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 of incorporation)		(Commission File Number)		(I.R.S. Employer 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))

 

 

Page 1 of 4

Exhibit Index appears on Page 4

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 October 29, 2008, Forrester Research, Inc. issued a press release announcing its financial results for the quarter ended September 30, 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.

     Non-cash 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 October 29, 2008 with respect to financial results for the quarter ended September 30, 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: October 29, 2008

Exhibit Index

Exhibit		Description		Page
99.1		Press Release dated October 29, 2008			5

Exhibit 99.1

FOR IMMEDIATE RELEASE

Forrester Research Reports Third-Quarter Financial Results

Cambridge, Mass., October 29, 2008 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its financial results for the third quarter ended September 30, 2008.

Third-Quarter Financial Performance

•		Total revenues were $59.5 million, compared with $51.1 million for the third quarter of last year.
•		On a GAAP-reported basis, which reflects an effective tax rate of 37 percent, Forrester reported net income of $6.4 million or $0.27 per diluted share, compared with net income of $6.8 million, or $0.29 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 $7.4 million or $0.31 per diluted share for the third quarter of 2008. Pro forma net income excludes non-cash stock-based compensation of $1.3 million, amortization of acquisition-related intangible assets of $282,000, gains on non-marketable investments of $26,000, and expenses related to the stock option investigation and restatement of the Company’s historical financial statements of $487,000. For the third quarter of 2007, pro forma net income was $6.7 million, or $0.28 per diluted share, which excludes non-cash stock-based compensation of $1.4 million, amortization of acquisition-related intangible assets of $293,000, gains on non-marketable investments of $98,000, and expenses related to the stock option investigation and restatement of the Company’s historical financial statements of $808,000, and which reflects a pro forma effective tax rate of 39 percent.

Nine-Month Period Ended September 30, 2008 Financial Performance

•		Total revenues were $178.0 million, compared with $153.6 million for the same period last year.
•		On a GAAP-reported basis, which reflects an effective tax rate of 39 percent, Forrester reported net income of $20.1 million, or $0.85 per diluted share for the nine months ended September 30, 2008, compared with net income of $13.3 million or $0.56 per diluted share for the same period last year.
•		On a pro forma basis, net income was $22.2 million or $0.94 per diluted share, for the nine months ended September 30, 2008. Pro forma net income excludes non-cash stock-based compensation of $4.0 million, amortization of acquisition-related intangible assets of $476,000, net gain on marketable and non-marketable investments of $2.1 million, and expenses related to the stock option investigation and restatement of the Company’s historical financial statements of $1.1 million, and which reflects a pro forma effective tax rate of 39 percent. For the same period in 2007, pro forma net income was $18.8 million, or $0.79 per diluted share, which excludes non-cash stock-based compensation of $5.8 million, amortization of acquisition-related intangible

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Forrester Third-Quarter 2008 Information / Page 2

assets of $978,000, net impairments from non-marketable investments of $1.7 million, and expenses related to the stock option investigation and restatement of the Company’s historical financial statements of $3.6 million, and which reflects a pro forma effective tax rate of 39 percent.

“Forrester’s third-quarter financials were solid despite the economic slowdown,” said George F. Colony, Forrester’s chairman of the board and chief executive officer. “We achieved our revenue and profit goals and are cautiously optimistic about the rest of 2008. During the third quarter, we continued to add new clients while renewing and enriching our existing clients, an indication that our role-based strategy provides clients with sustained relevancy even during uncertain economic times.”

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

Forrester is providing fourth-quarter 2008 financial guidance as follows:

Fourth-Quarter 2008 (GAAP):

•		Total revenues of approximately $64 million to $70 million.
•		Operating margin of approximately 14 percent to 18 percent.
•		Other income of approximately $1.5 million.
•		An effective tax rate of approximately 39 percent.
•		Diluted weighted average shares outstanding of approximately 23.7 million.
•		Diluted earnings per share of approximately $0.30 to $0.35.

