A reconciliation of the federal statutory rate to Forrester’s effective tax rate for the years ended December 31, 1998, 1999, and 2000 is as follows: Deferred income taxes as of December 31, 1999 and 2000 are related to the following temporary differences (in thousands): Forrester has aggregate net operating loss carryforwards for federal, state, and foreign tax purposes of approximately $47.2 million. These net operating losses will expire between 2015 and 2020. The utilization of these net operating loss carryforwards may be limited pursuant to Internal Revenue Code Section 382 as a result of ownership changes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Although realization is not assured, based upon the level of historical taxable income of Forrester and projections for Forrester’s future taxable income over the periods during which the deferred tax assets are deductible, management believes it is more likely than not that Forrester will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. Forrester leases its office space and certain office equipment under operating leases. At December 31, 2000, approximate future minimum rentals due are as follows (in thousands): (7) Commitments f-24 | 25 Forrester Research | Annual Report 2000 2001 $ 9,034 2002 8,975 2003 9,955 2004 10,379 2005 10,538 Thereafter 13,770 Total minimum lease payments $62,651 1999 2000 Non-deductible reserves and accruals $ 622 $ 2,041 Depreciation and amortization 323 563 Deferred commissions (1,818) (2,874) Net operating loss and other carryforwards — 17,238 $ (873) $16,968 1998 1999 2000 Income tax provision at federal statutory rate 34.0% 35.0% 35.0% Increase (decrease) in tax resulting from — State tax provision, net of federal benefit 4.4 3.7 3.3 Non-deductible costs related to acquisition — 1.1 — Non-deductible expenses 0.8 0.6 0.6 Tax-exempt interest income (0.8) (1.7) (3.1) Benefit of foreign sales corporation (0.8) (0.6) — Other, net 0.2 (0.6) 0.7 Effective income tax rate 37.8% 37.5% 36.5% Notes to Consolidated Financial Statements (continued)