What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-10 · 163 added, 161 removed, 487 unchanged (40% of the section changed)

3 unchanged sentences

(In thousands, except per share data, unaudited)

September 30,

Current Assets:

1 unchanged sentence

Accounts receivable, net of allowance for expected credit losses of $ 796 and $ 628 as

of June 30, 2020 and December 31, 2019, respectively

of September 30, 2020 and December 31, 2019, respectively

Deferred commissions

15 unchanged sentences

Total liabilities

Commitments and contingencies

Stockholders' Equity (Note 12):

4 unchanged sentences

Authorized - 125,000 shares

Issued - 23,401 and 23,275 shares as of June 30, 2020 and December 31, 2019,

Outstanding - 18,770 and 18,644 shares as of June 30, 2020 and

Issued - 23,579 and 23,275 shares as of September 30, 2020 and December 31, 2019,

Outstanding - 18,948 and 18,644 shares as of September 30, 2020 and

December 31, 2019, respectively

1 unchanged sentence

Retained earnings

Treasury stock - 4,631 shares as of June 30, 2020 and December 31, 2019

Treasury stock - 4,631 shares as of September 30, 2020 and December 31, 2019

Accumulated other comprehensive loss

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total revenues

11 unchanged sentences

Income (loss) before income taxes

Income tax expense

Income tax expense (benefit)

Net income (loss)

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

8 unchanged sentences

(In thousands, unaudited)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

8 unchanged sentences

Amortization of deferred financing fees

Foreign currency (gains) losses

Foreign currency losses

Changes in assets and liabilities, net of acquisitions:

26 unchanged sentences

Cash paid for interest

Cash (received) paid for income taxes

Non-cash financing activities for the six months ended June 30, 2019 include $ 3.7 million of debt issuance costs deducted directly from the proceeds of borrowings by the lender.

Cash paid for income taxes

Non-cash financing activities for the nine months ended September 30, 2019 include $ 3.7 million of debt issuance costs deducted directly from the proceeds of borrowings by the lender.

Refer to Note 4 – Debt for further information.

10 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the financial position, results of operations, comprehensive income (loss), 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, 2020 may not be indicative of the results for the year ending December 31, 2020, or any other period.

The results of operations for the three and nine months ended September 30, 2020 may not be indicative of the results for the year ending December 31, 2020, or any other period.

Due to the Company’s operating segment realignment during the three months ended June 30, 2020, the revenue line items in the Consolidated Statements of Operations were updated to present Events revenues as a separate financial statement line.

4 unchanged sentences

The COVID-19 pandemic has significantly affected the Company beginning in March 2020 primarily through lower contract bookings and a reduction in revenues from the conversion of the Company’s events from in-person to virtual events.

The Company also announced that its events in the second half of 2020 will be held as virtual events.

While the duration and severity of this pandemic is uncertain, the Company currently expects a reduction in its subscription Research, Connect and Analytics revenues during the second half of 2020 due to reduced customer contract booking activity that began in March 2020, and which is expected to continue through at least the third quarter of 2020.

The Company had previously announced that its events for the remainder of 2020 will be held as virtual events.

While the duration and severity of this pandemic is uncertain, the Company currently expects the reduction in its subscription Research, Connect and Analytics revenues to continue during the fourth quarter of 2020 due to reduced customer contract booking activity that began in March 2020 and continued into the third quarter of 2020.

The extent to which the COVID-19 pandemic ultimately impacts the Company’s business, financial condition, results of operations, cash flows, and liquidity may differ from the Company’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

1 unchanged sentence

The Company will continue to proactively respond to the situation and may take further actions that alter the Company’s business operations as may be required by governmental authorities, or that the Company determines are in the best interests of its employees and customers.

As of June 30, 2020, the Company is in compliance with its financial covenants under its Credit Agreement (refer to Note 4 – Debt ).

As of September 30, 2020, the Company is in compliance with its financial covenants under its Credit Agreement (refer to Note 4 – Debt ).

The Company currently forecasts that it will be in compliance with its financial covenants for at least one year from the issuance of these interim financial statements, after taking into consideration the measures noted above.

If the impact of COVID-19 is more severe than currently forecasted this may impact the Company’s ability to comply with its financial covenants which could have a material adverse effect on the Company.

The Company assessed certain accounting estimates that generally require consideration of forecasted financial information in context with the information reasonably available to it and the unknown future impacts COVID-19 as of June 30, 2020 and through the date of this report.

The accounting matters assessed included, but were not limited to, the allowance for expected credit losses, the carrying value of its goodwill and other long-lived assets, valuation allowances for tax assets, and revenue recognition.

