þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. |
DELAWARE | 04-2797789 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Number) | |
60 Acorn Park Drive | ||
CAMBRIDGE, MASSACHUSETTS | 02140 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o
|
Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
PAGE | ||||||||
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20 | ||||||||
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22 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT |
2
ITEM 1. | FINANCIAL STATEMENTS |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 73,586 | $ | 86,927 | ||||
Marketable investments (Note 4) |
139,033 | 119,990 | ||||||
Accounts receivable, net |
43,159 | 73,574 | ||||||
Deferred income taxes |
1,790 | 4,089 | ||||||
Deferred commissions |
9,406 | 12,598 | ||||||
Prepaid expenses and other current assets |
16,181 | 16,733 | ||||||
Restricted cash |
2,216 | 3,879 | ||||||
Total current assets |
285,371 | 317,790 | ||||||
Long-term marketable securities (Note 4) |
9,539 | 9,117 | ||||||
Restricted cash |
| 11,609 | ||||||
Property and equipment, net |
51,490 | 19,838 | ||||||
Deferred income taxes |
4,550 | 7,779 | ||||||
Goodwill |
71,677 | 67,958 | ||||||
Intangible assets, net |
11,170 | 8,487 | ||||||
Non-marketable investments (Note 5) |
7,684 | 7,359 | ||||||
Other assets |
488 | 540 | ||||||
Total assets |
$ | 441,969 | $ | 450,477 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 5,037 | $ | 3,644 | ||||
Accrued expenses |
27,959 | 36,485 | ||||||
Deferred revenue |
117,547 | 131,521 | ||||||
Total current liabilities |
150,543 | 171,650 | ||||||
Non-current liabilities |
13,059 | 6,920 | ||||||
Total liabilities |
163,602 | 178,570 | ||||||
Stockholders Equity (Note 8): |
||||||||
Preferred stock, $.01 par value |
||||||||
Authorized 500 shares, issued and outstanding none |
| | ||||||
Common stock, $.01 par value |
||||||||
Authorized 125,000 shares |
||||||||
Issued 30,779 and 30,500 as of September 30, 2011 and
December 31, 2010, respectively |
||||||||
Outstanding 22,564 and 22,812 as of September 30, 2011 and
December 31, 2010, respectively |
307 | 305 | ||||||
Additional paidin capital |
368,462 | 358,017 | ||||||
Retained earnings |
95,765 | 81,652 | ||||||
Treasury stock 8,215 and 7,688 as of September 30, 2011 and
December 31, 2010, respectively, at cost |
(181,000 | ) | (162,595 | ) | ||||
Accumulated other comprehensive loss |
(5,167 | ) | (5,472 | ) | ||||
Total stockholders equity |
278,367 | 271,907 | ||||||
Total liabilities and stockholders equity |
$ | 441,969 | $ | 450,477 | ||||
3
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Research services |
$ | 49,242 | $ | 42,895 | $ | 141,130 | $ | 123,063 | ||||||||
Advisory services and other |
20,532 | 16,882 | 67,836 | 60,547 | ||||||||||||
Total revenues |
69,774 | 59,777 | 208,966 | 183,610 | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of services and fulfillment |
25,071 | 22,399 | 78,593 | 69,026 | ||||||||||||
Selling and marketing |
24,927 | 20,228 | 76,401 | 61,036 | ||||||||||||
General and administrative |
7,928 | 9,489 | 25,176 | 24,413 | ||||||||||||
Depreciation |
1,420 | 943 | 3,335 | 2,740 | ||||||||||||
Amortization of intangible assets |
679 | 905 | 1,898 | 2,715 | ||||||||||||
Total operating expenses |
60,025 | 53,964 | 185,403 | 159,930 | ||||||||||||
Income from operations |
9,749 | 5,813 | 23,563 | 23,680 | ||||||||||||
Other income (expense), net |
378 | (945 | ) | 273 | 1,278 | |||||||||||
Gains on investments, net |
8 | 1,377 | 648 | 1,829 | ||||||||||||
Income before income taxes |
10,135 | 6,245 | 24,484 | 26,787 | ||||||||||||
Income tax provision |
4,403 | 2,541 | 10,371 | 10,409 | ||||||||||||
Net income |
$ | 5,732 | $ | 3,704 | $ | 14,113 | $ | 16,378 | ||||||||
Basic income per common share |
$ | 0.25 | $ | 0.16 | $ | 0.62 | $ | 0.73 | ||||||||
Diluted income per common share |
$ | 0.25 | $ | 0.16 | $ | 0.61 | $ | 0.71 | ||||||||
Basic weighted average common shares outstanding |
22,620 | 22,462 | 22,672 | 22,456 | ||||||||||||
Diluted weighted average common shares outstanding |
23,082 | 23,107 | 23,179 | 23,040 | ||||||||||||
4
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 14,113 | $ | 16,378 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
3,335 | 2,740 | ||||||
Amortization of intangible assets |
1,898 | 2,715 | ||||||
Net gains from investments |
(648 | ) | (1,829 | ) | ||||
Deferred income taxes |
5,820 | (537 | ) | |||||
Stock-based compensation |
3,093 | 3,686 | ||||||
Amortization of premium on investments |
2,523 | 1,728 | ||||||
Foreign currency losses |
1,202 | 683 | ||||||
Other non-cash items |
| 89 | ||||||
Changes in assets and liabilities, net of acquisitions: |
||||||||
Accounts receivable |
31,273 | 27,524 | ||||||
Deferred commissions |
3,193 | 913 | ||||||
Prepaid expenses and other current assets |
926 | (3,295 | ) | |||||
Accounts payable |
(1,732 | ) | 1,927 | |||||
Accrued expenses |
(3,428 | ) | (2,692 | ) | ||||
Deferred revenue |
(15,061 | ) | (12,342 | ) | ||||
Net cash provided by operating activities |
46,507 | 37,688 | ||||||
Cash flows from investing activities: |
||||||||
Acquisitions |
(7,164 | ) | (1,660 | ) | ||||
Purchases of property and equipment |
(33,194 | ) | (6,248 | ) | ||||
Purchases of marketable investments |
(81,008 | ) | (105,102 | ) | ||||
Proceeds from sales and maturities of marketable investments |
58,888 | 118,235 | ||||||
Decrease in restricted cash |
13,272 | 1,851 | ||||||
Other investing activity |
307 | 314 | ||||||
Net cash provided by (used in) investing activities |
(48,899 | ) | 7,390 | |||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of common stock under employee equity
incentive plans |
7,017 | 10,773 | ||||||
Excess tax benefits from stock-based compensation |
432 | 399 | ||||||
Repurchases of common stock |
(18,405 | ) | (13,951 | ) | ||||
Net cash used in financing activities |
(10,956 | ) | (2,779 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents |
7 | (2,004 | ) | |||||
Net increase (decrease) in cash and cash equivalents |
