EX-99 3 a4448561ex991.txt EXHIBIT 99.1 Exhibit 99.1 Forrester Research Announces Second-Quarter 2003 Financial Results; Integration Of Giga Information Group Is Ahead Of Schedule CAMBRIDGE, Mass.--(BUSINESS WIRE)--Aug. 5, 2003--Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the second quarter ended June 30, 2003, in line with its previous financial guidance. Second-Quarter Financial Performance -- Total revenues were $34.7 million, compared with $25.4 million for the second quarter of last year. -- On a GAAP-reported basis, which reflects an effective tax rate of 31 percent, Forrester reported second-quarter net income of $141,000, or $0.01 per diluted share compared to net income of $3.5 million, or $0.15 per diluted share for the same period last year. -- On a pro forma basis, which excludes amortization of acquisition-related intangible assets of $2.6 million, costs of $740,000 related to the integration of Giga Information Group, Inc., and a net write-down of $272,000 related to impairments of certain non-marketable securities, and which reflects a pro forma effective tax rate of 35 percent, net income was $2.5 million, or $0.11 per diluted share, for the second quarter of 2003. This compares with pro forma net income of $3.1 million, or $0.13 per diluted share for the same period last year, which excludes amortization of acquisition-related intangible assets of $82,000 and impairments of certain non-marketable securities of $486,000. Six-Month Period Ended June 30, 2003 Financial Performance -- Total revenues were $59.5 million, compared with $51.5 million for the same period last year. -- On a GAAP-reported basis, which reflects an effective tax rate of 31 percent, Forrester reported net income of $1.9 million, or $0.08 per diluted share for the six months ended 2003, compared to net loss of $2.6 million or ($0.11) per diluted share for the same period last year. -- On a pro forma basis, which excludes amortization of acquisition-related intangible assets of $3.5 million, costs of $771,000 related to the integration of Giga Information Group, Inc., and a write-down of $572,000 related to impairments of certain non-marketable securities, and which reflects a pro forma effective tax rate of 35 percent, net income was $5.0 million, or $0.22 per diluted share, for the six months ended 2003. This compares with pro forma net income of $6.4 million, or $0.27 per diluted share for the same period last year, which excludes a reorganization charge of $9.1 million, amortization of acquisition-related intangible assets of $164,000, and impairments of certain non-marketable securities of $2.7 million. A reconciliation of GAAP results to pro forma results may be found in the attached financial tables. "Our top priorities during the second quarter were to maintain high client satisfaction while ensuring the ongoing progress of integrating Giga Information Group, which we acquired in February," said George F. Colony, chairman of the board and chief executive officer. "The integration efforts are ahead of schedule and will strengthen Forrester's position in the marketplace. The sales teams recently have been integrated into one cohesive sales force, and this month the research staff -- already collaborating on research content -- will be united. Our conversations with clients continue to play a big role in developing and integrating the Forrester and Giga brands." In addition to the accelerated integration, the Forrester Oval Progam(TM)'s CIO Group and Councils gained momentum during the second quarter. The CIO Group, which provides CIOs with exclusive access to a peer network, client-directed research, benchmark data, best practices, and short projects, now has 93 members including new CIO clients from Liberty Mutual, Hitachi Metals, and Lafarge North America. Furthermore, the program's Application Development Council, Security & Risk Management Council, Enterprise Architecture Council, and the new Analyst Relations & Marketing Council added members, including Washington Mutual, Acapella, and Remedy, a BMC Software Company. Financial Guidance The integration of sales and research has resulted in a reduction in force of 30 employees, or approximately 5 percent of the company's work force. For the third quarter of 2003, the company expects to record a charge in the range of $1.0 million to $2.0 million related to the reorganization and work force reduction. On an annualized basis, associated savings are estimated to be approximately $4.0 million to $5.0 million. In addition, Forrester is currently in the process of evaluating its San Francisco office lease, and as a result, may record future lease-related charges. The company also announced today that as part of the integration, Forrester has combined its North American and Global operating groups. As a result, Emily