While there was not a material impact to the consolidated financial statements resulting from the Company’s assessments as of and for the three and six months ended June 30, 2020, the Company’s future assessment of its current expectations of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to its consolidated financial statements in future reporting periods.

While there was not a material impact to the consolidated financial statements resulting from the Company’s assessments as of and for the three and nine months ended September 30, 2020, the Company’s future assessment of its current expectations of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to its consolidated financial statements in future reporting periods.

Presentation of Restricted Cash

The following table summarizes the end-of-period cash and cash equivalents from the Company's Consolidated Balance Sheets and the total cash, cash equivalents and restricted cash as presented in the accompanying Consolidated Statements of Cash Flows (in thousands).

Six Months Ended June 30,

Nine Months Ended September 30,

Cash and cash equivalents

2 unchanged sentences

Cash, cash equivalents and restricted cash shown in statement of cash flows

Restricted cash consists primarily of collateral required for letters of credit.

The short-term or long-term classification is determined in accordance with the expiration of the underlying lease as the letters of credit are non-cancellable while the leases are in effect.

Restricted cash consists of collateral required for letters of credit and credit card processing outside of the U.S.

The short-term or long-term classification regarding the collateral for the letters of credit is determined in accordance with the expiration of the underlying lease as the letters of credit are non-cancellable while the leases are in effect.

Adoption of New Accounting Pronouncements

5 unchanged sentences

Expected losses are based, in part, on the Company’s historical loss rate experience as well as management’s expectations of future losses as informed by current economic conditions.

The allowance for expected credit losses on accounts receivable for the six months ended June 30, 2020 is summarized as follows (in thousands):

The allowance for expected credit losses on accounts receivable for the nine months ended September 30, 2020 is summarized as follows (in thousands):

Balance at December 31, 2019

1 unchanged sentence

Provision for expected credit losses

Net write-offs

Translation adjustments

Balance at June 30, 2020

Balance at September 30, 2020

The Company adopted the guidance in ASU No.

27 unchanged sentences

The acquisition method of accounting requires the Company to record the assets and liabilities acquired based on their estimated fair values as of the acquisition date, with any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to be recorded to goodwill.

The Company did not have any business combinations during the six months ended June 30, 2020.

The Company did not have any business combinations during the nine months ended September 30, 2020.

SiriusDecisions, Inc.

7 unchanged sentences

During the year ended December 31, 2019, the Company finalized the purchase price allocation and related accounting for the acquisition.

The Company recognized $ 1.7 million of acquisition costs in the six months ended June 30, 2019 related to the SiriusDecisions acquisition.

The Company recognized $ 1.7 million of acquisition costs in the nine months ended September 30, 2019 related to the SiriusDecisions acquisition.

The costs primarily consisted of investment banker fees and other professional services costs and are included in acquisition and integration costs within the Consolidated Statements of Operations.

Note 3 — Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill for the six months ended June 30, 2020 is summarized as follows (in thousands):

The change in the carrying amount of goodwill for the nine months ended September 30, 2020 is summarized as follows (in thousands):

Balance at December 31, 2019

Translation adjustments

Balance at June 30, 2020

Balance at September 30, 2020

The Company assesses goodwill for impairment annually on November 30, or on an interim basis if an event indicates a specific impairment may exist.

As a result of the Company’s segment realignment during the three months ended June 30, 2020 (refer to Note 14 – Operating Segments for additional information), the Company performed a qualitative assessment of goodwill for all reporting units immediately prior to and after the reporting unit change.

The Company concluded that no impairment existed.

As of June 30, 2020 , the Company had no accumulated goodwill impairment losses.

As a result of the Company’s segment realignments during the first half of 2020 (refer to Note 14 – Operating Segments for additional information), the Company performed qualitative assessments of goodwill for all reporting units immediately prior to and after the reporting unit changes and concluded no impairment existed.

Approximately $ 8.0 million of goodwill is allocated to the Company’s Consulting reporting unit, which has a negative carrying value as of September 30, 2020.

As of September 30, 2020 , the Company had no accumulated goodwill impairment losses.

Finite-Lived Intangible Assets

The carrying values of finite-lived intangible assets are as follows (in thousands):

June 30, 2020

September 30, 2020

Amortizable intangible assets

17 unchanged sentences

The Term Loans require repayment of the outstanding principal balance in quarterly installments each year, with the balance repayable on the maturity date, subject to customary exceptions.

