Gartner Reports Fourth Quarter and Full Year 2004 Results; Provides Outlook for 2005.STAMFORD Stamford, town, England Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles. , Conn. -- Gartner (Gartner, Inc., Stamford, CT, www.gartner.com) The largest information technology consulting firm that specializes in research and analysis. Founded in 1979 by Gideon Gartner, it has grown through acquisitions, including Dataquest in 1995 and Techrepublic in 2000. , Inc. (NYSE NYSE See: New York Stock Exchange : IT and ITB ITB Invitation To Bid ITB In The Beginning ITB Internationale Tourismusbörse (German) ITB In The Business (aka in the business service industry) ITB Intrathecal Baclofen Therapy ), the leading provider of research and analysis on the global information technology industry, today reported results for the fourth quarter and year ended December December: see month. 31, 2004. Fourth Quarter 2004 Results Total revenue for the fourth quarter of 2004 was $255 million, a 5% increase from $244 million in the corresponding period in 2003. Net income was $5 million, or $0.04 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, including charges of $14.7 million. The charges, which include $9.7 million of cash charges and $5.0 million of non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , consist of $5.9 million for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , $4.3 million related to asset impairments and the exit of certain non-core product lines, $2.3 million related to an adjustment to restructured facilities, $1.9 million for the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of certain internal systems, and $0.3 million for restructuring within the Company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . These charges are not related to Gartner's pending acquisition of META One definition of this Greek word is transcending, or going above and beyond. In the computer field, it defines things that embrace more than the usual. For example, a metafile contains all types of data. Meta-data describes other data. See metafile, metadata and meta tag. 1. Group, Inc. In the fourth quarter of 2003, the Company reported net income of $7 million, or $0.05 per diluted share, including a $24 million charge. Normalized EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for the fourth quarter, which excludes the previously mentioned charges, was $0.14, down from $0.18 a year ago. Normalized EPS is a non-GAAP financial measure. See "Non-GAAP Financial Measures" for a further discussion of normalized EPS. Excluding the effect of foreign currency, total revenue for the 2004 fourth quarter would have increased 2% as a result of strong performance in the Events business; cost of services and product development would have increased 10% as a result of growth in both Executive Programs and Events; and selling, general and administrative expenses would have increased 4% due to increased sales commissions and marketing related expenses. The impact of foreign currency on net income was less than $1 million. Research contract value would have increased 2% from the fourth quarter of 2003, excluding the effect of foreign currency. Gene Hall, Gartner's chief executive officer, said, "Overall, I am pleased with the actions we've we've Contraction of we have. we've have taken in the fourth quarter and the company's overall direction. At the same time, our fourth quarter results do not reflect Gartner's strong long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. potential, particularly with respect to our core Research business. Over the past several months, the management team has been working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to expand our sales efforts and to ensure that our portfolio of research offerings is strong, highly relevant and meets appropriate levels of profitability. While I am encouraged by the progress we saw this quarter, including the fact that Research contract value exceeded $500 million for the first time since the second quarter of 2002, as well as continued increases in both client and wallet See digital wallet. retention rates, we have much more work to do." Mr. Hall added, "Given ever-tougher demands on IT departments, I believe Gartner's value proposition is greater than ever and its growth potential is significant. We are keenly focused on seizing the opportunity before us." Full Year 2004 Results For fiscal 2004, total revenue was $894 million, an increase of 4% from $858 million in 2003. Net income for 2004 was $17 million, or $0.13 per diluted share, including $44 million of special charges. Net income for 2003 was $24 million, or $0.26 per diluted share, including $30 million of special charges. Normalized EPS for 2004 was $0.40, compared with $0.39 for 2003. See "Non-GAAP Financial Measures" for a further discussion of normalized EPS. Excluding the effect of foreign currency, total revenue for fiscal 2004 would have increased 1%; cost of services and product development would have increased 2%; and selling, general and administrative expenses would have increased 2%. The impact on net income was negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . . Business Segment Highlights Research. Research revenue was $120 million for the 2004 fourth quarter, an increase of 2% from the same period of 2003. For the full year 2004, Research revenue totaled $480 million, an increase of 3% for the year. At December 31, 2004, Research contract value, a leading indicator Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. of future revenue, was $509 million, up from $489 million at September September: see month. 