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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | (5) Income Taxes Income before income taxes for the years ended December 31, 2014, 2013 and 2012 consists of the following (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Domestic |  | $ | 12,939 |  |  | $ | 13,557 |  |  | $ | 24,124 |
Foreign |  |  | 5,450 |  |  |  | 6,435 |  |  |  | 8,030 |
Total |  | $ | 18,389 |  |  | $ | 19,992 |  |  | $ | 32,154 |
The components of the income tax provision (benefit) for the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 11,644 |  |  | $ | 8,286 |  |  | $ | 12,420 |
State |  |  | 2,239 |  |  |  | 1,624 |  |  |  | 3,069 |
Foreign |  |  | 1,167 |  |  |  | 1,587 |  |  |  | 1,336 |
Total current |  |  | 15,050 |  |  |  | 11,497 |  |  |  | 16,825 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (6,470 | ) |  |  | (3,935 | ) |  |  | (4,449 | )
State |  |  | (1,095 | ) |  |  | (562 | ) |  |  | (736 | )
Foreign |  |  | 39 |  |  |  | (32 | ) |  |  | (5,782 | )
Total deferred |  |  | (7,526 | ) |  |  | (4,529 | ) |  |  | (10,967 | )
Income tax provision |  | $ | 7,524 |  |  | $ | 6,968 |  |  | $ | 5,858 |
A reconciliation of the federal statutory rate to Forrester’s effective tax rate for the years ended December 31, 2014, 2013 and 2012 is as follows:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Income tax provision at federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Increase (decrease) in tax resulting from: |  |  |  |  |  |  |  |  |  |  |  |
State tax provision, net of federal benefit |  |  | 4.2 |  |  |  | 3.4 |  |  |  | 4.9 |
Foreign tax rate differential |  |  | (3.2 | ) |  |  | (4.9 | ) |  |  | (2.7 | )
Stock option compensation deduction |  |  | 2.6 |  |  |  | 2.0 |  |  |  | 0.7 |
Non-deductible expenses |  |  | 1.1 |  |  |  | 2.4 |  |  |  | 0.6 |
Change in valuation allowance |  |  | (1.0 | ) |  |  | 0.5 |  |  |  | (0.8 | )
Foreign tax credits |  |  | — |  |  |  | (3.7 | ) |  |  | (0.9 | )
Benefit upon audit settlement |  |  | — |  |  |  | — |  |  |  | (21.1 | )
Out-of-period adjustment |  |  | 2.5 |  |  |  | — |  |  |  | — |
Other, net |  |  | (0.3 | ) |  |  | 0.2 |  |  |  | 2.5 |
Effective tax rate |  |  | 40.9 | % |  |  | 34.9 | % |  |  | 18.2 | %
The components of deferred income taxes as of December 31, 2014 and 2013 are as follows (in thousands):
|  | 2014 |  |  | 2013 |
Non-deductible reserves and accruals |  | $ | 10,164 |  |  | $ | 7,239 |
Stock compensation |  |  | 5,086 |  |  |  | 4,539 |
Other assets |  |  | 838 |  |  |  | — |
Net operating loss and other carryforwards |  |  | 9,070 |  |  |  | 10,830 |
Gross deferred tax asset |  |  | 25,158 |  |  |  | 22,608 |
Less—valuation allowance |  |  | (1,565 | ) |  |  | (2,200 | )
Sub-total |  |  | 23,593 |  |  |  | 20,408 |
Depreciation and amortization |  |  | (799 | ) |  |  | (2,945 | )
Goodwill amortization |  |  | (5,224 | ) |  |  | (5,401 | )
Other liabilities |  |  | — |  |  |  | (2,134 | )
Deferred commissions |  |  | (5,399 | ) |  |  | (5,080 | )
Net deferred tax asset |  | $ | 12,171 |  |  | $ | 4,848 |
In July 2012, one of the Company’s non-U.S. subsidiaries licensed the intellectual property rights for the territory outside of the U.S. from the Company’s U.S. entity in order to align the Company’s business with its global operations. The license of intellectual property occurred between two wholly owned legal entities within Forrester that are based in different tax jurisdictions, creating a taxable gain reportable in the transferor entity’s jurisdiction. The gain is recognized for income tax purposes only and not in the financial statements. As the gain was the result of an intra-entity transaction, it was eliminated in consolidation for purposes of the consolidated financial statements. In accordance with GAAP, no gain or immediate tax impact should be recognized in the consolidated financial statements as a result of an intra-entity transaction. The Company recognizes tax expense specifically associated with an intra-entity transfer of intangible property over a period equal to the expected economic lives of the underlying assets being licensed. An amortization period of 9.5 years was determined based on the estimated economic lives of the intellectual property licensed. Current net deferred tax assets and long-term net deferred tax assets were $4.6 and $7.9 million as of December 31, 2014 and $2.2 and $3.7 million as of December 31, 2013, and are included in prepaid and other current assets and other assets, respectively, in the Consolidated Balance Sheets. Current net deferred tax liabilities and long-term net deferred tax liabilities were $0.2 million and $0.1 million as of December 31, 2014 and $0.2 and $0.9 million as of December 31, 2013, and are included in accrued expenses and other current liabilities and non-current liabilities, respectively, in the Consolidated Balance Sheets. The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a net deferred income tax asset. Judgment is required in considering the relative impact of negative and positive evidence. In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. Although realization is not assured, based upon the Company’s historical taxable income and projections of the Company’s future taxable income over the periods during which the deferred tax assets are deductible and the carryforwards expire, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances, as discussed below. As