Nagle Green, managing director of Forrester North America, has resigned to pursue other opportunities consistent with her long-term career goals. Neil Bradford, managing director of the Forrester Global operating group, has been named head of the expanded North American unit. Forrester is providing third-quarter 2003 guidance as follows: Third-Quarter 2003 (GAAP): -- Total revenues of approximately $30.0 million to $32.0 million. -- Operating margin of approximately (5) percent to 1 percent. -- Interest income of approximately $700,000 to $850,000. -- An effective tax rate of 31 percent. -- Diluted earnings per share of approximately ($0.03) to $0.01. Third-Quarter 2003 (Pro Forma): Pro forma financial guidance for the third quarter 2003 excludes amortization of acquisition-related intangible assets of approximately $2.6 million, impairment charges related to non-marketable securities, and third-quarter reorganization and integration charges estimated at $1.0 million to $2.0 million. -- Pro forma operating margin of approximately 9 percent to 11 percent. -- Pro forma effective tax rate of 35 percent, which varies from our actual effective tax rate of 31 percent due to our tax-free interest income decreasing as a percentage of our pro forma pre-tax income. -- Pro forma diluted earnings per share of approximately $0.10 to $0.12. Forrester is revising its full-year 2003 GAAP guidance and reaffirming full-year 2003 pro forma guidance as follows: Full-Year 2003 (GAAP): -- Total revenues of approximately $120.0 million to $125.0 million. -- Operating margin of approximately (1) percent to 4 percent, which assumes any charges related to the San Francisco office lease are not incurred during 2003. -- Interest income of approximately $3.8 million to $4.2 million. -- An effective tax rate of 31 percent. -- Diluted earnings per share of approximately $0.12 to $0.20, which assumes any charges related to the San Francisco office lease are not incurred during 2003. Full-Year 2003 (Pro Forma): Pro forma financial guidance for the full-year 2003 excludes amortization of acquisition-related intangible assets of approximately $8.7 million, impairment charges related to non-marketable securities, and reorganization and integration charges of approximately $2.0 million to $3.0 million, as well as charges related to terminating the San Francisco office lease. -- Pro forma operating margin of approximately 10 percent to 12 percent. -- Pro forma effective tax rate of 35 percent, which varies from our actual effective tax rate of 31 percent due to our tax-free interest income decreasing as a percentage of our pro forma pre-tax income. -- Pro forma diluted earnings per share of approximately $0.47 to $0.53. Forrester Research enables companies to understand the impact of technology on business. Forrester's WholeView(TM) Research, Strategic Services, and Events help clients understand how technology change affects their customers, strategy, and technology investment. In February 2003, Giga Information Group, Inc. became a wholly owned subsidiary of Forrester Research, Inc. Giga, through its Giga Advisory(R), Giga Consulting(TM), and Events, provides objective research, pragmatic advice, and personalized consulting to global IT professionals. 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 third quarter of and full-year 2003, statements about the potential success of WholeView and other product offerings, the anticipated cost savings related to the reorganization and work force reduction, Forrester's ability to successfully integrate Giga, and the ability of Forrester to achieve success as the economy improves. 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 successfully integrate Giga into Forrester's operations, Forrester's ability to anticipate business and economic conditions, market trends, competition, 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, the actual amount of the charge related to the reorganization and work force reduction, and Forrester's dependence on renewals of its membership-based research services and on key personnel. Forrester Research 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) 2003, Forrester Research, Inc. All rights reserved. Forrester, WholeView, Technographics, and Forrester Oval Program are trademarks of Forrester Research, Inc. Giga Advisory and Giga Consulting are trademarks of Giga Information Group, Inc. Forrester Research, Inc. Consolidated Statements Of Income (In thousands, except per share data) Three months ended Six months ended June 30, June 30, 2003 2002 2003 2002 (Unaudited) (Unaudited) Revenues Research services $26,611 $18,008 $45,432 $37,818 Advisory services and other 8,113 7,425 14,089 13,671 Total revenues 34,724 25,433 59,521 51,489 Operating expenses Cost of services and fulfillment 14,330 8,873 23,855 