As of June 30, 2020 , the amount payable in each year a is set forth in the table below (in thousands):

As of September 30, 2020 , the amount payable in each year is set forth in the table below (in thousands):

2020 (remainder)

3 unchanged sentences

Up to $ 5.0 million of the Revolving Credit Facility is available for the issuance of letters of credit, and any drawings under the letters of credit must be reimbursed within one business day.

As of June 30, 2020 , $ 0.9 million in letters of credit were issued under the Revolving Credit Facility.

As of September 30, 2020 , $ 0.9 million in letters of credit were issued under the Revolving Credit Facility.

Forrester incurred $ 1.8 million in costs related to the Revolving Credit Facility, which are recorded in other assets on the Consolidated Balance Sheets.

4 unchanged sentences

The following table summarizes the Company’s total outstanding borrowings as of the dates indicated (in thousands):

June 30, 2020

September 30, 2020

December 31, 2019

4 unchanged sentences

Net carrying amount

The contractual annualized interest rate as of June 30, 2020 on the Term loan facility was 2.1875 %, which consisted of LIBOR of 0.1875 % plus a margin of 2.00 %.

The contractual annualized interest rate as of September 30, 2020 on the Term loan facility was 2.1875 %, which consisted of LIBOR of 0.1875 % plus a margin of 2.00 %.

However, the Company has an interest rate swap that effectively converts the floating LIBOR base rates on a portion of the amounts outstanding to a fixed base rate.

Refer to Note 7 – Derivatives and Hedging for further information on the swap.

The Company had $ 75.0 million of available borrowing capacity on the revolver (not including the expansion feature) as of June 30, 2020 .

The weighted average annual effective rate on the Company's total debt outstanding for the three and six months ended June 30, 2020 , was 2.54 % and 3.24 %, respectively.

The Company had $ 74.1 million of available borrowing capacity on the revolver (not including the expansion feature) as of September 30, 2020 .

The weighted average annual effective rate on the Company's total debt outstanding for the three and nine months ended September 30, 2020 , was 2.1875 % and 2.9006 %, respectively.

The Credit Agreement contains certain customary restrictive loan covenants, including among others, financial covenants that apply a maximum leverage ratio and minimum fixed charge coverage ratio.

2 unchanged sentences

The Credit Agreement also contains customary events of default, representations, and warranties.

As of June 30, 2020 , the Company is in compliance with its financial covenants und er the Credit Agreement .

As of September 30, 2020 , the Company is in compliance with its financial covenants und er the Credit Agreement .

7 unchanged sentences

The components of lease expense were as follows (in thousands):

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Operating lease cost

3 unchanged sentences

Total lease cost

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Operating lease cost

4 unchanged sentences

Additional lease information is summarized in the following table (in thousands, except lease term and discount rate):

Six Months Ended

June 30, 2020

June 30, 2019

For the Nine Months Ended September 30,

Cash paid for amounts included in the measurement of operating

lease liabilities

Operating right-of-use assets obtained in exchange for lease

Operating lease right-of-use assets obtained in exchange for lease

Weighted-average remaining lease term - operating leases (years)

Weighted-average discount rate - operating leases

Future minimum lease payments under non-cancellable leases as of June 30, 2020 are as follows (in thousands):

Future minimum lease payments under non-cancellable leases as of September 30, 2020 are as follows (in thousands):

2020 (remainder)

2 unchanged sentences

Present value of lease liabilities

Lease balances as of June 30, 2020 are as follows (in thousands):

Lease balances as of September 30, 2020 are as follows (in thousands):

Operating lease right-of-use assets

4 unchanged sentences

The Company’s leases do not contain residual value guarantees, material restrictions or covenants, and all sublease transactions are not material.

The Company incurred $ 1.4 million of ROU asset impairments during the three months ended March 31, 2020 related to facility leases from the SiriusDecisions, Inc.

The Company incurred $ 1.4 million of ROU asset impairments during the nine months ended September 30, 2020 related to facility leases from the SiriusDecisions, Inc.

These impairments are recorded in acquisition and integration costs in the Consolidated Statements of Operations .

During the three months ended June 30, 2020, the Company did not enter into any new leases.

As of June 30, 2020, only one of the operating leases entered into during the prior quarter had not yet commenced.

This operating lease, which consists of $ 13.9 million of undiscounted lease payments, has a lease term of ten years and is expected to commence later in 2020.

Additionally, the Company could receive a variable incentive payment from one of its landlords to terminate the related office space lease early.

The range of possible incentive payments is zero to $ 3.5 million, would be received in late 2020 or the first half of 2021, and is dependent on the Company’s ability to exit the existing facility by the proposed early termination dates.

Additionally, the Company received a variable incentive payment of $ 3.5 million in the fourth quarter of 2020 from one of its landlords to terminate the related office space lease early.

