10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from              to            

Commission File No. 000-17948

ELECTRONIC ARTS INC.

(Exact name of registrant as specified in its charter)

Delaware	94-2838567
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
209 Redwood Shores Parkway Redwood City, California	94065
(Address of principal executive offices)	(Zip Code)

(650) 628-1500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  þ    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  þ    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer (Do not check if a smaller reporting company)	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  þ

As of February 2, 2017, there were 308,264,527 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.

1

ELECTRONIC ARTS INC.

FORM 10-Q

FOR THE PERIOD ENDED DECEMBER 31, 2016

Table of Contents

		Page
Part I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of December 31, 2016 and March 31, 2016	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2016 and 2015	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended December 31, 2016 and 2015	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2016 and 2015	6
	Notes to Condensed Consolidated Financial Statements	7
	Report of Independent Registered Public Accounting Firm	28
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	50
Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 6.	Exhibits	60
Signature		61
Exhibit Index		62

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PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (In millions, except par value data)	December 31, 2016			March 31, 2016 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	2,483		$	2,493
Short-term investments	1,736			1,341
Receivables, net of allowances of $196 and $159, respectively	587			233
Inventories	35			33
Other current assets	260			254
Total current assets	5,101			4,354
Property and equipment, net	424			439
Goodwill	1,704			1,710
Acquisition-related intangibles, net	9			57
Deferred income taxes, net	386			387
Other assets	95			103
TOTAL ASSETS	$	7,719		$	7,050
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	65		$	89
Accrued and other current liabilities	901			710
0.75% convertible senior notes due 2016, net	—			161
Deferred net revenue (online-enabled games)	1,971			1,458
Total current liabilities	2,937			2,418
Senior notes, net	990			989
Income tax obligations	87			80
Deferred income taxes, net	2			2
Other liabilities	154			163
Total liabilities	4,170			3,652
Commitments and contingencies (See Note 11)
0.75% convertible senior notes due 2016 (See Note 10)	—			2
Stockholders’ equity:
Common stock, $0.01 par value. 1,000 shares authorized; 307 and 301 shares issued and outstanding, respectively	3			3
Additional paid-in capital	1,086			1,349
Retained earnings	2,461			2,060
Accumulated other comprehensive loss	(1		)	(16		)
Total stockholders’ equity	3,549			3,396
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,719		$	7,050

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).

(a) Derived from audited Consolidated Financial Statements.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)	Three Months Ended December 31,						Nine Months Ended December 31,
(In millions, except per share data)	2016			2015			2016			2015
Net revenue:
Product	$	649		$	625		$	1,753		$	1,802
Service and other	500			445			1,565			1,286
Total net revenue	1,149			1,070			3,318			3,088
Cost of revenue:
Product	389			439			796			868
Service and other	127			107			300			260
Total cost of revenue	516			546			1,096			1,128
Gross profit	633			524			2,222			1,960
Operating expenses:
Research and development	285			266			870			827
Marketing and sales	240			190			511			469
General and administrative	110			97			329			296
Amortization of intangibles	2			2			5			6
Total operating expenses	637			555			1,715			1,598
Operating income (loss)	(4		)	(31		)	507			362
Interest and other income (expense), net	(2		)	1			(13		)	(11		)
Income (loss) before provision for (benefit from) income taxes	(6		)	(30		)	494			351
Provision for (benefit from) income taxes	(5		)	15			93			94
Net income (loss)	$	(1	)	$	(45	)	$	401		$	257
Earnings (loss) per share:
Basic	$ (	0.00)		$	(0.14	)	$	1.33		$	0.83
Diluted	$ (	0.00)		$	(0.14	)	$	1.28		$	0.77
Number of shares used in computation:
Basic	303			311			302			311
Diluted	303			311			314			333

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).

