Forrester Research Announces First-Quarter 2004 Financial Results
Forrester Research, Inc. (Nasdaq: FORR) today announced its first-quarter ended March 31, 2004 financial results, in line with its previous financial guidance.
First-Quarter Financial Performance
- Total revenues were $31.7 million, compared with $24.5 million for the first quarter of last year.
- On a GAAP-reported basis, which reflects an effective tax rate of 33.5 percent, Forrester reported a first-quarter net loss of $257,000 or $0.01 per diluted share, compared with net income of $1.8 million, or $0.08 per diluted share, for the same period last year.
- On a pro forma basis, which excludes amortization of $2.3 million of acquisition-related intangible assets, reorganization costs of $2.0 million, 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 first quarter of 2004. This compares with pro forma net income of $2.5 million, or $0.11 per diluted share, for the same period in 2003, which excludes amortization of $924,000 of acquisition-related intangible assets and impairments to certain non-marketable investments of $300,000, and a pro forma effective tax rate of 35 percent.
A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.
“The first quarter showed continued stabilization in Forrester’s business,” said George F. Colony, chairman of the board and chief executive officer. “Our dollar retention rate improved to 83%, meeting our target range of 80% to 85% for the first time in three years. Also during the quarter, our clients began using WholeView 2TM, our integrated research product. Our newly designed site offers Forrester’s clients quick access to a unique and valuable database of research services combining the former WholeView and Giga Advisory. WholeView 2 now serves as the foundation for all of Forrester¿s products and services moving forward.”
Forrester is providing financial guidance as follows:
Second-Quarter 2004 (GAAP):
- Total revenues of approximately $32.0 million to $34.0 million.
- Operating margin of approximately (1) percent to 3 percent.
- Other income of approximately $650,000 to $750,000.
- An effective tax rate of 33.5 percent.
- Diluted earnings per share of approximately $0.00 to $0.04.
Second-Quarter 2004 (Pro Forma):
Pro forma financial guidance for the second quarter of 2004 excludes amortization of acquisition-related intangible assets of approximately $1.4 million, a reorganization charge of approximately $1.5 million to $2.0 million related to the relocation of Forrester’s San Francisco office, and any gains or impairment charges related to non-marketable investments.
- Pro forma operating margin of approximately 10 percent to 12 percent.
- Pro forma effective tax rate of 35 percent, which varies from our estimated GAAP effective tax rate of 33.5 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 $0.11 to $0.13.
Full-Year 2004 (GAAP):
- Total revenues of approximately $133.0 million to $138.0 million.
- Operating margin of approximately 3 percent to 7 percent.
- Other income of approximately $2.7 million to $2.9 million.
- An effective tax rate of 33.5 percent.
- Diluted earnings per share of approximately $0.22 to $0.27.
Full-Year 2004 (Pro Forma):
Pro forma financial guidance for full-year 2004 excludes amortization of acquisition-related intangible assets of approximately $6.5 million, any impairment gains or impairment charges related to non-marketable investments, and reorganization charges of approximately $4.0 million to $5.0 million.
- Pro forma operating margin of approximately 11 percent to 13 percent.
- Pro forma effective tax rate of 35 percent, which varies from our estimated GAAP effective tax rate of 33.5 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 $0.52 to $0.57.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, Forrester’s financial and operating targets for the second quarter of and full-year 2004, statements about the potential success of WholeView 2 and other product offerings, the ability to achieve all of the anticipated benefits from the acquisition of Giga Information Group, the amount of the charge and any cost savings related to reductions in force and associated actions, 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 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 and any cost savings related to reductions in force and associated actions, and Forrester’s dependence on renewals of its membership-based research services and on key personnel. Forrester undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information, please refer to Forrester¿s reports and filings with the Securities and Exchange Commission.
The consolidated statements of income, consolidated balance sheets, and consolidated statements of cash flows are attached.