Good morning. Thank you for joining today's 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. George will open the call. Mike will follow George to discuss our finances. We'll then open the call to Q&A. A replay of the call will be available until August 9, 2012, and can be accessed by dialing (888) 286-8010 or internationally (617) 801-6888. Please reference the passcode 32235412. Before we begin, I would 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 expects, believes, anticipates and 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 risk and uncertainties that could cause future activities and results of operations to materially differ from those set forth in the forward-looking statements. Some of the important factors that could cause actual results to differ are discussed in our reports and filings with 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 George Colony.

Thanks for joining the call. I would like to update you on Forrester's 3 business imperatives and discuss the changes we're making to operations. We are putting the company through a number of transitions, and these changes are the right thing to do, even though they may bring short-term disruption. On the call today, I will give you context for these changes. I'll start with our first business imperative, moving the role based strategy forward. Most important of our role based initiatives are playbooks. In the old world we offered standalone reports, while playbooks are a programmatic set of solutions for clients. They help executives work through the full life-cycle of a problem. We are creating between 5 and 7 playbooks for each role. Every playbook addresses an important initiative like Cloud computing, and it guides clients through the stages of discovery, planning, acting and optimizing. Playbooks set the overall agenda for each role, and will guide the content in consulting events, boards and data. Playbooks will become the ultimate touch stones for our clients. We have just launched our first 14 playbooks on Forrester.com, with 35 planned for the second half of 2012. All roles will have their full complement of playbooks over the next 4 to 6 quarters. We regard the move to playbooks to be one of our many parallel efforts to reinvent the research business. Now just as playbooks are increasing in relevancy of research for each role, our events business continues to become more role focused. A recent example is our forum for customer experience professionals, which was held in New York City in late June. The event was Forrester's largest, with 1,100 people in attendance, and 38 companies sponsoring the event. It also generated the most revenue of any event in Forrester's history. At…

Thanks, George. I'll now begin my review of financial performance for Forrester's second quarter results; the balance sheet of June 30th; our second quarter metrics; and the outlook for the third quarter and full year, 2012. Please note that the income statement numbers that I'm reporting are pro forma and they exclude the following items: amortization of intangibles, stock based compensation expense, duplicate lease costs, reorganization costs, acquisition and integration costs, and net gains from investments. Also for 2012, we will utilize an effective tax rate of 39%, for pro forma purposes. The actual effective tax rate for the first half of 2012 is approximately 35%. For the second quarter, Forrester met revenue guidance and exceeded its quarterly guidance for both pro forma operating margins and earnings-per-share. Our key customer metrics continue to perform at historically high levels and our balance sheet remains strong, with cash and marketable securities increasing 8%, from December 31, 2011. We achieved these positive results during a particularly active first 6 months of 2012. As George mentioned in his opening comments, we've embarked on a number of initiatives and organizational changes in 2012, which are designed to better serve our clients and accelerate our ability to grow the business. Within our sales organization, we changed our structure to better service our clients by having one account owner for each client. We've changed our sales territories and compensation plans to improve sales productivity and allow for greater sales opportunities for each sales rep. We've changed our client group structure, combining our 3 client groups into 2 organizations: marketing and strategy, and business technology. Lastly, we have made and plan to make changes to our customer facing and customer supporting technology. We launched our new website in March and are preparing to move to a new CRM…

[Operator instruction] Your first question comes from the line of Bill Sutherland, representing Northland.

I wanted to see if I could get a little bit more color on the situation in Europe for you all, and maybe to segregate between the backdrop there and your sales force transition?

First, Bill, I would say as we look at our business, and as I briefly mentioned in my comments, we saw, particularly in Q2, was a nice pickup in our North American reps, both productivity in the aggregate per rep was up in a meaningful way and our business has been up. We grew our business in aggregate, and we’re up in both North America and Asia Pacific. Europe, on the other hand, is down year-over-year. That’s, I think, primarily due to macroeconomic headwinds. They’re a little bit more severe than I think we had anticipated. We assumed going into the year that, we’d begin to see some movement in a positive direction in Europe. Not huge, but in a positive direction, and so, we continue to move forward with our selling organizations there. Frankly, we believe it is the right thing to do for the long term. It’s just in the near term I think they are really feeling the headwinds there. As a result, you look at bookings per rep there being down year-over-year. Again, I think primarily driven by the macroeconomic headwinds they are seeing.