4

ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)	Three Months Ended December 31,							Nine Months Ended December 31,
(In millions)	2016			2015				2016			2015
Net income (loss)	$	(1	)	$	(45	)		$	401		$	257
Other comprehensive income (loss), net of tax:
Change in unrealized net gains and losses on available-for-sale securities	(5		)	(4		)		(4		)	(3		)
Reclassification adjustment for realized net gains and losses on available-for-sale securities	—			1			1	(1		)	—
Change in unrealized net gains and losses on derivative instruments	39			10				66			2
Reclassification adjustment for realized net gains and losses on derivative instruments	(8		)	(4		)		(18		)	(11		)
Foreign currency translation adjustments	(17		)	(16		)		(28		)	(47		)
Total other comprehensive income (loss), net of tax	9			(13		)		15			(59		)
Total comprehensive income (loss)	$	8		$	(58	)		$	416		$	198

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)	Nine Months Ended December 31,
(In millions)	2016			2015
OPERATING ACTIVITIES
Net income	$	401		$	257
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	140			149
Stock-based compensation	144			131
Loss on conversion of senior notes	—			8
Change in assets and liabilities:
Receivables, net	(367		)	(268		)
Inventories	(2		)	(6		)
Other assets	42			42
Accounts payable	(6		)	70
Accrued and other liabilities	111			(124		)
Deferred income taxes, net	—			6
Deferred net revenue (online-enabled games)	513			562
Net cash provided by operating activities	976			827
INVESTING ACTIVITIES
Capital expenditures	(94		)	(63		)
Proceeds from maturities and sales of short-term investments	968			707
Purchase of short-term investments	(1,372		)	(727		)
Net cash used in investing activities	(498		)	(83		)
FINANCING ACTIVITIES
Payment of convertible notes	(163		)	(293		)
Proceeds from issuance of common stock	33			86
Excess tax benefit from stock-based compensation	53			73
Repurchase and retirement of common stock	(383		)	(384		)
Net cash used in financing activities	(460		)	(518		)
Effect of foreign exchange on cash and cash equivalents	(28		)	(31		)
Increase (decrease) in cash and cash equivalents	(10		)	195
Beginning cash and cash equivalents	2,493			2,068
Ending cash and cash equivalents	$	2,483		$	2,263
Supplemental cash flow information:
Cash paid during the period for income taxes, net	$	51		$	28
Cash paid during the period for interest	$	23		$	3
Non-cash investing activities:
Change in accrued capital expenditures	$	(16	)	$	(8	)

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).

6

ELECTRONIC ARTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

We are a global leader in digital interactive entertainment. We develop, market, publish and distribute games, content and services that can be played by consumers on a variety of platforms, which include consoles (such as the PlayStation from Sony, and the Xbox from Microsoft), PCs, mobile phones and tablets. Some of our games are based on our wholly-owned intellectual property (e.g., Battlefield, Mass Effect, Need for Speed, The Sims and Plants vs. Zombies), and some of our games leverage content that we license from others (e.g., FIFA, Madden NFL and Star Wars). We also publish and distribute games developed by third parties (e.g., Titanfall). Our products and services may be purchased through multiple distribution channels, including physical and online retailers, platform providers such as console manufacturers, providers of free-to-download PC games, mobile carriers and directly through Origin, our own digital distribution platform.

Our fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest March 31. Our results of operations for the fiscal year ending March 31, 2017 contains 52 weeks and ends on April 1, 2017. Our results of operations for the fiscal year ended March 31, 2016 contained 53 weeks and ended on April 2, 2016. Our results of operations for the three months ended December 31, 2016 and 2015 contained 13 weeks each and ended on December 31, 2016 and January 2, 2016, respectively. Our results of operations for the nine months ended December 31, 2016 and 2015 contained 39 and 40 weeks, respectively, and ended on December 31, 2016 and January 2, 2016, respectively. For simplicity of disclosure, all fiscal periods are referred to as ending on a calendar month end.

The Condensed Consolidated Financial Statements are unaudited and reflect all adjustments (consisting only of normal recurring accruals unless otherwise indicated) that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the amounts reported in these Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. The results of operations for the current interim periods are not necessarily indicative of results to be expected for the current year or any other period.

