INVESTOR INFORMATION

Forrester Research (Nasdaq: FORR) is a global research and advisory firm serving professionals in 13 key roles across three distinct client segments. Our clients face progressively complex business and technology decisions every day. To help them understand, strategize, and act upon opportunities brought by change, Forrester provides proprietary research, consumer and business data, custom consulting, events and online communities, and peer-to-peer executive programs. We guide leaders in technology management, marketing and strategy, and the technology industry through independent fact-based insight, ensuring their business success today and tomorrow.

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Forrester Research Reports Fourth-Quarter And Full-Year Financial Results
CAMBRIDGE, Mass., Feb 10, 2010 (BUSINESS WIRE) -- Forrester Research, Inc. (Nasdaq: FORR) today announced its fourth-quarter ended December 31, 2009 and full-year 2009 financial results.

Fourth-Quarter Financial Performance

  • Total revenues were $61.5 million, compared with $62.9 million for the fourth quarter of last year.
  • On a GAAP-reported basis, Forrester reported net income of $6.7 million, or $0.29 per diluted share, compared with net income of $9.2 million, or $0.39 per diluted share, for the fourth quarter of last year.
  • On a pro forma basis, net income was $7.9 million, or $0.35 per diluted share, for the fourth quarter of 2009, which reflects a pro forma effective tax rate of 40 percent. Pro forma net income excludes stock-based compensation of $1.2 million, reorganization costs of $2.3 million, amortization of $0.5 million of acquisition-related intangible assets, and net non-marketable investment gains of $0.7 million. This compares with pro forma net income of $9.0 million, or $0.38 per diluted share, for the same period in 2008, which reflects a pro forma effective tax rate of 39 percent. Pro forma net income for the fourth quarter of 2008 excludes stock-based compensation of $1.4 million, amortization of $1.0 million of acquisition-related intangible assets, net non-marketable investment losses of $0.7 million, and a net reimbursement of $0.2 million of professional fees related to the Company's historical stock option investigation.

Year Ended December 31, 2009 Financial Performance

  • Total revenues were $233.4 million, compared with $240.9 million for 2008.
  • On a GAAP-reported basis, Forrester reported net income of $19.8 million, or $0.86 per diluted share for 2009, compared with net income of $29.2 million or $1.24 per diluted share for 2008.
  • On a pro forma basis, net income was $29.1 million or $1.27 per diluted share for 2009, which reflects a pro forma effective tax rate of 40 percent. Pro forma net income for 2009 excludes stock-based compensation of $6.1 million, amortization of $2.3 million of acquisition-related intangible assets, $5.4 million of reorganization costs, and net non-marketable investment losses of $1.0 million. This compares with pro forma net income of $31.1 million, or $1.32 per diluted share for 2008, which reflects a pro forma effective tax rate of 39 percent. Pro forma net income for 2008 excludes stock-based compensation of $5.4 million, amortization of $1.4 million of acquisition-related intangible assets, net marketable and non-marketable investment gains of $1.5 million, and net expenses of $0.9 million related to the Company's historical stock option investigation.

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables. The attached financial tables include selected balance sheet and cash flow data. We are finalizing adjustments to tax accounts in our balance sheet; full consolidated financial statements will be included in our 2009 Annual Report on Form 10-K. We do not expect any adjustments to affect our reported pro forma operating results.

"Forrester's performance accelerated in the fourth quarter of 2009, capping a year in which we beat our plan," said George F. Colony, Forrester's chairman of the board and chief executive officer. "We met or exceeded our financial targets including revenue, operating margin, and EPS, and ended the year with client and dollar retention approaching pre-recession levels. Forrester's role-based strategy is yielding increased relevancy to our clients, as shown in our financial results in 2009."

"Coming out of the 2009 recession, we believe that now is the time to expand the sales force, invest in the infrastructure of the business, and enhance our client-facing technology," said Michael Doyle, Forrester's chief financial officer. "These investments will dampen the operating margins in 2010 as reflected in our full-year guidance."

Forrester is providing first-quarter 2010 financial guidance as follows:

First-Quarter 2010 (GAAP):

  • Total revenues of approximately $57.5 million to $59.5 million.
  • Operating margin of approximately 10% to 12%.
  • Other income of approximately $250,000.
  • An effective tax rate of 40 percent.
  • Diluted earnings per share of approximately $0.16 to $0.20.

First-Quarter 2010 (Pro Forma):

Pro forma financial guidance for the first quarter of 2010 excludes stock-based compensation of $1.0 million to $1.2 million, amortization of acquisition-related intangible assets of approximately $0.9 million, and any gains or losses related to marketable and non-marketable investments.

  • Pro forma operating margin of approximately 13.5% to 15.5%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $0.21 to $0.25.

