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59
Fair Value Measurements at
December 31, 2009 Using
As of
December 31,
Quoted
Prices in
Active
Markets for
Identical
Financial
Instruments
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs Balance Sheet
2009 (Level 1) (Level 2) (Level 3) Classification
Financial assets:
Money market funds ...................................... $2,304 $2,304 $— $— Cash and cash equivalents
Mortgage backed securities ........................... 2 — 2 — Short-term investments
ARS held through UBS ................................. 54 — — 54 Short-term investments
U.S. treasuries and government agency
securities .................................................... 389 389 — — Short-term investments
ARS held through Morgan Stanley Smith
Barney LLC ............................................... 23 — — 23 Long-term investments
ARS rights from UBS(a) ............................... 7 — — 7 Other assets—current
Total financial assets at fair value .................. $2,779 $2,693 $2 $84
Financial liabilities:
Other financial liability .................................. $(23) $— $— $(23) Other liabilities—current
Total financial liabilities at fair value ............ $(23) $— $— $(23)
(a) Auction Rate Securities (“ARS”) rights from UBS represent an offer from UBS providing us with the right to
require UBS to purchase our ARS held through UBS at par value. To value the ARS rights, we considered the
intrinsic value, time value of money, and our assessment of the credit worthiness of UBS. We exercised our ARS
rights with UBS on June 30, 2010.
As of December 31, 2009 other financial liability represented the earn-out liability from a previous acquisition. The
earn-out liability was recorded at fair value at the date of the Business Combination, as it was to be settled by a variable
number of shares of our common stock based on the average of the closing prices on each of 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, 2010, there was a $23 million decrease in
our fair value estimate of this financial liability, which was recorded in investment and other income, net. There was no earn-
out liability recorded at December 31, 2010.
The following table provides a reconciliation of the beginning and ending balances of our financial assets and
financial liabilities classified as Level 3 by major categories (amounts in millions) at December 31, 2010:
Level 3
ARS
(a)
ARS rights
from UBS
(b)
Total
financial
assets at
fair
value
Other financial
liabilities
Balance at January 1, 2010 .............................................................................. $77 $7 $84 $(23)
Total gains or (losses) (realized/unrealized) included in investment and
other income, net..................................................................................... 7 (7) — 23
Purchases or acquired sales, issuances and settlements ............................... (61) — (61) —
Balance at December 31, 2010 ........................................................................ $23 $— $23 $—