These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, as filed with the United States Securities and Exchange Commission (“SEC”) on May 27, 2016.

Impact of Recently Issued Accounting Standards

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, related to simplifications of employee share-based payment accounting. This pronouncement eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures, and minimum statutory tax withholding requirements. The pronouncement is effective for annual periods (and for interim periods within those annual periods) beginning after December 15, 2016. We will adopt this new standard in the first quarter of fiscal year 2018. We are currently evaluating the impact of this new standard on our Consolidated Financial Statements and related disclosures.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. This update is effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Statements of Cash Flows.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update is intended to reduce the existing diversity in practice in how certain transactions are classified in the statement of cash flows. This update is effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted, provided that all of the amendments are adopted in the same period. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Statements of Cash Flows.

7

In March 2016, the FASB issued ASU 2016-04, Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products. The amendments in the ASU are designed to provide guidance and eliminate diversity in the accounting for derecognition of prepaid stored-value product liabilities. Typically, a prepaid stored-value product liability is to be derecognized when it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. This is when the likelihood of the product holder exercising its remaining rights becomes remote. This estimate shall be updated at the end of each period. The amendments in this ASU are effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825-10), which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The ASU also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments.

The requirements will be effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. We are currently evaluating the impact of this new standard on our Consolidated Financial Statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. We currently anticipate adopting the standard using the cumulative effect transition method. This new revenue standard, as amended by ASU 2015-14, is effective in the first quarter of fiscal year 2019. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the guidance in the new revenue standard on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance in the new revenue standard regarding an entity’s identification of its performance obligations in a contract, as well as an entity’s evaluation of the nature of its promise to grant a license of intellectual property and whether or not that revenue is recognized over time or at a point in time. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients, which amends the guidance in the new revenue standard on collectibility, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues that were raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as the new revenue standard. While we are currently evaluating the impact of the new revenue standard, as amended, on our Consolidated Financial Statements and related disclosures, we believe the adoption of the new standard will have a significant impact on the accounting for certain transactions with multiple elements or “bundled” arrangements (for example, sales of online-enabled games for which we do not have vendor-specific objective evidence of fair value (“VSOE”) for unspecified future updates) because the requirement to have VSOE for undelivered elements under current accounting standards is eliminated under the new standard. Accordingly, we may be required to recognize as revenue a portion of the sales price upon delivery of the software, as compared to the current requirement of recognizing the entire sales price ratably over an estimated offering period. In addition, based upon what we expect to be our performance obligations under the new standard, as amended, we believe that upon adoption, a larger portion of our bundled arrangements will be presented as service revenue instead of product revenue in our Consolidated Statements of Operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this standard to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

8

(2) FAIR VALUE MEASUREMENTS

There are various valuation techniques used to estimate fair value, the primary one being the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability. We measure certain financial and nonfinancial assets and liabilities at fair value on a recurring and nonrecurring basis.

Fair Value Hierarchy

The three levels of inputs that may be used to measure fair value are as follows:

• Level 1. Quoted prices in active markets for identical assets or liabilities.

• Level 2. Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities.

• Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of December 31, 2016 and March 31, 2016, our assets and liabilities that were measured and recorded at fair value on a recurring basis were as follows (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, 2016		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	230	$	230	$	—	$	—	Cash equivalents
Money market funds	556		556		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	843		—		843		—		Short-term investments and cash equivalents
U.S. Treasury securities	440		440		—		—		Short-term investments and cash equivalents
U.S. agency securities	162		—		162		—		Short-term investments
Commercial paper	136		—		136		—		Short-term investments and cash equivalents
Foreign government securities	136		—		136		—		Short-term investments and cash equivalents
Asset-backed securities	95		—		95		—		Short-term investments
Foreign currency derivatives	57		—		57		—		Other current assets and other assets
Deferred compensation plan assets (a)	10		10		—		—		Other assets
Total assets at fair value	$	2,665	$	1,236	$	1,429	$	—
Liabilities
Foreign currency derivatives	10		—		10		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	11		11		—		—		Other liabilities
Total liabilities at fair value	$	21	$	11	$	10	$	—

