Electronic Arts 2009 Annual Report Download - page 156

maintains the staff’s previous views related to equity securities and amends Topic 5.M. to exclude debt securities
from its scope. We do not expect the adoption of SAB 111 to have a material impact on our Consolidated
Financial Statements.
In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity
for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. FSP
FAS 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value
Measurements, when the volume and level of activity for the asset or liability have significantly decreased, and
includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009, and should be applied
prospectively. We are currently evaluating the impact FSP FAS 157-4 will have on our Consolidated Financial
Statements.
(2) FAIR VALUE MEASUREMENTS
On April 1, 2008, we adopted SFAS No. 157, except as it applies to the nonfinancial assets and nonfinancial
liabilities that are subject to FSP FAS 157-2. These nonfinancial items include assets and liabilities such as a
reporting unit measured at fair value in a goodwill impairment test and nonfinancial assets acquired and liabilities
assumed in a business combination. SFAS No. 157 defines fair value, establishes a framework for measuring fair
value and expands disclosure requirements regarding fair value measurements. SFAS No. 157 establishes a three-
tier hierarchy that draws a distinction between market participant assumptions based on (1) observable quoted
prices in active markets for identical assets or liabilities (Level 1), (2) inputs other than quoted prices in active
markets that are observable either directly or indirectly (Level 2), and (3) unobservable inputs that require us to
use other valuation techniques to determine fair value (Level 3).
Assets and Liabilities Measured at Fair Value on a Recurring Basis
As of March 31, 2009, our financial assets and liabilities that are measured and recorded at fair value on a
recurring basis were as follows (in millions):
As of
March 31,
2009
Fair Value Measurements at Reporting Date Using
Balance Sheet Classification
Quoted Prices in
Active Markets
for Identical
Financial
Instruments
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
(Level 1) (Level 2) (Level 3)
Assets
Money market funds ........ $1,069 $1,069 $ — $— Cash equivalents
Available-for-sale fixed
income securities ......... 596 212 384 —
Short-term investments
and cash equivalents
Available-for-sale equity
securities ............... 365 365 — —
Marketable equity
securities
Deferred compensation plan
assets(a) ................ 9 9 — — Other assets
Foreign currency
derivatives .............. 2 — 2 — Other current assets
Total assets at fair value . . . $2,041 $1,655 $386 $—
(a) There is an offsetting liability for the obligation presented in other liabilities in our Consolidated Balance Sheets.
Our money market funds, available-for-sale fixed income and equity securities, deferred compensation plan
assets and foreign currency derivatives are measured and recorded at fair value on a recurring basis.
Available-for-sale fixed income securities categorized as Level 1 consist of U.S. Treasury securities.
Available-for-sale fixed income securities categorized as Level 2 include $133 million in corporate bonds, $118
million in U.S. agency securities, $118 million in commercial paper, and $15 million in asset-backed securities.
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