(13,341 | ) | 40,295 | |||||
Cash and cash equivalents, beginning of period |
86,927 | 97,805 | ||||||
Cash and cash equivalents, end of period |
$ | 73,586 | $ | 138,100 | ||||
5
6
Assets: |
||||
Cash |
$ | 85 | ||
Accounts receivable |
561 | |||
Other current assets |
285 | |||
Goodwill |
3,695 | |||
Intangible assets |
4,815 | |||
Total assets |
9,441 | |||
Liabilities: |
||||
Accrued expenses |
160 | |||
Deferred revenue |
312 | |||
Total liabilities |
472 | |||
Net assets acquired |
$ | 8,969 | ||
Useful | ||||||||
Assigned | Life | |||||||
Value | (in years) | |||||||
Customer relationships |
$ | 3,605 | 7.5 | |||||
Research content |
1,080 | 1.5 | ||||||
Backlog |
130 | 1.0 | ||||||
$ | 4,815 | |||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Market | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
September 30, 2011 |
||||||||||||||||
Available-for-sale securities |
||||||||||||||||
State and municipal obligations |
$ | 10,828 | $ | 11 | $ | (6 | ) | 10,833 | ||||||||
Federal agency and corporate obligations |
128,458 | 169 | (427 | ) | 128,200 | |||||||||||
Total short-term available-for-sale securities |
139,286 | 180 | (433 | ) | 139,033 | |||||||||||
ARS, long-term |
11,000 | | (1,461 | ) | 9,539 | |||||||||||
Total available-for-sale securities |
$ | 150,286 | $ | 180 | $ | (1,894 | ) | $ | 148,572 | |||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Market | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
December 31, 2010 |
||||||||||||||||
Available-for-sale securities |
||||||||||||||||
State and municipal obligations |
$ | 12,011 | $ | 23 | $ | (25 | ) | $ | 12,009 | |||||||
Federal agency and corporate obligations |
107,669 | 483 | (171 | ) | 107,981 | |||||||||||
Total short-term available-for-sale securities |
119,680 | 506 | (196 | ) | 119,990 | |||||||||||
ARS, long-term |
11,000 | | (1,883 | ) | 9,117 | |||||||||||
Total available-for-sale securities |
$ | 130,680 | $ | 506 | $ | (2,079 | ) | $ | 129,107 | |||||||
7
FY 2011 | FY 2012 | FY2013 | Thereafter | Total | ||||||||||||||||
Federal agency and corporate obligations |
$ | 21,285 | $ | 57,713 | $ | 48,194 | $ | 1,008 | $ | 128,200 | ||||||||||
State and municipal obligations |
5,133 | 5,700 | | | 10,833 | |||||||||||||||
ARS |
| | 9,539 | 9,539 | ||||||||||||||||
Total |
$ | 26,418 | $ | 63,413 | $ | 48,194 | $ | 10,547 | $ | 148,572 | ||||||||||
As of September 30, 2011 | ||||||||||||||||
Less Than 12 Months | 12 Months or Greater | |||||||||||||||
Market | Unrealized | Market | Unrealized | |||||||||||||
Value | Losses | Value | Losses | |||||||||||||
State and municipal bonds |
$ | 1,113 | $ | 6 | $ | | $ | | ||||||||
Federal agency and corporate obligations |
67,015 | 427 | | | ||||||||||||
ARS |
| | 9,539 | 1,461 | ||||||||||||
Total |
$ | 68,128 | $ | 433 | $ | 9,539 | $ | 1,461 | ||||||||
As of December 31, 2010 | ||||||||||||||||
Less Than 12 Months | 12 Months or Greater | |||||||||||||||
Market | Unrealized | Market | Unrealized | |||||||||||||
Value | Losses | Value | Losses | |||||||||||||
State and municipal bonds |
$ | 3,258 | $ | 25 | $ | | $ | | ||||||||
Federal agency and corporate obligations |
45,928 | 171 | | | ||||||||||||
ARS |
| | 9,117 | 1,883 | ||||||||||||
Total |
$ | 49,186 | $ | 196 | $ | 9,117 | $ | 1,883 | ||||||||
As of September 30, 2011 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Money market funds (1) |
$ | 4,364 | $ | | $ | | $ | 4,364 | ||||||||
Federal agency and corporate obligations (2) |
| 138,027 | | 138,027 | ||||||||||||
State and municipal obligations |
| 10,834 | 9,538 | 20,372 | ||||||||||||
Total |
$ | 4,364 | $ | 148,861 | $ | 9,538 | $ | 162,763 | ||||||||
As of December 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Money market funds (1) |
$ | 25,222 | $ | | $ | | $ | 25,222 | ||||||||
Federal agency and corporate obligations |
| 107,981 | | 107,981 | ||||||||||||
State and municipal obligations |
| 12,009 | 9,117 | 21,126 | ||||||||||||
Total |
$ | 25,222 | $ | 119,990 | $ | 9,117 | $ | 154,329 | ||||||||
8
(1) | Included in cash and cash equivalents. | |
(2) | $9.8 million included in cash and cash equivalents as original maturities at the time of purchase were 90 days or less. |
ARS | ||||
Balance at December 31, 2010 |
$ | 9,117 | ||
Sales/Maturities |
| |||
Total gains (losses): |
||||
Included in other comprehensive income |
422 | |||
Included in earnings |
| |||
Balance at September 30, 2011 |
$ | 9,539 | ||
UBS | ||||||||
Right | ARS | |||||||
Balance at December 31, 2009 |
$ | 2,100 | $ | 39,525 | ||||
Sales/Maturities |
| (31,675 | ) | |||||
Total gains (losses): |
||||||||
Included in other comprehensive income |
| (16 | ) | |||||
Included in earnings |
(2,100 | ) | 2,100 | |||||
Balance at September 30, 2010 |
$ | | $ | 9,934 | ||||
9
Facility | ||||||||
Consolidation | Total | |||||||
Accrual at December 31, 2010 |
$ | 446 | $ | 446 | ||||
Cash payments |
(446 | ) | (446 | ) | ||||
Accrual at September 30, 2011 |
$ | | $ | | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Basic weighted average common shares outstanding |
22,620 | 22,462 | 22,672 | 22,456 | ||||||||||||
Weighted average common equivalent shares |
462 | 645 | 507 | 584 | ||||||||||||
Diluted weighted average common shares outstanding |
23,082 | 23,107 | 23,179 | 23,040 | ||||||||||||
Options excluded from diluted weighted average share calculation
as effect would have been anti-dilutive |
447 | 344 | 209 | 490 | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income |
$ | 5,732 | $ | 3,704 | $ | 14,113 | $ | 16,378 | ||||||||
Cumulative translation adjustment |
(2,593 | ) | 3,637 | 298 | (1,785 | ) | ||||||||||
Unrealized gain (loss) on marketable investments, net of tax |
(197 | ) | 103 | 7 | (140 | ) | ||||||||||
Total comprehensive income |
$ | 2,942 | $ | 7,444 | $ | 14,418 | $ | 14,453 | ||||||||
Weighted - | Weighted - | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Remaining | Aggregate | ||||||||||||||
Number | Price Per | Contractual | Intrinsic | |||||||||||||
of Shares | Share | Term (in years) | Value | |||||||||||||
