News Release
| Forrester Research Announces First-Quarter 2005 Financial Results |
CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 27, 2005--Forrester Research, Inc. (Nasdaq: FORR) today announced its first-quarter ended March 31, 2005 financial results.
First-Quarter Financial Performance
-- Total revenues were $33.8 million, compared with $31.7 million
for the first quarter of last year.
-- On a GAAP-reported basis, which reflects an effective tax rate
of 39 percent, Forrester reported first-quarter net income of
$2.7 million or $0.13 per diluted share, compared with a net
loss of $257,000, or $0.01 per diluted share, for the same
period last year.
-- On a pro forma basis, net income was $2.6 million or $0.12 per
diluted share, for the first quarter of 2005, which excludes
amortization of $1.1 million of acquisition-related intangible
assets, $1.7 million of realized gains on sales of securities,
and reflects a pro forma effective tax rate of 35 percent.
This compares with pro forma net income of $2.5 million, or
$0.11 per diluted share, for the same period in 2004, which
excludes amortization of $2.3 million of acquisition-related
intangible assets, reorganization costs of $2.0 million, and a
pro forma effective tax rate of 35 percent.
A reconciliation of GAAP results to pro forma results may be found in the attached financial tables. "Forrester's first-quarter financial results marked a good start to 2005," said George F. Colony, chairman of the board and chief executive officer. "We reported year-over-year organic growth in both revenues and earnings per share. New business continued to improve and client renewals remained strong. Consulting, in particular, performed well during the quarter. As we move through the rest of the year, our top priorities will be to continue to regenerate the research business, as well as to grow our new Data and Forrester Oval Program(TM) product offerings."
Forrester is providing financial guidance as follows:
Second-Quarter 2005 (GAAP):
-- Total revenues of approximately $37.0 million to $39.0
million.
-- Operating margin of approximately 8 percent to 10 percent.
-- Other income of approximately $700,000.
-- An effective tax rate of 39 percent.
-- Diluted earnings per share of approximately $0.10 to $0.12.
Second-Quarter 2005 (Pro Forma):
Pro forma financial guidance for the second quarter of 2005 excludes amortization of acquisition-related intangible assets of approximately $800,000 and any gains or impairment charges related to non-marketable investments.
-- Pro forma operating margin of approximately 10 percent to 12
percent.
-- Pro forma effective tax rate of 35 percent.
-- Pro forma diluted earnings per share of approximately $0.13 to
$0.15.
Full-Year 2005 (GAAP):
-- Total revenues of approximately $148.0 million to $153.0
million.
-- Operating margin of approximately 10 percent to 12 percent.
-- Other income of approximately $2.6 million to $3.0 million.
-- An effective tax rate of 39 percent.
-- Diluted earnings per share of approximately $0.52 to $0.62.
Full-Year 2005 (Pro Forma):
Pro forma financial guidance for full-year 2005 excludes amortization of acquisition-related intangible assets of approximately $3.5 million, as well as all gains and impairment charges related to marketable and non-marketable securities.
-- Pro forma operating margin of approximately 12 percent to 14
percent.
-- Pro forma diluted earnings per share of approximately $0.62 to
$0.67.
-- An effective tax rate of 35 percent.
Forrester is an independent technology research company that provides pragmatic and forward-thinking advice about technology's impact on business. Business, marketing, and IT professionals worldwide collaborate with Forrester to align their technology investments with their business goals. Forrester offers products and services in four major areas: Research, Data, Consulting, and Community. Established in 1983, Forrester is headquartered in Cambridge, Mass. For additional 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 2005, statements about the potential success of product offerings, and the ability of Forrester to achieve success in the current economy. 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, any cost savings related to reductions in force and associated actions, 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. (C) 2005, Forrester Research, Inc. All rights reserved. Forrester and Forrester Oval Program are trademarks of Forrester Research, Inc.
Forrester Research, Inc.
