Activision 2008 Annual Report Download - page 87

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73
adoption of SFAS No. 157 for non-financial assets and liabilities does not have a material impact
on our Consolidated Financial Statements. The table below segregates all financial assets and
liabilities that are measured at fair value on a recurring basis (which, for purposes of SFAS
No. 157, means they are so measured at least annually) into the most appropriate level within the
fair value hierarchy based on the inputs used to determine the fair value at the measurement date
(amounts in millions):
Fair Value Measurements at
Reporting Date Using
Quoted
Prices in
Active
Markets for
Identical
Financial
Instruments
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
As of
December 31,
2008 (Level 1) (Level 2) (Level 3) Balance Sheet
Classification
Financial assets:
Money market funds................... $2,609 $2,609 $— $— Cash and cash equivalents
Mortgage backed securities........ 7 — 7 — Short-term investments
Auction rate securities................ 78 — — 78 Long-term investments
Put option from UBS.................. 10 — — 10 Other assets—non-current
Foreign currency derivatives...... 5 — 5 — Other assets—current
Total financial assets at fair
value....................................... $2,709 $2,609 $12 $88
Financial liabilities:
Foreign currency derivatives...... $2 $— $2 $— Other liabilities—current
Other financial liability .............. 31 — — 31 Other liabilities—non-
current
Total financial liabilities at fair
value....................................... $33 $— $2 $31
Other financial liability represents the earn-out liability from our acquisition of Bizarre
Creations. The earn-out liability was recorded at fair value at the date of the Business Combination
as it will be settled by a variable number of shares of our common stock based on the average
closing price for the five business days immediately preceding issuance of the shares. When
estimating the fair value, we considered our projection of revenues from the related titles under the
earn-out provisions. For the year ended December 31, 2008, there is no change in our fair value
estimate of this financial liability.