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			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 March 31, 2016		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	345	$	345	$	—	$	—	Cash equivalents
Money market funds	143		143		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	623		—		623		—		Short-term investments and cash equivalents
U.S. Treasury securities	407		407		—		—		Short-term investments and cash equivalents
U.S. agency securities	170		—		170		—		Short-term investments and cash equivalents
Commercial paper	81		—		81		—		Short-term investments and cash equivalents
Foreign government securities	122		—		122		—		Short-term investments and cash equivalents
Foreign currency derivatives	16		—		16		—		Other current assets and other assets
Deferred compensation plan assets (a)	8		8		—		—		Other assets
Total assets at fair value	$	1,915	$	903	$	1,012	$	—
Liabilities
Foreign currency derivatives	10		—		10		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	9		9		—		—		Other liabilities
Total liabilities at fair value	$	19	$	9	$	10	$	—

(a) The Deferred Compensation Plan assets consist of various mutual funds. See Note 15 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, for additional information regarding our Deferred Compensation Plan.

(3) FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of December 31, 2016 and March 31, 2016, our cash and cash equivalents were $2,483 million and $2,493 million, respectively. Cash equivalents were valued using quoted market prices or other readily available market information.

Short-Term Investments

Short-term investments consisted of the following as of December 31, 2016 and March 31, 2016 (in millions):

	As of December 31, 2016									As of March 31, 2016
	Cost or Amortized Cost		Gross Unrealized					Fair Value		Cost or Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses							Gains		Losses
Corporate bonds	$	842	$	—	$	(2	)	$	840	$	620	$	1	$	—	$	621
U.S. Treasury securities	400		—		(1		)	399		389		1		—		390
U.S. agency securities	163		—		(1		)	162		167		—		—		167
Commercial paper	116		—		—			116		50		—		—		50
Foreign government securities	124		—		—			124		113		—		—		113
Asset-backed securities	95		—		—			95		—		—		—		—
Short-term investments	$	1,740	$	—	$	(4	)	$	1,736	$	1,339	$	2	$	—	$	1,341

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The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of December 31, 2016 and March 31, 2016 (in millions):

	As of December 31, 2016				As of March 31, 2016
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments
Due in 1 year or less	$	928	$	928	$	571	$	571
Due in 1-2 years	419		418		461		462
Due in 2-3 years	306		304		295		296
Due in 3-4 years	87		86		12		12
Short-term investments	$	1,740	$	1,736	$	1,339	$	1,341

(4) DERIVATIVE FINANCIAL INSTRUMENTS

The assets or liabilities associated with our derivative instruments and hedging activities are recorded at fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. As discussed below, the accounting for gains and losses resulting from changes in fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge accounting.

We transact business in various foreign currencies and have significant international sales and expenses denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency forward contracts, generally with maturities of 18 months or less, to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in certain foreign currencies. Our cash flow risks are primarily related to fluctuations in the Euro, British pound sterling, Canadian dollar, Swedish krona, Australian dollar, Chinese yuan and South Korean won. In addition, we utilize foreign currency forward contracts to mitigate foreign currency exchange risk associated with foreign-currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. The foreign currency forward contracts not designated as hedging instruments generally have a contractual term of approximately 3 months or less and are transacted near month-end. We do not use foreign currency forward contracts for speculative trading purposes.