Fourth-Quarter 2008 (Pro Forma):

Pro forma financial guidance for the fourth quarter of 2008 excludes non-cash stock-based compensation expense of approximately $1.2 million to $1.5 million, amortization of acquisition-related intangible assets of approximately $500,000, costs related to the stock option investigation and restatement of the Company’s historical financial statements of $100,000 to $400,000, and any gains or impairment charges related to non-marketable investments.

•		Pro forma operating margin of approximately 18 percent to 21 percent.
•		Pro forma effective tax rate of 39 percent.
•		Pro forma diluted earnings per share of approximately $0.35 to $0.39.

Forrester is providing full-year 2008 guidance as follows:

Forrester Third-Quarter 2008 Information / Page 3

Full-Year 2008 (GAAP):

•		Total revenues of approximately $242 million to $248 million.
•		Operating margin of approximately 14 percent to 16 percent.
•		Other income of approximately $6.6 million.
•		An effective tax rate of 39 percent.
•		Diluted earnings per share of approximately $1.15 to $1.21.

Full-Year 2008 (Pro Forma):

Pro forma financial guidance for full-year 2008 excludes non-cash stock-based compensation expense of $5.1 million to $5.5 million, amortization of acquisition-related intangible assets of approximately $1 million, costs related to the stock option investigation and restatement of the Company’s historical financial statements of $1.1 million to $1.5 million, as well as any gains or impairment charges related to marketable and non-marketable investments.

•		Pro forma operating margin of approximately 17.5 percent to 18.5 percent.
•		Pro forma diluted earnings per share of approximately $1.29 to $1.33.
•		An effective tax rate of 39 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.

Forrester Third-Quarter 2008 Information / Page 4

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 guidance for the fourth quarter of and full-year 2008. 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, 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.

^© 2008, 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 Third-Quarter Fiscal 2008 Results/Page 5

Forrester Research, Inc.
Consolidated Statements of Income
(In thousands, except per share data)

		Three months ended September 30,								Nine months ended September 30,
		2008				2007				2008				2007
		(Unaudited)								(Unaudited)
Revenues
Research services		$	40,326			$	32,945			$	114,136			$	96,312
Advisory services and other			19,180				18,190				63,818				57,325
Total revenues			59,506				51,135				177,954				153,637
Operating expenses
Cost of services and fulfillment			21,806				18,648				65,848				60,106
Selling and marketing			20,282				17,913				60,119				52,813
General and administrative			7,529				7,002				22,945				22,533
Depreciation			1,012				1,026				2,998				2,881
Amortization of intangible assets			282				293				476				978
Total operating expenses			50,911				44,882				152,386				139,311
Income from operations			8,595				6,253				25,568				14,326
Other income, net			1,447				2,175				5,221				6,153
Realized gains (losses) from securities and non-marketable investments			26				98				2,136				(1,690	)
Income from operations before income taxes			10,068				8,526				32,925				18,789
Income tax provision			3,680				1,729				12,864				5,460
Net income		$	6,388			$	6,797			$	20,061			$	13,329
Diluted income per share from net income		$	0.27			$	0.29			$	0.85			$	0.56
Diluted weighted average shares outstanding			23,793				23,667				23,655				23,749
Basic income per share from net income		$	0.28			$	0.29			$	0.87			$	0.58
Basic weighted average shares outstanding			23,163				23,072				23,056				23,067
Pro forma data (1):
Income from operations		$	8,595			$	6,253			$	25,568			$	14,326
Amortization of intangible assets			282				293				476				978
Investigation related expenses			487				808				1,085				3,635
Non-cash stock-based compensation included in the following expense categories:
Cost of services and fulfillment			678				817				2,094				3,119
Selling and marketing			247				313				723				1,524
General and administrative			343				295				1,156				1,120
Pro forma income from operations			10,632				8,779				31,102				24,702
Other income, net			1,447				2,175				5,221				6,153
Pro forma income before income taxes			12,079				10,954				36,323				30,855
Pro forma income tax provision			4,711				4,272				14,166				12,033
Pro forma net income		$	7,368			$	6,682			$	22,157			$	18,822
Pro forma diluted earnings per share		$	0.31			$	0.28			$	0.94			$	0.79
Diluted weighted average shares outstanding			23,793				23,667				23,655				23,749