This amount will be recognized as a reduction in rent expense during the fourth quarter of 2020.

Note 6 – Contract Assets and Liabilities

4 unchanged sentences

If the right to payment for services performed was conditional on something other than the passage of time, the unbilled amount would be recorded as a separate contract asset.

There were no contract assets as of June 30, 2020 or 2019.

There were no contract assets as of September 30, 2020 or 2019.

The majority of the Company’s contracts are non-cancellable.

1 unchanged sentence

The Company records accounts receivable on these contracts only up to the amount of revenue earned but not yet collected.

In addition, since the majority of the Company’s contracts are for a duration of one year and payment is expected within one year from the transfer of products and services, the Company does not adjust its receivables or transaction price for the effects of a significant financing component.

In addition, since the majority of the Company’s contracts are for a duration of one year and payment is expected within one year from the transfer of products and services, the Company does not adjust its receivables or transaction prices for the effects of a significant financing component.

Deferred Revenue

3 unchanged sentences

Similar to accounts receivable, the Company does not record deferred revenue for invoices issued on a cancellable contract.

During the three months ended June 30, 2020 and 2019, the Company recognized revenue of $ 43.2 and $ 53.5 million, respectively, related to its deferred revenue balance at the beginning of each such period.

During the six months ended June 30, 2020 and 2019, the Company recognized revenue of $ 113.1 and $ 111.6 million, respectively, related to its deferred revenue balance at the

beginning of each such period.

To determine revenue recognized in each such period from deferred revenue at the beginning of the period, the Company first allocates revenue to the individual deferred revenue balance outstanding at the beginning of the period, until the revenue equals that balance .

Approximately $ 309.8 million of revenue is expected to be recognized during the next 12 to 24 months from remaining performance obligations as of June 30, 2020.

During the three months ended September 30, 2020 and 2019, the Company recognized revenue of $ 25.5 and $ 21.2 million, respectively, related to its deferred revenue balance at the beginning of each such period.

During the nine months ended September 30, 2020 and 2019, the Company recognized revenue of $ 138.6 and $ 132.8 million, respectively, related to its deferred revenue balance at the beginning of each such period.

To determine revenue recognized in each such period from deferred revenue at the beginning of the

period, the Company first allocates revenue to the individual deferred revenue balance outstanding at the beginning of the period, until the revenue equals that balance .

Approximately $ 301.0 million of revenue is expected to be recognized during the next 24 months from remaining performance obligations as of September 30, 2020.

Cost to Obtain Contracts

The Company capitalizes commissions paid to internal sales representatives and related fringe benefits costs that are incremental to obtaining customer contracts .

The Company capitalizes commissions paid to sales representatives and related fringe benefits costs that are incremental to obtaining customer contracts .

These costs are included in deferred commissions on the Consolidated Balance Sheets.

1 unchanged sentence

Costs to obtain a contract are amortized to operations as the related revenue is recognized over the initial contract term.

Amortization expense related to deferred commissions for the three months ended June 30, 2020 and 2019 was $ 9.0 million and $ 8.9 million, respectively.

Amortization expense related to deferred commissions for the six months ended June 30, 2020 and 2019 was $ 17.2 million and $ 16.0 million, respectively.

Amortization expense related to deferred commissions for the three months ended September 30, 2020 and 2019 was $ 9.9 million and $ 8.1 million, respectively.

Amortization expense related to deferred commissions for the nine months ended September 30, 2020 and 2019 was $ 27.1 million and $ 24.1 million, respectively.

The Company evaluates the recoverability of deferred commissions at each balance sheet date .

Note 7 — Derivatives and Hedging

The Company enters into derivative contracts (an interest rate swap and foreign currency forwards) to mitigate the cash flow risk associated with changes in interest rates on its variable rate debt (see Note 4 – Debt ) and changes in foreign exchange rates on forecasted foreign currency transactions.

The Company enters into derivative contracts (an interest rate swap and foreign currency forwards) to mitigate the cash flow risk associated with changes in interest rates on its variable rate debt (refer to Note 4 – Debt ) and changes in foreign exchange rates on forecasted foreign currency transactions.

The Company accounts for its derivate contracts in accordance with FASB ASC Topic 815 – Derivatives and Hedging (“Topic 815”) , which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value.

Interest Rate Swap

At June 30, 2020, the Company had a single interest rate swap contract that matures in 2022 , with an initial notional amount of $ 95.0 million.

The notional amount at June 30, 2020 was $ 84.9 million.

At September 30, 2020, the Company had a single interest rate swap contract that matures in 2022 , with an initial notional amount of $ 95.0 million.

