EX-99 3 a4498917ex991.txt EXHIBIT 99.1 Exhibit 99.1 Forrester Research Announces Third-Quarter 2003 Financial Results CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 22, 2003--Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the third quarter ended September 30, 2003, in line with its previous financial guidance. Third-Quarter Financial Performance -- Total revenues were $32.2 million, compared with $21.9 million for the third quarter of last year. -- On a GAAP-reported basis, which reflects an effective tax rate of 31 percent, Forrester reported third-quarter net income of $186,000, or $0.01 per diluted share compared to a net loss of $307,000, or ($0.01) 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 $167,000 related to the integration of Giga Information Group, Inc., and reorganization costs of $1.2 million, and which reflects a pro forma effective tax rate of 35 percent, net income was $2.8 million, or $0.12 per diluted share, for the third quarter of 2003. This compares with pro forma net income of $2.6 million, or $0.11 per diluted share for the same period last year, which excludes amortization of acquisition-related intangible assets of $82,000, impairments of certain non-marketable securities of $859,000, and reorganization costs of $3.1 million. Nine-Month Period Ended September 30, 2003 Financial Performance -- Total revenues were $90.7 million, compared with $73.4 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 $2.1 million, or $0.09 per diluted share for the nine months ended 2003, compared to a net loss of $2.9 million or ($0.12) per diluted share for the same period last year. -- On a pro forma basis, which excludes amortization of acquisition-related intangible assets of $6.1 million, costs of $938,000 related to the integration of Giga Information Group, Inc., reorganization costs of $1.2 million, 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 $7.8 million, or $0.34 per diluted share, for the nine months ended 2003. This compares with pro forma net income of $9.0 million, or $0.38 per diluted share for the same period last year, which excludes a reorganization charge of $12.2 million, amortization of acquisition-related intangible assets of $246,000, and impairments of certain non-marketable securities of $3.6 million. A reconciliation of GAAP results to pro forma results may be found in the attached financial tables. "The third quarter showed modest improvement in Forrester's business," said George F. Colony, chairman of the board and chief executive officer. "New business as well as cross-sell business between legacy Forrester and Giga accounts increased. Companies began to emerge from their hibernation to become more engaged in technology projects and technology spending. I'm cautiously optimistic about our business based on the slight improvement we saw in the third quarter." Forrester also continued to make major progress toward finalizing the integration of Giga. "During the third quarter, we completed the final steps in the organizational integration of the two companies," said Colony. "We are one team across Forrester. Now early in the fourth quarter, we are rolling out a significantly enhanced research offering called WholeView 2(TM) that combines the best of Forrester and Giga. Whole View 2 is a comprehensive, collaborative view of technology from deep IT issues to broad business issues. WholeView 2, developed after extensive research and planning that included input from numerous clients, is being marketed and sold during the fourth quarter." The Forrester Oval Program(TM), comprising five technology boards, continued to gain traction during the third quarter. The CIO Group added 18 new CIOs from large corporations. The four technology Councils -- boards for non-CIO technology professionals -- gained 17 new members for a total Oval membership of 190. Forrester is providing financial guidance as follows: Fourth-Quarter 2003 (GAAP): -- Total revenues of approximately $32.0 million to $35.0 million. -- Operating margin of approximately 5 percent to 8 percent, which assumes that no charges related to the San Francisco office lease are incurred during 2003. -- Other income of approximately $700,000 to $800,000. -- An effective tax rate of 31 percent. -- Diluted earnings per share of approximately $0.06 to $0.10, which assumes that no charges related to the San Francisco office lease are incurred during 2003. Fourth-Quarter 2003 (Pro Forma): Pro forma financial guidance for the fourth quarter 2003 excludes amortization of acquisition-related intangible assets of approximately $2.6 million and any impairment charges related to non-marketable investments. -- Pro forma operating margin of approximately 14 percent to 16 percent. -- Pro forma effective tax rate of 35 percent, which varies from our actual effective tax rate of 31 percent because of our tax-free interest income decreasing as a percentage of our pro forma pre-tax income. -- Pro forma diluted earnings per share of approximately $0.15 to $0.17. 