Fair Value Measurements (Notes)

3 Months Ended

Jun. 30, 2013

Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]

Fair Value Measurements

Fair Value Measurements

Accounting rules for fair value clarify that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1- Observable inputs such as quoted prices in active markets;

Level 2- Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3- Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Marketable Debt Instruments

Marketable debt instruments include instruments such as corporate bonds and debt, government agency bonds, bank deposits, municipal bonds, and money market fund deposits. When the Company uses observable market prices for identical securities that are traded in less active markets, the Company classifies its marketable debt instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at June 30, 2013 are as follows (amounts in thousands):

	Quoted Prices in Active Markets for  Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant  Unobservable Inputs (Level 3)		Total Balance
Assets
Money market mutual funds	$	168,699	$	—	$	—	$	168,699
Marketable equity securities	5,931		—		—		5,931
Corporate bonds and debt	—		709,300		6,190		715,490
Government agency bonds	—		686,425		—		686,425
Deposit accounts	—		234,532		—		234,532
Municipal bonds	—		49,574		—		49,574
Auction rate securities	—		—		34,599		34,599
Total assets measured at fair value	$	174,630	$	1,679,831	$	40,789	$	1,895,250
Liabilities
Contingent consideration	$	—	$	—	$	20,492	$	20,492
Total liabilities measured at fair value	$	—	$	—	$	20,492	$	20,492

Assets measured at fair value on a recurring basis at March 31, 2013 are as follows (amounts in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market fund deposits	$	100,878	$	—	$	—	$	100,878
Marketable equity securities	5,509		—		—		5,509
Corporate bonds and debt	—		678,932		6,190		685,122
Government agency bonds	—		558,153		—		558,153
Deposit accounts	—		427,456		—		427,456
Municipal bonds	—		25,138		—		25,138
Auction rate securities	—		—		33,791		33,791
Total assets measured at fair value	$	106,387	$	1,689,679	$	39,981	$	1,836,047
Liabilities
Contingent consideration	$	—	$	—	$	19,100	$	19,100
Total liabilities measured at fair value	$	—	$	—	$	19,100	$	19,100

There were no transfers between Level 1 and Level 2 during the three months ended June 30, 2013 or the year ended March 31, 2013.

At June 30, 2013, the Company's ARS for which recent auctions were unsuccessful are made up of securities related to the insurance industry valued at $9.8 million, securities related to the energy and telecommunications sectors valued at $5.3 million, and student loan securities valued at $19.4 million. At March 31, 2013, the Company's ARS for which recent auctions were unsuccessful were made up of bonds related to the insurance sector valued at $9.8 million, securities related to the energy and telecommunications sectors valued at $5.3 million, and student loan securities valued at $18.7 million.

At June 30, 2013, the majority of the ARS were valued by the Company with the assistance of a third party using a discounted cash flow model based on the characteristics of the individual securities, which the Company believes yields the best estimate of fair value. The Company estimated the fair value of its ARS, which are classified as Level 3 securities, based on the following: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (iii) consideration of the probabilities of default, auction failure, or repurchase at par for each period; and (iv) estimates of the recovery rates in the event of default for each security. The Company received notifications from issuers of two of its student loan ARS positions that they were redeeming the outstanding bond positions at par. The redemption notices were used in valuing these securities at June 30, 2013.

The significant unobservable inputs used in the fair value measurement of the insurance sector ARS were estimated discount rates, liquidity risk premium, and the liquidity horizon. The discount rate applied to these securities was 2% to 2.5% adjusted for the liquidity risk premium which ranged from 9.1% to 29.5%. The anticipated liquidity horizon ranged from 7 to 10 years.

The significant unobservable inputs used in the fair value measurement of the Company's investments in the student loan and the energy and telecommunication sector ARS include the estimated discount rates, liquidity risk premium, and the liquidity horizon. The discount rate applied to these securities ranged from 0.11% to 0.42% adjusted for the liquidity risk premium which ranges from 3.0% to 4.5%. The liquidity horizon was contemplated in the calculation of the cumulative probability of the principal being returned prior to maturity. This probability was calculated to range from 72.9% to 98.6%, with probabilities of default ranging from 1.4% to 11.6%.

A significant increase in the liquidity premium or discount rate, in isolation, would lead to a significantly lower fair value measurement. A significant increase in the liquidity horizon, in isolation, would lead to a significantly lower fair value measurement. Each quarter the Company investigates material changes in the fair value measurements of its ARS.

Level 3 liabilities include contingent consideration from the Company's Roving Networks acquisition. The Company evaluates the estimated fair value of its contingent consideration on a quarterly basis based on certain revenue and gross margin performance criteria and records fair value adjustments as necessary. The final measurement date for the contingent consideration was June 30, 2013 and there will be no further adjustments to such liability.

The following tables present a reconciliation for all assets and liabilities measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs (Level 3) for the three months ended June 30, 2013, and the year ended March 31, 2013 (amounts in thousands):

Three months ended June 30, 2013	Auction Rate Securities			Corporate Debt		Contingent Consideration			Total Gains (Losses)
Balance at March 31, 2013	$	33,791		$	6,190	$	(19,100	)	$	—
Total gains or losses (realized and unrealized):
Included in earnings	(1		)	—		(1,392		)	(1,393		)
Included in other comprehensive income	1,109			—		—			—
Purchases, sales, issuances, and settlements, net	(300		)	—		—			—
Acquisition-related	—			—		—			—
Balance at June 30, 2013	$	34,599		$	6,190	$	(20,492	)	$	(1,393	)

Year ended March 31, 2013	Auction Rate Securities			Corporate Debt		Contingent Consideration			Total Gains
Balance at March 31, 2012	$	10,246		$	4,625	$	—		$	—
Total gains or losses (realized and unrealized):
Included in earnings	(412		)	—		(4,400		)	$	(4,813	)
Included in other comprehensive income	332			—		—			218
Purchases, sales, issuances, and settlements, net	(650		)	1,565		—			—
Acquisition-related	24,275			—		(14,700		)	—
Balance at March 31, 2013	$	33,791		$	6,190	$	(19,100	)	$	(4,595	)

Assets measured at fair value on a recurring basis are presented/classified on the condensed consolidated balance sheets at June 30, 2013 as follows (amounts in thousands):

	Quoted Prices  in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Cash and cash equivalents	$	168,699	$	234,532	$	—	$	403,231
Short-term investments	—		558,644		—		558,644
Long-term investments	5,931		886,655		40,789		933,375
Total assets measured at fair value	$	174,630	$	1,679,831	$	40,789	$	1,895,250

Assets measured at fair value on a recurring basis are presented/classified in the consolidated balance sheets at March 31, 2013 as follows (amounts in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)		Total Balance
Assets
Cash and cash equivalents	$	100,878	$	427,456	$	—	$	528,334
Short-term investments	—		1,050,263		—		1,050,263
Long-term investments	5,509		211,960		39,981		257,450
Total assets measured at fair value	$	106,387	$	1,689,679	$	39,981	$	1,836,047

Financial Assets Not Recorded at Fair Value on a Recurring Basis

The Company's non-marketable equity and cost method investments are not recorded at fair value on a recurring basis.  These investments are monitored on a quarterly basis for impairment charges.  The investments will only be recorded at fair value when an impairment charge is recognized.  There were no impairment charges recognized on these investments in the three months ended June 30, 2013 and June 30, 2012. These investments are included in other assets on the condensed consolidated balance sheet.