The notional amount at September 30, 2020 was $ 80.6 million.

The Company pays a base fixed rate of 1.65275 % and in return receives the greater of (1) 1-month LIBOR, rounded up to the nearest 1/16 of a percent, or (2) 0.00 %.

The fair value of the swap on June 30, 2020 was a liability of $ 1.7 million (see Note 8 – Fair Value Measurements for information on determining the fair value).

The fair value of the swap on September 30, 2020 was a liability of $ 1.4 million (refer to Note 8 – Fair Value Measurements for information on determining the fair value).

The liability is included in other non-current liabilities in the Consolidated Balance Sheets.

3 unchanged sentences

As required under Topic 815, the swap’s effectiveness is assessed on a quarterly basis.

Since its inception, and through June 30, 2020, the interest rate swap was considered highly effective.

Accordingly, the entire $ 1.2 million negative fair value as of June 30, 2020 is recorded, net of taxes, in other comprehensive loss.

Since its inception, and through September 30, 2020, the interest rate swap was considered highly effective.

Accordingly, the entire negative fair value as of September 30, 2020 of $ 1.0 million (net of taxes) is recorded in accumulated other comprehensive loss.

The Company expects $ 0.7 million of this loss, net of taxes, to be reclassified into earnings within the next 12 months.

2 unchanged sentences

These contracts generally have short durations and are recorded at fair value with both realized and unrealized gains and losses recorded in other income (expense), net in the Consolidated Statements of Operations because the Company does not designate these contracts as hedges for accounting purposes.

During the three months ended June 30, 2020, the Company entered into three foreign currency forward exchange contracts, all of which settled by June 30, 2020.

Accordingly, as of June 30, 2020, there are no amounts recorded in the Consolidated Balance Sheets for these contracts.

During the nine months ended September 30, 2020, the Company entered into three foreign currency forward exchange contracts, all of which settled by September 30, 2020.

Accordingly, as of September 30, 2020, there are no amounts recorded in the Consolidated Balance Sheets for these contracts.

The Company’s derivative counterpart ies are investment grade financial institution s .

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Amount recorded in:

1 unchanged sentence

Other income (expense), net (2)

Consists of interest expense from interest rate swap contract.

Consists of net realized gains and losses on foreign currency forward contracts.

The Company did no t have any derivatives as of, or during, the six months ended June 30, 2019.

Consists of interest expense from the interest rate swap contract.

Consists of net realized losses on foreign currency forward contracts.

The Company did no t have any derivatives as of, or during, the nine months ended September 30, 2019.

Note 8 — Fair Value Measurements

2 unchanged sentences

The Company believes that the carrying amount of its variable-rate borrowings reasonably approximate their fair values because the rates of interest on those borrowings reflect current market rates of interest.

Additionally, the Company measures certain financial assets and liabilities at fair value on a recurring basis including cash equivalents, contingent purchase price related to acquisitions, and its derivative contracts.

Additionally, the Company measures certain financial assets and liabilities at fair value on a recurring basis including cash equivalents and its derivative contracts.

The fair values of these financial assets and liabilities have been classified as Level 1, 2, or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements:

5 unchanged sentences

The following table represents the Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):

As of June 30, 2020

As of September 30, 2020

Money market funds (1)

9 unchanged sentences

The acquisition of FeedbackNow on July 6, 2018 included a contingent consideration arrangement that required up to $ 4.2 million of consideration to be paid to the sellers based on the financial performance of FeedbackNow during the two-year period subsequent to the closing date.

The fair value of the remaining contingent consideration to be paid to the sellers is $ 2.6 million at June 30, 2020 and $ 2.5 million at December 31, 2019, and is included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

The Company has an interest rate swap contract that hedges the risk of variability from interest payments on its borrowings (see Note 4 – Debt and Note 7 – Derivatives and Hedging ).

The calculated fair value of the remaining contingent consideration to be paid to the sellers at December 31, 2019 was $ 2.5 million.

As of September 30, 2020, the contingency had been resolved and the remaining contractual payment of $ 2.7 million was due to the sellers.

This amount was paid in October 2020 .

The amounts as of September 30, 2020 and December 31, 2019 are included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

The Company has an interest rate swap contract that hedges the risk of variability from interest payments on its borrowings (refer to Note 4 – Debt and Note 7 – Derivatives and Hedging ).

The fair value of the interest rate swap is based on valuations prepared by a third-party broker.

Those valuations are based on observable interest rates and other observable market data, which the Company considers Level 2 inputs.

During the six months ended June 30, 2020 and 2019, the Company did not transfer assets or liabilities between levels of the fair value hierarchy.

