Forrester Research, Inc. (Nasdaq: FORR), a leading provider of research and analysis on emerging technologies, today announced its fourth-quarter and year-end 2002 financial results in line with its previous financial guidance.
Fourth-Quarter Financial Performance
- Total revenues were $23.5 million, compared with $34.7 million for the fourth quarter of last year.
- On a GAAP-reported basis, which includes a write-down of approximately $525,000 related to impairments of certain non-marketable investments, and an income tax benefit of $61,000, Forrester reported fourth-quarter net income of $3.5 million, or $0.15 per diluted share.
- Excluding the impairments, and using a pro forma effective income tax rate of 30 percent, pro forma net income was $2.8 million, or $0.12 per diluted share, for the fourth quarter of 2002. This compares with pro forma net income of $6.0 million, or $0.25 per diluted share for the same period last year, which also excludes impairment charges.
Full-Year 2002 Financial Performance
- Total revenues for the year ended December 31, 2002 were $96.9 million, compared with $159.1 million for 2001.
- On a GAAP-reported basis, which includes total charges of $12.2 million related to reorganizations and work force reductions, write-downs of $4.1 million related to the impairments of certain non-marketable investments, and an income tax benefit of $311,000, Forrester reported net income of$589,000, or $0.02 per diluted share for the year ended December 31, 2002.
- Excluding these charges and impairments, and using a pro forma effective income tax rate of 30 percent, pro forma net income was $11.6 million, or $0.49 per diluted share for the year ended December 31, 2002. This compares with pro forma net income of $21.3 million, or $0.89 per diluted share for 2001, which also excludes reorganization and impairment charges as well as the gain from the sale of Internet AdWatch.
“Forrester met its fourth-quarter and full-year financial guidance, generated more than $5 million in cash from operations, and concluded the year with a cash and marketable securities balance of more than $194 million, despite the continued slowdown in technology spending,” said George F. Colony, chairman of the board and chief executive officer. “Going into 2002, we knew that revenues would decline based on our ratable revenue recognition model and a difficult sales cycle. That said, the successful introduction of WholeView™ Research contributed to a significant increase in client retention in 2002.”
2003 Strategy And New Products
After extensive new product development and testing in 2002, Forrester will introduce several new products in 2003 in response to an evolving marketplace. “Our clients continue to rely on our syndicated research, of which WholeView is the bedrock,” said Colony. “In addition, we are launching new products that leverage our extensive research database and capabilities to meet clients’ specific problems and challenges. The combination of primary syndicated, or ‘push,’ research and client-directed, or ‘pull,’ research differentiates Forrester from others in the technology research industry.
“For clients, Forrester’s new products squarely address their specific technology issues in a more directed and personal way. For Forrester, we believe the expansion of client-directed research will drive renewal rates and open new markets,” continued Colony.
As an example of Forrester’s client-directed research, the company today announced the launch of the Forrester Oval Program, which provides members with exclusive industry-specific benchmark data, access to a senior analyst for individual research-related questions, membership-directed research, best practices, and peer-to-peer networking. The CIO Group, Forrester’s first Oval Program, will bring together a network of CIOs from $1 billion-plus companies.
Forrester’s Intensive Advisory, another client-directed initiative that was available in 2002, will be expanded in 2003. Intensive Advisory leverages Forrester’s technology research to provide senior executives with strategic decision support for their most challenging issues. Forrester’s Intensive Advisory is staffed by a dedicated team of experienced strategy consultants, each with more than 10 years of experience.
“While the economy remains uncertain for 2003, we are excited about the year ahead,” said Colony. “Last week, we announced that we have entered into a definitive agreement and initiated a tender offer to acquire all of the shares of Giga Information Group, Inc. We are confident that Giga’s pragmatic IT advice combined with Forrester’s forward-looking research and vertical industry strengths will provide our clients with an extremely strong offering.”
As Forrester continues to unveil innovative products and prepares for the integration of Giga, the company also remains committed to ongoing rigorous expense control. Forrester’s guidance for the first quarter of 2003 does not take into account the acquisition of Giga, nor does it assume an improvement in the current state of the economy.
- Total revenues of approximately $18.5 million to $20.0 million.
- Operating margin of approximately 7 percent to 9 percent.
- Diluted earnings per share of approximately $0.07 to $0.09.
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 2003 and statements about the potential success of product offerings. 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 need to retain professional staff, possible variations in Forrester’s quarterly operating results, Forrester’s ability to successfully complete the acquisition of Giga and integrate Giga into Forrester’s operations, Forrester’s dependence on renewals of its membership-based research services and on key personnel, and risks associated with Forrester’s ability to offer new products and services. 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.