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 that no charges related to the San Francisco office lease are incurred during 2003. -- Other 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 that no charges related to the San Francisco office lease are 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 investments, and reorganization and integration charges of approximately $2.2 million. -- 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 because of 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. Separately, Forrester General Counsel Timothy J. Moynihan is leaving the company at the end of 2003. A search for a new general counsel is under way. Forrester is an independent technology research company that provides both pragmatic and forward-thinking advice about technology's impact on business. Business, marketing, and IT professionals worldwide collaborate with Forrester to align their technology investments with their business goals. Forrester offers products and services in four major areas: Research, Data, Consulting, and Community. In February 2003, Forrester acquired Giga Information Group. 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 fourth quarter of and full-year 2003, statements about the potential success of WholeView(TM) and other product offerings, 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, 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. Kimberly Maxwell Karyl Levinson Director, Investor Relations Director, Corporate Communications Forrester Research, Inc. Forrester Research, Inc. +1 617/613-6234 +1 617/613-6262 kmaxwell@forrester.com press@forrester.com (C) 2003, Forrester Research, Inc. All rights reserved. Forrester, WholeView, WholeView 2, and Forrester Oval Program are trademarks of Forrester Research, Inc. Forrester Research, Inc. Consolidated Statements Of Income ---------------------------------------------------------------------- (In thousands, except per share data) Three months ended Nine months ended September 30, September 30, 2003 2002 2003 (2) 2002 -------------------- -------------------- (Unaudited) (Unaudited) Revenues Research services $23,798 $16,984 $68,169 $54,802 Advisory services and other 8,410 4,954 22,499 18,625 ----------- -------- ----------- -------- Total revenues 32,208 21,938 90,668 73,427 Operating expenses Cost of services and fulfillment 12,525 7,540 36,380 25,394 Selling and marketing 10,749 7,094 29,523 23,820 General and administrative 3,927 2,889 10,985 9,590 Depreciation and amortization 1,520 1,947 5,052 6,001 Amortization of intangible assets 2,608 82 6,140 246 Integration costs 167 - 938 - Reorganization costs 1,230 3,082 1,230 12,170 ----------- -------- ----------- -------- Total operating expenses 32,726 22,634 90,248 77,221 (Loss) income from operations (518) (696) 420 (3,794) Other income, net 787 1,221 3,201 4,262 Impairments of non- marketable investments - (859) (572) (3,593) ----------- -------- ----------- -------- Income (loss) before income taxes 269 (334) 3,049 (3,125) Income tax provision (benefit) 83 (27) 945 (250) ----------- -------- ----------- -------- Net income (loss) $186 $(307) $2,104 $(2,875) =========== ======== =========== ======== Diluted earnings (loss) per share $0.01 $(0.01) $0.09 $(0.12) =========== ======== =========== ======== Diluted weighted average shares outstanding 22,741 23,263 22,793 23,254 =========== ======== =========== ======== Basic earnings (loss) per share $0.01 $(0.01) $0.09 $(0.12) =========== ======== =========== ======== Basic weighted average shares outstanding 22,462 23,263 22,572 23,254 =========== ======== =========== ======== Pro forma data (1): (Loss) income from operations (518) (696) 420 (3,794) Amortization of intangible assets 2,608 82 6,140 246 Integration costs 167 - 938 - Reorganization costs 1,230 3,082 1,230 12,170 ----------- -------- ----------- -------- Pro forma income from operations 3,487 2,468 8,728 8,622 Other income, net 787 1,221 3,201 4,262 ----------- -------- ----------- -------- Pro forma income before income taxes 4,274 3,689 11,929 12,884 Pro forma income tax provision 1,496 1,107 4,175 3,865 ----------- -------- ----------- -------- Pro forma net income $2,778 $2,582 $7,754 $9,019 =========== ======== =========== ======== Pro forma diluted earnings per share $0.12 $0.11 $0.34 $0.38 =========== ======== =========== ======== Diluted weighted average shares outstanding 22,741 23,562 22,793 23,801 =========== ======== =========== ======== (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. Due to the significance of these items, management believes that the pro forma presentation aids in the comparability of results. (2) Results for the nine months ended September 30, 2003 reflect a $1.1 million reclassification related to the fair value assessment of deferred revenue with regard to our purchase of Giga Information Group, Inc., that reduces research services revenues and reduces selling and marketing expenses in order to be consistent with the presentation for the three months ended September 30, 2003. Forrester Research, Inc. Consolidated Balance Sheets --------------------------------------------------------------------- (In thousands) September December 30, 31, 2003 2002 ----------- --------- (unaudited) Assets Cash and cash equivalents $11,342 $11,479 Marketable securities 117,539 183,152 Accounts receivable, net 19,655 17,791 Deferred commissions 4,008 3,524 Prepaid expenses and other current assets 6,962 5,902 ----------- --------- Total current assets 159,506 221,848 Property and equipment, net 9,045 10,674 Goodwill, net 55,096 13,244 Intangibles assets, net 14,104 760 Deferred income taxes 37,538 21,630 Non-marketable investments and other assets 14,688 10,117 ----------- --------- Total assets $289,977 $278,273 =========== ========= Liabilities and stockholders' equity Accounts payable $1,757 $1,601 Accrued expenses 27,650 20,681 Deferred revenue 51,606 42,123 ----------- --------- Total liabilities 81,013 64,405 Preferred stock - - Common stock 242 240 Additional paid-in capital 170,447 167,935 Retained earnings 66,858 64,754 Treasury stock, at cost (28,881) (20,085) Accumulated other comprehensive income 298 1,024 ----------- --------- Total stockholders' equity 208,964 213,868 ----------- --------- Total liabilities and stockholders' equity $289,977 $278,273 =========== ========= Forrester Research, Inc. Consolidated Statements Cash Flows ---------------------------------------------------------------------- (In thousands) Nine months ended September 30, 2003 2002 --------------------- (Unaudited) Cash flows from operations Net income (loss) 2,104 (2,875) Adjustments to reconcile net income (loss) to net cash provided by operating activities - Depreciation and amortization 5,052 6,001 Amortization of intangible assets 6,140 246 Impairments of non-marketable investments 572 3,593 Realized gain on sale of marketable securities (509) - Tax benefit from stock options 239 2,179 Deferred income taxes 747 437 Non-cash reorganization costs - 3,629 Increase in provision for doubtful accounts - 196 Loss on disposal of property and equipment - 92 Amortization of premiums on marketable securities 618 868 Changes in assets and liabilities, net of acquisition - Accounts receivable 9,088 13,541 Deferred commissions (434) 1,642 Prepaid expenses and other 2,401 (1,923) Accounts payable (1,395) (711) Accrued expenses (4,714) (2,369) Deferred revenue (16,914) (20,659) ----------- --------- Net cash provided by operating activities 2,995 3,887 Cash flows from investing activities Acquisition of Giga Information Group, Inc., net of cash acquired (57,027) - Purchases of property and equipment (1,122) (1,028) Purchase of non-marketable investment (3,150) (3,825) (Decrease) Increase in other assets (1,439) 411 Purchases of marketable securities (164,338) (148,237) Proceeds from sales and maturities of marketable securities 230,641 157,722 ----------- --------- Net cash provided by investing activities 3,565 5,043 Cash flows from financing activities Proceeds from exercises of employee stock options 2,070 9,293 Acquisition of treasury shares (6,796) (14,830) Structured stock repurchases (1,793) (2,000) ----------- --------- Net cash used in financing activities (6,519) (7,537) Effect of exchange rate changes on cash and cash equivalents (178) 73 ----------- --------- Net (decrease) increase in cash and cash equivalents (137) 1,466 Cash and cash equivalents, beginning of period 11,479 17,747 ----------- --------- Cash and cash equivalents, end of period 11,342 19,213 =========== ========= CONTACT: Forrester Research, Inc. Kimberly Maxwell, 617-613-6234 kmaxwell@forrester.com Karyl Levinson, 617-613-6262 press@forrester.com