During the nine months ended September 30, 2020 and 2019, the Company did not transfer assets or liabilities between levels of the fair value hierarchy.

Additionally, there have been no changes to the valuation techniques for Level 2 or Level 3 liabilities.

Level 3 liabilities at June 30, 2020 consist entirely of the contingent purchase price related to the acquisition of FeedbackNow.

Changes in the fair value of Level 3 contingent consideration for the six months ended June 30, 2020 were as follows (in thousands):

Level 3 activity for the nine months ended September 30, 2020 consisted entirely of the contingent purchase price related to the acquisition of FeedbackNow.

Changes in the fair value of Level 3 contingent consideration for the nine months ended September 30, 2020 were as follows (in thousands):

Consideration

1 unchanged sentence

Fair value adjustment of contingent purchase price (1)

Payment of contingent purchase price

Foreign exchange effect

Balance at June 30, 2020

Balance at September 30, 2020

This amount was recognized as acquisition and integration costs within the Consolidated Statements of Operations.

As of June 30, 2020, the remaining range of undiscounted amounts that could be payable under this arrangement is $ 2.0 million to $ 2.6 million.

The amount is expected to be finalized and paid to the sellers by the end of 2020.

The significant unobservable inputs used in the Monte Carlo simulation to fair value the contingent consideration included projected contract bookings, a discount rate of 17.3 %, and revenue volatility of 26.6 %.

Increases or decreases in the inputs would result in a higher or lower fair value measurement.

Note 9 — Income Taxes

1 unchanged sentence

Certain items such as changes in tax rates, tax benefits or expense related to settlements of share-based payment awards, and foreign currency gains or losses are treated as discrete items and are recorded in the period in which they arise.

Income tax expense for the six months ended June 30, 2020 was $ 0.3 million resulting in an effective tax rate of 2.2 % for the period.

Income tax expense for the six months ended June 30, 2019 was $ 0.7 million resulting in an effective tax rate of ( 6.0 )% for the period.

The decrease in income tax expense during the 2020 period was due to the release of a U.S.

valuation allowance on capital loss carryforwards.

Income tax expense for the nine months ended September 30, 2020 was $ 2.7 million resulting in an effective tax rate of 26.0 % for the period.

Income tax benefit for the nine months ended September 30, 2019 was $ 0.1 million resulting in an effective tax rate of 0.5 % for the period.

The increase in income tax expense during the 2020 period was primarily due to the increase in overall U.S.

profitability.

The Company anticipates that its effective tax rate for the full year 2020 will be approximately 25 %.

1 unchanged sentence

The Company is currently evaluating the potential impact that the provisions in the CARES may have on its financial position and results of operations.

In July 2015, the U.S.

Tax Court issued an opinion in Altera Corp.

Commissioner related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement.

The opinion invalidates part of a treasury regulation requiring stock-based compensation to be included in any qualified intercompany cost-sharing arrangement.

The Company previously recorded a tax benefit based on the opinion in the case.

In June 2019, the U.S.

Court of Appeals for Ninth Circuit reversed the U.S.

Tax Court’s decision.

submitted its appeal for an en banc rehearing before the U.S.

Court of Appeals for the Ninth Circuit, which was subsequently denied.

During 2020 , Altera Corp.

submitted a request to the Supreme Court to accept the case for review, which was also denied, resulting in finality of any legal recourse.

The Company maintains its previously recorded tax benefit in accordance with the U.S.

Tax Court decision.

Note 10 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows (net of tax, in thousands):

Note 10 — Accumulated Other Comprehensive Income (Loss) (“AOCI/L”)

The components of accumulated other comprehensive income (loss) are as follows (net of tax, in thousands):

Total Accumulated

1 unchanged sentence

Other Comprehensive

Balance at March 31, 2020

Income (Loss)

Balance at June 30, 2020

Other comprehensive income (loss) activity during the period:

1 unchanged sentence

Unrealized loss before reclassification

Reclassification of realized losses to income

Reclassification of AOCI/L to income (1)

Other comprehensive income (loss) for the period

Balance at June 30, 2020

Balance at September 30, 2020

Total Accumulated

Other Comprehensive

Balance at March 31, 2019

Income (Loss)

Balance at June 30, 2019

Other comprehensive income (loss) activity during the period:

1 unchanged sentence

Other comprehensive income (loss) for the period

Balance at June 30, 2019

Balance at September 30, 2019

Total Accumulated

1 unchanged sentence

Other Comprehensive

Income (Loss)

Balance at December 31, 2019

2 unchanged sentences

Unrealized loss before reclassification

Reclassification of realized losses to income

Reclassification of AOCI/L to income (1)

Other comprehensive income (loss) for the period

Balance at June 30, 2020

Balance at September 30, 2020

Total Accumulated

Other Comprehensive

Income (Loss)

Balance at December 31, 2018

2 unchanged sentences

Other comprehensive income (loss) for the period

Balance at June 30, 2019

Balance at September 30, 2019

Reclassifications are related to the Company’s interest rate swap (cash flow hedge) and were recorded in Interest expense in the Consolidated Statements of Operations.

