The ways in which information technology is consumed,
the structure of our industry, and the needs and responsibilities
of our clients’ IT organizations are changing.
We are working to substantially change how Forsythe
provides IT infrastructure services and solutions to our clients.
We have been supporting the IT needs of North American
businesses for 43 years and are proud to be part of
the new and developing landscape.
IT is in the midst of a
significant transformation.
We are several years into a significant transformation of our business. As more of our clients embrace the digitalization of their business, we see fundamental changes in how IT is selected, implemented, consumed and supported. These new approaches are driving sweeping changes in our industry structure. Our clients’ needs and the responsibilities of their IT organizations are changing rapidly as well. A large percentage of technology consumption is shifting outside of IT organizations and being replaced with IT services selected and funded by business units.
In response, we are working to enhance how our company provides IT infrastructure services and solutions, while simultaneously continuing to support our clients’ legacy technology needs. This is hardly our first transformation in 43 years of business success, but managing through change is challenging—just as it is for our clients.
Financial results
As the result of a broad effort to diversify our revenue sources, our 2013 operating earnings were down year over year. Our $1.1 billion in gross revenues were 3 percent behind the prior year and our operating earnings were down 11 percent. We delivered strong growth in our professional and managed services businesses, but our hardware business was down versus 2012.
We invested heavily in our new acquisitions and our new business offerings to support the
• Synnefo – In May 2013, we acquired the
virtualization business of Synnefo Technology Solutions, Inc., an IT virtualization and cloud services provider. The acquisition expanded Forsythe’s capabilities and resources to help clients architect, build, migrate and run hybrid data center infrastructures. Synnefo completed 325,000 client workload migrations in 2013.
• Mentora and SOS Security – 2013 was a
year of continued investment in our 2012 acquisitions. Both have provided us with access to an expanded client base, valuable new offerings for our clients and talented people to help us better serve our clients. Mentora’s capabilities are helping us move forward along the transformational path to providing more integrated services to our clients. With SOS Security, in 2013 we invested in expanding geographical reach.
• KillerIT – 2013 was also a year of investment in
our first software-as-a-service (SaaS) division, KillerIT, which helps clients to value their
2013 was a year of rapid transformation
and financial success for Forsythe.
Although we did not meet our growth objectives in 2013, our hard work and continued client focus led to several notable accomplishments:
Our security business grew by over 20 percent.
Our professional services business grew 12
percent.
Our data center migrations business grew
150 percent.
Our managed services business grew in
excess of 500 percent.
In addition, our Technology Evaluation Center, which showcases more than 150 technologies from 40 vendors, performed 144 technology evaluations, as well as hosting technology demonstrations and tours for clients.
Our employee stock ownership plan (ESOP)
has continued to grow in value. Our share price as of December 31, 2013, is up 4 percent from 2012 and has achieved a compound annual growth rate of more than 19 percent since Forsythe became 100-percent employee-owned in March 2006.
Clients
We continue to focus on building long-term relationships with our clients. Our 2013 retention rates are 100 percent for our top 50 clients and 97 percent for our top 200 clients. Our average client relationship is seven years. We have been serving some of our clients for over 20 years. The significant increase in our migration business described above reflects the efforts many of our clients are undertaking to modernize and transform their environments in response to a landscape of intense competition, rapid growth, and frequent mergers and acquisitions. Forsythe is able to help our clients navigate through these rapidly changing times.
Our people and processes
As our business transforms, we continue to invest in processes and systems to enable our people to serve our clients more effectively and efficiently. One constant in this climate of change is the commitment our nearly 1,000 employee-owners demonstrate to our core values:43
rd
consecutive
year of profitability.
Looking Ahead
A major investment we are making in 2014 is the launch of Forsythe Data Centers, a colocation facility in Elk Grove Village, Illinois, that will provide modular, scalable, private data center suites for clients. Forsythe Data Centers is a new business venture for us. It takes our one-stop-shopping model to the next level, offering clients end-to-end services for their full technology infrastructure lifecycle, plus the facility to house them, as well as migration services. We believe this new venture will provide clients with a more convenient, effective data center facility option and will also fill a gap in the current marketplace, where data center demand significantly exceeds supply. We broke ground on our new facility in April 2014 and expect it to be ready for occupancy in April 2015.
Forsythe Data Centers is one of multiple strategic investments on our part, along with Synnefo, Mentora, SOS Security, KillerIT and a variety of new offerings we are developing.
We look forward to meeting our clients’ changing needs and ensuring our success for the long term by continuing to transform our business.
William P. Brennan
President & CEO
Awards and recognition
We are proud to be honored with the following 2013 recognitions and industry awards:
Computer Reseller News (CRN) Managed Service Provider (MSP) Elite 150 CRN Tech Elite 250
CRN Top Solution Provider (formerly VARBusiness 500)
Crain’s Chicago Business Largest Privately Held Companies List Monitor Top 100 Leading Companies
Monitor Top Private Independents
We are proud to be honored with multiple partner of the year awards. (See What We Do: Our Partners for list.)
