Fair Value Measurements

9 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

There are various valuation techniques used to estimate fair value, the primary of which is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability. We measure certain financial and nonfinancial assets and liabilities at fair value on a recurring and nonrecurring basis.

Fair Value Hierarchy

The three levels of inputs that may be used to measure fair value are as follows:

• Level 1. Quoted prices in active markets for identical assets or liabilities.

• Level 2. Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities.

• Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of December 31, 2012 and March 31, 2012, our assets and liabilities that were measured and recorded at fair value on a recurring basis were as follows (in millions):

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets  for Identical Financial Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
	As of December 31, 2012		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Money market funds	$	363	$	363	$	—	$	—	Cash equivalents
Available-for-sale securities:
Corporate bonds	149		—		149		—		Short-term investments
U.S. agency securities	68		—		68		—		Short-term investments
Marketable equity securities	59		59		—		—		Marketable equity securities
U.S. Treasury securities	56		56		—		—		Short-term investments
Commercial paper	3		—		3		—		Short-term investments and cash equivalents
Deferred compensation plan assets (a)	11		11		—		—		Other assets
Foreign currency derivatives	2		—		2		—		Other current assets
Total assets at fair value	$	711	$	489	$	222	$	—
Liabilities
Contingent consideration (b)	$	42	$	—	$	—	$	42	Accrued and other current  liabilities and other liabilities
Total liabilities at fair value	$	42	$	—	$	—	$	42

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
		Contingent Consideration
Balance as of March 31, 2012		$	112
Change in fair value(c)		(65		)
Payments(d)		(5		)
Balance as of December 31, 2012		$	42

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets  for Identical Financial Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
	As of March 31, 2012		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Money market funds	$	490	$	490	$	—	$	—	Cash equivalents
Available-for-sale securities:
U.S. Treasury securities	170		170		—		—		Short-term investments and cash equivalents
Corporate bonds	150		—		150		—		Short-term investments
Marketable equity securities	119		119		—		—		Marketable equity securities
U.S. agency securities	116		—		116		—		Short-term investments
Commercial paper	16		—		16		—		Short-term investments and cash equivalents
Deferred compensation plan assets (a)	11		11		—		—		Other assets
Foreign currency derivatives	2		—		2		—		Other current assets
Total assets at fair value	$	1,074	$	790	$	284	$	—
Liabilities
Contingent consideration (b)	$	112	$	—	$	—	$	112	Accrued and other current liabilities and other liabilities
Total liabilities at fair value	$	112	$	—	$	—	$	112

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
		Contingent Consideration
Balance as of March 31, 2011		$	51
Additions		100
Change in fair value (c)		11
Payment (d)		(25		)
Reclassification (e)		(25		)
Balance as of March 31, 2012		$	112

(a) The deferred compensation plan assets consist of various mutual funds.

(b) The contingent consideration as of December 31, 2012 and March 31, 2012 represents the estimated fair value of the additional variable cash consideration payable primarily in connection with our acquisitions of PopCap Games, Inc. (“PopCap”), KlickNation Corporation (“KlickNation”), and Chillingo Limited (“Chillingo”) that are contingent upon the achievement of certain performance milestones. We estimated the fair value of the acquisition-related contingent consideration payable using probability-weighted discounted cash flow models, and applied a discount rate that appropriately captures the risk associated with the obligation. The weighted average of the discount rates used during the nine months ended December 31, 2012 and during the fiscal year 2012, was 12 percent. The significant unobservable input used in the fair value measurement of the contingent consideration payable are forecasted earnings. Significant changes in forecasted earnings would result in a significantly higher or lower fair value measurement. At December 31, 2012 and March 31, 2012, the fair market value of acquisition-related contingent consideration totaled $42 million and $112 million, respectively, compared to a maximum potential payout of $566 million and $572 million, respectively.

(c) The change in fair value is reported as acquisition-related contingent consideration in our Condensed Consolidated Statements of Operations.

(d) During the nine months ended December 31, 2012, we made payments totaling $5 million to settle certain performance milestones achieved in connection with two of our acquisitions. During the fourth quarter of fiscal year 2012, we made a payment of $25 million to settle certain performance milestones achieved through December 31, 2011 in connection with our acquisition of Playfish Limited (“Playfish”).

(e) During the fourth quarter of fiscal year 2012, we reclassified $25 million of contingent consideration in connection with our acquisition of Playfish to other current liabilities in our Condensed Consolidated Balance Sheet as the contingency was settled. This amount was paid during the second quarter of fiscal 2013.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

During the three and nine months ended December 31, 2012, our assets that were measured and recorded at fair value on a nonrecurring basis and the related impairments on those assets were as follows:

			Fair Value Measurements at Reporting Date Using
	Net Carrying Value as of December 31, 2012		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Impairments for the Three Months Ended December 31, 2012		Total Impairments for the Nine Months Ended December 31, 2012
			(Level 1)		(Level 2)		(Level 3)
Assets
Acquisition-related intangible assets	$	15	$	—	$	—	$	15	$	6	$	8
Total impairments recorded for nonrecurring measurements on assets held as of December 31, 2012									$	6	$	8

During the three and nine months ended December 31, 2012, we became aware of facts and circumstances that indicated that the carrying value of some of our acquisition-related intangible assets were not recoverable. This impairment is included in cost of product revenue on our Condensed Consolidated Statement of Operations. During the three and nine months ended December 31, 2011, there were no material impairment charges for assets and liabilities measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.