of December 31, 2014 and 2013, the Company maintained a valuation allowance of approximately $1.6 million and $2.2 million, respectively, primarily relating to foreign net operating loss carryforwards from an acquisition and U.S. capital losses. As of December 31, 2014, the Company had U.S. federal net operating loss carryforwards of approximately $5.4 million obtained from acquired businesses. These carryforwards are limited pursuant to section 382 of the Internal Revenue Code due to changes in ownership as a result of the acquisitions. If unused, these carryforwards would expire on various dates from 2019 through 2028. The Company also has foreign net operating loss carryforwards of approximately $23.5 million, which can be carried forward indefinitely. Approximately $5.0 million of the foreign net operating loss carryforwards relate to a prior acquisition, the utilization of which is subject to limitation under the tax law of the United Kingdom. In 2012 the Company settled a tax audit at its German subsidiary resulting in the recognition of $5.9 million in deferred tax assets relating to net operating losses and intangible assets at this subsidiary. As of December 31, 2014, the Company had U.S. federal and state capital loss carryforwards of $1.2 million, of which $0.8 million expires in 2016 and $0.4 million expires in 2018. The following table provides a summary of the changes in the deferred tax valuation allowance for the years ended December 31, 2014, 2013 and 2012 (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Deferred tax valuation allowance at January 1 |  | $ | 2,200 |  |  | $ | 2,086 |  |  | $ | 3,077 |
Additions |  |  | 17 |  |  |  | 801 |  |  |  | 11 |
Deductions |  |  | (574 | ) |  |  | (712 | ) |  |  | (1,066 | )
Translation adjustments |  |  | (78 | ) |  |  | 25 |  |  |  | 64 |
Deferred tax valuation allowance at December 31 |  | $ | 1,565 |  |  | $ | 2,200 |  |  | $ | 2,086 |
During the years ended December 31, 2013 and 2012, the Company recognized approximately $0.4 million and $(0.3) million, respectively, of net tax benefits (deficiencies) from tax deductions in excess of (or less than) book deductions resulting from employee stock option exercises. Net tax benefits were insignificant for the year ended December 31, 2014. The net tax benefits (deficiencies) were recorded as an increase (decrease) to additional paid-in-capital. Excess tax benefits from share-based payments are recognized in the year that the deduction reduces the amount of cash payable for taxes. Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $15.6 million as of December 31, 2014. The Company has not provided any additional federal or state income taxes or foreign withholding taxes on the undistributed earnings as such earnings have been indefinitely reinvested in the business. Due to the various methods by which such earnings could be repatriated in the future, the amount of taxes attributable to the undistributed earnings is not practicably determinable. The Company utilizes a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken on a tax return. The first step is a determination of whether the tax position should be recognized in the financial statements. The second step determines the measurement of the tax position. A reconciliation of the beginning and ending amount of unrecognized tax benefits is summarized as follows for the years ended December 31, 2014, 2013 and 2012 (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Unrecognized tax benefits at January 1 |  | $ | 2,012 |  |  | $ | 1,844 |  |  | $ | 1,269 |
Additions for tax positions of prior years |  |  | 6 |  |  |  | 414 |  |  |  | 112 |
Reductions for tax positions of prior years |  |  | — |  |  |  | (256 | ) |  |  | (37 | )
Additions for tax positions of current year |  |  | 121 |  |  |  | 19 |  |  |  | 1,444 |
Settlements |  |  | — |  |  |  | — |  |  |  | (582 | )
Lapse of statute of limitations |  |  | — |  |  |  | — |  |  |  | (360 | )
Translation adjustments |  |  | (3 | ) |  |  | (9 | ) |  |  | (2 | )
Unrecognized tax benefits at December 31 |  | $ | 2,136 |  |  | $ | 2,012 |  |  | $ | 1,844 |
As of December 31, 2014, the total amount of unrecognized tax benefits totaled approximately $2.1 million, all of which if recognized, would decrease our effective tax rate in a future period. It is not expected that a significant amount of unrecognized tax benefits would be recognized within the next 12 months. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense and such amounts were not significant in the years ended December 31, 2014, 2013 and 2012. At December 31, 2014 and 2013, the Company had $0.2 million and $0.1 million, respectively, of accrued interest and penalties related to uncertain tax positions. The Company files income tax returns in the U.S. and in foreign jurisdictions. Generally, the Company is no longer subject to U.S., state, local and foreign income tax examinations by tax authorities in its major jurisdictions for years before 2009, except to the extent of net operating loss and tax credit carryforwards from those years. Major taxing jurisdictions include the U.S., the Netherlands, the United Kingdom, Germany and Switzerland. During 2014 the Internal Revenue Service completed the audit of the Company’s 2011 consolidated Federal income tax return and there were no material adjustments.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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