Fair Value Measurements

9 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

(2) FAIR VALUE MEASUREMENTS

There are various valuation techniques used to estimate fair value, the primary one being 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, 2019 and March 31, 2019, 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, 2019		(Level 1)		(Level 2)		(Level 3)		Balance Sheet  Classification
Assets
Bank and time deposits	$	85	$	85	$	—	$	—	Cash equivalents
Money market funds	1,352		1,352		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	837		—		837		—		Short-term investments and cash equivalents
U.S. Treasury securities	459		459		—		—		Short-term investments and cash equivalents
U.S. agency securities	8		—		8		—		Short-term investments
Commercial paper	438		—		438		—		Short-term investments and cash equivalents
Foreign government securities	48		—		48				Short-term investments
Asset-backed securities	281		—		281		—		Short-term investments
Certificates of deposit	43		—		43		—		Short-term investments
Foreign currency derivatives	22		—		22		—		Other current assets and other assets
Deferred compensation plan assets (a)	14		14		—		—		Other assets
Total assets at fair value	$	3,587	$	1,910	$	1,677	$	—
Liabilities
Contingent consideration (b)	$	35	$	35	$	—	$	—	Accrued and other current liabilities
Foreign currency derivatives	9		—		9		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	14		14		—		—		Other liabilities
Total liabilities at fair value	$	58	$	49	$	9	$	—

 

			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, 2019		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	23	$	23	$	—	$	—	Cash equivalents
Money market funds	2,704		2,704		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	327		—		327		—		Short-term investments and cash equivalents
U.S. Treasury securities	294		294		—		—		Short-term investments and cash equivalents
U.S. agency securities	57		—		57		—		Short-term investments and cash equivalents
Commercial paper	233		—		233		—		Short-term investments and cash equivalents
Foreign government securities	58		—		58		—		Short-term investments and cash equivalents
Asset-backed securities	55		—		55		—		Short-term investments and cash equivalents
Certificates of deposit	2		—		2		—		Short-term investments and cash equivalents
Foreign currency derivatives	33		—		33		—		Other current assets and other assets
Deferred compensation plan assets (a)	11		11		—		—		Other assets
Total assets at fair value	$	3,797	$	3,032	$	765	$	—
Liabilities
Contingent consideration (b)	$	136	$	—	$	—	$	136	Accrued and other current liabilities
Foreign currency derivatives	16		—		16		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	12		12		—		—		Other liabilities
Total liabilities at fair value	$	164	$	12	$	16	$	136

(a) The Deferred Compensation Plan assets consist of various mutual funds. See Note 15 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, for additional information regarding our Deferred Compensation Plan.

(b)

The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with our acquisition of Respawn Entertainment, LLC (“Respawn”) that is contingent upon the achievement of certain performance milestones. As of March 31, 2019, we estimated fair value using a probability-weighted income approach combined with a real options methodology, and applied a discount rate that appropriately captures the risk associated with the obligation, ranging from 2.9 percent to 3.1 percent. During the nine months ended December 31, 2019, there were no material changes to the estimated fair value of the contingent consideration liability other than $105 million in payments for performance milestones achieved. As of December 31, 2019, all remaining performance milestones have been achieved and the $35 million remaining payment amount was fixed and was paid in the fourth quarter of fiscal year 2020. See Note 7 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, for additional information regarding the Respawn acquisition.