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Forrester Third-Quarter Fiscal 2008 Results/Page 6

Forrester Research, Inc.
Consolidated Balance Sheets
(In thousands)

		September 30,				December 31,
		2008				2007
Assets:
Cash and cash equivalents		$	124,869			$	53,163
Available-for-sale securities			83,258				195,811
Accounts receivable, net			37,352				69,865
Deferred commissions			8,497				10,631
Deferred income taxes, net			7,489				13,236
Prepaid expenses and other current assets			10,625				11,304
Total current assets			272,090				354,010
Available-for-sale securities			45,935				—
Property and equipment, net			6,932				6,834
Goodwill, net			69,253				53,677
Intangible assets, net			8,102				309
Deferred income taxes, net			6,831				2,274
Non-marketable investments and other assets			9,115				9,253
Total assets		$	418,258			$	426,357
Liabilities and stockholders’ equity:
Accounts payable		$	3,458			$	4,174
Accrued expenses			18,734				28,891
Deferred revenue			98,128				111,418
Total current liabilities			120,320				144,483
Non-current liabilities			6,894				6,858
Preferred stock			—				—
Common stock			291				282
Additional paid-in capital			310,955				284,431
Retained earnings			101,539				81,478
Treasury stock, at cost			(116,514	)			(90,428	)
Accumulated other comprehensive loss			(5,227	)			(747	)
Total stockholders’ equity			291,044				275,016
Total liabilities and stockholders’ equity		$	418,258			$	426,357

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Forrester Third-Quarter Fiscal 2008 Results/Page 7

Forrester Research, Inc.
Consolidated Statements of Cash Flows
(In thousands)

		Nine months ended September 30,
		2008				2007
		(Unaudited)				(Unaudited)
Cash flows from operations:
Net income		$	20,061			$	13,329
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation			2,998				2,881
Amortization of intangible assets			476				978
Non-cash stock-based compensation			3,973				5,763
Increase in provision for doubtful accounts			494				380
Deferred income taxes			2,961				3,991
(Gains) impairments from non-marketable investments, net			(79	)			1,690
Gains on sales of available-for-sale securities			(2,057	)			—
Amortization of premiums on available-for-sale securities			626				473
Changes in assets and liabilities, net of acquisition -
Accountsreceivable			34,518				24,147
Deferredcommissions			2,134				2,216
Prepaidexpensesandothercurrentassets			2,290				(4,146	)
Accountspayable			(1,056	)			(338	)
Accruedexpenses			(10,035	)			(6,116	)
Deferredrevenue			(16,951	)			(16,053	)
Net cash provided by operating activities			40,353				29,195
Cash flows from investing activities:
Acquisition of Jupiter			(23,398	)			—
Purchases of property and equipment			(2,730	)			(3,826	)
Proceeds from non-marketable investments			250				1,058
Decrease in other assets			344				26
Proceeds from sale of discontinued operations			—				250
Purchases of available-for-sale securities			(966,671	)			(872,420	)
Proceeds from sales and maturities of available-for-sale securities			1,028,902				845,631
Net cash provided by (used in) investing activities			36,697				(29,281	)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock option plans and employee stock purchase plan			17,246				811
Tax benefits related to stock options			5,314				—
Acquisition of treasury shares			(26,086	)			—
Net cash (used in) provided by financing activities			(3,526	)			811
Effect of exchange rate changes on cash and cash equivalents			(1,818	)			938
Net increase in cash and cash equivalents			71,706				1,663
Cash and cash equivalents, beginning of period			53,163				39,157
Cash and cash equivalents, end of period		$	124,869			$	40,820

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