10-Q 1 forr-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

FOR THE QUARTERLY PERIOD ENDED March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

COMMISSION FILE NUMBER: 000-21433

 

FORRESTER RESEARCH, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

04-2797789

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

60 Acorn Park Drive

Cambridge, Massachusetts

 

02140

(Zip Code)

(Address of principal executive offices)

 

 

 

(617) 613-6000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange on Which Registered

Common Stock, $.01 Par Value

 

FORR

 

Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of May 2, 2022, 18,876,000 shares of the registrant’s common stock were outstanding.

 


 

FORRESTER RESEARCH, INC.

INDEX TO FORM 10-Q

 

 

 

Page

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

3

 

Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

3

 

Consolidated Statements of Income for the three months ended March 31, 2022 and 2021

4

 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021

5

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

6

 

Notes to Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 3.

Defaults Upon Senior Securities

28

Item 4.

Mine Safety Disclosures

28

Item 5.

Other Information

28

Item 6.

Exhibits

29

 

 

 

SIGNATURES

30

 

 

 

 

 

2


 

PART I.

ITEM 1. FINANCIAL STATEMENTS

FORRESTER RESEARCH, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data, unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

112,496

 

 

$

115,769

 

Marketable investments (Note 2)

 

 

19,116

 

 

 

18,509

 

Accounts receivable, net of allowance for expected credit losses of $807 and $610 as
   of March 31, 2022 and December 31, 2021, respectively

 

 

70,260

 

 

 

86,965

 

Deferred commissions

 

 

27,229

 

 

 

29,631

 

Prepaid expenses and other current assets

 

 

20,265

 

 

 

18,614

 

Total current assets

 

 

249,366

 

 

 

269,488

 

Property and equipment, net

 

 

27,064

 

 

 

28,245

 

Operating lease right-of-use assets

 

 

62,086

 

 

 

65,009

 

Goodwill

 

 

244,069

 

 

 

244,994

 

Intangible assets, net

 

 

59,340

 

 

 

62,733

 

Other assets

 

 

9,977

 

 

 

9,660

 

Total assets

 

$

651,902

 

 

$

680,129

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

887

 

 

$

840

 

Accrued expenses and other current liabilities

 

 

56,507

 

 

 

97,800

 

Deferred revenue

 

 

248,084

 

 

 

213,696

 

Total current liabilities

 

 

305,478

 

 

 

312,336

 

Long-term debt

 

 

60,000

 

 

 

75,000

 

Non-current operating lease liabilities

 

 

61,476

 

 

 

65,038

 

Other non-current liabilities

 

 

22,518

 

 

 

23,848

 

Total liabilities

 

 

449,472

 

 

 

476,222

 

Commitments and contingencies (Note 5, 14)

 

 

 

 

 

 

Stockholders' Equity (Note 12):

 

 

 

 

 

 

Preferred stock, $0.01 par value

 

 

 

 

 

 

Authorized - 500 shares; issued and outstanding - none

 

 

 

 

 

 

Common stock, $0.01 par value

 

 

 

 

 

 

Authorized - 125,000 shares

 

 

 

 

 

 

Issued - 24,143 and 24,085 shares as of March 31, 2022 and December 31, 2021,
   respectively

 

 

 

 

 

 

Outstanding - 18,941 and 19,058 shares as of March 31, 2022 and
   December 31, 2021, respectively

 

 

241

 

 

 

241

 

Additional paid-in capital

 

 

251,001

 

 

 

245,985

 

Retained earnings

 

 

156,973

 

 

 

152,825

 

Treasury stock - 5,202 and 5,027 shares as of March 31, 2022 and
   December 31, 2021, respectively

 

 

(201,414

)

 

 

(191,955

)

Accumulated other comprehensive loss

 

 

(4,371

)

 

 

(3,189

)

Total stockholders’ equity

 

 

202,430

 

 

 

203,907

 

Total liabilities and stockholders’ equity

 

$

651,902

 

 

$

680,129

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3


 

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data, unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

Research

 

$

85,780

 

 

$

74,968

 

Consulting

 

 

38,431

 

 

 

38,550

 

Events

 

 

760

 

 

 

263

 

Total revenues

 

 

124,971

 

 

 

113,781

 

Operating expenses:

 

 

 

 

 

 

Cost of services and fulfillment

 

 

53,251

 

 

 

47,477

 

Selling and marketing

 

 

44,044

 

 

 

39,279

 

General and administrative

 

 

15,524

 

 

 

13,178

 

Depreciation

 

 

2,319

 

 

 

2,290

 

Amortization of intangible assets

 

 

3,362

 

 

 

3,903

 

Integration costs

 

 

 

 

 

118

 

Total operating expenses

 

 

118,500

 

 

 

106,245

 

Income from operations

 

 

6,471

 

 

 

7,536

 

Interest expense

 

