Good day ladies and gentlemen and welcome to the Fourth Quarter 2008 Forrester Research Earnings Conference Call. My name is [Carmera] and I'll be your coordinator for today. At this time, all participants are in listen only mode. We will be facilitating a question and answer session towards the end of this conference. (Operator Instructions) As a reminder ladies and gentlemen, this conference is being recorded for replay purposes. I would now like to turn the call over to your host for today, Ms. Karyl Levinson, Vice President of Corporate Communications.

Good morning and thank you for joining our Fourth Quarter and Full Year 2008 Call. With me today are George Colony, Forrester's Chairman of the Board and CEO, Charles Rutstein, Forrester's Chief Operating Officer, and Mike Doyle, Forrester's Chief Financial Officer. Mike will open the call and provide detail on our financial results for the quarter. George will follow Mike and provide a strategic update on the business and our role-based strategy. After George completes his review, we'll open the call to Q&A. A replay of this call will be available until February 18, 2009, and can be accessed by dialing 888-286-8010. Please reference the pass code 40138075. This call is also available via webcast and it will be archived in the investor section at forrester.com. Before we begin, I'd like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as, expect, believe, anticipate, intends, plans, estimates, or similar expressions, are intended to identify these forward-looking statements. These statements are based on the company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Some of the important factors that could cause the actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. I'll now hand the call over to Mike Doyle.

Thanks Karyl. I will now begin my review of the financial performance for Forrester's fourth quarter and full year results, the balance sheet at December 31st, our fourth quarter metrics, and the outlook for the first quarter and full year 2009. Please note that the income statement numbers I'm reporting are pro forma, and exclude the following items, amortization of intangibles, non-cash stock-based compensation expense, professional fees related to the stock option investigation, and restatement of the company's historical financial statements, and net realized gains from securities and non-marketable investments. Also, we continue to book an effective tax rate at 39% for pro forma purposes. The actual effective tax rate for 2008 is approximately 35%. For the fourth quarter, Forrester met its pro forma guidance for earnings per share, exceeded our operating margin guidance, and fell slightly short of our revenue guidance for the quarter. This performance came in what was an extremely difficult quarter for the global economy, which adversely impacted many of our customers. Our positive performance on many fronts continues to demonstrate the success of our role-based strategy. That said, our softness in revenue indicates we're not completely immune to the effects of a global economic down-turn. With today's release, we're reporting fourth quarter 2008 revenues of $62.9 million and pro forma operating margin of 23%. Revenue increased 8% versus prior year, including the impact of foreign exchange. Operating margin performance was two points above the upper end of our guidance and 2 points above prior year. Pro forma earnings per share came in at $0.38 per share, within our guidance and up 3% versus a year ago. For the full year ended December 31, 2008 we are reporting revenues of $240.9 million, up 14% from the same period a year ago. Pro forma operating margin increased…

Thanks Mike and I’d like to welcome everyone to Forrester’s Q4 investor conference call. In my remarks I will address three topics; number one, Forrester's prospects during the recession, two, Forrester’s three business imperatives, and finally three, an update on the acquisition of Jupiter Research. Turning first to Forrester and the economy; as Mike has referenced our business was not immune to the global economic slowdown in Q4 and as shown in our guidance, we are expecting the recession to persist through 2009. I would love to claim that we can overcome the exigencies of the overall economy, but the fact remains that two thirds of our business comes from 1B plus companies and it is their budgeting that to a great extent governs our prospects. In addition, we are loosely tied to the tech economy, Forrester’s’ latest forecast shows the global decline in tech spending when expressed in U.S. dollars. However, we do expect a modest growth of approximately 3% in local currency. In the 2001 recession, there was significant structural changes in the tech economy Y2K expenditures ended and the dotcom bubble popped. In this recession, Forrester does not expect wide swaths of the tech market to be eliminated, as was the case in 2001 to 2003. While susceptible to the macro economy, I believe that Forrester’s better position this time around. In fact I see six strengths that we take into this recession that we did not have in 2001. Number one, role-based, our strategy is keeping us relative and client focused. This should help us renew clients and sign on new companies. The executives in our 19 roles will wake up every morning and go to work right through the recession, and we’ll be there to help them manage through their challenges. This morning I looked…