Forrester is providing full-year 2010 guidance as follows:

Full-Year 2010 (GAAP):

  • Total revenues of approximately $240 million to $248 million.
  • Operating margin of approximately 11% to 12%.
  • Other income of approximately $1.0 million.
  • An effective tax rate of 40 percent.
  • Diluted earnings per share of approximately $0.72 to $0.78.

Full-Year 2010 (Pro Forma):

Pro forma financial guidance for full-year 2010 excludes stock-based compensation expense of $5.0 million to $6.0 million, amortization of acquisition-related intangible assets of approximately $3.6 million, and any gains or losses related to marketable and non-marketable investments.

  • Pro forma operating margin of approximately 14.5% to 15.5%.
  • Pro forma effective tax rate of 40 percent.
  • Pro forma diluted earnings per share of approximately $0.97 to $ 1.03.

About Forrester Research

Forrester Research (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 20 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 26 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 guidance for the first quarter of and full-year 2010. 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 respond to business and economic conditions, particularly in light of the global economic environment, technology spending, market trends, competition, industry consolidation, the ability to attract and retain professional staff, possible variations in Forrester's quarterly operating results, any cost savings related to reductions in force and associated actions, 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 and the table of selected balance sheet and cash flow data are attached.

© 2010, Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc.

Forrester Research, Inc.
Consolidated Statements of Income
(Unaudited; in thousands, except per share data)
Three months ended Year ended
December 31, December 31,
2009 2008 2009 2008
Revenues:
Research services $ 40,758 $ 41,203 $ 157,726 $ 155,339
Advisory services and other 20,728 21,718 75,626 85,536
Total revenues 61,486 62,921 233,352 240,875
Operating expenses:
Cost of services and fulfillment 20,960 21,954 84,266 87,802
Selling and marketing 19,558 19,825 76,094 79,944
General and administrative 7,993 6,778 28,461 29,723
Depreciation 1,069 1,009 4,380 4,007
Reorganization costs 2,300 - 5,441 -
Amortization of intangible assets 539 959 2,290 1,435
Total operating expenses 52,419 50,525 200,932 202,911
Income from operations 9,067 12,396 32,420 37,964
Other income, net 115 152 2,297 5,373
Gains (losses) from investments, net 701 (663 ) (982 ) 1,473
Income before income taxes 9,883 11,885 33,735 44,810
Income tax provision 3,196 2,731 13,965 15,595
Net Income $ 6,687 $ 9,154 $ 19,770 $ 29,215
Diluted income per share $ 0.29 $ 0.39 $ 0.86 $ 1.24
Diluted weighted average shares outstanding 22,677 23,377 22,884 23,585
Basic income per share $ 0.30 $ 0.40 $ 0.87 $ 1.27
Basic weighted average shares outstanding 22,372 23,079 22,645 23,062
Pro forma data (1):
Income from operations $ 9,067 $ 12,396 $ 32,420 $ 37,964
Amortization of intangible assets 539 959 2,290 1,435
Reorganization costs 2,300 - 5,441 -
Investigation related expenses - (208 ) - 877

Stock-based compensation included in the following expense categories:

Cost of services and fulfillment 480 682 2,961 2,776
Selling and marketing 239 266 1,123 988
General and administrative 471 438 2,027 1,594
Pro forma income from operations 13,096 14,533 46,262 45,634
Other income, net 115 152 2,297 5,373
Pro forma income before income taxes 13,211 14,685 48,559 51,007
Pro forma income tax provision 5,284 5,727 19,424 19,893
Pro forma net income $ 7,927 $ 8,958 $ 29,135 $ 31,114
Pro forma diluted income per share $ 0.35 $ 0.38 $ 1.27 $ 1.32
Diluted weighted average shares outstanding 22,677 23,377 22,884 23,585

(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 reorganization costs, amortization of intangible assets, stock-based compensation, net gains or losses from marketable and non-marketable investments and costs associated with the historical stock option investigation, as well as their related tax effects. The pro forma data does not purport to be prepared in accordance with Accounting Principles Generally Accepted in the United States.

Forrester Research, Inc.
Selected Balance Sheet and Cash Flow Data
(Unaudited, in thousands)
December 31,
2009 2008
Balance sheet data:
Cash, cash equivalents and marketable investments $ 259,792 $ 259,929
Accounts receivable, net $ 67,436 $ 64,226
Deferred revenue $ 117,888 $ 113,844
Year ended
December 31,
2009 2008
Cash flow data:
Net cash provided by operating activities $ 43,022 $ 43,652
Cash used for acquisitions $ (5,592 ) $ (22,406 )
Purchases of property and equipment $ (4,284 ) $ (3,698 )
Repurchases of common stock $ (20,399 ) $ (30,423 )

SOURCE: Forrester Research, Inc.

Forrester Research, Inc.
Michael Doyle, +1 617-613-6000
Chief Financial Officer
mdoyle@forrester.com
or
Forrester Research, Inc.
Karyl Levinson, +1 617-613-6262
Vice President, Corporate Communications
press@forrester.com
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