Outstanding at December 31, 2010 |
2,215 | $ | 26.00 | |||||||||||||
Granted |
345 | 34.56 | ||||||||||||||
Exercised |
(222 | ) | 25.21 | |||||||||||||
Forfeited |
(64 | ) | 31.30 | |||||||||||||
Outstanding at September 30, 2011 |
2,274 | $ | 27.22 | 6.59 | $ | 12,771 | ||||||||||
Exercisable at September 30, 2011 |
1,373 | $ | 24.99 | 5.24 | $ | 10,332 | ||||||||||
10
Weighted- | ||||||||
Average | ||||||||
Grant Date | ||||||||
RSUs | Fair Value | |||||||
Unvested at December 31, 2010 |
192 | $ | 27.64 | |||||
Granted |
116 | 33.19 | ||||||
Vested or settled |
(9 | ) | 29.86 | |||||
Forfeited |
(20 | ) | 27.90 | |||||
Unvested at September 30, 2011 |
279 | $ | 29.86 | |||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cost of services and fulfillment |
$ | 678 | $ | 531 | $ | 1,325 | $ | 1,588 | ||||||||
Selling and marketing |
294 | 238 | 686 | 708 | ||||||||||||
General and administrative |
440 | 387 | 1,082 | 1,390 | ||||||||||||
Total |
$ | 1,412 | $ | 1,156 | $ | 3,093 | $ | 3,686 | ||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
September 30, 2011 | September 30, 2010 | |||||||||||||||
Equity Incentive | Employee Stock | Equity Incentive | Employee Stock | |||||||||||||
Plans | Purchase Plan | Plans | Purchase Plan | |||||||||||||
Average risk-free interest rate |
1.11 | % | 0.08 | % | 1.37 | % | 0.20 | % | ||||||||
Expected dividend yield |
None | None | None | None | ||||||||||||
Expected life |
3.5 Years | 0.5 Years | 3.5 Years | 0.5 Years | ||||||||||||
Expected volatility |
40 | % | 28 | % | 40 | % | 25 | % | ||||||||
Weighted average fair value |
$ | 10.01 | $ | 7.56 | $ | 9.49 | $ | 6.87 |
Nine Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2011 | September 30, 2010 | |||||||||||||||
Equity Incentive | Employee Stock | Equity Incentive | Employee Stock | |||||||||||||
Plans | Purchase Plan | Plans | Purchase Plan | |||||||||||||
Average risk-free interest rate |
1.29 | % | 0.14 | % | 2.02 | % | 0.17 | % | ||||||||
Expected dividend yield |
None | None | None | None | ||||||||||||
Expected life |
3.5 Years | 0.5 Years | 3.6 Years | 0.5 Years | ||||||||||||
Expected volatility |
40 | % | 28 | % | 40 | % | 25 | % | ||||||||
Weighted average fair value |
$ | 10.53 | $ | 7.55 | $ | 9.63 | $ | 6.23 |
11
BT | TI | M&S | Events | Consolidated | ||||||||||||||||
Three months ended September 30, 2011 |
||||||||||||||||||||
Revenue |
$ | 25,220 | $ | 21,655 | $ | 21,499 | $ | 1,400 | $ | 69,774 | ||||||||||
Direct margin |
17,065 | 15,231 | 13,387 | 410 | 46,093 | |||||||||||||||
Selling, marketing, administrative and other expenses |
(35,665 | ) | ||||||||||||||||||
Amortization of intangible assets |
(679 | ) | ||||||||||||||||||
Income from operations |
$ | 9,749 | ||||||||||||||||||
BT | TI | M&S | Events | Consolidated | ||||||||||||||||
Three months ended September 30, 2010 |
||||||||||||||||||||
Revenue |
$ | 23,047 | $ | 18,342 | $ | 17,889 | $ | 499 | $ | 59,777 | ||||||||||
Direct margin |
16,283 | 13,410 | 11,059 | (146 | ) | 40,606 | ||||||||||||||
Selling, marketing, administrative and other expenses |
(33,888 | ) | ||||||||||||||||||
Amortization of intangible assets |
(905 | ) | ||||||||||||||||||
Income from operations |
$ | 5,813 | ||||||||||||||||||
BT | TI | M&S | Events | Consolidated | ||||||||||||||||
Nine months ended September 30, 2011 |
||||||||||||||||||||
Revenue |
$ | 73,667 | $ | 62,373 | $ | 62,828 | $ | 10,098 | $ | 208,966 | ||||||||||
Direct margin |
49,319 | 44,381 | 38,615 | 4,601 | 136,916 | |||||||||||||||
Selling, marketing, administrative and other expenses |
(111,455 | ) | ||||||||||||||||||
Amortization of intangible assets |
(1,898 | ) | ||||||||||||||||||
Income from operations |
$ | 23,563 | ||||||||||||||||||
BT | TI | M&S | Events | Consolidated | ||||||||||||||||
Nine months ended September 30, 2010 |
||||||||||||||||||||
Revenue |
$ | 69,173 | $ | 54,617 | $ | 52,133 | $ | 7,687 | $ | 183,610 | ||||||||||
Direct margin |
48,456 | 40,215 | 31,880 | 3,182 | 123,733 | |||||||||||||||
Selling, marketing, administrative and other expenses |
(97,338 | ) | ||||||||||||||||||
Amortization of intangible assets |
(2,715 | ) | ||||||||||||||||||
Income from operations |
$ | 23,680 | ||||||||||||||||||
BT | TI | M&S | Events | Consolidated | ||||||||||||||||
Direct margin three months ended March 31, 2010 |
||||||||||||||||||||
As reported |
$ | 15,913 | $ | 13,915 | $ | 10,159 | $ | (120 | ) | $ | 39,867 | |||||||||
As adjusted |
15,981 | 13,318 | 10,199 | 369 | 39,867 | |||||||||||||||
Change |
$ | (68 | ) | $ | 597 | $ | (40 | ) | $ | (489 | ) | $ | | |||||||
Direct margin three months ended June 30, 2010 |
||||||||||||||||||||
As reported |
$ | 16,166 | $ | 14,388 | $ | 10,616 | $ | 2,090 | $ | 43,260 | ||||||||||
As adjusted |
16,192 | 13,487 | 10,622 | 2,959 | 43,260 | |||||||||||||||
Change |
$ | (26 | ) | $ | 901 | $ | (6 | ) | $ | (869 | ) | $ | | |||||||
Direct margin six months ended June 30, 2010 |
||||||||||||||||||||
As reported |
$ | 32,079 | $ | 28,303 | $ | 20,775 | $ | 1,970 | $ | 83,127 | ||||||||||
As adjusted |
32,173 | 26,805 | 20,821 | 3,328 | 83,127 | |||||||||||||||
Change |
$ | (94 | ) | $ | 1,498 | $ | (46 | ) | $ | (1,358 | ) | $ | | |||||||
Direct margin three months ended September 30, 2010 |
||||||||||||||||||||
As reported |
$ | 15,990 | $ | 13,616 | $ | 11,059 | $ | (59 | ) | $ | 40,606 | |||||||||
As adjusted |
16,283 | 13,410 | 11,059 | (146 | ) | 40,606 | ||||||||||||||
Change |
$ | (293 | ) | $ | 206 | $ | | $ | 87 | $ | | |||||||||
Direct margin nine months ended September 30, 2010 |
||||||||||||||||||||
As reported |
$ | 48,069 | $ | 41,920 | $ | 31,834 | $ | 1,910 | $ | 123,733 | ||||||||||
As adjusted |
48,456 | 40,215 | 31,880 | 3,182 | 123,733 | |||||||||||||||
Change |
$ | (387 | ) | $ | 1,705 | $ | (46 | ) | $ | (1,272 | ) | $ | | |||||||
12
| Deferred revenue - billings in advance of revenue recognition as of the measurement date. | ||
| Agreement value - the total revenues recognizable from all research and advisory service contracts in force at a given time (but not including advisory-only contracts), without regard to how much revenue has already been recognized. | ||
