News Release
| Forrester Research Reports First-Quarter Financial Results |
| CAMBRIDGE, Mass., Apr 30, 2008 (BUSINESS WIRE) -- Forrester Research, Inc. (Nasdaq: FORR) today announced its
first-quarter, ended March 31, 2008, financial results.
First-Quarter Financial Performance -- Total revenues were $55.0 million, compared with $47.3 million for the first quarter of last year. -- On a GAAP-reported basis, Forrester reported net income of $5.0 million or $0.21 per diluted share, compared with net income of $2.0 million, or $0.09 per diluted share, for the same period last year. -- On a pro forma basis, net income was $6.2 million, or $0.26 per diluted share, for the first quarter of 2008, which reflects a pro forma effective tax rate of 39 percent. Pro forma net income excludes non-cash stock-based compensation expense of $1.4 million, amortization of $171,000 of acquisition-related intangible assets, marketable and non-marketable investment gains of $497,000, and a net benefit of $68,000 related to the settlement of stock option-related payroll tax exposure offset by professional fees related to the stock option investigation and restatement of the Company's historical financial statements. This compares with pro forma net income of $4.8 million, or $0.20 per diluted share, for the same period in 2007, which excludes non-cash stock-based compensation expense of $2.6 million, amortization of $392,000 of acquisition-related intangible assets, non-marketable investment gains of $174,000, and expenses related to the stock option investigation and restatement of the Company's historical financial statements of $1.7 million, and which reflects a pro forma effective tax rate of 39 percent. A reconciliation of GAAP results to pro forma results may be found in the attached financial tables. Forrester believes that pro forma financial results provide investors with consistent and comparable information 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 first-quarter results demonstrate a positive start to 2008," said George F. Colony, Forrester's chairman of the board and chief executive officer. "We fell squarely in the range of our revenue and pro forma EPS targets, and deferred revenue increased nicely quarter over quarter and year over year, which should bode well for the remainder of 2008. During the first quarter, we introduced a new metric to gauge the success and penetration of the role-based strategy we launched last year. Roles per client measures the average number of roles Forrester serves in each of its client companies. As of the first quarter, this metric stood at 3.2." Forrester is providing second-quarter 2008 financial guidance as follows: Second-Quarter 2008 (GAAP): -- Total revenues of approximately $62.0 million to $64.5 million. -- Operating margin of approximately 15 percent to 17 percent. -- Other income of approximately $1.8 million. -- An effective tax rate of 39 percent to 41 percent. -- Diluted earnings per share of approximately $0.26 to $0.32 Second-Quarter 2008 (Pro Forma): Pro forma financial guidance for the second quarter of 2008 excludes amortization of acquisition-related intangible assets of approximately $23,000, non-cash stock-based compensation expense of $1.2 million to $1.6 million, costs related to the stock option investigation and restatement of the Company's historical financial statements of approximately $100,000, and any gains or impairment charges related to marketable and non-marketable investments. -- Pro forma operating margin of approximately 18 percent to 19 percent. -- Pro forma effective tax rate of 39 percent. -- Pro forma diluted earnings per share of approximately $0.32 to $0.36. Forrester is providing full-year 2008 guidance as follows: Full-Year 2008 (GAAP): -- Total revenues of approximately $240 million to $248 million. -- Operating margin of approximately 14 percent to 16 percent. -- Other income of approximately $8 million. -- An effective tax rate of 41 percent. -- Diluted earnings per share of approximately $1.14 to $ 1.24. Full-Year 2008 (Pro Forma): Pro forma financial guidance for full-year 2008 excludes non-cash stock-based compensation expense of $5.0 million to $ 6.0 million, amortization of acquisition-related intangible assets of approximately $250,000, costs related to the stock option investigation and restatement of the Company's historical financial statements of $200,000 to $500,000, and gains or impairment charges related to marketable and non-marketable investments. -- Pro forma operating margin of approximately 17 percent to 18 percent. -- Pro forma diluted earnings per share of approximately $1.28 to $1.36. -- An effective tax rate of 39 percent. Forrester Research, Inc. (Nasdaq : FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. For more than 24 years, Forrester has been making leaders successful every day through its proprietary research, consulting, events, and peer-to-peer executive programs. 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 second 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 follow. (C) 2008, Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc.
Forrester Research, Inc.
