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Marketable Investments | 9 Months Ended
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Sep. 30, 2013
Investments Debt And Equity Securities [Abstract] |
Marketable Investments | Note 2 — Marketable Investments The following table summarizes the Company’s marketable investments (in thousands):
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Market Value |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  | $ | 9,660 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 9,665 |
Federal agency and corporate obligations |  |  | 77,330 |  |  |  | 131 |  |  |  | (165 | ) |  |  | 77,296 |
Total short-term available-for-sale securities |  |  | 86,990 |  |  |  | 136 |  |  |  | (165 | ) |  |  | 86,961 |
ARS, long-term |  |  | 11,000 |  |  |  | — |  |  |  | (1,908 | ) |  |  | 9,092 |
Total available-for-sale securities |  | $ | 97,990 |  |  | $ | 136 |  |  | $ | (2,073 | ) |  | $ | 96,053 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Market Value |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  | $ | 18,859 |  |  | $ | 27 |  |  | $ | (14 | ) |  | $ | 18,872 |
Federal agency and corporate obligations |  |  | 115,653 |  |  |  | 380 |  |  |  | (29 | ) |  |  | 116,004 |
Total short-term available-for-sale securities |  |  | 134,512 |  |  |  | 407 |  |  |  | (43 | ) |  |  | 134,876 |
ARS, long-term |  |  | 11,000 |  |  |  | — |  |  |  | (2,030 | ) |  |  | 8,970 |
Total available-for-sale securities |  | $ | 145,512 |  |  | $ | 407 |  |  | $ | (2,073 | ) |  | $ | 143,846 |
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 and nine months ended September 30, 2013 or 2012. The following table summarizes the maturity periods of the marketable securities in the Company’s portfolio as of September 30, 2013. 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 through September 30, 2013. On October 30, 2013 the Company sold the entire portfolio of ARS for net proceeds of $9.1 million. The following table reflects the ARS at their contractual maturity dates of between 2024 and 2034 (in thousands).
|  | FY 2013 |  |  | FY2014 |  |  | FY2015 |  |  | Thereafter |  |  | Total |
State and municipal obligations |  | $ | 2,772 |  |  | $ | 4,821 |  |  | $ | 2,072 |  |  | $ | — |  |  | $ | 9,665 |
Federal agency and corporate obligations |  |  | 7,385 |  |  |  | 25,035 |  |  |  | 28,919 |  |  |  | 15,957 |  |  |  | 77,296 |
ARS |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,092 |  |  |  | 9,092 |
Total |  | $ | 10,157 |  |  | $ | 29,856 |  |  | $ | 30,991 |  |  | $ | 25,049 |  |  | $ | 96,053 |
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 September 30, 2013 |
|  | 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 |  |  | 35,843 |  |  |  | 165 |  |  |  | — |  |  |  | — |
ARS |  |  | — |  |  |  | — |  |  |  | 9,092 |  |  |  | 1,908 |
Total |  | $ | 35,843 |  |  | $ | 165 |  |  | $ | 9,092 |  |  | $ | 1,908 |
|  | As of December 31, 2012 |
|  | Less Than 12 Months |  |  | 12 Months or Greater |
|  | Market Value |  |  | Unrealized Losses |  |  | Market Value |  |  | Unrealized Losses |
State and municipal bonds |  | $ | 9,430 |  |  | $ | 14 |  |  | $ | — |  |  | $ | — |
Federal agency and corporate obligations |  |  | 17,716 |  |  |  | 29 |  |  |  | — |  |  |  | — |
ARS |  |  | — |  |  |  | — |  |  |  | 8,970 |  |  |  | 2,030 |
Total |  | $ | 27,146 |  |  | $ | 43 |  |  | $ | 8,970 |  |  | $ | 2,030 |
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 September 30, 2013 and December 31, 2012 (in thousands):
|  | As of September 30, 2013 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Money market funds (1) |  | $ | 7,111 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,111 |
State and municipal obligations |  |  | — |  |  |  | 9,665 |  |  |  | — |  |  |  | 9,665 |
Federal agency and corporate obligations |  |  | — |  |  |  | 77,296 |  |  |  | — |  |  |  | 77,296 |
ARS |  |  | — |  |  |  | — |  |  |  | 9,092 |  |  |  | 9,092 |
Total |  | $ | 7,111 |  |  | $ | 86,961 |  |  | $ | 9,092 |  |  | $ | 103,164 |
|  | As of December 31, 2012 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Money market funds (1) |  | $ | 815 |  |  | $ | — |  |  | $ | — |  |  | $ | 815 |
State and municipal obligations |  |  | — |  |  |  | 18,872 |  |  |  | — |  |  |  | 18,872 |
Federal agency and corporate obligations (2) |  |  | — |  |  |  | 148,117 |  |  |  | — |  |  |  | 148,117 |
ARS |  |  | — |  |  |  | — |  |  |  | 8,970 |  |  |  | 8,970 |
Total |  | $ | 815 |  |  | $ | 166,989 |  |  | $ | 8,970 |  |  | $ | 176,774 |
(1) | Included in cash and cash equivalents.
(2) | $32.1 million are included in cash and cash equivalents at December 31, 2012 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 September 30, 2013 and December 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 receive interest income on its ARS investments at each interest reset date (which occurs at either seven or 35 day intervals for each security), these investments trade infrequently and therefore do not have a readily determinable market value. Interest rates on the securities ranged from 0.1% to 0.4% and 0.1% to 0.5% during the nine months ended September 30, 2013 and 2012, respectively. The Company values the ARS using a discounted cash flow model that includes unobservable inputs including estimates of future interest rates, discount rates and expected holding periods of the securities, which is considered a Level 3 valuation. Unobservable inputs included in the valuation as of September 30, 2013 include a weighted average interest rate of 1.7%, a weighted average discount rate of 4.9%, and a weighted average holding period of 8.7 years. The valuation resulted in an unrealized loss recorded in accumulated other comprehensive income in the Consolidated Balance Sheets of $1.9 million at September 30, 2013 and $2.0 million at December 31, 2012. As of September 30, 2013, the Company classified the loss as temporary due to the strong underlying credit rating of the securities and the fact that the Company, as of September 30, 2013, did not intend to sell the securities and was 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. On October 22, 2013 the Company made the decision to sell its entire portfolio of ARS. On October 30, 2013 the Company completed the sale of the ARS for net proceeds of $9.1 million, resulting in a realized loss of $1.9 million that will be recognized as an investment loss in the consolidated statement of income for the three months ended December 31, 2013. The following table provides a summary of changes in fair value of the Company’s Level 3 financial assets for the nine months ended September 30, 2013 and 2012 (in thousands):
|  | ARS |
Balance at December 31, 2011 |  | $ | 9,565 |
Sales |  |  | — |
Gains included in other comprehensive income |  |  | 224 |
Balance at September 30, 2012 |  | $ | 9,789 |
|  | ARS |
Balance at December 31, 2012 |  | $ | 8,970 |
Sales |  |  | — |
Gains included in other comprehensive income |  |  | 122 |
Balance at September 30, 2013 |  | $ | 9,092 |

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