 

(613

)

 

 

(1,129

)

Other expense, net

 

 

(257

)

 

 

(470

)

Gain on investments, net

 

 

426

 

 

 

 

Income before income taxes

 

 

6,027

 

 

 

5,937

 

Income tax expense

 

 

1,879

 

 

 

1,981

 

Net income

 

$

4,148

 

 

$

3,956

 

Basic income per common share

 

$

0.22

 

 

$

0.21

 

Diluted income per common share

 

$

0.22

 

 

$

0.21

 

Basic weighted average common shares outstanding

 

 

18,988

 

 

 

19,061

 

Diluted weighted average common shares outstanding

 

 

19,264

 

 

 

19,288

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4


 

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)

 

 

Three Months Ended

 

 

March 31,

 

 

2022

 

 

2021

 

Net income

$

4,148

 

 

$

3,956

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

Foreign currency translation

 

(1,314

)

 

 

(2,301

)

Net change in market value of investments

 

(64

)

 

 

 

Net change in market value of interest rate swap

 

196

 

 

 

190

 

Other comprehensive loss

 

(1,182

)

 

 

(2,111

)

Comprehensive income

$

2,966

 

 

$

1,845

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5


 

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 

 

Three Months Ended

 

 

March 31,

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

Net income

$

4,148

 

 

$

3,956

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

2,319

 

 

 

2,290

 

Amortization of intangible assets

 

3,362

 

 

 

3,903

 

Net gains from investments

 

(426

)

 

 

 

Deferred income taxes

 

(1,012

)

 

 

(2,395

)

Stock-based compensation

 

3,294

 

 

 

2,492

 

Operating lease right-of-use assets amortization

 

2,690

 

 

 

2,666

 

Amortization of deferred financing fees

 

109

 

 

 

232

 

Amortization of premium on investments

 

43

 

 

 

 

Foreign currency losses

 

216

 

 

 

521

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

16,239

 

 

 

15,181

 

Deferred commissions

 

2,402

 

 

 

1,683

 

Prepaid expenses and other current assets

 

(1,696

)

 

 

(1,255

)

Accounts payable

 

50

 

 

 

(275

)

Accrued expenses and other liabilities

 

(41,120

)

 

 

(22,235

)

Deferred revenue

 

34,909

 

 

 

36,505

 

Operating lease liabilities

 

(2,861

)

 

 

(2,718

)

Net cash provided by operating activities

 

22,666

 

 

 

40,551

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(1,262

)

 

 

(1,468

)

Purchases of marketable investments

 

(3,190

)

 

 

 

Proceeds from maturities of marketable investments

 

2,455

 

 

 

 

Other investing activity

 

85

 

 

 

 

Net cash used in investing activities

 

(1,912

)

 

 

(1,468

)

Cash flows from financing activities:

 

 

 

 

 

Payments on borrowings

 

(15,000

)

 

 

(3,125

)

Repurchases of common stock

 

(9,459

)

 

 

 

Proceeds from issuance of common stock under employee equity incentive plans

 

1,861

 

 

 

2,614

 

Taxes paid related to net share settlements of stock-based compensation awards

 

(139

)

 

 

(480

)

Net cash used in financing activities

 

(22,737

)

 

 

(991

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(1,353

)

 

 

(478

)

Net change in cash, cash equivalents and restricted cash

 

(3,336

)

 

 

37,614

 

Cash, cash equivalents and restricted cash, beginning of period

 

118,031

 

 

 

90,652

 

Cash, cash equivalents and restricted cash, end of period

$

114,695

 

 

$

128,266

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid for interest

$

516

 

 

$

902

 

Cash paid for income taxes

$

1,155

 

 

$

1,719

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

6


 

FORRESTER RESEARCH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 1 — Interim Consolidated Financial Statements

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. It is recommended that these financial statements be read in conjunction with the consolidated financial statements and related notes that appear in the Forrester Research, Inc. (“Forrester”) Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the financial position, results of operations, comprehensive income, and cash flows as of the dates and for the periods presented have been included. The results of operations for the three months ended March 31, 2022 may not be indicative of the results for the year ending December 31, 2022, or any other period.

Presentation of Restricted Cash

The following table summarizes the end-of-period cash and cash equivalents from the Company's Consolidated Balance Sheets and the total cash, cash equivalents and restricted cash as presented on the accompanying Consolidated Statements of Cash Flows (in thousands).

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

Cash and cash equivalents

$

112,496

 

 

$

125,600

 

Restricted cash classified in (1):

 

 

 

 

 

Prepaid expenses and other current assets

 

 

 

 

360

 

Other assets

 

2,199

 

 

 

2,306

 

Cash, cash equivalents and restricted cash shown in statement of cash flows

$

114,695

 

 

$

128,266

 

 

(1)
Restricted cash consists of collateral required for leased office space, and for the three months ended March 31, 2021, also included an amount for credit card processing outside of the U.S. The short-term or long-term classification regarding the collateral for the leased office space is determined in accordance with the expiration of the underlying leases.

