Operating Segments

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Operating Segments

Note 8 — Operating Segments

Forrester is organized into two client groups with each client group responsible for writing relevant research for the roles within the client organization on a worldwide basis. The two client groups, which are considered operating segments, are: Business Technology (“BT”) and Marketing and Strategy (“M&S”). In addition, the Company’s Events segment supports both client groups. Each client group generates revenues through sales of research, advisory and other service offerings targeted at specific roles within their targeted clients. Each client group consists of research personnel focused primarily on issues relevant to particular roles and to the day-to-day responsibilities of persons within the roles. Amounts included in the Events segment relate to the operations of the events production department. Revenue reported in the Events segment consists primarily of sponsorships and event tickets to Forrester events.

Forrester evaluates reportable segment performance and allocates resources based on direct margin. Direct margin, as presented below, is defined as operating income excluding sales expenses, certain marketing and fulfillment expenses, stock-based compensation expense, general and administrative expenses, depreciation expense, amortization of intangible assets and reorganization costs. In the first quarter of 2013, the Company modified segment direct margin for each of the BT and M&S client groups to reflect the transfer of revenue and direct costs related to one product line from BT to M&S and to reallocate certain shared consulting costs between BT & M&S. Accordingly, the 2012 amounts have been reclassified to conform to the current presentation. The accounting policies used by the segments are the same as those used in the consolidated financial statements.

The following tables present information about reportable segments (in thousands):

	BT		M&S		Events			Consolidated
Three Months Ended September 30, 2013
Revenue	$	37,659	$	31,809	$	347		$	69,815
Direct margin		24,912		20,923		(656	)		45,179
Selling, marketing, administrative and other expenses									(40,321	)
Amortization of intangible assets									(557	)
Reorganization costs									—
Other income (expense) and gains (losses) on investments									(53	)
Income before income taxes								$	4,248
	BT		M&S		Events			Consolidated
Three Months Ended September 30, 2012
Revenue	$	37,764	$	30,707	$	302		$	68,773
Direct margin		25,966		20,203		(727	)		45,442
Selling, marketing, administrative and other expenses									(37,696	)
Amortization of intangible assets									(579	)
Reorganization costs									(37	)
Other income (expense) and gains (losses) on investments									1,112
Income before income taxes								$	8,242
	BT		M&S		Events			Consolidated
Nine Months Ended September 30, 2013
Revenue	$	115,327	$	95,690	$	9,112		$	220,129
Direct margin		78,100		62,909		3,204			144,213
Selling, marketing, administrative and other expenses									(123,269	)
Amortization of intangible assets									(1,670	)
Reorganization costs									(1,905	)
Other income (expense) and gains (losses) on investments									476
Income before income taxes								$	17,845
	BT		M&S		Events			Consolidated
Nine Months Ended September 30, 2012
Revenue	$	115,470	$	92,995	$	9,405		$	217,870
Direct margin		78,882		60,823		3,241			142,946
Selling, marketing, administrative and other expenses									(116,921	)
Amortization of intangible assets									(1,779	)
Reorganization costs									(1,431	)
Other income (expense) and gains (losses) on investments									1,794
Income before income taxes								$	24,609