Refer to Note 7 – Derivatives and Hedging .

Note 11 — Net Income (Loss) Per Common Share

1 unchanged sentence

Diluted net income (loss) per common share is computed by dividing net income (loss) by the diluted weighted average number of common shares and common equivalent shares outstanding during the period.

weighted average number of common equivalent shares outstanding has been determined in accordance with the treasur y-stock method.

The weighted average number of common equivalent shares outstanding has been determined in accordance with the treasury-stock method.

Common equivalent shares consist of common stock issuable on the exercise of outstanding stock options and the vesting of restricted stock units.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Basic weighted average common shares outstanding

6 unchanged sentences

The components of stockholders’ equity are as follows (in thousands):

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Treasury Stock

1 unchanged sentence

Income (Loss)

Balance at March 31, 2020

Balance at June 30, 2020

Issuance of common stock under

2 unchanged sentences

Other comprehensive income

Balance at June 30, 2020

Three Months Ended June 30, 2019

Balance at September 30, 2020

Three Months Ended September 30, 2019

Treasury Stock

1 unchanged sentence

Income (Loss)

Balance at March 31, 2019

Balance at June 30, 2019

Issuance of common stock under

1 unchanged sentence

Stock-based compensation expense

Other comprehensive income

Balance at June 30, 2019

Six Months Ended June 30, 2020

Other comprehensive loss

Balance at September 30, 2019

Nine Months Ended September 30, 2020

Treasury Stock

8 unchanged sentences

pronouncement, net of tax of $ 61

Other comprehensive loss

Balance at June 30, 2020

Six Months Ended June 30, 2019

Other comprehensive income

Balance at September 30, 2020

Nine Months Ended September 30, 2019

Treasury Stock

5 unchanged sentences

Stock-based compensation expense

Other comprehensive income

Balance at June 30, 2019

Restricted stock unit activity for the six months ended June 30, 2020 is presented below (in thousands, except per share data):

Other comprehensive loss

Balance at September 30, 2019

Restricted stock unit activity for the nine months ended September 30, 2020 is presented below (in thousands, except per share data):

Unvested at December 31, 2019

Unvested at June 30, 2020

Stock option activity for the six months ended June 30, 2020 is presented below (in thousands, except per share data and contractual term):

Unvested at September 30, 2020

Stock option activity for the nine months ended September 30, 2020 is presented below (in thousands, except per share data and contractual term):

Term (in years)

Outstanding at December 31, 2019

Outstanding at June 30, 2020

Exercisable at June 30, 2020

Vested and expected to vest at June 30, 2020

Outstanding at September 30, 2020

Vested and Exercisable at September 30, 2020

Stock-Based Compensation

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of services and fulfillment

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Average risk-free interest rate

3 unchanged sentences

Weighted average fair value

As a result of the acquisition of SiriusDecisions on January 3, 2019 (see Note 2 – Acquisitions) , and the related debt incurred to fund the acquisition (see Note 4 – Debt ), the Company suspended its dividends program in 2019.

The Company did no t declare or pay any dividends in the six months ended June 30, 2020 and 2019, respectively.

In 2019, the Company suspended its dividends program as a result of the acquisition of SiriusDecisions on January 3, 2019 (refer to Note 2 – Acquisitions) , and the related debt incurred to fund the acquisition (refer to Note 4 – Debt ).

The Company did no t declare or pay any dividends in the nine months ended September 30, 2020 and 2019, respectively.

Treasury Stock

As of June 30, 2020, Forrester’s Board of Directors had authorized an aggregate $ 535.0 million to purchase common stock under its stock repurchase program.

As of September 30, 2020, Forrester’s Board of Directors had authorized an aggregate $ 535.0 million to purchase common stock under its stock repurchase program.

The shares repurchased may be used, among other things, in connection with Forrester’s equity incentive and purchase plans.

In the six months ended June 30, 2020 and 2019, the Company did no t repurchase any shares of common stock.

From the inception of the program through June 30, 2020, the Company repurchased 16.3 million shares of common stock at an aggregate cost of $ 474.9 million.

