News Release
| Forrester Research Announces First-Quarter 2006 Financial Results; Company Raises Full-Year 2006 Guidance |
CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 26, 2006--Forrester Research, Inc. (Nasdaq: FORR) today announced its first-quarter ended March 31, 2006 financial results.
First-Quarter Financial Performance
-- Total revenues were $41.2 million, compared with $33.8 million
for the first quarter of last year.
-- On a GAAP-reported basis, which reflects an effective tax rate
of 50.1 percent, Forrester reported first-quarter net income
of $1.5 million or $0.07 per diluted share, compared with net
income of $2.7 million, or $0.13 per diluted share, for the
same period last year.
-- On a pro forma basis, net income was $3.3 million or $0.15 per
diluted share, for the first quarter of 2006, which excludes
amortization of $652,000 of acquisition-related intangible
assets, non-cash stock-based compensation of $1.7 million,
$199,000 of realized gains on non-marketable investments, and
reflects a pro forma effective tax rate of 37 percent. This
compares with pro forma net income of $2.6 million, or $0.12
per diluted share, for the same period in 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.
A reconciliation of GAAP results to pro forma results may be found in the attached financial tables. "Forrester's first-quarter results exceeded expectations," said George F. Colony, chairman of the board and chief executive officer. "Total revenues and pro forma earnings per share grew 22 percent and 25 percent, respectively, and ahead of the high end of our guidance. We made significant progress in growing the syndicated products, as research services revenues increased 16 percent. Deferred revenue, the best leading indicator of our business, improved by 20 percent over the first-quarter of 2005. We are pleased with our fast start to 2006 and to be raising full-year guidance at this time." Forrester is providing second-quarter 2006 financial guidance as follows:
Second-Quarter 2006 (GAAP):
-- Total revenues of approximately $45.5 million to $47.5
million.
-- Operating margin of approximately 7 percent to 9 percent.
-- Other income of approximately $900,000.
-- An effective tax rate of approximately 51 percent.
-- Diluted earnings per share of approximately $0.11 to $0.14.
Second-Quarter 2006 (Pro Forma):
Pro forma financial guidance for the second-quarter of 2006 excludes amortization of acquisition-related intangible assets of approximately $500,000, non-cash stock-based compensation expense of approximately $2.0 million to $2.5 million, and does not include any estimate of gains or impairment charges related to non-marketable investments.
-- Pro forma operating margin of approximately 13 percent to 14
percent.
-- Pro forma effective tax rate of 37 percent.
-- Pro forma diluted earnings per share of approximately $0.19 to
$0.21.
Forrester is revising full-year 2006 guidance as follows:
Full-Year 2006 (GAAP):
GAAP financial guidance includes an estimate of $8.0 million to $10.0 million in non-cash stock-based compensation expense related to the adoption of SFAS 123R, Share-Based Payment, and its related estimated impact on the effective tax rate.
-- Total revenues of approximately $178.0 million to $183.0
million.
-- Operating margin of approximately 7 percent to 9 percent.
-- Other income of approximately $3.6 million.
-- An effective tax rate of approximately 51 percent.
-- Diluted earnings per share of approximately $0.45 to $0.56.
Full-Year 2006(Pro Forma):
Pro forma financial guidance for full-year 2006 excludes amortization of acquisition-related intangible assets of approximately $2.1 million, non-cash stock-based compensation expense of approximately $8.0 million to $10.0 million, and excludes gains or impairment charges related to non-marketable investments.
-- Pro forma operating margin of approximately 14 percent to 15
percent.
-- Pro forma diluted earnings per share of approximately $0.83 to
$0.89.
-- An effective tax rate of 37 percent.