| Client retention - the percentage of client companies with memberships expiring during the most recent twelve-month period that renewed one or more of those memberships during that same period. | ||
| Dollar retention - the percentage of the dollar value of all client membership contracts renewed during the most recent twelve-month period to the total dollar value of all client membership contracts that expired during the period. | ||
| Enrichment - the percentage of the dollar value of client membership contracts renewed during the most recent twelve-month period to the dollar value of the corresponding expiring contracts. |
As of | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Deferred revenue |
$ | 117.5 | $ | 104.6 | $ | 12.9 | 12 | % | ||||||||
Agreement value |
$ | 211.2 | $ | 191.8 | $ | 19.4 | 10 | % | ||||||||
Client retention |
81 | % | 80 | % | 1 | 1 | % | |||||||||
Dollar retention |
91 | % | 89 | % | 2 | 2 | % | |||||||||
Enrichment |
104 | % | 102 | % | 2 | 2 | % | |||||||||
Number of clients |
2,703 | 2,562 | 141 | 6 | % |
13
14
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Research services |
71 | % | 72 | % | 68 | % | 67 | % | ||||||||
Advisory services and other |
29 | 28 | 32 | 33 | ||||||||||||
Total revenues |
100 | 100 | 100 | 100 | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of services and fulfillment |
36 | 37 | 38 | 38 | ||||||||||||
Selling and marketing |
36 | 34 | 36 | 33 | ||||||||||||
General and administrative |
11 | 16 | 12 | 13 | ||||||||||||
Depreciation |
2 | 2 | 2 | 2 | ||||||||||||
Amortization of intangible assets |
1 | 1 | 1 | 1 | ||||||||||||
Income from operations |
14 | 10 | 11 | 13 | ||||||||||||
Other income, net |
| (2 | ) | | 1 | |||||||||||
Gains on investments, net |
| 2 | 1 | 1 | ||||||||||||
Income before income taxes |
14 | 10 | 12 | 15 | ||||||||||||
Income tax provision |
6 | 4 | 5 | 6 | ||||||||||||
Net income |
8 | % | 6 | % | 7 | % | 9 | % | ||||||||
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
(dollars in millions) | ||||||||||||||||
Revenues |
$ | 69.8 | $ | 59.8 | $ | 10.0 | 17 | % | ||||||||
Revenues from research services |
$ | 49.2 | $ | 42.9 | $ | 6.3 | 15 | % | ||||||||
Revenues from advisory services and other |
$ | 20.5 | $ | 16.9 | $ | 3.6 | 21 | % | ||||||||
Revenues attributable to customers outside of the U.S. |
$ | 20.5 | $ | 16.3 | $ | 4.2 | 26 | % | ||||||||
Percentage
of revenue attributable to customers outside of the U.S. |
29 | % | 27 | % | 2 | 7 | % | |||||||||
Number of clients (at end of period) |
2,703 | 2,562 | 141 | 6 | % | |||||||||||
Number of events |
2 | 1 | 1 | 100 | % |
15
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Cost of services and fulfillment (dollars in millions) |
$ | 25.1 | $ | 22.4 | $ | 2.7 | 12 | % | ||||||||
Cost of services and fulfillment as a percentage of
total revenues |
36 | % | 37 | % | (1 | ) | (3 | %) | ||||||||
Number of research and fulfillment employees (at end
of period) |
552 | 448 | 104 | 23 | % |
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Selling and marketing expenses (dollars in millions) |
$ | 24.9 | $ | 20.2 | $ | 4.7 | 23 | % | ||||||||
Selling and marketing expenses as a percentage
of total revenues |
36 | % | 34 | % | 2 | 6 | % | |||||||||
Selling and marketing employees (at end of period) |
490 | 416 | 74 | 18 | % |
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
General and administrative expenses (dollars in millions) |
$ | 7.9 | $ | 9.5 | $ | (1.6 | ) | (16 | %) | |||||||
General and administrative expenses as a percentage
of total revenues |
11 | % | 16 | % | (5 | ) | (31 | %) | ||||||||
General and administrative employees (at end of period) |
180 | 167 | 13 | 8 | % |
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Depreciation expense (dollars in millions) |
$ | 1.4 | $ | 0.9 | $ | 0.5 | 51 | % | ||||||||
Depreciation expense as a percentage of total revenues |
2 | % | 2 | % | | |
16
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Amortization expense (dollars in millions) |
$ | 0.7 | $ | 0.9 | $ | (0.2 | ) | (25 | %) | |||||||
Amortization expense as a percentage of total revenues |
1 | % | 1 | % | | |
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Other income (expense), net (dollars in millions) |
$ | 0.4 | $ | (0.9 | ) | $ | 1.3 | 140 | % | |||||||
Other income (expense), net as a percentage of total revenues |
| (2 | %) | 2 | 100 | % |
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Gains on investments, net (dollars in millions) |
$ | | $ | 1.4 | $ | (1.4 | ) | (100 | %) | |||||||
Gains on investments, net as a percentage
of total revenues |
| 2 | % | (2 | ) | (100 | %) |
Three Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Provision for income taxes (dollars in millions) |
$ | 4.4 | $ | 2.5 | $ | 1.9 | 73 | % | ||||||||
Effective tax rate |
43 | % | 41 | % | 2 | 5 | % |
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
(dollars in millions) | ||||||||||||||||
Revenues |
$ | 209.0 | $ | 183.6 | $ | 25.4 | 14 | % | ||||||||
Revenues from research services |
$ | 141.1 | $ | 123.1 | $ | 18.0 | 15 | % | ||||||||
Revenues from advisory services and other |
$ | 67.8 | $ | 60.5 | $ | 7.3 | 12 | % | ||||||||
Revenues attributable to customers outside of the U.S. |
$ | 62.0 | $ | 51.7 | $ | 10.3 | 20 | % | ||||||||
Percentage of revenue attributable to customers outside
of the U.S. |
30 | % | 28 | % | 2 | 7 | % | |||||||||
Number of clients (at end of period) |
2,703 | 2,562 | 141 | 6 | % | |||||||||||
Number of events |
10 | 9 | 1 | 11 | % |
17
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Cost of services and fulfillment (dollars in millions) |
$ | 78.6 | $ | 69.0 | $ | 9.6 | 14 | % | ||||||||
Cost of services and fulfillment as a percentage of
total revenues |
38 | % | 38 | % | | | ||||||||||
Number of research and fulfillment employees (at end
of period) |
552 | 448 | 104 | 23 | % |
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Selling and marketing expenses (dollars in millions) |