30, 2004, and $482 million at December 31, 2003. This represents the Company's highest reported contract value since the first quarter of 2002. Client retention was 80% for the fourth quarter of 2004, versus 78% in both the third quarter of 2004 and fourth quarter of 2003. Wallet retention, a measure of dollar retention for the Research business, was 95% for the fourth quarter, up from 93% in the third quarter and 89% in the fourth quarter of 2003. Consulting. Consulting revenue was $67 million for the 2004 fourth quarter, flat with the fourth quarter of 2003. For the full year 2004, Consulting revenue was $259 million, the same level as 2003. Utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be averaged 60% during the fourth quarter and 63% for the year, compared with average utilization of 54% and 55%, respectively, for same periods of 2003. Billable headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. was 493 as of December 31, 2004, down 6% from 526 at the end of 2003. Consulting backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. was $112 million at December 31, 2004, a $9 million sequential One after the other in some consecutive order such as by name or number. increase from September 30, 2004. Events. Events revenue was $64 million for the fourth quarter of 2004, up 18% from the fourth quarter of 2003. For 2004, Events revenue totaled $138 million, an increase of 16% from the prior year. The Company held 56 events in the year as compared to 57 in 2003, and had approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 31,000 worldwide attendees in 2004, a 12% increase compared to 2003. Business Outlook Gartner also provided its outlook for 2005. The Company noted that the following outlook does not include the impact of its pending acquisition of META Group, Inc., which is expected to close in the second quarter of 2005. For the full year 2005, the Company is targeting total revenue of approximately $916 million to $942 million. By segment, for the full year 2005 the company is targeting Research revenue of approximately $485 million to $495 million, Consulting revenue of approximately $263 million to $273 million, Events revenue of approximately $154 million to $159 million, and other revenue of approximately $14 million to $15 million. Based on this revenue the Company is targeting EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the full year 2005 of $85 million to $95 million, GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). EPS of $0.15 to $0.24 and normalized EPS, excluding special charges, of $0.30 to $0.35. The estimated fully diluted share count is 115 million shares. See "Non-GAAP Financial Measures" for a further discussion of EBITDA and normalized EPS. In the first quarter of 2005, Gartner expects to record special charges in the range of $10 million to $20 million related to the further restructuring of international operations and severance. The Company anticipates additional charges of approximately $6 million to be taken during the second or third quarter of 2005 related to the continued consolidation of real estate facilities. The Company also noted that the 2005 forecast includes an adjustment of approximately $20 million for employee compensation. Commenting on the Company's outlook, Mr. Hall said, "The business is now clearly headed in the right direction, and 2005 will be dedicated to the continued, aggressive execution of important changes aimed at laying the groundwork for significant profitable growth in the years ahead. As detailed above, we plan to take several charges during the year, as we rationalize ra·tion·al·ize v. 1. To make rational. 2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear our product portfolio and trim on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . We are also reversing a temporary decrease in employee compensation instituted several years ago in the face of challenging economic conditions. In today's more robust economic environment, it is imperative imperative: see mood. imperative - imperative language that we restore compensation to competitive levels to reduce turnover and retain the employees who are key to the success of our business." Mr. Hall continued, "Looking further ahead, we expect the recent launch of a number of important initiatives and programs to begin achieving positive results in 2005 and to have a material impact on our earnings in 2006, on the order of $15 million to $20 million of EBITDA. We also expect the acquisition of META and subsequent integration to result in increased EBITDA of approximately $20 million in 2006. Based on this outlook, we are driving toward total EBITDA for 2006 in the range of $125 million to $135 million." Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. and Capital Structure Gartner also announced that its Board of Directors has approved the elimination of its classified Board structure. Additionally, as previously announced, the Board has approved the combination of the Company's A and B share classes. Both of these items are subject to stockholder approval at our annual meeting to take place in the late spring or early summer of 2005. The Company also noted that while existing cash and credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities are adequate to finance the pending META Group acquisition, Gartner will continue to evaluate current capital markets and seek opportunities to optimize optimize - optimisation its capital structure. Conference Call and Investor Day Information The Company has scheduled a conference call at 10:00 a.m. ET today, Thursday Thursday: see week. , February February: see month. 3, 2005, to discuss the Company's financial results. The conference call will be available via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by accessing Gartner's Web site at www.gartner.com/investors. A replay of the webcast will be available for 30 days following the call. The Company will also host an Investor Day conference on Thursday, February 17, 2005 at Cipriani Cipriani, a surname of Italian origin, can refer to:
