Note 1 — Interim Consolidated Financial Statements

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 months ended March 31, 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

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

During the quarter ended September 30, 2013, the Company identified certain immaterial prior period errors that affected the three months ended March 31, 2013. The Company has reflected in the financial information included in this Note the correction of all identified prior period errors in the three months ended March 31, 2013. The prior period errors relate to:

•

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 was ($0.1) million. The effect of this error has also been reflected in net (gains) losses from investments 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.

Revised Consolidated Statements of Income


	Three Months Ended March 31, 2013
	As Previously Reported			Adjustments			As Revised
Revenues:
Research services	$	50,378		$	(100	)	$	50,278
Advisory services and events		21,121			(38	)		21,083

Total revenues		71,499			(138	)		71,361
Income from operations		3,418			(138	)		3,280
Gains (losses) on investments, net		(51	)		(149	)		(200	)
Income before income taxes		3,743			(287	)		3,456
Income tax provision		1,402			(115	)		1,287

Net income	$	2,341		$	(172	)	$	2,169

Basic income per common share	$	0.10		$	—		$	0.10

Diluted income per common share	$	0.10		$	—		$	0.10

Revised Consolidated Statements of Comprehensive Income

The consolidated statement of comprehensive income for the three months ended March 31, 2013 is impacted by the same amount as net income for the period.

Revised Consolidated Statements of Cash Flows


	Three Months Ended March 31, 2013
	As Previously Reported		Adjustments			As Revised
Cash flows from operating activities:
Net income	$	2,341	$	(172	)	$	2,169
Net (gains) losses from investments		51		149			200
Prepaid expenses and other current assets		1,271		(115	)		1,156
Deferred revenue		2,709		138			2,847
Net cash provided by operating activities		35,453		—			35,453