Adoption of New Accounting Pronouncements

The Company adopted the guidance in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes on January 1, 2021. The standard provides guidance to simplify the accounting for income taxes in certain areas, changes the accounting for select income tax transactions, and makes other minor improvements. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Finance Reporting. The new standard provides optional guidance for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting due to the risk of cessation of the London Interbank Offered Rate (“LIBOR”). The updates apply to contracts, hedging relationships, and other transactions that reference LIBOR, or another reference rate expected to be discontinued because of reference rate reform, and as a result require a modification. An entity may elect to apply the amendments immediately or at any point through December 31, 2022. The adoption of this standard will not have a material impact on the Company’s financial position or results of operations as the Company's only interest rate swap, which is based on LIBOR, will terminate prior to the cessation of LIBOR.

 

 

7


 

Note 2 — Marketable Investments

The following table summarizes the Company’s marketable investments (in thousands):

 

 

As of March 31, 2022

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Market

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate obligations

 

$

19,234

 

 

$

 

 

$

(118

)

 

$

19,116

 

Total

 

$

19,234

 

 

$

 

 

$

(118

)

 

$

19,116

 

 

 

 

As of December 31, 2021

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Market

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate obligations

 

$

18,542

 

 

$

 

 

$

(33

)

 

$

18,509

 

Total

 

$

18,542

 

 

$

 

 

$

(33

)

 

$

18,509

 

Realized gains and losses on investments are included in earnings and are determined using the specific identification method. There were no realized gains or losses on the sale of the Company’s marketable investments during the three months ended March 31, 2022.

The following table summarizes the maturity periods of the marketable investments in the Company’s portfolio as of March 31, 2022 (in thousands).

 

 

FY 2022

 

 

FY 2023

 

 

FY 2024

 

 

Total

 

Corporate obligations

 

$

11,617

 

 

$

7,003

 

 

$

496

 

 

$

19,116

 

Total

 

$

11,617

 

 

$

7,003

 

 

$

496

 

 

$

19,116

 

 

The following table shows the gross unrealized losses and market value of the Company’s available-for-sale securities with unrealized losses that are not deemed to be other-than-temporary, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

 

 

As of March 31, 2022

 

 

 

Less Than 12 Months

 

 

12 Months or Greater

 

 

 

Market

 

 

Unrealized

 

 

Market

 

 

Unrealized

 

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

Corporate obligations

 

$

19,116

 

 

$

118

 

 

$

 

 

$

 

Total

 

$

19,116

 

 

$

118

 

 

$

 

 

$

 

 

 

 

As of December 31, 2021

 

 

 

Less Than 12 Months

 

 

12 Months or Greater

 

 

 

Market

 

 

Unrealized

 

 

Market

 

 

Unrealized

 

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

Corporate obligations

 

$

18,509

 

 

$

33

 

 

$

 

 

$

 

Total

 

$

18,509

 

 

$

33

 

 

$

 

 

$

 

 

Note 3 — Goodwill and Other Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired. Goodwill is not amortized; however, it is required to be tested for impairment annually, which requires assessment of the potential impairment at the reporting unit level. Reporting units are determined based on the components of the Company's operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Testing for impairment is also required on an interim basis if an event or circumstance indicates it is more likely than not an impairment loss has been incurred.

 

8


 

The Company performed its annual impairment testing as of November 30, 2021 utilizing a qualitative assessment to determine if it was more likely than not that the fair values of each of its reporting units was less than their respective carrying values and concluded that no impairments existed. Subsequent to completing the annual test and through March 31, 2022, there were no events or circumstances that required an interim impairment test. Accordingly, as of March 31, 2022, the Company had no accumulated goodwill impairment losses. Approximately $8.2 million of goodwill is allocated to the Company’s Consulting reporting unit, which had a negative carrying value as of the date of the last test.

 

The change in the carrying amount of goodwill for the three months ended March 31, 2022 is summarized as follows (in thousands):

 

Total

 

Balance at December 31, 2021

$

244,994

 

Translation adjustments

 

(925

)

Balance at March 31, 2022

$

244,069

 

Finite-Lived Intangible Assets

The carrying values of finite-lived intangible assets are as follows (in thousands):

 

 

March 31, 2022

 

 

Gross

 

 

 

 

 

Net

 

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

Amount

 

 

Amortization

 

 

Amount

 

Amortizable intangible assets:

 

 

 

 

 

 

 

 

Customer relationships

$

78,342

 

 

$

27,931

 

 

$

50,411

 

Technology

 

16,807

 

 

 

13,464

 

 

 

3,343

 

Trademarks

 

12,472

 

 

 

