Interim Consolidated Financial Statements (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Changes And Error Corrections [Abstract]

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted 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 accounting principles generally accepted in the United States of America. 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, 2013. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position, results of operations, and cash flows as of the dates and for the periods presented have been included. The results of operations for the three and six months ended June 30, 2014 may not be indicative of the results for the year ending December 31, 2014, or any other period.

During the quarter ended March 31, 2014, the Company recorded $0.5 million of expenses for out-of-period corrections, of which $0.4 million related to depreciation and $0.1 million related to other immaterial amounts that related to prior periods.

Fair Value Measurements

Fair Value Measurements

The carrying amounts reflected in the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. See Note 3 – Marketable Investments for the fair value of the Company’s marketable investments.

Revision of Quarterly Financial Statements

Revision of quarterly financial statements

During the quarter ended September 30, 2013, the Company identified certain immaterial prior period errors that affected the three and six months ended June 30, 2013. The Company has reflected in the financial information included in this Note the correction of these prior period errors in the three and six months ended June 30, 2013. The prior period errors relate to:

•

An adjustment of $0.8 million for the three months ended June 30, 2013 to increase the amount of research services revenue related to recognition of revenue for the event ticket included in the Company’s RoleView and Forrester Leadership Board subscription products. The effect of this error has also been reflected in deferred revenue in the revised consolidated statement of cash flows presented below.

•

Adjustments to revenue for historical insignificant variances in deferred revenue for reconciling items between the Company’s general ledger and sub-ledger system. The decrease to revenue for the three months ended March 31, 2013 was ($0.1) million and the effect of this error has also been reflected in deferred revenue in the revised consolidated statement of cash flows presented below.

•

Adjustments to the Company’s share of operating results in one of the technology-related investment funds in which the Company holds an interest, which adjustments are principally a result of information received by the Company from the fund after the applicable reporting periods. The Company records a portion of the fund’s operating results, based on the Company’s ownership interest in the fund, as investment gains (losses). The adjustments to the gains (losses) on investments for the three months ended March 31, 2013 and June 30, 2013 was ($0.1) million and $0.1 million, respectively.

Revised Consolidated Statements of Income


	Three Months Ended June 30, 2013								Six Months Ended June 30, 2013
	As Previously Reported			Adjustments			As Revised		As Previously Reported			Adjustments			As Revised
Revenues:
Research services	$	50,512		$	800		$	51,312	$	100,890		$	700		$	101,590
Advisory services and events		27,652			(11	)		27,641		48,773			(49	)		48,724

Total revenues		78,164			789			78,953		149,663			651			150,314
Income from operations		8,999			789			9,788		12,417			651			13,068
Gains (losses) on investments, net		(51	)		149			98		(102	)		—			(102	)
Income before income taxes		9,203			938			10,141		12,946			651			13,597
Income tax provision		3,581			375			3,956		4,983			260			5,243

Net income	$	5,622		$	563		$	6,185	$	7,963		$	391		$	8,354

Basic income per common share	$	0.26		$	0.03		$	0.29	$	0.37		$	0.01		$	0.38

Diluted income per common share	$	0.26		$	0.02		$	0.28	$	0.36		$	0.02		$	0.38

Revised Consolidated Statements of Comprehensive Income

The consolidated statement of comprehensive income for the three and six months ended June 30, 2013 is impacted by the same amount as net income for the period.

Revised Consolidated Statements of Cash Flows


	Six Months Ended June 30, 2013
	As Previously Reported			Adjustments			As Revised
Cash flows from operating activities:
Net income	$	7,963		$	391		$	8,354
Prepaid expenses and other current assets		4,619			260			4,879
Deferred revenue		(12,955	)		(651	)		(13,606	)
Net cash provided by operating activities		37,231			—			37,231

Revenue Recognition

In May, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The new standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. For Forrester, the standard will be effective in the first quarter of 2017. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company has not yet selected a transition method. The Company is currently evaluating the potential changes from this ASU to its future financial reporting and disclosures.

Unrecognized Tax Benefit

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The standard addresses the balance sheet presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The standard requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The adoption of this ASU as of January 1, 2014 did not have a material effect on the Company’s balance sheet.

- Definition

Disclosure of accounting policy for revenue recognition. If the entity has different policies for different types of revenue transactions, the policy for each material type of transaction is generally disclosed. If a sales transaction has multiple element arrangements (for example, delivery of multiple products, services or the rights to use assets) the disclosure may indicate the accounting policy for each unit of accounting as well as how units of accounting are determined and valued. The disclosure may encompass important judgment as to appropriateness of principles related to recognition of revenue. The disclosure also may indicate the entity's treatment of any unearned or deferred revenue that arises from the transaction.

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