(Operator Instructions) And the first question comes from the line of Laura Lederman William Blair. : Laura Lederman – William Blair & Company: I like that new last name. I like [Lieberman]. Anyway –

Someday you'll get it right, Laura. Laura Lederman – William Blair & Company: Thanks for taking my question. A few thoughts, one is if you look at your guidance, what is assumed for wallet retention, dollar retention at the high and the low end? I'm trying to understand the assumptions behind the guidance. And, also, can you give us a sense of cash flow and kind of how that will look in 2009, as well? And then I just have a few more.

Yes, I think Laura, the general assumption here is that for client and dollar retention, I think we dipped in Q4. I think we'll be able to sustain reasonably in those ranges that we're in right now. Again, that's assuming the 2009 plays out as Q4 2008, and as it relates to cash flow, clearly we have a wide range on our revenue and earnings target. So, what we're looking at is cash flow, operating cash flow, probably in the range of $20 to $30 million. I know that's broad, we'll try and refine that as the year progresses, and that compares to the roughly $43 million in cash operating cash flow this year. Laura Lederman – William Blair & Company: Can you just talk a little bit about how the respective businesses are holding up – core research versus the boards, versus consulting, versus events, versus data – just a sense of what's behind the two revenue lines and how each of the businesses is holding up?

Sure Laura, so I'll give you a high level commentary. As you might expect, the events business has been softer than it has been historically. That's largely tied to people's travel budgets being down. The overall syndicated business, which includes the research, the core research product itself, as well as the leadership boards product, as well as some of the data products, as you saw in the results, are growing faster than the company overall. That is they're making up a larger portion of the bookings and therefore, the revenue. So, we're seeing strength there. I think that derives from two places, number one, from, as George mentioned, the increasing relevance of that content, and two, from the sales incentives that we have in place. The mirror image is probably true on the consulting side where we're seeing slower than company grow trades that is making up a smaller share of the business. I think that comes, again, probably from two factors, number one, those sales incentives working in the opposite direction, but also to some lessened demand in the quarter for it. Some projects that would happen at the margin, some companies who might have been thinking about a website redesign or something like that, are probably deferring those projects. Laura Lederman – William Blair & Company: What about some color on core research versus boards, because a lot of the growth boards have been so strong? Has that slowed down? I realize that corporate executive board has issues of its own, but wanted to understand how that business is doing, versus the core IT research.

Sure. The leadership board's business continues to grow at a faster rate than the core research. Both are growing at rates which are slower, of course, than they did in the past. Part of that is probably due to the scale that we're starting to reach in the boards business, as you know we were growing that business, 40, 50, 60% year-on-year, and that continue forever. Part of that though, is also due to the slowing of growth in the business overall. So, I think that the fundamental dynamics, which underlie it Laura, which is to say we're seeing increasing interest in the boards products, they are role-based and therefore the relevancy is very high. There is continuing tradeoff between those two in favor of boards. That works in our favor, because, of course, those products are higher priced, and those dynamics haven't changed.

One other comment Laura that I would make is that once we clear through this recession, I think that in aggregate, overall research will revert back to our long-term targeted rates, of the 15 to 20% growth. Laura Lederman – William Blair & Company: One final question, and then I'll pass it on. I realize your not breaking out Jupiter separately, but can you still give us a sense of how much that adds to growth in the first half of next year, so we can kind of get an Apples to Apples sense of I guess growth for '09 and for Q1 if you take out Jupiter.

I think for the first half, Laura, I think you should that it's adding about three points to our growth numbers for the first half. Laura Lederman – William Blair & Company: Thanks a lot I appreciate it. Good job in a bad environment guys.

Okay, thanks Laura. Appreciate it.

And the next question comes from the line of Andrew Lutz BlackRock.

Hey guys how are you?

Hey, Andrew how are you?

Good, of the 20 to 30 in cash flow how much of that is typically going to be collected in Q1? About half?