2013 FINANCIAL HIGHLIGHTS DOLLARS IN MILLIONS
Years Ended December 31 2013 2012 2011 2010 2009
Gross revenues* $1,137.8 $1,176.7 $1,109.2 $1,018.3 $891.6
GAAP revenues* 874.5 894.3 845.0 790.7 688.0
Operating earnings 20.2 22.8 19.7 13.4 15.8
Assets 500.0 523.3 481.7 472.0 503.0
Stockholder’s equity 62.9 55.5 58.7 56.0 48.4
SHARE PRICE IN DOLLARS
Share price $83.15 $80.04 $65.00 $52.87 $52.31
Employees 981 931 868 889 934
* Gross revenues include revenues from the sale of third-party maintenance contracts. GAAP revenues, consistent with generally accepted accounting principles, reflect net revenues from the sale of third-party maintenance contracts.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATING EARNINGS DOLLARS IN MILLIONS
Years Ended December 31 2013 2012 2011
REVENUES
Sales of technology products and services $810.2 $822.0 $783.3
Lease and other revenues, net 64.3 72.3 61.7
Total revenues 874.5 894.3 845.0
COSTS AND EXPENSES
Costs of technology products and services 632.6 644.6 613.3
Lease costs 44.2 52.5 42.7
Selling, general and administrative expenses
Employee compensation 139.3 135.0 131.6
Other 38.2 39.4 37.7
Total costs and expenses 854.3 871.5 825.3
Operating earnings $20.2 $22.8 $19.7
Financials
CONDENSED CONSOLIDATED BALANCE SHEETS DOLLARS IN MILLIONS
Years Ended December 31 2013 2012
CURRENT ASSETS
Cash and cash equivalents $2.2 $5.8
Accounts receivable, net 193.4 215.6
Inventory primarily in transit to customers, net 30.3 38.9
Current portion of net investment in sales-type leases and direct
financing leases 57.8 57.6
Prepaid expenses and other assets 7.1 5.7
Total current assets 290.8 323.6
Net investment in sales-type leases and direct financing leases 73.8 66.9
Equipment on operating leases, net 8.1 9.5
Property and equipment, net 34.9 33.3
Goodwill and intangibles, net 92.4 90.0
Total assets $500.0 $523.3
CURRENT LIABILITIES
Accounts payable and accrued expenses 263.3 284.7
Other current liabilities 60.3 59.6
Total current liabilities 323.6 344.3
Senior bank debt 16.6 35.5
Other non-current liabilities 96.9 88.0
Total liabilities 437.1 467.8
STOCKHOLDER’S EQUITY
Total stockholder’s equity 62.9 55.5
Forsythe creates solutions that make practical business sense from idea to
implementation. We help businesses champion innovation and deliver
bottom-line results.
Forsythe works with more than 1,000 U.S. and Canada-based companies.
Our clients include 35 of the Fortune 100 and hundreds of Fortune 1000
companies. Our experience crosses all facets of information technology,
including data center solutions, IT risk management, network and workspace,
systems solutions, IT portfolio valuation, managed and hosting services and
financial solutions.
For 43 years, Forsythe has been helping organizations in all
industries with their information technology (IT).
Financials
What We Do
Whether it’s to manage risk, lower costs, secure
data or improve performance, we plan, procure,
build, migrate and manage IT infrastructure for
today and tomorrow.
Using sound strategies and extensive data center expertise,
we help companies do more with less.
IT Portfolio Valuation
• Application Inventory and Valuation
• Application Placement and Rationalization
• Buy-Hold-Sell IT Portfolio Management Reporting
• IT Project and Infrastructure Portfolio Integration
Systems Solutions
• Storage Solutions
• Systems Compute Solutions
• IT Operations Management
• Converged Infrastructure Solutions
• Application Performance Testing
IT Risk Management
• Security Solutions
• Identity and Access Management
Data Center Solutions
• Data Center Migrations
• Hybrid Data Center Services
• Data Center Strategy
• Data Center Engineering
• Asset Services
• Maintenance
Network & Workspace
• Network Solutions • Unified Communications • Desktop Virtualization • Workspace Solutions
Managed Services
• Support Services • Transitional Support • Resident ServicesChallenge
Blue Cross’s IT team was faced with its own transformation while the company was changing from a health insurance company to a health care company. Blue Cross also had to prepare for new federal and state requirements created by the Affordable Care Act. Top priorities included: • Creating an agile, responsive and interoperable
IT model that could adapt to constant change and cost pressures
• Modernizing and transforming the company’s IT for lower costs, efficiency and scalability while maintaining security of member information • Eliminating day-to-day outages and
performance issues that impacted core business • Freeing up core IT staff members to think and
act more strategically
• Enabling membership to interact easily with Blue Cross via a multi-channel consumer model (web, mobile and call center)
Solution
Forsythe worked alongside Blue Cross IT
leadership team to define the charter for the newly envisioned organization. Blue Cross and Forsythe then co-created the roadmap for an
$85 million modernization, which included: • A program focused on six core areas of
IT, consisting of 35 individual projects that encompassed the entire IT operating environment
• Program management and thought leadership • Engaging with Blue Cross and four other
systems integrators to ensure project completion with Forsythe leading the integration, in many cases
Blue Cross Blue Shield of Minnesota Transforms
Its IT in Preparation for Major Industry Changes
With 2.6 million members, Blue Cross Blue Shield
of Minnesota (Blue Cross) is the state’s largest
non-profit. The company’s mission is to make a healthy
difference in people’s lives—Blue Cross strives to
improve its members’ health by maintaining costs
without sacrificing quality of care.