New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . The conference will begin at 9:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy and will conclude at approximately 1:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . Registration is required. Please contact Amy Cohen cohen or kohen (Hebrew: “priest”) Jewish priest descended from Zadok (a descendant of Aaron), priest at the First Temple of Jerusalem. The biblical priesthood was hereditary and male. of Citigate Sard Verbinnen at 212-687-8080 for further information. Details regarding the webcast of the Investor Day conference will be available next week. About Gartner Gartner, Inc. is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 10,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth in-depth adj. Detailed; thorough: an in-depth study. in-depth Adjective detailed or thorough: an in-depth analysis analysis and actionable Giving sufficient legal grounds for a lawsuit; giving rise to a Cause of Action. An act, event, or occurrence is said to be actionable when there are legal grounds for basing a lawsuit on it. advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut Stamford is a city in Fairfield County, Connecticut, United States. According to 2006 Census Bureau estimates, the population of the city is 119,261, making it the fourth largest city in the state. , and has 3,700 associates, including more than 1,000 research analysts and consultants, in more than 75 locations worldwide. For more information, visit www.gartner.com. Non-GAAP Financial Measures Investors are cautioned that EBITDA and normalized EPS information contained in this press release are not financial measures under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . In addition, they should not be construed as alternatives to any other measures of performance determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles. These non-GAAP financial measures are provided to enhance the user's overall understanding of the Company's current financial performance and the Company's prospects for the future. We believe EBITDA and normalized EPS are important measures of our recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. operations as they exclude items that may not be indicative indicative: see mood. of our core operating results and calculate earnings per share in a manner consistent with prior periods by including the effect of our debt conversion which occurred during the fourth quarter of 2003. EBITDA is based on operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , excluding depreciation and amortization, goodwill impairments, and other charges. Normalized EPS is based on net income (loss), excluding other charges, non-cash charges, goodwill impairments, and gains and losses on investments. For 2003, normalized EPS includes the effect of the convertible debt as if it had been converted at the beginning of the period, as the convertible debt had a dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). when including the normalized adjustments. See "Supplemental Information" at the end of this release for reconciliation of GAAP net income and loss and EPS to normalized net income and EPS. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Statements contained in this press release regarding the growth and prospects of the business, the Company's first quarter and full year 2005 and 2006 financial results, future restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , the pending acquisition of META Group, Inc. and all other statements in this release other than recitation rec·i·ta·tion n. 1. a. The act of reciting memorized materials in a public performance. b. The material so presented. 2. a. Oral delivery of prepared lessons by a pupil. b. of historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. (as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995). Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. thereby. Factors that could cause actual results to differ materially include, but are not limited to ability to expand or even retain the Company's customer base; ability to grow or even sustain revenue from individual customers; ability to attract and retain professional staff of research analysts and consultants upon whom the Company is dependent; ability to achieve and effectively manage growth; ability to pay the Company's debt obligations; ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; ability to integrate META Group's current operations and businesses; ability to expand or even retain META Group's customers; ability to carry out the Company's strategic initiatives and manage associated costs; substantial competition from existing competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. and potential new competitors; additional risks associated with international operations including foreign currency fluctuations; the impact of restructuring and other charges on the Company's businesses and operations; and other risks listed from time to time in the Company's reports filed with the Securities and Exchange Commission. These filings can be found on Gartner's Web site at www.gartner.com/investors and the SEC's Web site at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Forward-looking statements included herein speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" and the Company disclaims any obligation to revise or update such statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events or circumstances.