6,886

 

 

 

5,586

 

Total

$

107,621

 

 

$

48,281

 

 

$

59,340

 

 

 

December 31, 2021

 

 

Gross

 

 

 

 

 

Net

 

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

Amount

 

 

Amortization

 

 

Amount

 

Amortizable intangible assets:

 

 

 

 

 

 

 

 

Customer relationships

$

78,364

 

 

$

25,805

 

 

$

52,559

 

Technology

 

16,845

 

 

 

13,073

 

 

 

3,772

 

Trademarks

 

12,478

 

 

 

6,076

 

 

 

6,402

 

Total

$

107,687

 

 

$

44,954

 

 

$

62,733

 

 

Estimated intangible asset amortization expense for each of the five succeeding years is as follows (in thousands):

 

2022 (remainder)

$

9,824

 

2023

 

11,943

 

2024

 

9,902

 

2025

 

8,876

 

2026

 

8,391

 

Thereafter

 

10,404

 

Total

$

59,340

 

 

Note 4 — Debt

On December 21, 2021, the Company and certain of its subsidiaries entered into an amendment of its existing credit facility, dated as of January 3, 2019, with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and the lenders party thereto (the "Existing Credit Agreement" and the Existing Credit Agreement as amended by the Amendment, the "Amended Credit Agreement").

 

9


 

The Existing Credit Agreement was amended to, among other things, (a) increase the aggregate principal amount of revolving credit commitments (the "Revolving Credit Facility") from $75.0 million to $150.0 million and eliminate the existing term loan facility, (b) extend the scheduled maturity date of the revolving credit commitments to December of 2026, (c) reduce the applicable margin with respect to revolving loans to, at Forrester’s option, (i) between 1.25% and 1.75% per annum for loans based on LIBOR and (ii) between 0.25% and 0.75% per annum for loans based on the applicable base rate, in each case, based on Forrester’s consolidated total leverage ratio, (d) reduce the commitment fee applicable to undrawn revolving credit commitments to between 0.30% and 0.20% per annum based on the Company's consolidated total leverage ratio, (e) replace the minimum fixed charge coverage ratio financial covenant under the Existing Credit Agreement with a minimum consolidated interest coverage ratio of 3.50:1.00 and (f) include a covenant limiting the amount of capital expenditures made by the Company in each fiscal year, subject to exceptions for (i) up to $25.0 million with respect to its headquarters property and (ii) an additional general basket of $20.0 million annually.

On December 21, 2021, the Company converted the $100.0 million outstanding term loan amounts under the Existing Credit Agreement to $100.0 million outstanding on the Revolving Credit Facility as the lenders remained the same under both facilities. The Amended Credit Agreement permits the Company to increase commitments under the Revolving Credit Facility in an aggregate principal amount up to $50.0 million, subject to approval by the Administrative Agent and certain customary terms and conditions.

The Company may voluntarily prepay revolving loans under the Amended Credit Agreement at any time and from time to time, without premium or penalty, other than customary breakage reimbursement requirements for LIBOR-based loans. No interim amortization payments are required to be made under the Amended Credit Agreement.

The Amended Credit Agreement provides that once LIBOR ceases to exist in 2023, the benchmark rate for the Revolving Credit Facility will automatically transfer from LIBOR to the Secured Overnight Financing Rate.

Up to $5.0 million of the Revolving Credit Facility is available for the issuance of letters of credit, and any drawings under the letters of credit must be reimbursed within one business day. As of March 31, 2022, $0.8 million in letters of credit were issued under the Revolving Credit Facility.

The Company incurred $0.5 million in costs related to the issuance of the Revolving Credit Facility under the Amended Credit Agreement, which were recorded to other assets on the Consolidated Balance Sheets. These costs are being amortized on a straight-line basis over the five-year term of the Revolving Credit Facility and are included in interest expense in the Consolidated Statements of Income. The Amended Credit Agreement was accounted for as a debt modification and thus no existing debt issuance costs were written off to interest expense as a result of the modification.

Outstanding Borrowings

The following table summarizes the Company’s total outstanding borrowings as of the dates indicated (in thousands):

Description:

 

March 31, 2022

 

 

December 31, 2021

 

Revolving credit facility

 

$

60,000

 

 

$

75,000

 

 

 

10


 

The contractual annualized interest rate as of March 31, 2022 was 2.0%, which consisted of LIBOR of 0.5% plus a margin of 1.5%. However, the Company has an interest rate swap contract that effectively converts the floating LIBOR base rates on a portion of the amounts outstanding to a fixed base rate. Refer to Note 7 – Derivatives and Hedging for further information on the swap.

The Company had $89.2 million of available borrowing capacity on the Revolving Credit Facility (not including the expansion feature) as of March 31, 2022. The weighted average annual effective rate for the three months ended March 31, 2022, was 1.66%.