17,854 Selling and marketing 11,768 8,254 19,835 16,726 General and administrative 3,781 3,375 7,058 6,701 Depreciation and amortization 1,839 1,988 3,532 4,054 Amortization of intangible assets 2,608 82 3,532 164 Integration costs 740 - 771 - Reorganization costs - - - 9,088 Total operating expenses 35,066 22,572 58,583 54,587 (Loss) income from operations (342) 2,861 938 (3,098) Other income, net 819 1,481 2,414 3,041 Impairments of non- marketable investments (272) (486) (572) (2,734) Income (loss) before income taxes 205 3,856 2,780 (2,791) Income tax provision (benefit) 64 309 862 (223) Net income (loss) $141 $3,547 $1,918 $(2,568) Diluted earnings (loss) per share $0.01 $0.15 $0.08 $(0.11) Diluted weighted average shares outstanding 22,718 23,989 22,819 23,250 Basic earnings (loss) per share $0.01 $0.15 $0.08 $(0.11) Basic weighted average shares outstanding 22,515 23,354 22,627 23,250 Pro forma data (1): (Loss) income from operations (342) 2,861 938 (3,098) Amortization of intangible assets 2,608 82 3,532 164 Integration costs 740 - 771 - Reorganization costs - - - 9,088 Pro forma income from operations 3,006 2,943 5,241 6,154 Other income, net 819 1,481 2,414 3,041 Pro forma income before income taxes 3,825 4,424 7,655 9,195 Pro forma income tax provision 1,339 1,327 2,679 2,758 Pro forma net income $2,486 $3,097 $4,976 $6,437 Pro forma diluted earnings per share $0.11 $0.13 $0.22 $0.27 Diluted weighted average shares outstanding 22,718 23,989 22,819 23,920 (1) The pro forma data excludes amortization of intangibles and other integration costs related to acquisitions, reorganization costs, and impairments of 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) June 30, December 31, 2003 2002 Assets Cash and cash equivalents $13,881 $11,479 Marketable securities 121,749 183,152 Accounts receivable, net 18,028 17,791 Deferred commissions 4,784 3,524 Prepaid expenses and other current assets 7,733 5,902 Total current assets 166,175 221,848 Property and equipment, net 10,427 10,674 Goodwill, net 56,126 13,244 Intangibles assets, net 16,712 760 Deferred income taxes 35,367 21,630 Non-marketable investments and other assets 12,176 10,117 Total assets $296,983 $278,273 Liabilities and stockholders' equity Accounts payable $2,956 $1,601 Accrued expenses 24,272 20,681 Deferred revenue 59,487 42,123 Total liabilities 86,715 64,405 Preferred stock - - Common stock 242 240 Additional paid-in capital 169,651 167,935 Retained earnings 66,672 64,754 Treasury stock, at cost (27,380) (20,085) Accumulated other comprehensive income 1,083 1,024 Total stockholders' equity 210,268 213,868 Total liabilities and stockholders' equity $296,983 $278,273 Forrester Research, Inc. Consolidated Statements Of Cash Flows (In thousands) Six months ended June 30, 2003 2002 Cash flows from operations: Net income (loss) $1,918 $(2,568) Adjustments to reconcile net income (loss) to net cash provided by operating activities- Depreciation 3,532 4,054 Amortization of intangible assets 3,532 164 Write-downs of non-marketable investments 572 2,734 Loss on disposal of property and equipment - 92 Realized gain on sale of securities (509) - Tax benefit from stock options 155 1,996 Deferred income taxes 793 (2,222) Non-cash reorganization costs - 2,772 Increase in provision for doubtful accounts - 196 Accretion of premiums on marketable securities 413 376 Changes in assets and liabilities, net of acquisition - Accounts receivable 10,534 12,176 Deferred commissions (1,260) 1,023 Prepaid expenses and other 1,758 (932) Accounts payable (207) (433) Accrued expenses (7,649) (2,911) Deferred revenue (8,710) (14,206) Net cash provided by operating activities 4,872 2,311 Cash flows from investing activities: Acquisition of Giga Information Group, Inc., net of cash acquired (56,066) - Purchases of property and equipment (1,017) (966) Purchase of non-marketable investments (2,150) (2,625) Decrease in other assets 75 259 Purchase of marketable securities (126,158) (92,995) Proceeds from sales and maturities of marketable securities 188,766 94,017 Net cash provided by (used in) investing activities 3,450 (2,310) Cash flows from financing activities: Proceeds from issuance of common stock under employee stock option plans and employee stock purchase plan 1,457 7,912 Acquisition of treasury shares (5,295) (7,920) Structured stock repurchase (1,892) - Net cash used in financing activities (5,730) (8) Effect of exchange rate changes on cash and cash equivalents (190) (37) Net increase (decrease) in cash and cash equivalents 2,402 (44) Cash and cash equivalents, beginning of period 11,479 17,747 Cash and cash equivalents, end of period $13,881 $17,703 CONTACT: Forrester Research, Inc. Kimberly Maxwell, 617/613-6234 kmaxwell@forrester.com or Forrester Research, Inc. Karyl Levinson, 617/613-6262 press@forrester.com