702				9,253
Total assets		$	454,951			$	426,357
Liabilities and stockholders’ equity:
Accounts payable		$	3,532			$	4,174
Accrued expenses			27,527				28,891
Deferred revenue			113,844				111,418
Total current liabilities			144,903				144,483
Deferred income tax liability and other non-current accrued income tax liability			6,551				6,858
Total liabilities			151,454				151,341
Preferred stock			—				—
Common stock			291				282
Additional paid-in capital			315,149				284,431
Retained earnings			110,693				81,478
Treasury stock, at cost			(120,851	)			(90,428	)
Accumulated other comprehensive loss			(1,785	)			(747	)
Total stockholders’ equity			303,497				275,016
Total liabilities and stockholders’ equity		$	454,951			$	426,357

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Forrester Fourth-Quarter and Full Year Fiscal 2008 Results/Page 7

Forrester Research, Inc.

Consolidated Statements of Cash Flows
(In thousands)

		Year ended
		December 31,				December 31,
		2008				2007
		(Unaudited)
Cash flows from operations:
Net income		$	29,215			$	18,943
Adjustments to reconcile net income to net cash provided by operating activities —
Depreciation			4,007				3,986
Amortization of intangible assets			1,435				1,232
Non-cash stock-based compensation			5,358				8,326
Impairments from non-marketable investments, net			584				1,622
Realized net gains and impairments on sales of investments			(2,057	)			(603	)
Increase in provision for doubtful accounts			594				480
Excess tax benefits from stock-based compensation			(8,476	)			101
Deferred income taxes			(156	)			6,878
Accretion of premiums on investments			870				607
Changes in assets and liabilities —
Accounts receivable			6,806				(9,966	)
Deferred commissions			881				(514	)
Prepaid expenses and other current assets			(4,184	)			(3,552	)
Accounts payable			(893	)			1,171
Accrued expenses			9,449				(1,122	)
Deferred revenue			211				9,841
Net cash provided by operating activities			43,644				37,430
Cash flows from investing activities:
Acquisition of Jupiter			(22,398	)			—
Purchases of property and equipment			(3,698	)			(5,106	)
Proceeds from non-marketable investments			493				2,640
Proceeds from sale of discontinued operations			—				250
Decrease in other assets			444				146
Purchases of short-term investments			(1,224,793	)			(1,240,584	)
Proceeds from sales and maturities of short-term investments			1,288,532				1,217,367
Net cash provided by (used in) investing activities			38,580				(25,287	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock option plans and employee stock purchase plan			18,577				4,896
Tax benefits related to stock options			8,476				807
Acquisition of treasury shares			(30,423	)			(4,594	)
Net cash (used in) provided by financing activities			(3,370	)			1,109
Effect of exchange rate changes on cash and cash equivalents			(2,539	)			754
Net increase in cash and cash equivalents			76,315				14,006
Cash and cash equivalents, beginning of period			53,163				39,157
Cash and cash equivalents, end of period		$	129,478			$	53,163