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News Release Details

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

February 9, 2012
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Board Of Directors Initiates Quarterly Dividend

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Feb. 9, 2012-- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2011 fourth-quarter and full-year financial results. The company also announced that it has instituted a new quarterly dividend, with the first dividend of $0.14 per share to be payable March 21, 2012, to shareholders of record on March 7, 2012.

Fourth-Quarter Financial Performance

  • Total revenues were $74.7 million for the fourth quarter of 2011, compared with $67.1 million for the fourth quarter of last year.
  • On a GAAP basis, net income was $8.9 million, or $0.38 per diluted share, for the fourth quarter of 2011, compared with net income of $4.1 million, or $0.18 per diluted share, for the same period last year.
  • On a pro forma basis, net income was $9.2 million, or $0.40 per diluted share, for the fourth quarter of 2011, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $0.5 million, amortization of $0.7 million of acquisition-related intangible assets, $0.4 million of reorganization costs, and net investment gains of $0.4 million. This compares with pro forma net income of $5.9 million, or $0.26 per diluted share, for the same period in 2010, which reflects a pro forma tax rate of 40%. Pro forma net income for the fourth quarter of 2010 excludes stock-based compensation of $1.2 million, amortization of $0.9 million of acquisition-related intangible assets, $0.5 million of duplicate lease costs, $0.3 million of acquisition costs, and net investment gains of $0.5 million.

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

“Revenue increased 11% in the quarter, which was in line with expectations, while operating margin and earnings per share exceeded guidance,” said George F. Colony, Forrester’s chairman and chief executive officer. “For the full year, we achieved revenue growth exceeding 13% and earnings-per-share growth of over 18%.”

“For 2012, we have realigned our sales force to simplify the sales process for our customers and to increase our sales productivity,” said Colony. “We will continue to invest in client-facing and sales support systems. Our 2012 operating margin guidance reflects the incremental costs of facility and technology investments in 2011 and 2012.”

Quarterly Dividend

Forrester also announced today that its Board of Directors has approved a quarterly dividend of $0.14 per share payable March 21, 2012, to shareholders of record on March 7, 2012. “We believe the decision to institute a regular quarterly dividend provides an appropriate return to our shareholders,” said Michael A. Doyle, Forrester’s chief financial officer. “Our strong balance sheet and cash flow allow us to implement this regular quarterly dividend while at the same time leave us well positioned to continue to invest for innovation and growth.”

Year Ended December 31, 2011, Financial Performance

  • Total revenues were $283.6 million for 2011, compared with $250.7 million for 2010.
  • On a GAAP basis, net income was $23.0 million, or $0.99 per diluted share, for 2011, compared with net income of $20.5 million, or $0.89 per diluted share, for 2010.
  • On a pro forma basis, net income was $29.4 million, or $1.27 per diluted share, for 2011, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $3.6 million, amortization of $2.6 million of acquisition-related intangible assets, $3.9 million of duplicate lease costs, $1.0 million of acquisition and integration costs, $0.4 million of reorganization costs, and net investment gains of $1.0 million. This compares with pro forma net income of $24.8 million, or $1.07 per diluted share for 2010, which reflects a pro forma tax rate of 40%. Pro forma net income for 2010 excludes stock-based compensation of $4.9 million, amortization of $3.6 million of acquisition-related intangible assets, $0.9 million of duplicate lease costs, $0.1 million of acquisition-related credits, and net investment gains of $2.3 million.

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

Forrester is providing first-quarter 2012 financial guidance as follows:

First-Quarter 2012 (GAAP):

  • Total revenues of approximately $68.5 million to $71.5 million.
  • Operating margin of approximately 3.5% to 5.5%.
  • Other income, net of approximately $0.2 million.
  • An effective tax rate of 39%.
  • Diluted earnings per share of approximately $0.07 to $0.11.

First-Quarter 2012 (Pro Forma):

Pro forma financial guidance for the first quarter of 2012 excludes stock-based compensation expense of $1.1 million to $1.3 million, amortization of acquisition-related intangible assets of approximately $0.6 million, reorganization costs of $1.3 million to $1.5 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 8.0% to 10.0%.
  • Pro forma effective tax rate of 39%.
  • Pro forma diluted earnings per share of approximately $0.15 to $0.19.

Our full-year 2012 guidance is as follows:

Full-Year 2012 (GAAP):

  • Total revenues of approximately $308.0 million to $316.0 million.
  • Operating margin of approximately 11.0% to 12.0%.
  • Other income, net of approximately $0.8 million.
  • An effective tax rate of 39%.
  • Diluted earnings per share of approximately $0.94 to $1.00.