Consolidated Statements of Income
----------------------------------------------------------------------
(In thousands, except per share data)
Three months ended
March 31,
2008 2007
--------------------
(Unaudited)
Revenues
Research services $35,949 $31,302
Advisory services and other 19,025 16,015
-------- -------
Total revenues 54,974 47,317
Operating expenses
Cost of services and fulfillment 21,148 19,838
Selling and marketing 18,850 17,117
General and administrative 7,226 7,758
Depreciation 1,036 923
Amortization of intangible assets 171 392
-------- -------
Total operating expenses 48,431 46,028
Income from operations 6,543 1,289
Other income, net 2,072 1,866
Realized gains from securities and non-
marketable investments 497 174
-------- -------
Income from operations before income taxes 9,112 3,329
Income tax provision 4,084 1,299
-------- -------
Net income $ 5,028 $ 2,030
======== =======
Diluted income per share from net income $ 0.21 $ 0.09
======== =======
======== =======
Diluted weighted average shares outstanding 23,617 23,752
======== =======
Basic income per share from net income $ 0.22 $ 0.09
======== =======
======== =======
Basic weighted average shares outstanding 23,048 23,058
======== =======
Pro forma data (1):
Income from operations $ 6,543 $ 1,289
Amortization of intangible assets 171 392
Investigation related expenses (68) 1,742
Non-cash stock-based compensation included in
the following
expense categories:
Cost of services and fulfillment 768 1,462
Selling and marketing 270 678
General and administrative 368 478
-------- -------
Pro forma income from operations 8,052 6,041
Other income, net 2,072 1,866
-------- -------
Pro forma income before income taxes 10,124 7,907
Pro forma income tax provision 3,948 3,084
-------- -------
Pro forma net income $ 6,176 $ 4,823
======== =======
Pro forma diluted earnings per share $ 0.26 $ 0.20
======== =======
Diluted weighted average shares outstanding 23,617 23,752
======== =======
(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. Forrester uses pro
forma financial information to manage its business, including use of
pro forma results as the basis for setting targets for various
compensation programs. Our pro forma presentation excludes
amortization of intangibles, non-cash stock-based compensation
expense, gains from marketable and non-marketable investments, costs
associated with the stock option investigation and restatement of our
historical financial statements, 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 Sheets
----------------------------------------------------------------------
(In thousands)
March 31, December
31,
2008 2007
---------- ---------
Assets:
Cash and cash equivalents $ 126,510 $ 53,163
Available-for-sale securities 79,613 195,811
Accounts receivable, net 50,880 69,865
Deferred commissions 10,300 10,631
Deferred income taxes, net 11,694 13,236
Prepaid expenses and other current assets 10,079 11,304
---------- ---------
Total current assets 289,076 354,010
Available-for-sale securities 61,412 -
Property and equipment, net 6,830 6,834
Goodwill, net 53,769 53,677
Intangible assets, net 150 309
Deferred income taxes, net 4,271 2,274
Non-marketable investments and other assets 9,437 9,253
---------- ---------
Total assets $ 424,945 $426,357
========== =========
Liabilities and stockholders' equity:
Accounts payable $ 3,347 $ 4,174
Accrued expenses 25,835 28,891
Deferred revenue 117,059 111,418
---------- ---------
Total current liabilities 146,241 144,483
---------- ---------
Non-current liabilities 6,936 6,858
Preferred stock -
Common stock 284 282
Additional paid-in capital 291,388 284,431
Retained earnings 86,506 81,478
Treasury stock, at cost (104,902) (90,428)
Accumulated other comprehensive loss (1,508) (747)
---------- ---------
Total stockholders' equity 271,768 275,016
---------- ---------
Total liabilities and stockholders' equity $ 424,945 $426,357
========== =========
Forrester Research, Inc.
Consolidated Statements of Cash Flows
----------------------------------------------------------------------
(In thousands)
Three months ended March
31,
2008 2007
(Unaudited) (Unaudited)
Cash flows from operations:
Net income $ 5,028 $ 2,030
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation 1,036 923
Amortization of intangible assets 171 392
Non-cash stock-based compensation 1,406 2,618
Increase in provision for doubtful accounts 96 100
Deferred income taxes 605 952
Gains from non-marketable investments (100) (174)
Gains on sales of available-for-sale
securities (397) -
Amortization of premiums on available-for-
sale securities 187 173
Changes in assets and liabilities -
Accounts receivable 19,802 19,457
Deferred commissions 331 521
Prepaid expenses and other current assets 1,873 (2,790)
Accounts payable (886) (689)
Accrued expenses (3,819) (2,115)
Deferred revenue 4,419 88
------------------------
Net cash provided by operating activities 29,752 21,486
Cash flows from investing activities:
Purchases of property and equipment (954) (1,993)
Proceeds from non-marketable investments 200 300
Decrease in other assets 202 86
Purchases of available-for-sale securities (390,696) (225,360)
Proceeds from sales and maturities of
available-for-sale securities 442,962 204,310
------------------------
Net cash provided by (used in) investing
activities 51,714 (22,657)
Cash flows from financing activities:
Proceeds from exercises of employee stock
options 4,377 811
Excess tax benefits from non-cash stock-
based compensation 1,175 -
Acquisition of treasury shares (14,474) -
------------------------
Net cash (used in) provided by financing
activities (8,922) 811
Effect of exchange rate changes on cash and
cash equivalents 803 48
------------------------
Net increase (decrease) in cash and cash
equivalents 73,347 (312)
Cash and cash equivalents, beginning of
period 53,163 39,157
------------------------
Cash and cash equivalents, end of period $ 126,510 $ 38,845
========================
SOURCE: Forrester Research, Inc. Forrester Research, Inc. Michael Doyle, +1 617-613-6000 Chief Financial Officer mdoyle@forrester.com or Karyl Levinson, +1 617-613-6262 Vice President, Corporate Communications press@forrester.com |