Electronic Arts 2015 Annual Report Download - page 139

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Annual Report
Fair Value Measurements at Reporting
Date Using
As of
March 31,
2014
Quoted Prices
in Active
Markets for
Identical
Financial
Instruments
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
(Level 1) (Level 2) (Level 3) Balance Sheet Classification
Assets
Money market funds ............... $ 588 $588 $ — $ — Cash equivalents
Available-for-sale securities:
Corporate bonds ................. 279 — 279 — Short-term investments
Commercial paper ............... 146 — 146 — Short-term investments and
cash equivalents
U.S. Treasury securities ........... 118 118 — — Short-term investments and
cash equivalents
U.S. agency securities ............ 89 — 89 — Short-term investments and
cash equivalents
Deferred compensation plan assets(a) . . . 9 9 — — Other assets
Total assets at fair value .......... $1,229 $715 $514 $ —
Liabilities
Contingent consideration(b) .......... $ 4 $ — $ — $ 4 Accruedandothercurrent
liabilities and other liabilities
Foreign currency derivatives ......... 6 — 6 — Accruedandothercurrent
liabilities
Deferred compensation plan
liabilities(a) ..................... 9 9 — — Other liabilities
Total liabilities at fair value ........ $ 19 $ 9 $ 6 $ 4
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Contingent
Consideration
Balance as of March 31, 2013 ...................................... $43
Change in fair value(c) ........................................... (35)
Payments(d) ................................................... (4)
Balance as of March 31, 2014(b) ..................................... $ 4
(a) The Deferred Compensation Plan assets consist of various mutual funds. See Note 15 for additional
information regarding our Deferred Compensation Plan.
(b) The contingent consideration as of March 31, 2014 represented the estimated fair value of the additional
variable cash consideration payable in connection with our acquisitions of KlickNation Corporation
(“KlickNation”) and Chillingo Limited (“Chillingo”) that were 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 captured the risk associated with the obligation. The weighted average of the discount rates
used during the fiscal year 2015 was 17 percent. The weighted average of the discount rates used during the
fiscal year 2014 was 18 percent. The significant unobservable input used in the fair value measurement of
the contingent consideration payable was forecasted earnings. At March 31, 2014, the fair market value of
acquisition-related contingent consideration totaled $4 million, compared to a maximum potential payout of
$10 million. At March 31, 2015, the KlickNation earn-out expired.
(c) The change in fair value is reported as acquisition-related contingent consideration in our Consolidated
Statements of Operations.
69