Okay. That’s good color. I didn’t get the headcount change. What was the increase in your sales headcount in the quarter, Mike?

Essentially, when you look at our sales headcount, Bill, we’re just up slightly year-over-year. So, quarter-over-quarter, our sales headcount, if I look at it, just the aggregate sales headcount is essentially about flat to down a bit from quarter end March.

And the attrition has kind of settled out?

It did not in the second quarter. I think towards the tail end we began to see it slow, but we basically saw the same levels of attrition. Actually, it ticked up a bit for the first 2 months of the quarter over Q1. So I think we saw a little bit of the cumulative effect of the change. That went longer than we anticipated, Bill, which has the effect of impacting bookings and also our consulting revenue. I think it is too early. Being candid, it’s too early to say, yes, it’s going back down. It was slowed recently, but I’m not yet ready to call that a trend. I think we’re watching it extremely closely. We expect that it is going to settle. I think we expected noise in the first quarter. It continued and persisted into the second quarter. So, we’ve done some things to help mitigate that. We made modifications to our sales comp plan in May, and we’re looking to make some modifications as well in July, that Charles and I are working through. The May effect seems to have worked a little bit. I think that’s the appropriate thing to do, to adjust where we see macroeconomic headwinds, but we see things that don’t quite match up to the realities of the economy. We expect that is going to bring the attrition rates back to normal levels.

Okay. George, I think you mentioned on the new Forrester.com, you know, the clients love it once they get up the curve, and do you all have programs in place to assist that kind of client adoption on the site?

Yes, hey, Bill, it's Charles. We do the kinds of things you would expect training on the website, in particular, for new clients as they're coming aboard, but also for existing clients. We walk them through how to use the site, how to set up the site in a personalized way for them so they get the alerts and things automatically push them if they want. So yes, there's a lot of work that we're doing there and I think you can see in some of the customer traffic numbers that it is starting to take hold.

It's was a pretty radical change, Bill. If you compare the 2 sites. I mean we took a very big jump forward and so it's taken a little bit more time for clients to really acclimate, but I think we're completely on the right track here. And, as I said, if you heard the numbers, but the numbers are showing far more engagement via the new site. So we're very happy with where we're headed here.

Right. Right. I just didn't know if you might have moved the process along faster by actually going out. I don't know to what degree the client service folks go outbound to your client base.

A lot, Bill.

The next question comes from the line of Dan Leben representing Robert W. Baird.

First, with the revised guidance, help us think about the reduction in terms of research versus the advisory side in terms of where the pieces are coming from.

As I think about it, Dan, I think we're going to see it on both fronts. I think because the reduction for us is primarily due to the attrition levels we saw. It's our ability, literally, to have the right number of hedge to continue booking business. So it's going to be probably down a bit on both fronts versus probably what your original guidance and models have shown. More so probably on non-syndicated front than syndicated proportionately as a percentage.

Okay. And, then, within the attrition, help us understand some of the, I guess, the profile of where you're seeing the higher attrition. Is it the higher productivity type salespeople, is it people that are still ramping up the curve and didn't like their new roles? Help us understand what that mix looks like.

Yes, sure. Hey, Dan, it's Charles. Let me try and set the context for you here briefly and then address that question. So, as you may recall from our last quarter's call, we changed a lot of things in the sales force. So many of our sales reps got a new boss, they got a new territory and they got a new comp plan, all within the first couple of months of the year. What that means is that a lot of people had a lot of dislocation. We expected that in the first quarter, as Mike said, it extended into the second quarter longer than we had anticipated and that's why you're seeing the results that you are. In terms of where the turnover has been, I don't think there are any market trends with respect to geography, with respect to performance level, or even with respect to the types of clients they serve. Obviously, you see higher attrition among people who are down relative to their plan and are not making money. You tend to see, in general, higher retention among people who are higher against plan, the higher performers because they are making money. But, overall, that number was simply higher than we wanted it to be.