$ | 76.4 | $ | 61.0 | $ | 15.4 | 25 | % | ||||||||
Selling and marketing expenses as a percentage
of total revenues |
36 | % | 33 | % | 3 | 9 | % | |||||||||
Selling and marketing employees (at end of period) |
490 | 416 | 74 | 18 | % |
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
General and administrative expenses (dollars in millions) |
$ | 25.2 | $ | 24.4 | $ | 0.8 | 3 | % | ||||||||
General and administrative expenses as a percentage
of total revenues |
12 | % | 13 | % | (1 | ) | (8 | %) | ||||||||
General and administrative employees (at end of period) |
180 | 167 | 13 | 8 | % |
18
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Depreciation expense (dollars in millions) |
$ | 3.3 | $ | 2.7 | $ | 0.6 | 22 | % | ||||||||
Depreciation expense as a percentage of total revenues |
2 | % | 2 | % | | |
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Amortization expense (dollars in millions) |
$ | 1.9 | $ | 2.7 | $ | (0.8 | ) | (30 | %) | |||||||
Amortization expense as a percentage of total revenues |
1 | % | 1 | % | | |
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Other income (expense), net (dollars in millions) |
$ | 0.3 | $ | 1.3 | $ | (1.0 | ) | (79 | %) | |||||||
Other income (expense), net as a percentage of total revenues |
| 1 | % | (1 | ) | (100 | %) |
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Gains on investments, net (dollars in millions) |
$ | 0.6 | $ | 1.8 | $ | (1.2 | ) | (65 | %) | |||||||
Gains on investments, net as a percentage
of total revenues |
1 | % | 1 | % | | |
Nine Months Ended | Absolute | Percentage | ||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | |||||||||||||
Provision for income taxes (dollars in millions) |
$ | 10.4 | $ | 10.4 | $ | | | |||||||||
Effective tax rate |
42 | % | 39 | % | 3 | 8 | % |
19
20
Maximum Dollar | ||||||||||||
Value that May | ||||||||||||
Yet be Purchased | ||||||||||||
Total Number of | Average Price | Under the Stock | ||||||||||
Period | Shares Purchased (1) | Paid per Share | Repurchase Program | |||||||||
(In thousands) | ||||||||||||
July 1- July 31 |
| $ | | $ | 84,010 | |||||||
August 1 - August 31 |
136,391 | $ | 32.16 | $ | 79,624 | |||||||
September 1 - September 30 |
19,302 | $ | 32.38 | $ | 79,000 | |||||||
155,693 | ||||||||||||
(1) | All purchases of our common stock were made under the stock repurchase program first announced in 2002. |
21
31.1
|
Certification of the Principal Executive Officer. (filed herewith) | |
31.2
|
Certification of the Principal Financial Officer. (filed herewith) | |
32.1
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith) | |
32.2
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith) | |
101.INS*
|
XBRL Instance Document. (furnished herewith) | |
101.SCH*
|
XBRL Taxonomy Extension Schema. (furnished herewith) | |
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase. (furnished herewith) | |
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase. (furnished herewith) | |
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase. (furnished herewith) |
* | Pursuant to Rule 406T of Regulation S-T, these interactive date files shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. |
22
FORRESTER RESEARCH, INC. |
||||
By: | /s/ Michael A. Doyle | |||
Michael A. Doyle | ||||
Chief Financial Officer and Treasurer (Principal financial officer) |
||||
23
Exhibit | ||
No. | Document | |
31.1
|
Certification of the Principal Executive Officer. (filed herewith) | |
31.2
|
Certification of the Principal Financial Officer. (filed herewith) | |
32.1
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith) | |
32.2
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith) | |
101.INS*
|
XBRL Instance Document. (furnished herewith) | |
101.SCH*
|
XBRL Taxonomy Extension Schema. (furnished herewith) | |
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase. (furnished herewith) | |
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase. (furnished herewith) | |
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase. (furnished herewith) |
* | Pursuant to Rule 406T of Regulation S-T, these interactive date files shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. |
/s/ GEORGE F. COLONY | ||||
George F. Colony | ||||
Chairman of the Board and Chief Executive Officer (Principal executive officer) |
||||
/s/ MICHAEL A. DOYLE | ||||
Michael A. Doyle | ||||
Chief Financial Officer and Treasurer (Principal financial officer) |
||||
1) | the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, as filed with the Securities and Exchange Commission (the 10-Q Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2) | the information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ George F. Colony | ||||
George F. Colony | ||||
Chairman of the Board and Chief Executive Officer |
||||
1) | the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, as filed with the Securities and Exchange Commission (the 10-Q Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2) | the information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ MICHAEL A. DOYLE | ||||
Michael A. Doyle | ||||
Chief Financial Officer and Treasurer | ||||
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Per Share data | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Stockholders' Equity (Note 8): | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 500 | 500 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 125,000 | 125,000 |
Common stock, shares issued | 30,779 | 30,500 |
Common stock, shares outstanding | 22,564 | 22,812 |
Treasury stock, shares | 8,215 | 7,688 |
Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Revenues: | ||||
Research services | $ 49,242 | $ 42,895 | $ 141,130 | $ 123,063 |
Advisory services and other | 20,532 | 16,882 | 67,836 | 60,547 |
Total revenues | 69,774 | 59,777 | 208,966 | 183,610 |
Operating expenses: | ||||
Cost of services and fulfillment | 25,071 | 22,399 | 78,593 | 69,026 |
Selling and marketing | 24,927 | 20,228 | 76,401 | 61,036 |
General and administrative | 7,928 | 9,489 | 25,176 | 24,413 |
Depreciation | 1,420 | 943 | 3,335 | 2,740 |