Forrester Research (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice about technology's impact on business and consumers. For 22 years, Forrester has been a thought leader and trusted advisor, helping global clients lead in their markets through its 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 2006. 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. (C) 2006, 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,
2006 2005
---------- -------
(Unaudited)
Revenues
Research services $ 27,203 $23,369
Advisory services and other 13,994 10,413
---------- -------
Total revenues 41,197 33,782
Operating expenses
Cost of services and fulfillment 17,627 13,777
Selling and marketing 14,545 11,902
General and administrative 5,600 4,034
Depreciation 884 874
Amortization of intangible assets 652 1,123
---------- -------
Total operating expenses 39,308 31,710
Income from operations 1,889 2,072
Other income, net 958 750
Realized gains on securities 199 1,668
---------- -------
Income before income taxes 3,046 4,490
Income tax provision 1,526 1,751
---------- -------
Net income $ 1,520 $ 2,739
========== =======
Diluted income per share $ 0.07 $ 0.13
========== =======
Diluted weighted average shares outstanding 21,790 21,840
========== =======
Basic income per share $ 0.07 $ 0.13
========== =======
Basic weighted average shares outstanding 21,186 21,611
========== =======
Pro forma data (1):
Income from operations $ 1,889 $ 2,072
Amortization of intangible assets 652 1,123
Non-cash stock-based compensation included in
the following expense categories:
Cost of services and fulfillment 746 -
Selling and marketing 463 -
General and administrative 527 -
---------- -------
Pro forma income from operations 4,277 3,195
Other income, net 958 750
---------- -------
Pro forma income before income taxes 5,235 3,945
Pro forma income tax provision 1,937 1,381
---------- -------
Pro forma net income $ 3,298 $ 2,564
========== =======
Pro forma diluted earnings per share $ 0.15 $ 0.12
========== =======
Diluted weighted average shares outstanding 21,790 21,840
========== =======
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 intangibles, non-cash stock- based compensation 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 December
31, 31,
2006 2005
---------- --------
(Unaudited)
Assets:
Cash and cash equivalents $ 80,070 $ 48,538
Marketable securities 76,348 83,730
Accounts receivable, net 33,344 52,177
Deferred commissions 8,859 8,940
Prepaid expenses and other current assets 7,975 5,126
---------- --------
Total current assets 206,596 198,511
Property and equipment, net 5,233 5,771
Goodwill, net 53,126 53,034
Intangible assets, net 2,888 3,530
Deferred income taxes 37,094 36,941
Non-marketable investments and other assets 14,246 13,915
---------- --------
Total assets $ 319,183 $311,702
========== ========
Liabilities and stockholders' equity:
Accounts payable $ 1,276 $ 1,716
Accrued expenses 24,857 24,569
Deferred revenue 87,460 86,663
---------- --------
Total liabilities 113,593 112,948
Preferred stock - -
Common stock 258 254
Additional paid-in capital 200,469 192,206
Retained earnings 83,943 82,425
Treasury stock, at cost (76,462) (73,527)
Accumulated other comprehensive loss (2,618) (2,604)
---------- --------
Total stockholders' equity 205,590 198,754
---------- --------
Total liabilities and stockholders' equity $ 319,183 $311,702
========== ========
Forrester Research, Inc.
Consolidated Statements of Cash Flows
----------------------------------------------------------------------
(In thousands)
Three months ended
March 31,
2006 2005
---------- --------
(Unaudited)
Cash flows from operations:
Net income $ 1,520 $ 2,739
Adjustments to reconcile net income to net cash provided
by operating activities -
Depreciation 884 874
Amortization of intangible assets 652 1,123
Non-cash stock-based compensation 1,736 -
Tax benefit from stock options 8 28
Deferred income taxes (188) 574
Realized gains on securities (199) (1,668)
Amortization of premiums on marketable
securities 178 297
Changes in assets and liabilities -
Accounts receivable 19,027 10,037
Deferred commissions 81 164
Prepaid expenses and other current
assets (3,025) (915)
Accounts payable (431) (1,551)
Accrued expenses 333 (1,783)
Deferred revenue 456 1,480
---------- --------
Net cash provided by operating activities 21,032 11,399
Cash flows from investing activities:
Purchases of property and equipment (328) (1,590)
Purchases of non-marketable investments (300) -
Proceeds from non-marketable investments 137 -
Decrease in other assets 32 230
Purchase of marketable securities (74,886) (42,421)
Proceeds from sales and maturities of
securities 82,181 43,654
---------- --------
Net cash provided by (used in) investing
activities 6,836 (127)
Cash flows from financing activities:
Proceeds from exercises of employee stock
options 6,522 215
Acquisition of treasury shares (2,935) (4,789)
Structured stock repurchases - -
---------- --------
Net cash provided by (used in) financing
activities 3,587 (4,574)
Effect of exchange rate changes on cash and cash
equivalents 77 (136)
---------- --------
Net increase in cash and cash equivalents 31,532 6,562
Cash and cash equivalents, beginning of period 48,538 37,328
---------- --------
Cash and cash equivalents, end of period $ 80,070 $ 43,890
========== ========
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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