In the nine months ended September 30, 2020 and 2019, the Company did no t repurchase any shares of common stock.

From the inception of the program through September 30, 2020, the Company repurchased 16.3 million shares of common stock at an aggregate cost of $ 474.9 million.

Note 13 — Non-Marketable Investments

At June 30, 2020 and December 31, 2019, the carrying value of the Company’s non-marketable investments, which were composed of interests in technology-related private equity funds, was $ 4.9 million and $ 2.5 million, respectively.

At June 30, 2020, $ 4.3 million is included in prepaid expenses and other current assets in the Consolidated Balance Sheets as Forrester received a distribution of this amount from the underlying funds during July 2020.

The remaining $ 0.6 million, and the entire balance at December 31, 2019, is included in other assets in the Consolidated Balance Sheets.

At September 30, 2020 and December 31, 2019, the carrying value of the Company’s non-marketable investments, which were composed of interests in technology-related private equity funds, was $ 0.5 million and $ 2.5 million, respectively, and is included in Other assets in the Consolidated Balance Sheets.

The Company’s non-marketable investments are accounted for using the equity method as the investments are limited partnerships and the Company has an ownership interest in excess of 5 % and, accordingly, the Company records its share of the investee’s operating results each period.

Gains from non-marketable investments were $ 2.4 million during each of the three and six months ended June 30, 2020 and are included in gain (loss) on investments, net in the Consolidated Statements of Operations.

Gains (losses) from non-marketable investments were immaterial during the three and six months ended June 30, 2019.

During the three and six months ended June 30, 2020 and 2019, no distributions were received from the funds.

Gains from non-marketable investments were zero and $ 2.4 million during the three and nine months ended September 30, 2020, respectively, and are included in Gain (loss) on investments, net in the Consolidated Statements of Operations.

Gains and losses from non-marketable investments were immaterial during the three months ended September 30, 2019.

Losses from non-marketable investments were $ 0.1 million during the nine months ended September 30, 2019.

The Company uses the cumulative earnings approach to classify distributions received from equity method investments.

During the three and nine months ended September 30, 2020, $ 4.3 million was distributed from the funds to the Company.

This amount was included within Other investing activity in the Consolidated Statements of Cash Flows as it was considered a return on investment.

During the three and nine months ended September 30, 2019, no distributions were received from the funds.

Note 14 — Operating Segments

6 unchanged sentences

The Research segment includes the revenues of the Research, Connect and Analytics products and the cost of the organizations responsible for developing and delivering these products.

In addition, this segment includes Consulting revenues from the delivery of advisory services (such as workshops, speeches and advisory days) delivered by the Company’s research and analytics analysts.

The costs of the product management organization that is responsible for product pricing and packaging, and the launch of new products is included in this segment.

In addition, this segment includes Consulting revenues from advisory services (such as workshops, speeches and advisory days) delivered by the Company’s research and analytics analysts.

The costs of the product management organization responsible for product pricing and packaging, and the launch of new products, is included in this segment.

The Consulting segment includes the revenues and the related costs of the Company’s project consulting organization.

2 unchanged sentences

The Company evaluates reportable segment performance and allocates resources based on segment revenues and expenses.

Segment expenses include the direct expenses of each segment organization and exclude s selling and marketing expenses, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, interest and other expense, and gains ( losses ) on investments.

Segment expenses include the direct expenses of each segment organization and excludes selling and marketing expenses, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, interest and other expense, and gains (losses) on investments.

The accounting policies used by the segments are the same as those used in the consolidated financial statements.

The Company provides disaggregated revenue by product in the segment tables below (in thousands):

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Research revenues

6 unchanged sentences

Interest expense, other expense and gains on investments

Income before income taxes

Three Months Ended June 30, 2019

Loss before income taxes

Three Months Ended September 30, 2019

Research revenues

5 unchanged sentences

Acquisition and integration costs

Interest expense, other expense and losses on investments

Income before income taxes

Six Months Ended June 30, 2020

Interest expense, other income and losses on investments

Loss before income taxes

Nine Months Ended September 30, 2020

Research revenues

5 unchanged sentences

Acquisition and integration costs

Interest expense, other income and gains on investments

Interest expense, other expense and gains on investments

Income before income taxes

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Research revenues

7 unchanged sentences

Loss before income taxes

Note 15 — Commitments and Contingencies

From time to time, the Company may be subject to legal proceedings and civil and regulatory claims that arise in the ordinary course of its business activities.

Regardless of the outcome, litigation can have a material adverse effect on the Company because of defense and settlement costs, diversion of management resources, and other factors.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements