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Marketable Investments

3 Months Ended

Mar. 31, 2012

Marketable Investments [Abstract]

Marketable Investments

Note 3 — Marketable Investments

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


		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Market Value
March 31, 2012
Available-for-sale securities
State and municipal obligations		$	14,122			$	15			$	—			$	14,137
Federal agency and corporate obligations			128,550				318				(120	)			128,748

Total short-term available-for-sale securities			142,672				333				(120	)			142,885
ARS, long-term			11,000				—				(1,419	)			9,581

Total available-for-sale securities		$	153,672			$	333			$	(1,539	)		$	152,466


		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Market 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

Realized gains and losses on securities are included in earnings and are determined using the specific identification method. Realized gains or losses on the sale of the Company’s federal agency, state, municipal and corporate obligations were not material in the three months ended March 31, 2012 or 2011.

The following table summarizes the maturity periods of the marketable securities in the Company’s portfolio as of March 31, 2012. In February 2008, certain auction rate securities (“ARS”) that Forrester held experienced failed auctions that limited the liquidity of these securities. These auction failures have continued 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
State and municipal obligations		$	4,627			$	4,010			$	5,500			$	—			$	14,137
Federal agency and corporate obligations			36,309				48,605				32,641				11,193				128,748
ARS			—				—				—				9,581				9,581

Total		$	40,936			$	52,615			$	38,141			$	20,774			$	152,466

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 March 31, 2012
		Less Than 12 Months								12 Months or Greater
		Market Value				Unrealized Losses				Market Value				Unrealized Losses

State and municipal bonds		$	—			$	—			$	—			$	—
Federal agency and corporate obligations			48,192				115				2,037				5
ARS			—				—				9,581				1,419

Total		$	48,192			$	115			$	11,618			$	1,424


		As of December 31, 2011
		Less Than 12 Months								12 Months or Greater
		Market Value				Unrealized Losses				Market Value				Unrealized 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

Fair Value

The Company measures certain financial assets at fair value on a recurring basis, including cash equivalents, available-for-sale securities and trading securities. The fair values of these financial assets have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

Level 1 — Fair value based on quoted prices in active markets for identical assets or liabilities.

Level 2 — Fair value based on inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Fair value based on unobservable inputs that are supported by little or no market activity and such inputs are significant to the fair value of the assets or liabilities.

The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011 (in thousands):


		As of March 31, 2012
		Level 1				Level 2				Level 3				Total
Money market funds (1)		$	2,844			$	—			$	—			$	2,844
State and municipal obligations			—				14,137				—				14,137
Federal agency and corporate obligations (2)			—				146,846				—				146,846
ARS			—				—				9,581				9,581

Total		$	2,844			$	160,983			$	9,581			$	173,408


		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

(1)	Included in cash and cash equivalents.

(2)	$18.1 million and $1.0 million included in cash and cash equivalents at March 31, 2012 and December 31, 2011, respectively, as original maturities at the time of purchase were 90 days or less.

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 March 31, 2012 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. The Company values the ARS using a discounted cash flow model that includes unobservable inputs including estimates of interest rates, discounts rates and expected holding periods of the securities, which is considered a Level 3 valuation. Unobservable inputs included in the valuation as of March 31, 2012 included a weighted average interest rate of 0.29%, a weighted average discount rate of 3.26% and a weighted average holding period of 5 years. The valuation resulted in an unrealized loss recorded in other comprehensive loss in the Consolidated Balance Sheets of $1.4 million at March 31, 2012 and December 31, 2011. 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. Significant increases or decreases in any of the valuation assumptions in isolation would result in a significant change in the fair value.

The following table provides a summary of changes in fair value of the Company’s Level 3 financial assets for the three months ended March 31, 2012 and 2011 (in thousands):


		ARS
Balance at December 31, 2011			9,565
Sales			—
Total gains (losses):
Included in other comprehensive income (loss)			16

Balance at March 31, 2012		$	9,581


		ARS
Balance at December 31, 2010			9,117
Sales			—
Total gains (losses):
Included in other comprehensive income (loss)			—

Balance at March 31, 2011		$	9,117

- 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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