It's usually half. In this case it could be a little bit more than half Andrew, so typically we get anywhere's from 20 say to 25 in the first quarter of the year, so we probably will see that down a bit and we've also, because of the reduction in force, we will see some outflow of severance payments in the first quarter as well.

Okay.

But still that said, it's still going to be more than half probably is going to come in the first quarter.

So at the end of Q1, we'll have something north of $12.00 a share of cash on the balance sheet?

That's probably about right.

Okay.

Again that's and usually first quarter because it's so tight between quiet periods, share repurchase activity on a dollar basis won't be quite as large.

And where would you what kind of parameters would you buy shares up to? Where does it cease to become accretive?

Well, at these levels it's certainly accretive. We were buyers of the stock in the high 20s this past year, so from our perspective and particularly in this low interest environment, it's accretive up to we've never given our up end targets and we won't, but in this market Andrew, I don’t suspect we're going to bump into the upper end frankly during the course of 2009.

We will be I am sure, happy buyers all the way through the year, being voracious buyers.

Yes I think so.

Okay, and the last question, just wanted to sort of understand how low the bar is set here, in terms of expectations for revenue and earnings. Did you guys feel like you took expectations down to a level, that if you continue to see the trends that you saw in December throughout the rest of '09 you can continue to hit that guidance?

I think that the model that we have for the economy for the year Andrew, is one that reflects Q4 and we don't see any recovery in 2009. Hopefully we're wrong about that but I think that what you're seeing is our guidance reflecting the conditions in Q4 persisting through the year.

So essentially, when you back out the cash you've got a $5.00 or $6.00 stock, with a $1.00 of earnings power?

Right, that's exactly right.

Okay.

Really our view is that we're even in this tough market we're probably undervalued, but that's right.

Okay. All right, thanks guys.

Thanks Andrew.

(Operator Instructions) The next question comes from the line of Brian Murphy Sidoti Company. Brian Murphy - Sidoti & Company: Hi, Brian Murphy, Sidoti & Company, thanks for take my question. Mike, I think you mentioned that some customers are renewing, but maybe reducing the scope of their agreements and maybe moving from Enterprise to seat-based agreements, could you just give us a little bit more color on that in terms of how that might fit into any discounting that you're seeing out there? And also, maybe if you could just give us some more color on why you think you might see less pricing pressure this time around than in the last downturn, thanks.

Is it there's a lot in the question and I am going to turn it a piece of it to Charles and a piece to George. Just one overall comment though before Charles gets started, relative to just discounting and terms in general; I was actually quite pleased that both from discounting and payment terms, we actually saw no change, no material change in our activity there. Even though I would have expected that we would have had more discounting pressure, I think that credit to the sales organization we showed good discipline in the marketplace in the fourth quarter, plus the nature of our client base because it's a lot of 1B plus, we didn’t get huge pressure on the terms front, so.

We walked away from some bad deals, actually.

Right, so I think that we're doing the right things there and I'll let Charles tackle a couple of the other pieces relative to the retention and enrichment activities.

Sure, so Brian, I think there are a couple of dynamics that you've put your finger on here, one is under our control the other is less under our control. The one that's under out control is the one that Mike alluded to with unlimited deals or Enterprise deals. We have made an express intention to change our posture on those in the last 12 months or so. We've raised the bar considerably on the amount of money you have to spend with us in order to have one of those agreements and in so doing, have reduced the number of such agreements pretty materially. So that is good for us. It gives us much more upside in those accounts over the longer term. A latter dynamic is the less enrichment that you see and in some cases the trade down in accounts, companies in particular who are in industries who have been most effected by this in financial services and automotive As Mike said, we were actually relatively happy with the retention of those clients, in some cases those clients traded down to a smaller number of seats in the quarter.

And in reference to pricing in this recession, last time we went through the '01 to '03 recession, we had two additional public competitors, one was Medigroup, absorbed now by Gartner and the other was Giga, now absorbed by Forrester so there is there are fewer and more rational competitors in the marketplace, therefore we think pricing will be pretty much maintained through this recession. Brian Murphy - Sidoti & Company: Okay and in your guidance, are you assuming sort of roughly the same seasonality?

