BLKB » Topics » 3. Marketable Securities

This excerpt taken from the BLKB 8-K filed Nov 25, 2008.

3. Marketable Securities

The Company has classified all investments as available-for-sale, which are summarized as follows:

 

December 31, 2007

   Cost    Gross
Unrealized
Gains
   Gross
Unrealized
Losses
    Fair
Market
Value

Certificates of deposit

   $ 1,344    $ —      $ —       $ 1,344

Auction rate security

     1,000      —        —         1,000

U.S. Government/Agency

     502      2      —         504
                            
   $ 2,846    $ 2    $ —       $ 2,848
                            

December 31, 2006

   Cost    Gross
Unrealized
Gains
   Gross
Unrealized
Losses
    Fair
Market
Value

Certificates of deposit

   $ 1,344    $ —      $ (2 )   $ 1,342

Auction rate security

     1,000      —        —         1,000

Corporate Bonds

     1,653      1      (1 )     1,653

U.S. Government/Agency

     3,375      23      (9 )     3,389
                            
   $ 7,372    $ 24    $ (12 )   $ 7,384
                            

In February 2008, the auction failed for the $1 million auction rate security held by the Company. The Company believes it will be able to liquidate the investment in auction rate security without significant loss within the next year, and we currently believe these securities are not significantly impaired as the underlying assets are generally student loans which are substantially backed by the federal government. Accordingly these auction rate securities are classified as short-term investments on our balance sheet. The Company has reviewed all other investments as of December 31, 2007 for impairment and concluded that their carrying value approximated their fair value.

As of December 31, 2007, investments with a remaining maturity of one year or less amounted to $1,752, investments with a remaining maturity of greater than one year and less than five years amounted to $96 and investments with a remaining maturity of greater than five years amounted to $1,000. The Company realized a net gain $8 from the sale of securities in 2006. No gains or losses were realized from the sale of securities in 2007.

This excerpt taken from the BLKB 10-Q filed Nov 10, 2008.

6. Marketable securities

As of September 30, 2008, marketable securities measured at fair value on a recurring basis consisted of the following (in thousands):

 

Description   

Quoted Prices in Active
Markets for Identical

Assets (Level 1)

  

Significant
Unobservable
Inputs

(Level 3)

   Total

Certificate of deposit

   $ 96    $ -      $ 96

Auction rate security

     -        975      975

US government bond

     501      -        501
     $ 597    $ 975    $ 1,572

The auction rate security has an aggregate principal balance of $1,000,000 on which interest is paid at the maximum contractual rates. Subsequent to September 30, 2008, the Company accepted an offer to sell the security at its par value and the sale closed on November 4, 2008. On October 15, 2008, the U.S. government bond matured.

The Company estimated the fair value of these auction rate securities using the discounted cash flow method (Level 3 inputs). The discounted cash flow method determines fair value based on the present value of projected cash flows over a specific period. The values are then discounted to reflect the degree of risk inherent in the security and achieving the projected cash flows. Based on the discounted cash flow model, the Company determined that the fair value of the auction rate security had not changed during the third quarter of 2008. The determination of the fair value of the auction rate security also considered, among other things, the collateralization underlying the individual securities and the creditworthiness of the counterparty.

The following table summarizes the changes in fair values (pre-tax) for Level 3 items for the three months ended September 30, 2008.

 

(in thousands)    Level 3

Beginning balance

   $ -  

Assets acquired in business combination

     975
      

Ending balance

   $ 975

The Company has reviewed all other investments at September 30, 2008 for impairment and concluded that their carrying value approximated their fair value.

EXCERPTS ON THIS PAGE:

8-K
Nov 25, 2008
10-Q
Nov 10, 2008
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