Consolidated Statements of Income
----------------------------------------------------------------------
(In thousands, except per share data)
Three months ended
March 31,
2005 2004
--------------------
(Unaudited)
Revenues
Research services $23,369 $22,989
Advisory services and other 10,413 8,740
----------- --------
Total revenues 33,782 31,729
Operating expenses
Cost of services and fulfillment 13,777 13,139
Selling and marketing 11,902 11,060
General and administrative 4,034 3,411
Depreciation 874 1,031
Amortization of intangible assets 1,123 2,344
Reorganization costs - 1,957
----------- --------
Total operating expenses 31,710 32,942
Income (loss) from operations 2,072 (1,213)
Other income, net 750 826
Realized gains on sales of securities 1,668 -
----------- --------
Income (loss) before income taxes 4,490 (387)
Income tax provision (benefit) 1,751 (130)
----------- --------
Net income (loss) $2,739 $(257)
=========== ========
Diluted income (loss) per share $0.13 $(0.01)
=========== ========
Diluted weighted average shares outstanding 21,840 22,255
=========== ========
Basic income (loss) per share $0.13 $(0.01)
=========== ========
Basic weighted average shares outstanding 21,611 22,255
=========== ========
Pro forma data (1):
Income (loss) from operations $2,072 $(1,213)
Amortization of intangible assets 1,123 2,344
Reorganization costs - 1,957
----------- --------
Pro forma income from operations 3,195 3,088
Other income, net 750 826
----------- --------
Pro forma income before income taxes 3,945 3,914
Pro forma income tax provision 1,381 1,370
----------- --------
Pro forma net income $2,564 $2,544
=========== ========
Pro forma diluted earnings per share $0.12 $0.11
=========== ========
Diluted weighted average shares outstanding 21,840 22,771
=========== ========
(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 amortization of intangible assets,
reorganization costs and any realized gains or impairments from
our non-marketable investments, as well as their related tax
effects. This does not purport to be prepared in accordance with
Generally Accepted Accounting Principles.
Forrester Research, Inc.
Consolidated Balance Sheets
----------------------------------------------------------------------
(In thousands)
March 31, December 31,
2005 2004
-------------- -------------
(Unaudited)
Assets:
Cash and cash equivalents $43,890 $37,328
Marketable securities 87,808 90,112
Accounts receivable, net 28,718 39,210
Deferred commissions 6,670 6,834
Prepaid expenses and other current
assets 6,226 5,509
-------------- -------------
Total current assets 173,312 178,993
Property and equipment, net 7,102 6,410
Goodwill, net 53,182 52,875
Intangible assets, net 6,002 6,992
Deferred income taxes 43,176 42,860
Non-marketable investments and other
assets 14,483 14,742
-------------- -------------
Total assets $297,257 $302,872
============== =============
Liabilities and stockholders' equity:
Accounts payable $2,254 $3,741
Accrued expenses 24,758 26,928
Deferred revenue 73,036 72,357
-------------- -------------
Total liabilities 100,048 103,026
Preferred stock - -
Common stock 247 247
Additional paid-in capital 180,553 180,310
Retained earnings 73,816 71,077
Treasury stock, at cost (54,845) (50,056)
Accumulated other comprehensive loss (2,562) (1,732)
-------------- -------------
Total stockholders' equity 197,209 199,846
-------------- -------------
Total liabilities and stockholders'
equity $297,257 $302,872
============== =============
Forrester Research, Inc.
Consolidated Statements of Cash Flows
----------------------------------------------------------------------
(In thousands)
Three months ended
March 31,
2005 2004
--------------------
(Unaudited)
Cash flows from operations:
Net income (loss) $2,739 $(257)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities -
Depreciation 874 1,031
Amortization of intangible assets 1,123 2,344
Tax benefit from stock options 28 90
Deferred income taxes 574 (1)
Realized gains on sales of securities (1,668) -
Amortization of premiums on marketable
securities 297 173
Changes in assets and liabilities -
Accounts receivable 10,037 15,586
Deferred commissions 164 200
Prepaid expenses and other current
assets (915) (872)
Accounts payable (1,551) (658)
Accrued expenses (1,783) (5,862)
Deferred revenue 1,480 (2,295)
----------- --------
Net cash provided by operating activities 11,399 9,479
Cash flows from investing activities:
Purchases of property and equipment (1,590) (530)
Purchases of non-marketable investments - (963)
Decrease in other assets 230 269
Purchase of marketable securities (42,421) (34,060)
Proceeds from sales and maturities of
securities 43,654 49,150
----------- --------
Net cash (used in) provided by investing
activities (127) 13,866
Cash flows from financing activities:
Proceeds from exercises of employee stock
options 215 512
Acquisition of treasury shares (4,789) (6,187)
Structured stock repurchases - (1,500)
----------- --------
Net cash used in financing activities (4,574) (7,175)
Effect of exchange rate changes on cash and cash
equivalents (136) (124)
----------- --------
Net increase in cash and cash equivalents 6,562 16,046
Cash and cash equivalents, beginning of period 37,328 22,385
----------- --------
Cash and cash equivalents, end of period $43,890 $38,431
=========== ========
CONTACT: Forrester Research, Inc.
Kimberly Maxwell, 617-613-6234
Director, Investor Relations
kmaxwell@forrester.com
or
Karyl Levinson, 617-613-6262
Director, Corporate Communications
press@forrester.com
SOURCE: Forrester Research, Inc.
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