Yes, we are Brian in terms of yes, we expect the business to play out the same way it has in past years.

The next question comes from the line of Vincent Colicchio Noble Financial.

Vince Colicchio, that was a good try, question on sales cycles. You're about halfway through the March quarter. Was it basically flat change with the December quarter? No material change there?

Vince I am not sure we're going to comment on the current quarter. I mean I can give you a little bit of color on the Q4 if that would be helpful?

Sure.

So perhaps it's no surprise and I'm sure you've heard from others, there were longer sales cycles in the quarter, more approval necessary in order to get deals done, that in turn requires running the business differently. It means driving more activity, generating more leads to big to build bigger pipelines, just to get to the same target numbers. So those dynamics that we talked about on the previous call in Q3 were certainly in place in Q4 as well.

Okay. My other questions were answered, thank you.

Thank you very much, Vincent.

Thanks.

(Operator Instructions) The next question comes from the line of William Sutherland Boenning & Scattergood. William Sutherland - Boenning & Scattergood Inc. : Hey everybody.

Hey, Bill. William Sutherland - Boenning & Scattergood Inc. : The I was a little surprised to see the event business being expanded in '09? I guess you were happy given the environment with the attendance and the ratings, but is this to fill product gaps? Is that the main reason for it or?

I think the reasons are two fold Bill. Number one is a strategic reason, as you said to fill out the portfolio of events for the roles that we serve. There is also, of course, an underlying financial story. The best way to think about that is that we make a commitment well, well in advance on these events and so you can think about that as a sunk cost. You have a choice at that point as to whether hold the event or not in this environment. If you choose not to hold the event obviously you eat a big cost. We believe that in all of our models, even declines from where we are, we still think we can make money on those events. Now we may make less money than we had originally thought when we booked those events a year or more in advance, but we still think they are positive contributions to the earnings line. William Sutherland - Boenning & Scattergood Inc. : Okay.

In the last recession, Bill, we became quite astute at scaling the events to be smaller and more intimate and that actually works even better now in the role based world, because every one of those events is coming from the birds of a feather essentially and they do tend to work quite well, even in small sizes. William Sutherland - Boenning & Scattergood Inc. : Okay the I was just looking at the mix of revenue potentially in '09 based on the guidance and if your research is relatively flat, or maybe because of currency down a bit, your queue will probably go up more than two points. Is that a possibility, or is there something in advisory that I'm not understanding?

I think your observation is correct, Bill. I mean we target two points. I think that's been stated objective, actually from probably the end of 2007, but if things play out and the guidance breaks the way we expect, we should be north of two points on syndicated mix improvement. William Sutherland - Boenning & Scattergood Inc.: So and I actually wanted to ask a follow up on that, because if I was curious, to what degree as you look at your Q4 performance, that operating leverage improvement was mostly mix shift, and how much of it was you guys moving the levers and controlling things?

Bill, I think it's a combination of the two. Obviously, we see leverage out of that mix shift as you would expect, but we also put the brakes, as Mike alluded to, on quite a bit of both discretionary spending in the quarter, as well as slowing down the expected ramp, right. We expected to hire a lot more people than we chose to do in the fourth quarter. So it's a combination of those things. William Sutherland - Boenning & Scattergood Inc.: Both in sales and research, Charles?

Across both, that's right, Bill. William Sutherland - Boenning & Scattergood Inc.: And so the plan for '09 then, is just to fill in as sales attrition curves, as opposed to any net increase?

That's correct. We're targeting roughly flat sales headcount for the year at this point. William Sutherland - Boenning & Scattergood Inc.: Okay, great. Well, thanks for the Q&A.

And we have further questions at this time. I would like to turn the call back over to Ms. Karyl Levinson.

Thank you very much for your time today. Enjoy the rest of the day. Good bye.

This concludes the presentation for today ladies and gentlemen. You may now disconnect. Have a wonderful day.