GARTNER, INC.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues:
Research $120,274 $117,560 2% $480,486 $466,907 3%
Consulting 67,111 67,326 0% 259,419 258,628 0%
Events 64,336 54,650 18% 138,393 119,355 16%
Other 3,688 4,406 -16% 15,523 13,556 15%
--------- --------- --------- ---------
Total revenues 255,409 243,942 5% 893,821 858,446 4%
Costs and expenses:
Cost of services
and product
development 124,441 110,515 13% 434,499 410,666 6%
Selling, general and
administrative 95,823 89,880 7% 350,135 333,283 5%
Depreciation 6,280 8,210 -24% 27,650 36,045 -23%
Amortization of
intangibles 97 212 -54% 687 1,275 -46%
Goodwill impairment 1,972 - U 2,711 - U
Other charges 11,872 24,290 F 35,781 29,716 U
--------- --------- --------- ---------
Total costs and
expenses 240,485 233,107 3% 851,463 810,985 5%
--------- --------- --------- ---------
Operating income 14,924 10,835 38% 42,358 47,461 -11%
(Loss) gain from
investments (813) (884) F (2,958) 4,740 U
Interest (expense)
income, net (1,330) (178) U (1,317) (17,106) F
Other (expense)
income, net (297) 113 U (3,922) 461 U
--------- --------- --------- ---------
Income before income
taxes 12,484 9,886 26% 34,161 35,556 -4%
Provision for income
taxes 7,489 3,009 149% 17,514 11,863 48%
--------- --------- --------- ---------
Net income $ 4,995 $ 6,877 -27% $ 16,647 $ 23,693 -30%
========= ========= ========= =========
Income per common
share:
Basic $ 0.05 $ 0.05 -17% $ 0.13 $ 0.26 -48%
Diluted $ 0.04 $ 0.05 -16% $ 0.13 $ 0.26 -49%
Weighted average shares
outstanding:
Basic 110,279 126,088 -13% 123,603 91,123 36%
Diluted 112,402 129,826 -13% 126,326 92,579 36%
SUPPLEMENTAL
INFORMATION
--------------
Normalized
EPS (1) $ 0.14 $ 0.18 -22% $ 0.40 $ 0.39 3%
(1) Normalized net income & EPS is based on net income, excluding
other charges, non-cash charges, goodwill impairments, and gains and
losses from investments. Normalized EPS for 2003 also includes the
effect of the convertible debt as if it had been converted at the
beginning of 2003. We believe normalized EPS is an important measure
of our recurring operations. See "Supplemental Information" at the end
of this release for a reconciliation from GAAP net income and EPS to
normalized net income and EPS and a discussion of the reconciling
items.