Full-Year 2012 (Pro Forma):

Pro forma financial guidance for full-year 2012 excludes stock-based compensation expense of $4.5 million to $5.0 million, amortization of acquisition-related intangible assets of approximately $2.4 million, reorganization costs of $1.3 million to $1.5 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 14.0% to 15.0%.
  • Pro forma effective tax rate of 39%.
  • Pro forma diluted earnings per share of approximately $1.16 to $1.22.

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 roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 28 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 2012 and future quarterly dividends. 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 retain and enrich memberships for its research products and services, technology spending, Forrester’s ability to respond to business and economic conditions and market trends, the risks and challenges inherent in international business activities, competition and industry consolidation, the ability to attract and retain professional staff, Forrester’s dependence on key personnel, and possible variations in Forrester’s quarterly operating results. 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.

                         
Forrester Research, Inc.
Consolidated Statements of Income
(Unaudited, In thousands, except per share data)
Three months ended Year ended
December 31, December 31,
2011 2010   2011 2010
 
Revenues:
Research services $ 50,518 $ 45,445 $ 191,648 $ 168,508
Advisory services and other   24,132   21,671     91,968   82,218  
Total revenues 74,650 67,116 283,616 250,726
 
Operating expenses:
Cost of services and fulfillment 24,978 25,079 103,571 94,105
Selling and marketing 25,067 23,627 101,468 84,663
General and administrative 8,108 9,547 33,284 33,960
Depreciation 2,024 888 5,359 3,628
Amortization of intangible assets 664 905 2,562 3,620
Reorganization costs   375   -     375   -  
Total operating expenses 61,216 60,046 246,619 219,976
 
Income from operations 13,434 7,070 36,997 30,750
 
Other income (expense), net 357 (29 ) 630 1,249
Gains on investments, net   370   472     1,018   2,301  
Income before income taxes 14,161 7,513 38,645 34,300
 
Income tax provision   5,264   3,384     15,635   13,793  
Net Income $ 8,897 $ 4,129   $ 23,010 $ 20,507  
 
Diluted income per share $ 0.38 $ 0.18   $ 0.99 $ 0.89  
 
Diluted weighted average shares outstanding   23,118   23,134     23,164   23,063  
 
Basic income per share $ 0.39 $ 0.18   $ 1.02 $ 0.91  
 
Basic weighted average shares outstanding   22,646   22,543     22,666   22,478  
 
Pro forma data (1):
 
Income from operations $ 13,434 $ 7,070 $ 36,997 $ 30,750
Amortization of intangible assets 664 905 2,562 3,620
Duplicate lease costs - 487 3,850 875
Reorganization costs 375 - 375 -
Acquisition and integration costs (credits) - 256 986 (70 )

Stock-based compensation included in the
following expense categories:

 
Cost of services and fulfillment 319 507 1,644 2,094
Selling and marketing 65 234 751 943
General and administrative   165   447     1,247   1,837  
 
Pro forma income from operations 15,022 9,906 48,412 40,049
 
Other income (expense), net   357   (29 )   630   1,249  
Pro forma income before income taxes 15,379 9,877 49,042 41,298
 
Pro forma income tax provision   6,151   3,951     19,617   16,519  
 
Pro forma net income $ 9,228 $ 5,926   $ 29,425 $ 24,779  
 
Pro forma diluted income per share $ 0.40 $ 0.26   $ 1.27 $ 1.07  
Diluted weighted average shares outstanding   23,118   23,134     23,164   23,063  
 
 
(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, and are also used by Forrester in
making compensation decisions. Our pro forma presentation excludes amortization of acquisition-related
intangible assets, duplicate lease costs, costs or (credits) associated with acquisition and integration
activities, stock-based compensation, reorganization costs and net gains or losses from investments, 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.
Consolidated Balance Sheet and Cash Flow Data
(Unaudited, In thousands)
 
December 31,
2011 2010
 
Balance sheet data:
Cash, cash equivalents and marketable investments $ 227,603 $ 216,034
Accounts receivable, net $ 81,378 $ 73,574
Deferred revenue $ 147,887 $ 131,521
 
 
Year ended
December 31,
2011 2010
 
Cash flow data:
Net cash provided by operating activities $ 55,444 $ 38,657
Cash used for acquisitions $ (7,531 ) $ (1,660 )
Purchases of property and equipment $ (39,776 ) $ (13,426 )
Repurchases of common stock $ (18,405 ) $ (21,345 )
Dividend paid $ - $ (68,414 )

© 2012, Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc.

Source: Forrester Research, Inc.

Forrester Research, Inc.
Michael Doyle, +1 617-613-6000
Chief Financial Officer
mdoyle@forrester.com
or
Forrester Research, Inc.
Jon Symons, + 1 617-613-6104
Director, Media Relations
press@forrester.com