Amortization of intangible assets | 679 | 905 | 1,898 | 2,715 |
Total operating expenses | 60,025 | 53,964 | 185,403 | 159,930 |
Income from operations | 9,749 | 5,813 | 23,563 | 23,680 |
Other income (expense), net | 378 | (945) | 273 | 1,278 |
Gains on investments, net | 8 | 1,377 | 648 | 1,829 |
Income before income taxes | 10,135 | 6,245 | 24,484 | 26,787 |
Income tax provision | 4,403 | 2,541 | 10,371 | 10,409 |
Net income | $ 5,732 | $ 3,704 | $ 14,113 | $ 16,378 |
Basic income per common share | $ 0.25 | $ 0.16 | $ 0.62 | $ 0.73 |
Diluted income per common share | $ 0.25 | $ 0.16 | $ 0.61 | $ 0.71 |
Basic weighted average common shares outstanding | 22,620 | 22,462 | 22,672 | 22,456 |
Diluted weighted average common shares outstanding | 23,082 | 23,107 | 23,179 | 23,040 |
Document and Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Nov. 01, 2011 | Jun. 30, 2010 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | FORRESTER RESEARCH INC | ||
Entity Central Index Key | 0001023313 | ||
Document Type | 10-Q | ||
Document Period End Date | Sep. 30, 2011 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 441,000,000 | ||
Entity Common Stock, Shares Outstanding | 22,673,000 |
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Net Income Per Common Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Common Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Common Share |
Note 7 — Net Income Per Common Share
Basic net income per common share is computed by dividing net income by the basic weighted average
number of common shares outstanding during the period. Diluted net income per common share is
computed by dividing net income by the diluted weighted average number of common shares and common
equivalent shares outstanding during the period. The weighted average number of common equivalent
shares outstanding has been determined in accordance with the treasury-stock method. Common
equivalent shares consist of common stock issuable on the exercise of outstanding options and
vesting of restricted stock units when dilutive.
Basic and diluted weighted average common shares are as follows (in thousands):
|
Acquisition | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition |
Note 3 — Acquisition
On May 12, 2011, Forrester acquired Springboard Research (“Springboard”), a provider of research
and advisory services focused on Asia Pacific and emerging markets. Springboard was a former
division of Knowledge Platform, Inc. The acquisition of the Springboard business further supports
Forrester’s role-based strategy and expands Forrester’s coverage in the Asia Pacific region. The
total purchase price was approximately $9.0 million, of which approximately $6.7 million was paid
on the acquisition date and $2.3 million (the “Holdback”) is payable at various times
through June 1, 2013, subject to possible reduction to satisfy indemnification claims and specified
contingencies. Of the $2.3 million Holdback, up to $0.9 million could be retained by the Company if
certain key employees do not remain with the Company through May 12, 2012 or if the Company is not
able to occupy one of Springboard’s facilities through
September 15, 2012. As of September 30, 2011, $1.2 million and $0.9 million of the Holdback remains in accrued expenses and non-current liabilities,
respectively, in the Consolidated Balance Sheets. The results of Springboard, which were not
material to the consolidated financial statements, have been included in Forrester’s consolidated
financial statements since May 12, 2011 in the Technology Industry Client Group segment. Pro forma
financial information has not been provided as it is not material to the consolidated results of
operations.
A summary of the purchase price allocation for Springboard is as follows (in thousands):
Approximately $2.1 million of the goodwill is deductible for tax purposes. The Company
believes the goodwill reflects its expectations of synergistic revenue opportunities from the
acquisition and the value of the acquired workforce.
Intangible assets are amortized according to the expected cash flows to be received. The following
are the identifiable intangible assets acquired and their respective weighted average lives
(dollars in thousands):
|
Income Taxes | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Income Taxes [Abstract] | |
Income Taxes |
Note 9 — Income Taxes
Forrester provides for income taxes on an interim basis according to management’s estimate of the
effective tax rate expected to be applicable for the full fiscal year. Certain items such as
changes in tax rates, foreign exchange gains or losses on the remeasurement of deferred tax
liabilities and tax benefits related to disqualifying dispositions of incentive stock options are treated as discrete items and are recorded in the period in which they arise.
|
Operating Segments | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segments |
Note 10 — Operating Segments
Forrester is organized into three client groups with each client group responsible for writing
relevant research for the roles within the client organization on a worldwide basis. The three
client groups, which are considered operating segments, are: Business Technology (“BT”) (formerly
called Information Technology or IT), Technology Industry (“TI”), and Marketing and Strategy
(“M&S”). In addition, the Company’s Events
segment supports all three client groups. All of the client groups generate revenues through sales of research, advisory and other
service offerings targeted at specific roles within their targeted clients. Each of the client
groups consists of research personnel focused primarily on issues relevant to particular roles and
to the day-to-day responsibilities of persons within the roles. Amounts included in the “Events”
segment relate to the operations of the events production department. Revenue reported in the
Events segment consists primarily of sponsorships and sales of event tickets to Forrester events.
Forrester evaluates reportable segment performance and allocates resources based on direct margin.
