(3) FAIR VALUE MEASUREMENTS
Fair value 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 September 30, 2011 and March 31, 2011, our assets and liabilities that were measured and recorded at fair value on a recurring basis were as follows (in millions):
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Fair Value Measurements at Reporting Date Using |
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Quoted Prices in Active Markets for Identical Financial Instruments |
Significant Other Observable Inputs |
Significant Unobservable Inputs |
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As of September 30, 2011 |
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(Level 1) |
(Level 2) |
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(Level 3) |
Balance Sheet Classification |
Assets |
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Money market funds |
$ |
346 |
$ |
346 |
$ |
- |
$ |
- |
Cash equivalents |
Available-for-sale securities: |
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Marketable equity securities |
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214 |
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214 |
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- |
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- |
Marketable equity securities |
Corporate bonds |
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170 |
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- |
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170 |
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- |
Short-term investments |
U.S. agency securities |
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86 |
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- |
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86 |
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- |
Short-term investments |
U.S. Treasury securities |
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85 |
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85 |
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- |
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- |
Short-term investments and cash equivalents |
Commercial paper |
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22 |
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- |
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22 |
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- |
Short-term investments and cash equivalents |
Deferred compensation plan assets (a) |
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12 |
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12 |
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- |
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- |
Other assets |
Foreign currency derivatives |
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1 |
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- |
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1 |
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- |
Other current assets |
Total assets at fair value |
$ |
936 |
$ |
657 |
$ |
279 |
$ |
- |
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Liabilities |
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Contingent consideration (b) |
$ |
166 |
$ |
- |
$ |
- |
$ |
166 |
Accrued and other current liabilities and other liabilities |
Total liabilities at fair value |
$ |
166 |
$ |
- |
$ |
- |
$ |
166 |
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
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Contingent Consideration |
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Balance as of March 31, 2011 |
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$ |
51 |
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Additions |
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97 |
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Change in fair value (c) |
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18 |
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Balance as of September 30, 2011 |
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$ |
166 |
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As of March 31, 2011 |
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(Level 1) |
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(Level 2) |
(Level 3) |
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Balance Sheet Classification |
Assets |
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Money market funds |
$ |
774 |
$ |
774 |
$ |
- |
$ |
- |
Cash equivalents |
Available-for-sale securities: |
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Corporate bonds |
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253 |
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- |
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253 |
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- |
Short-term investments |
Marketable equity securities |
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161 |
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161 |
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- |
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- |
Marketable equity securities |
U.S. Treasury securities |
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129 |
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129 |
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- |
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- |
Short-term investments and cash equivalents |
U.S. agency securities |
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102 |
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- |
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102 |
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- |
Short-term investments |
Commercial paper |
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31 |
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- |
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31 |
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- |
Short-term investments and cash equivalents |
Deferred compensation plan assets (a) |
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12 |
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12 |
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- |
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- |
Other assets |
Total assets at fair value |
$ |
1,462 |
$ |
1,076 |
$ |
386 |
$ |
- |
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Liabilities |
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Contingent consideration (b) |
$ |
51 |
$ |
- |
$ |
- |
$ |
51 |
Accrued and other current liabilities and other liabilities |
Total liabilities at fair value |
$ |
51 |
$ |
- |
$ |
- |
$ |
51 |
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
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Contingent Consideration |
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Balance as of March 31, 2010 |
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$ |
65 |
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Additions |
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3 |
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Change in fair value (c) |
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(17) |
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Balance as of March 31, 2011 |
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$ |
51 |
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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
There were no material impairment charges for assets and liabilities measured at fair value on a nonrecurring basis in periods subsequent to initial recognition during the three and six months ended September 30, 2011 and 2010. |