“
During a time of change in the health care industry, Blue Cross’ goal, via a very
intense program, was to get current and stay current. This program yielded great
Financials
Results
In less than 22 months, Blue Cross unveiled a new, highly resilient data center with a dramatically improved operating environment that had been renovated within the existing space. This transformation enabled Blue Cross to launch a rapid development program to put new products in members’ hands in weeks versus months.
The project’s operational results included: • $35 million annual reduction in technology
run-rate costs (desktop, server/storage, database, network, and data center)
• $1.3 million reduction in annual lease costs, while gaining 30 percent in processing power, by upgrading mainframe platforms
• Two-year deferral of data storage investment, equating to millions of dollars in annual savings: 100 percent increase in storage utilization efficiency, resulting in 80 percent reduction in storage unit costs and 90 percent reduction in floor space by deploying a 100 percent disk-based (tapeless) backup solution • $45K+ monthly savings in cooling and electrical • 89 percent reduction in platform and systems
obsolescence that resulted in improved platforms and systems performance and availability
• 45 percent reduction in major incidents; 49 percent decrease in mean time to restore service (MTRS); 50 percent increase in root cause determination
• Adopted the HITRUST common security
“
2013 was an extremely challenging
year for us. Not only did we have this
huge technology transformation in
front of us, but we were also facing
industry-wide changes and a dramatic
shift in our business model.”
David Kaercher
Vice President Enterprise Technology, Blue Cross Blue Shield of Minnesota
“
Blue Cross was committed to and engaged in making change happen quickly
to support their clients’ health care needs.”
Other Client Successes
Forsythe supported a healthcare company’s growth by:
• Reducing storage operating costs by 15 percent • Improving manageability
• Minimizing risks to data while optimizing the overall storage environment
Forsythe provided a non-profit client with an IT infrastructure roadmap that:
• Reduced total cost of ownership (TCO) by 20 percent • Improved performance and manageability through: – Standardization
– Consolidation – Virtualization
Forsythe designed and implemented a private cloud environment that:
• Reduced the client’s end-to-end workload provisioning time from 60 days to less than one • Reduced power requirements per workload by 70 percent
• Supported applications across data centers
Forsythe implemented a multi-technology rollout for a global company with a
decentralized IT organization, by:
• Pre-configuring, deployed and installed products from multiple manufacturers to client locations in more than 60 countries
• Resolving application performance issues across the company
Forsythe is the premier IT infrastructure integrator in North
America, providing independent expert technology solutions
and being recognized for helping customers optimize their
IT investment.
Forsythe works hand in hand with its partners to meet our
clients’ diverse needs. Together, we design effective solutions
that leverage and integrate best-of-breed technologies.
Our Partners
We routinely win “Partner of the Year” honors from many of these
industry-leading companies and work closely with them to strategize solutions that help
propel our clients into the future.
Our strong network of partnerships include
more than 250 top technology manufacturers.
Forsythe Technology
•
Cisco Transformational Services Partner of the Year•
CommVault Professional Services Partner of the Year•
Dell PartnerDirect Software Partner of the Year•
EMC Enterprise Partner of the Year – North America•
FireMon Channel Innovator•
IBM Beacon Award Winner•
Oracle Excellence Award for Specialized Partner of the Year – North America in Hardware•
Riverbed North America’s Partner of the YearSOS Security, a Forsythe company
•
EnTrust 2013 Top Performing Partner•
Palo Alto Networks 2013 Western Region Partner of the YearPartner Awards
We are honored to have been recognized with the following
partner awards in 2013.
Locations
Corporate Headquarters
7770 Frontage Road, Skokie, Illinois 60077
www.forsythe.com
(847) 213-7000
(800) 843-4488
[email protected]
Locations
Canada
Mississauga, Ontario Winnipeg, ManitobaU.S. (North Area)
Bloomington, Minnesota Cincinnati, Ohio
Clive, Iowa Dublin, Ohio Lincolnshire, Illinois Liverpool, New York Marlborough, Connecticut Strongsville, Ohio
New York, New York Newtown, Pennsylvania Omaha, Nebraska Overland Park, Kansas
U.S. (South Area)
Atlanta, Georgia Austin, Texas
Centennial, Colorado Charlotte, North Carolina El Segundo, California Fort Lauderdale, Florida Greenville, South Carolina Houston, Texas Irvine, California Jacksonville, Florida Nashville, Tennessee Plano, Texas