Direct margin, as presented below, is defined as operating income excluding sales expenses, certain
marketing and fulfillment expenses, stock-based compensation expense, general and administrative
expenses, depreciation expense, and amortization of intangibles. The accounting policies used by
the reportable segments are the same as those used in the consolidated financial statements.
Forrester does not identify or allocate assets, including capital expenditures, by operating
segment. Accordingly, assets are not being reported by segment because the information is not
available by segment and is not reviewed in the evaluation of performance or in making decisions on
the allocation of resources.
The following tables present information about reportable segments (in thousands):
During the three months ended September 30, 2011, the Company identified errors
in the presentation of direct margin by operating segment during the nine-month period ending
September 30, 2010. Certain corporate level adjustments related to
the BT, TI and M&S segments were
incorrectly classified within the Event segment. There was no effect on consolidated segment direct margin.
The Company has concluded that the error described above was immaterial to all periods discussed. The Company has
detailed the adjustments to the prior periods below (amounts in thousands):
|
Stockholders Equity | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
Note 8 — Stockholders’ Equity
Comprehensive Income
The components of total comprehensive income for the three and nine months ended September 30, 2011
and 2010 are as follows (in thousands):
Equity Plans
Stock option activity for the nine months ended September 30, 2011 is presented below (in
thousands, except per share data):
Restricted stock unit activity for the nine months ended September 30, 2011 is presented
below (in thousands, except per share data):
Stock-Based Compensation
Forrester recognizes the fair value of stock-based compensation in net income over the requisite
service period of the individual grantee, which generally equals the vesting period. Stock-based
compensation was recorded in the following expense categories (in thousands):
In 2009, the Company issued to its employees 95,496 performance-based RSUs. The vesting of
the RSUs is subject to performance criteria and will vest at 100% or 40% on April 1, 2012, or the
RSUs could be forfeited, depending on whether specified revenue growth and certain operating margin
targets related to full year 2011 performance are achieved. Compensation expense in 2009, 2010 and
the three months ended March 31, 2011 was recognized based on an estimate of 100% vesting of the
RSUs. During the three months ended June 30, 2011, the Company modified its assessment
of the likelihood of vesting to the 40% level and recorded a credit, to stock-based compensation
expense, of approximately $0.8 million during the three months ended June 30, 2011 resulting from
the change in estimate. Compensation expense in the three months ended September 30, 2011 continued to be recognized based on an estimate of 40% vesting.
Forrester utilizes the Black-Scholes valuation model for estimating the fair value of stock-based
compensation. Options granted under the equity incentive plans and shares subject to purchase under
the employee stock purchase plan were valued using the following assumptions:
Treasury Stock
Forrester’s Board of Directors has authorized an aggregate $260 million to purchase common stock
under the stock repurchase program. The shares repurchased may be used, among other things, in
connection with Forrester’s employee and director equity incentive and purchase plans. As of
September 30, 2011, Forrester had repurchased approximately 8.2 million shares of common stock at
an aggregate cost of approximately $181.0 million.
|
Interim Consolidated Financial Statements | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Interim Consolidated Financial Statements [Abstract] | |
Interim Consolidated Financial Statements |
Note 1 — Interim Consolidated Financial Statements
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and pursuant to the rules and regulations of the Securities and
Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and
footnote disclosures required for complete financial statements are not included herein. The
year-end balance sheet data was derived from audited financial statements, but does not include all
disclosures required by accounting principles generally accepted in the United States of America.
It is recommended that these financial statements be read in conjunction with the consolidated
financial statements and related notes that appear in the Forrester Research, Inc. (“Forrester”)
Annual Report on Form 10-K for the year ended December 31, 2010. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary for a fair
presentation of the financial position, results of operations, and cash flows as of the dates and
for the periods presented have been included. The results of operations for the three and nine
months ended September 30, 2011 may not be indicative of the results for the year ending December
31, 2011, or any other period.
|
Marketable Investments | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Marketable Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investments |
Note 4 — Marketable Investments
The following table summarizes the Company’s marketable investments (in thousands):
Realized gains and losses on securities are included in earnings and are determined using the
specific identification method. Realized gains or losses on the sale of the Company’s federal
agency, state, municipal and corporate obligations were not material in the three and nine months
ended September 30, 2011 or 2010.
The following table summarizes the maturity periods of the marketable securities in the Company’s
portfolio as of September 30, 2011. In February 2008, certain auction rate securities (“ARS”) that
Forrester held experienced failed auctions that limited the liquidity of these securities. These
auction failures have continued and based on current market conditions, it is likely that auction
failures will continue. The following table reflects the ARS at their contractual maturity dates of
between
2024 and 2034 (in thousands).
The following table shows the gross unrealized losses and market value of Forrester’s
available-for-sale securities with unrealized losses that are not deemed to be
other-than-temporary, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position (in thousands):
Fair Value
The Company measures certain financial assets at fair value on a recurring basis, including cash
equivalents, available-for-sale securities and trading securities. The fair values of these
financial assets have been classified as Level 1, 2 or 3 within the fair value hierarchy as
described in the accounting standards for fair value measurements.
Level 1 — Fair value based on quoted prices in active markets for identical assets or liabilities.
Level 2 — Fair value based on inputs other than Level 1 inputs that are observable, either
directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities.
Level 3 — Fair value based on unobservable inputs that are supported by little or no market
activity and such inputs are significant to the fair value of the assets or liabilities.
The following table represents the Company’s fair value hierarchy for its financial assets (cash
equivalents and investments) measured at fair value on a recurring basis as of September 30, 2011
and December 31, 2010 (in thousands):
Level 2 assets consist of the Company’s entire portfolio of federal, state,
municipal and corporate bonds, excluding those municipal bonds described below with an auction
reset feature. Level 2 assets have been initially valued at the transaction price and subsequently
valued, at the end of each reporting period, typically utilizing third party pricing services or
other market observable data. The pricing services utilize industry standard valuation methods,
including both income and market based approaches and observable market inputs to determine value.
These observable market inputs include reportable trades, benchmark yields, credit spreads,
broker/dealer quotes, bids, offers, current spot rates and other industry and economic events.
Level 3 assets at September 30, 2011 consist entirely of municipal bonds with an auction reset
feature (ARS). Prior to 2008, the fair value of the ARS investments approximated par value due to
the frequent resets through the auction process. While the Company continues to earn interest on
its ARS investments at the contractual rate, these investments trade infrequently and therefore do
not have a readily determinable market value. Accordingly, the estimated fair value of the ARS no
longer approximates par value. At September 30, 2011, the Company held ARS with one investment
advisor. The Company values the ARS using a discounted cash flow model that includes estimates of
interest rates, timing and amount of cash flows, credit and liquidity premiums and expected holding
periods of the securities, which is considered a Level 3 valuation. The valuation resulted in an
unrealized loss recorded in other comprehensive loss in the Consolidated Balance Sheets of $1.5
million at September 30, 2011 and $1.9 million at December 31, 2010. The Company believes that the
loss is temporary due to the strong underlying credit rating of the securities and the fact that
the Company does not intend to sell the securities and is not likely to be required to sell the
securities. The assumptions used in valuing the ARS are volatile and subject to change as the
underlying sources of these assumptions and market conditions change.
