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Note 5. Fair Value Measurement
The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and
the classification by level of input within the fair value hierarchy (in millions):
Description
December 31,
2012
Fair Value Measurement at
Reporting Date Using
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
Money market funds ........................... $ 871 $ 871 $ — $ —
Marketable securities:
U.S. government securities ...................... 5,165 5,165 — —
U.S. government agency securities ................ 2,077 2,077 — —
Total cash equivalents and marketable
securities .............................. $8,113 $8,113 $ — $ —
Other current liabilities:
Contingent consideration liability ............. $ 4 $ — $ — $ 4
Other liabilities:
Derivative financial instrument ............... $ 4 $ — $ 4 $ —
Description
December 31,
2011
Fair Value Measurement at
Reporting Date Using
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3
Cash equivalents:
Money market funds ........................... $ 892 $ 892 — —
U.S. government securities ...................... 60 60 — —
U.S. government agency securities ................ 50 50 — —
Total cash equivalents ...................... 1,002 1,002 — —
Marketable securities:
U.S. government securities ...................... 1,415 1,415 — —
U.S. government agency securities ................ 981 981 — —
Total cash equivalents and marketable
securities .............................. $3,398 $3,398 $ — $ —
There was no contingent consideration liability or interest rate swap as of December 31, 2011.
Our Level 2 derivative financial instrument represents our interest rate swap agreement which is valued
based on a valuation model using significant inputs derived from or corroborated by observable market data.
We estimate the fair value of our Level 3 contingent consideration liability based on the probability
assessment of the earn-out criteria. In developing these estimates, we consider factors not observed in the market
and thus this represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs
88