Okay. And, last one on the guidance part. Was there any impact from FX on the revenue revision?

Not meaningfully, Dan. I think that from our end, and that's not to say, I mean, I think predict the foreign exchange market it gets a little bit crazy for us, but we didn't see why variability versus what we have. I think, as we mentioned in the quarter, it was about 2 points on growth, but the balance of the year reflects really current levels for both the pound and the euro, which are predominant currencies. We have some exposure in a smaller way in India to the rupee on the expense side and a little bit on the same dollar and the Canadian dollar, but I think, by and large, we don't have huge FX impacts in the back half.

Okay. And then when you look at Europe, if you were to just look within the retention metrics in terms of client retention and wall retention, etc., are those numbers pretty consistent? Are you starting to see some macro driven weakness in those metrics?

I would say the best way to look at, we don't typically break it out, but we're stronger in North America than we are in Europe from a pure selling standpoint and you would see the same in the metrics. Although, in general, our client retention metrics have been pretty good across the board. So we're not seeing anything dramatic in Europe. I think where you’re seeing it, it's more on enrichment and new business. Again, that's more of a macro piece than not and that's where we get pulled down. I mean I think we're frustrated with an interest rate of sub 100, but, again, I think a big part of that is the macro economy.

There's no question, Dan, there's tougher sledding in Europe than it is in North America.

New or renew.

Your next question comes from the line of Brian Murphy representing Sidoti & Company.

All right. Charles, I was wondering if you could give us some sort of updated color on pricing and packaging. I think last quarter you talked a little bit about maybe making some changes there to address the way customers are consuming information. And, specifically, I want to know is there anything going on out there that would fundamentally change or put any sort of additional pressure on pricing? Any sort of forces of commoditization out there? Any changes at all?

Sure, okay, Brian. So, first things first, we did institute a price change at mid-year after the quarter close, so there was no impact in the quarter that we're just reporting, though it's new prices took hold at the beginning of this quarter, we'll report on that, of course, in future quarters. Those increases, just so you can think about them for your model, whereas has been our model in the past, they have been by segment and product. That is not uniform across the board, but selective price changes in various places. On average, those were between about 2% and 6% and we expect those to hold. That's built into the numbers that we have. To date, discounting has remained in a very tight band and we don't anticipate that changing. With respect to the broader issues about whether we're going to see much bigger pricing structural changes and the way that we go to market, I think we'll defer that question for now, but you should anticipate more on that from us in the future. We're doing some very deep thinking on that right now. More than thinking, modeling and discussing, so we'll have things to report, probably sometime next year. That being said, I don't think that we're seeing widespread commoditization. There's no massive downward pressure on the prices right now. There's no question, of course, that the world is changing and information is more available, but so far the value of our product is holding up well.

Right. I mean, obviously, if you're able to put through a 2% to 6% price increase, I think things are holding up pretty well. That's great. So, and just lastly, if you could just update us on your thoughts on capital structure. I mean it looks like you guys are going to be able to consistently generate in excess of $50 million in cash flow from operations. So, even with nearly $11 per share, and cash and investments on the balance sheet here, you guys look like are going to continue to build cash. Any thoughts on maybe increasing the dividend or just any help there would be good.

Sure. So, first of all, the current movement in the last hour or two of stock, we will clearly be buyers of our stock at these price levels. So repurchase will continue probably in a more aggressive way. The board is scheduled to take up cap structure as they do in the fall with our fall meeting to evaluate both currently level of dividend and should we increase it, as well as any other options from a cap structure standpoint. And, again, as I've said before, they've really ruled nothing out. I think the board has remained open about this. So in the near term I will tell you at these prices we will be buyers of our stocks and the repurchase activity will continue and the board will meet in our October meeting and that's typically when we discuss cap structure because it's also first glance at plan and outlook for the next year as it relates to M&A. So it's a chance for them to look at all the pieces and then make some determinations.

Your next question comes from the line of Timothy McHugh representing William Blair.

Just wanted to ask a little more on the sales force turnover. Can you give us qualitative or quantitative sense of exactly how much higher than normal it's trending right now?