Through July 1, 2010, the Company also held ARS with UBS AG (UBS). Historically, UBS provided a
valuation utilizing Level 3 inputs for the ARS investments. UBS utilized a discounted cash flow
approach to arrive at its valuation, which was corroborated by a separate and comparable discounted
cash flow analysis prepared by the Company. The assumptions used in preparing the discounted cash
flow model included estimates, based on data available at each balance sheet date, of interest
rates, timing and amount of cash flows, credit and liquidity premiums, and expected holding periods
of the ARS. In November 2008, the Company accepted an offer (the “Right”) from UBS entitling the
Company to sell at par value ARS originally purchased from UBS at any time during a two-year period
from June 30, 2010 through July 2, 2012. The Company valued the Right as an asset using a
discounted cash flow approach including estimates of interest rates and timing and amount of cash
flows, adjusted for any bearer risk associated with UBS’s financial ability to repurchase the ARS
beginning June 30, 2010, based on data available at each balance sheet date. The combined fair
value of the Right and the UBS ARS historically equaled the par value of the UBS ARS. The remaining
$5.4 million of par value UBS ARS at June 30, 2010 were sold to UBS at par under the Right on July
1, 2010.
The following table provides a summary of changes in fair value of the Company’s Level 3 financial
assets for the nine months ended September 30, 2011 and 2010 (in thousands):
|
Non-Marketable Investments | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Non-Marketable Investments [Abstract] | |
Non-Marketable Investments |
Note 5— Non-Marketable Investments
At September 30, 2011 and December 31, 2010, the carrying value of the Company’s non-marketable
investments, which were composed primarily of interests in technology-related private equity funds,
were $7.7 million and $7.4 million, respectively.
One of the Company’s investments, with a book value of $1.6 million and $1.7 million at September
30, 2011 and December 31, 2010, respectively, is being accounted for using the cost method and, accordingly, is valued at cost unless an
other-than-temporary impairment in its value occurs. The other investments are being accounted for
using the equity method as the investments are limited partnerships and the Company has an
ownership interest in excess of 5% and, accordingly, the Company records its share of the
investee’s operating results each period. The Company recorded a gain from its non-marketable
investments of $0.6 million and $1.8 million during the nine months ended September 30, 2011 and
2010, respectively, which are included in gains on investments, net in the Consolidated Statements
of Income. Gains from non-marketable investments were insignificant during the three months ended
September 30, 2011 and were $1.4 million during the three months ended September 30, 2010.
|
Reorganization | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization |
Note 6 — Reorganization
The following table rolls forward the activity in the reorganization accrual for the nine months
ended September 30, 2011 (in thousands):
|
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Revenue Recognition | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Revenue Recognition [Abstract] | |
Revenue Recognition |
Note 2 — Revenue Recognition
Effective January 1, 2011 the Company adopted Update No. 2009-13, “Multiple-Deliverable Revenue
Arrangements — a consensus of the FASB Emerging Issues Task Force” (ASU 2009-13) for contracts
entered into or materially modified after that date. ASU 2009-13 updates the previous
multiple-element revenue arrangements guidance. The revised guidance primarily provides three
significant changes: 1) it eliminates the need for objective and reliable evidence of the fair
value of the undelivered element in order for a delivered item to be treated as a separate unit of
accounting; 2) it eliminates the residual method to allocate the arrangement consideration; and, 3)
it modifies the fair value requirements of EITF Issue 00-21 by providing “best estimate of selling
price” in addition to vendor specific objective evidence and vendor objective evidence for
determining the selling price of a deliverable. In addition, the guidance also expands the
disclosure requirements for revenue recognition. The adoption of ASU 2009-13 did not have a
material impact on the Company’s financial position, results of operations or cash flows.
Forrester generates revenues from licensing research (including our data products), performing
advisory services and consulting projects and hosting events. Forrester executes contracts that
govern the terms and conditions of each arrangement. Revenues are recognized when persuasive
evidence of an arrangement exists, the fee is fixed or determinable, services have been provided to
the customer, and collectability is reasonably assured. Revenue contracts may include either a
single product or service or a combination of multiple products and services. Revenues from
contracts that contain multiple products and services are allocated among the separate units of
accounting based on their relative selling prices; however, the amount recognized is limited to the
amount that is not contingent on future performance conditions. The Company obtains the selling
prices of its products and services based on an analysis of standalone sales of these products and
services during the year. Research service revenues are recognized ratably over the term of the
contract. Advisory service revenues are recognized when the customer receives the agreed upon
deliverable and consulting project revenues, which are short-term in nature and based upon
fixed-fee agreements, are recognized as the services are provided. Losses on consulting project
contracts, if any, would be recognized in the period in which the loss first becomes probable and
reasonably estimable. Reimbursed out-of-pocket expenses are recorded as advisory services revenue.
Event revenues are recognized upon completion of the event.
Annual subscriptions to our RoleView research include access to all or a designated portion of our
research, and depending on the type of license, membership in one or more of our Forrester
leadership boards, unlimited phone or email analyst inquiry, unlimited participation in Forrester
Teleconferences, and the right to attend one event. Contracts for RoleView research entered into
prior to the adoption of ASU 2009-13 on January 1, 2011, were accounted for as one unit of
accounting and recognized ratably as research services revenue over the membership period.
Contracts for RoleView research entered into or significantly modified after January 1, 2011 are
accounted for as two units of accounting: 1) the event ticket and 2) the remaining research
services that are delivered throughout the contract period, based on the new guidance that permits
alternative methods of determining selling price as it relates to the components that we do not
sell on a standalone basis, such as research services in this case. Arrangement consideration is
allocated to each of these elements based upon their relative selling prices, which is based on
standalone sales of event tickets and the estimated selling price of the remaining research
services. Annual subscriptions to our data products include access to designated survey data
products and access to a data specialist, which are delivered throughout the year, and are
accounted for as one unit of accounting and recognized ratably as research services revenue over
the membership period. Clients are offered a service guarantee, which gives them the right to
cancel their contracts prior to the end of the contract term and receive a refund for unused
products or services.
|