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Marketable Investments

12 Months Ended

Dec. 31, 2011

Marketable Investments [Abstract]

Marketable Investments

(4)

Marketable Investments

The following table summarizes the Company’s marketable investments (in thousands):


						Gross				Gross
		Amortized				Unrealized				Unrealized				Market
		Cost				Gains				Losses				Value
December 31, 2011
Available-for-sale securities
State and municipal obligations		$	9,485			$	9			$	(12	)		$	9,482
Federal agency and corporate obligations			127,717				127				(335	)			127,509

Total short-term available-for-sale securities			137,202				136				(347	)			136,991
ARS, long-term			11,000				—				(1,435	)			9,565

Total available-for-sale securities		$	148,202			$	136			$	(1,782	)		$	146,556


						Gross				Gross
		Amortized				Unrealized				Unrealized				Market
		Cost				Gains				Losses				Value
December 31, 2010
Available-for-sale securities
State and municipal obligations		$	12,011			$	23			$	(25	)		$	12,009
Federal agency and corporate obligations			107,669				483				(171	)			107,981

Total short-term available-for-sale securities			119,680				506				(196	)			119,990
ARS, long-term			11,000				—				(1,883	)			9,117

Total available-for-sale securities		$	130,680			$	506			$	(2,079	)		$	129,107

The following table summarizes the maturity periods of the marketable securities in the Company’s portfolio as of December 31, 2011. In February 2008, certain ARS that Forrester held experienced failed auctions that limited the liquidity of these securities. These auction failures have continued throughout 2011 and based on current market conditions, it is likely that auction failures will continue. The following table reflects the ARS at their contractual maturity dates of between 2024 and 2034 (in thousands).


		FY 2012				FY2013				FY2014				Thereafter				Total
Federal agency and corporate obligations		$	57,982			$	54,665			$	14,862			$	—			$	127,509
State and municipal obligations			5,664				1,055				2,763				—				9,482
ARS			—				—				—				9,565				9,565

Total short and long-term		$	63,646			$	55,720			$	17,625			$	9,565			$	146,556

The following table shows the gross unrealized losses and market value of Forrester’s available-for-sale securities with unrealized losses that are not deemed to be other-than-temporary, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):


		As of December 31, 2011
		Less Than 12 Months								12 Months or Greater
		Market				Unrealized				Market				Unrealized
		Value				Losses				Value				Losses
State and municipal bonds		$	2,763			$	9			$	1,107			$	3
Federal agency and corporate obligations			68,962				313				2,043				22
ARS			—				—				9,565				1,435

Total		$	71,725			$	322			$	12,715			$	1,460


		As of December 31, 2010
		Less Than 12 Months								12 Months or Greater
		Market				Unrealized				Market				Unrealized
		Value				Losses				Value				Losses
State and municipal bonds		$	3,258			$	25			$	—			$	—
Federal agency and corporate obligations			45,928				171				—				—
ARS			—				—				9,117				1,883

Total		$	49,186			$	196			$	9,117			$	1,883

The Company holds ARS with a fair value of $9.6 million and a par value of $11.0 million at December 31, 2011. These ARS will continue to be held as available-for-sale and are classified as a long-term asset in the Consolidated Balance Sheet. The Company intends to retain its investment in these ARS until the earlier of an anticipated recovery in market value or maturity and as a result has not recorded an other-than-temporary loss on these ARS.

Realized gains or losses on sales of the Company’s federal obligations, state and municipal bonds and corporate bonds were not significant for the years ended December 31, 2011, 2010 or 2009.

The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and marketable investments) measured at fair value on a recurring basis (in thousands):


		As of December 31, 2011
		Level 1				Level 2				Level 3				Total
Money market funds (1)		$	5,786			$	—			$	—			$	5,786
State and municipal obligations			—				9,482				—				9,482
Federal agency and corporate obligations (2)			—				128,509				—				128,509
ARS			—				—				9,565				9,565

Total		$	5,786			$	137,991			$	9,565			$	153,342


		As of December 31, 2010
		Level 1				Level 2				Level 3				Total
Money market funds (1)		$	25,222			$	—			$	—			$	25,222
State and municipal obligations			—				12,009				—				12,009
Federal agency and corporate obligations			—				107,981				—				107,981
ARS			—				—				9,117				9,117

Total		$	25,222			$	119,990			$	9,117			$	154,329

(1)	Included in cash and cash equivalents.

(2)	$1.0 million included in cash and cash equivalents.

Level 2 assets consist of the Company’s entire portfolio of federal, state, municipal and corporate bonds, excluding those municipal bonds described below with an auction reset feature. Level 2 assets have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, typically utilizing third party pricing services or other market observable data. The pricing services utilize industry standard valuation methods, including both income and market based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events.

Level 3 assets at December 31, 2011 and 2010 consist entirely of municipal bonds with an auction reset feature (ARS). Prior to 2008, the fair value of the ARS investments approximated par value due to the frequent resets through the auction process. While the Company continues to earn interest on its ARS investments at the contractual rate, these investments trade infrequently and therefore do not have a readily determinable market value. Accordingly, the estimated fair value of the ARS no longer approximates par value. At December 31, 2011, the Company held ARS with one investment advisor. The Company values the ARS using a discounted cash flow model that includes estimates of interest rates, timing and amount of cash flows, credit and liquidity premiums and expected holding periods of the securities, which is considered a Level 3 valuation. The valuation resulted in an unrealized loss recorded in other comprehensive loss in the Consolidated Balance Sheets of $1.4 million at December 31, 2011 and $1.9 million at December 31, 2010. The Company believes that the loss is temporary due to the strong underlying credit rating of the securities and the fact that the Company does not intend to sell the securities and is not likely to be required to sell the securities. The assumptions used in valuing the ARS are volatile and subject to change as the underlying sources of these assumptions and market conditions change.

Through July 1, 2010, the Company also held ARS with UBS AG (UBS). Historically, UBS provided a valuation utilizing Level 3 inputs for the ARS investments. UBS utilized a discounted cash flow approach to arrive at its valuation, which was corroborated by a separate and comparable discounted cash flow analysis prepared by the Company. The assumptions used in preparing the discounted cash flow model included estimates, based on data available at each balance sheet date, of interest rates, timing and amount of cash flows, credit and liquidity premiums, and expected holding periods of the ARS. In November 2008, the Company accepted an offer (the “Right”) from UBS entitling the Company to sell at par value ARS originally purchased from UBS at any time during a two-year period from June 30, 2010 through July 2, 2012. The Company valued the Right as an asset using a discounted cash flow approach including estimates of interest rates and timing and amount of cash flows, adjusted for any bearer risk associated with UBS’s financial ability to repurchase the ARS beginning June 30, 2010, based on data available at each balance sheet date. The combined fair value of the Right and the UBS ARS historically equaled the par value of the UBS ARS. The remaining $5.4 million of par value UBS ARS at June 30, 2010 were sold to UBS at par under the Right on July 1, 2010.

The following table provides a summary of changes in fair value of the Company’s Level 3 financial assets for the years ended December 31, 2011 and 2010 (in thousands):


		UBS
		Right				ARS
Balance at December 31, 2009		$	2,100			$	39,525
Sales			—				(31,675	)
Total gains (losses):
Included in other comprehensive income			—				(833	)
Included in earnings			(2,100	)			2,100

Balance at December 31, 2010		$	—				9,117

Sales							—
Total gains (losses):
Included in other comprehensive loss							448

Balance at December 31, 2011						$	9,565

- Definition

Tabular disclosure of marketable securities. This may consist of investments in certain debt and equity securities, short-term investments and other assets.

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