GARTNER, INC.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2004 2003
------------ -----------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $160,126 $229,962 -30%
Fees receivable, net 257,689 266,122 -3%
Deferred commissions 32,978 27,751 19%
Prepaid expenses and other current
assets 31,024 25,642 21%
------------ ---------
Total current assets 481,817 549,477 -12%
Property, equipment and leasehold
improvements, net 63,495 66,541 -5%
Goodwill 231,759 230,387 1%
Intangible assets, net 138 985 -86%
Other assets 78,230 66,364 18%
------------ ---------
Total Assets $855,439 $913,754 -6%
============ =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $175,855 $173,693 1%
Deferred revenues 307,696 315,524 -2%
Current portion of long term debt 40,000 -
------------ ---------
Total current liabilities 523,551 489,217 7%
Other liabilities 52,655 50,385 5%
Long term debt 150,000 -
------------ ---------
Total Liabilities 726,206 539,602 35%
Total Stockholders' Equity 129,233 374,152 -65%
------------ ---------
Total Liabilities and
Stockholders' Equity $855,439 $913,754 -6%
============ =========
GARTNER, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Twelve Months
Ended
December 31,
2004 2003
--------- ---------
Operating activities:
Net income $ 16,647 $ 23,693
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of intangibles 28,337 37,320
Non-cash compensation 1,427 1,072
Tax benefit associated with employees' exercise
of stock options 10,004 3,930
Deferred taxes (8,613) (4,567)
Loss (gain) from investments, net 2,957 (4,740)
Accretion of interest and amortization of debt
issue costs 954 18,649
Goodwill impairment 2,711 -
Non-cash charges associated with long-lived
assets 5,157 -
Changes in assets and liabilities:
Fees receivable, net 13,711 29,980
Deferred commissions (5,197) (1,689)
Prepaid expenses and other current assets (77) 3,829
Other assets (3,795) (937)
Deferred revenues (14,765) (4,467)
Accounts payable and accrued liabilities (1,129) 34,264
--------- ---------
Cash provided by operating activities 48,329 136,337
--------- ---------
Investing activities:
Proceeds from insurance recovery - 5,464
Investments - (1,960)
Prepaid acquisition cost (3,870) -
Additions to property, equipment and leasehold
improvements (25,104) (28,928)
--------- ---------
Cash used in investing activities (28,974) (25,424)
--------- ---------
Financing activities:
Proceeds from stock issued for stock plans 67,786 41,655
Proceeds from debt 200,000 -
Payments for debt issuance costs (2,821) (1,182)
Payments for debt (10,000) -
Purchases of stock via tender offer, including
costs (346,150) -
Purchases of treasury stock (6,112) (43,434)
--------- ---------
Cash used in financing activities (97,297) (2,961)
--------- ---------
Net (decrease) increase in cash and cash
equivalents (77,942) 107,952
Effects of exchange rates on cash and cash
equivalents 8,106 12,353
Cash and cash equivalents, beginning of period 229,962 109,657
--------- ---------
Cash and cash equivalents, end of period $160,126 $229,962
========= =========
SELECTED STATISTICAL DATA
(Dollars In thousands)
December December
31, 31,
2004 2003
--------- ---------
Research contract value $509,204 $482,219
Consulting backlog $111,779 $ 99,718
Research client organizations 8,720 8,859
BUSINESS SEGMENT DATA
(Dollars in thousands)
Direct Gross Contrib.
Revenue Expense Contribution Margin
--------- --------- ------------ --------
Three Months Ended 12/31/04
Research $120,274 $ 51,653 $ 68,621 57%
Consulting 67,111 45,215 21,896 33%
Events 64,336 25,411 38,925 61%
Other 3,688 271 3,417 93%
--------- --------- ------------
TOTAL $255,409 $122,550 $132,859 52%
========= ========= ============
Three Months Ended 12/31/03
Research $117,560 $47,067 $70,493 60%
Consulting 67,326 45,856 21,470 32%
Events 54,650 22,741 31,909 58%
Other 4,406 660 3,746 85%
--------- --------- ------------
TOTAL $243,942 $116,324 $127,618 52%
========= ========= ============
Twelve Months Ended 12/31/04
Research $480,486 $187,782 $292,704 61%
Consulting 259,419 166,708 92,711 36%
Events 138,393 68,931 69,462 50%
Other 15,523 1,583 13,940 90%
--------- --------- ------------
TOTAL $893,821 $425,004 $468,817 52%
========= ========= ============
Twelve Months Ended 12/31/03
Research $466,907 $174,033 $292,874 63%
Consulting 258,628 171,850 86,778 34%
Events 119,355 63,351 56,004 47%
Other 13,556 3,475 10,081 74%
--------- --------- ------------
TOTAL $858,446 $412,709 $445,737 52%
========= ========= ============
SUPPLEMENTAL
INFORMATION
EPS Reconciliation - GAAP to Normalized
(in thousands, except per share data)
Three Months Ended December 31,
-------------------------------------------------
2004 2003
------------------------ ------------------------
After- After-
Tax Tax
Income Shares EPS Income Shares EPS
-------- -------- ------ -------- -------- ------
GAAP Basic EPS $ 4,995 110,279 $0.05 $ 6,877 126,088 $0.05
Share equivalents
from stock
compensation shares - 2,123 (0.01) - 3,738 (0.00)
Convertible long-term
debt - - - - - -
-------- -------- ------ -------- -------- ------
GAAP Diluted EPS $ 4,995 112,402 $0.04 $ 6,877 129,826 $0.05
Other charges (1) 6,968 - 0.06 15,725 - 0.12
Non-cash charges (2) 1,597 - 0.02 - - -
Goodwill
impairments (3) 1,423 - 0.01 - - -
Loss from
investments (4) 818 - 0.01 862 - 0.01
Convertible long-term
debt (5) - - - 239 3,188 0.00
-------- -------- ------ -------- -------- ------
Normalized net
income & EPS $15,801 112,402 $0.14 $23,703 133,014 $0.18
======== ======== ====== ======== ======== ======
Twelve Months Ended December 31,
-------------------------------------------------
2004 2003
------------------------ ------------------------
After- After-
Tax Tax
Income Shares EPS Income Shares EPS
-------- -------- ------ -------- -------- ------
GAAP Basic EPS $16,647 123,603 $0.13 $23,693 91,123 $0.26
Share equivalents from
stock compensation
shares - 2,723 0.00 - 1,456 (0.00)
Convertible long-term
debt - - - - - -
-------- -------- ------ -------- -------- ------
GAAP Diluted EPS $16,647 126,326 $0.13 $23,693 92,579 $0.26
Other charges (1) 23,921 - 0.19 19,360 - 0.21
Non-cash charges (2) 4,540 - 0.04 - - -
Goodwill impairments
(3) 2,162 - 0.02 - - -
Loss (gain) from
investments (4) 2,977 - 0.02 (2,523) - (0.03)
Convertible long-term
debt (5) - - - 10,148 37,035 (0.05)
-------- -------- ------ -------- -------- ------
Normalized net income
& EPS $50,247 126,326 $0.40 $50,678 129,614 $0.39
======== ======== ====== ======== ======== ======
General Notes & Footnotes
- Normalized net income & EPS is based on net income (loss),
excluding other charges, non-cash charges, goodwill impairments, and
gains and losses from investments. For 2003, normalized net income and
EPS also includes the effect of the convertible debt as if it had been
converted at the beginning of the period as the convertible debt had a
dilutive effect when including the normalized adjustments. We believe
normalized EPS is an important measure of our recurring operations.
- The normalized effective tax rate was 36% in 2004 and 33% in
2003.
(1) Other charges during 2004 included costs related to a
reduction in workforce, the exit from certain non-core product lines,
an adjustment to previously abandoned facilities, and the closing of
certain operations in South America. Other charges during 2003 were
for costs associated with a reduction in workforce and facilities.
(2) The non-cash charges in 2004 were associated with the
abandonment of certain internal systems and the exit from certain
non-core product lines, which were recorded in "Other charges," and
the closing of certain operations in South America recorded in "Other
(expense) income, net."
(3) The goodwill impairments in 2004 were associated with the exit
from certain non-core product lines and our closing of certain
operations in South America and were recorded in "Goodwill
impairment."
(4) The 2004 loss on investments was related to losses in minority
owned investments recorded in "(Loss) gain from investments." The 2003
(gain) from investments includes a $0.9 million impairment charge
during the fourth quarter, and a $5.5 million insurance recovery
during the second quarter relating to previous losses incurred
associated with the sale of a business.
(5) Normalized net income and EPS for 2003 includes the effect of
convertible debt as if it had been converted at the beginning of 2003
in order to be on a comparable basis with 2004.
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