Yes, to give you some perspective, Tim, and then I'll let Charles give some color because he's probably closer to it, but in terms of raw numbers, in the last couple of years, the last year or two, we've been running 15% to 16% turnover in sales. So that's reasonable numbers. We expected a spike up to be in the 20s in the first quarter just as a result of change. It's reasonably predictable when you make changes like this that you're going to have some activity. And that's, in fact, what we saw, what we expected was it would settle back down and what we're getting is attrition in the mid to high 20s that is only now starting to subside a bit and that's not what we assume. We assume it would subside sooner than it did. So that's really the challenge we're facing and the delta between a very high teens number and mid to high 20s in terms of reps and lost booking opportunity is where we're seeing the softness. And if you think about the way our model works, now we're hiring these back-fills and it takes some time to ramp and so we can cover renewal activity with existing rep, but it's the new business and the growth aspect that we lose as a result of it and that's we factored into our guidance. Obviously, we're aggressively looking to hire and build back up. In addition, as I mentioned earlier, Charles and I are working on other things we can do from a comp standpoint to, again, to bring attrition down on the sales front.

It's Charles. Just to clarify the numbers that you're talking about are annualized numbers for turnover. So it's not year-to-date for this point. That's right.

Okay. Great. That's helpful. And then on the North American front you said you saw a significant improvement in the productivity.

Right.

Can you just talk from separating out kind of the ramp up or the normalization from the sales force turnover that you might have seen there, versus the macro environment in North America? Has it become easier or harder to sell the product or to get a renewal.

First, the raw data and I'll let Charles give some more. We were in aggregate our productivity for both North America and European reps was down in the first quarter versus prior years. So we expected that because there was so much change, we lost some time. To credit our North American reps, it roared back and closed in on 10% year-over-year growth in the second quarter for North American reps, which really is pretty amazing. They digested change, in my mind, a spectacular way and credit to them. And not to discount the European effort because I think they're facing a much more difficult road. They're still trending below prior year levels, Tim, and I think what they're fighting there, which I think almost everyone is aware of, is it's just a tough macroeconomic situation. I think they're working as hard as our folks in North America, but it's just a tougher headwind and I'll let Charles give a little bit more color there, but I'm happy with what's happening in North America and I think Europe we're just going to have to be more patient with.

So, I'll add a little bit color here. I mentioned earlier that we changed quite a bit in the first quarter of the structure, people's territories, their comp plan. Some people have got on board of those changes and some people have not. Those who have not have largely opted out. I think it's important to note though, that we still believe in all of those changes. As we did the analysis, we believed in it. As we've seen the results here, of course, in the second quarter it's caused us to go back and rethink it and we've come up with the same answer that says the structure is right. The comp plan, which is all about rewarding growth, it's about rewarding productivity, to Mike's point is the right thing to do for all the company. So what we are expecting is that this will subside. In the short run though, basically, you have this sort of bi-polar effect. You have people who stayed on board, stayed in their territory, stuck with it. As Mike said, especially, in North America you saw meaningful productivity improvements. It's the aggregate number because of those empty chairs that is hurting overall.

Okay. So you're comfortable at tomorrow if a -- it's a timing issue related to the sales force, Charles, than some sort of underlying change in the demand environment or the competitive environment.

Correct. That's our assessment.

Okay. And then last numbers question, just do you have a sense of the number of events for the year now. I know you said Q3, but what for the full year?

Yes, we did. We are looking at 20 events for the year. That compares with 19 a year ago, Tim. One thing I'll factor in here, when we picked up Springboard last year, they run a number of events, smaller events for Asia-Pacific. So I always caution people not to look at it as a big proportionate bump. We picked up a number of smaller events last year. We picked them up mid-year, we now have a full year of those events. But we've ramped up events in a meaningful way. The bulk of those occurred in Q2 with 16 events. We dropped to 3 in Q3 and then we come back up to 9 events in Q4, just to give you some perspective.

With no further questions at this time, I would now like to turn the call back to Mike Doyle, Forrester's Chief Financial Officer, for closing remarks.

Great. Thanks everybody for joining our call. George will now be out on the road during the course of the quarter, so we look forward to seeing all of you and thanks again.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.