Cash Flow Hedging Activities

Certain of our forward contracts are designated and qualify as cash flow hedges. The effectiveness of the cash flow hedge contracts, including time value, is assessed monthly using regression analysis, as well as other timing and probability criteria. To qualify for hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative assets or liabilities associated with our hedging activities are recorded at fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. The effective portion of gains or losses resulting from changes in the fair value of these hedges is initially reported, net of tax, as a component of accumulated other comprehensive income (loss) in stockholders’ equity. The gross amount of the effective portion of gains or losses resulting from changes in the fair value of these hedges is subsequently reclassified into net revenue or research and development expenses, as appropriate, in the period when the forecasted transaction is recognized in our Condensed Consolidated Statements of Operations. In the event that the gains or losses in accumulated other comprehensive income (loss) are deemed to be ineffective, the ineffective portion of gains or losses resulting from changes in fair value, if any, is reclassified to interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. In the event that the underlying forecasted transactions do not occur, or it becomes remote that they will occur, within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from accumulated other comprehensive income (loss) to interest and other income (expense), net, in our Condensed Consolidated Statements of Operations.

Total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting designation are as follows (in millions):

	As of December 31, 2016						As of March 31, 2016
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability
Forward contracts to purchase	$	177	$	—	$	8	$	148	$	5	$	1
Forward contracts to sell	$	700	$	44	$	1	$	685	$	11	$	9

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The net impact of the effective portion of gains and losses from our cash flow hedging activities in our Condensed Consolidated Statements of Operations was a gain of $8 million for the three months ended December 31, 2016 and a gain of $4 million for the three months ended December 31, 2015.

The net impact of the effective portion of gains and losses from our cash flow hedging activities in our Condensed Consolidated Statements of Operations was a gain of $18 million for the nine months ended December 31, 2016 and a gain of $11 million for the nine months ended December 31, 2015.

During the three and nine months ended December 31, 2016 and 2015, we reclassified an immaterial amount of the ineffective portion of gains or losses resulting from changes in fair value into interest and other income (expense), net.

The amount excluded from the assessment of hedge effectiveness during three and nine months ended December 31, 2016 and 2015 and recognized in interest and other income (expense), net, was immaterial.

Balance Sheet Hedging Activities

Our foreign currency forward contracts that are not designated as hedging instruments are accounted for as derivatives whereby the fair value of the contracts are reported as other current assets or accrued and other current liabilities on our Condensed Consolidated Balance Sheets, and gains and losses resulting from changes in the fair value are reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. The gains and losses on these foreign currency forward contracts generally offset the gains and losses in the underlying foreign-currency-denominated monetary assets and liabilities, which are also reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations.

Total gross notional amounts and fair values for currency derivatives that are not designated as hedging instruments are accounted for as follows (in millions):

	As of December 31, 2016						As of March 31, 2016
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability
Forward contracts to purchase	$	143	$	—	$	1	$	108	$	—	$	—
Forward contracts to sell	$	681	$	13	$	—	$	159	$	—	$	—

The effect of foreign currency forward contracts not designated as hedging instruments in our Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2016 and 2015, was as follows (in millions):

	Statement of Operations Classification	Amount of Gain (Loss) Recognized in the Statement of Operations
		Three Months Ended December 31,				Nine Months Ended December 31,
		2016		2015		2016		2015
Foreign currency forward contracts not designated as hedging instruments	Interest and other income (expense), net	$	49	$	13	$	50	$	15

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(5) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended December 31, 2016 and 2015 are as follows (in millions):

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of September 30, 2016	$	1		$	31		$	(42	)	$	(10	)
Other comprehensive income (loss) before reclassifications	(5		)	39			(17		)	17
Amounts reclassified from accumulated other comprehensive income (loss)	—			(8		)	—			(8		)
Total other comprehensive income (loss), net of tax	(5		)	31			(17		)	9
Balance as of December 31, 2016	$	(4	)	$	62		$	(59	)	$	(1	)

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of September 30, 2015	$	(3	)	$	6		$	(47	)	$	(44	)
Other comprehensive income (loss) before reclassifications	(4		)	10			(16		)	(10		)
Amounts reclassified from accumulated other comprehensive income (loss)	1			(4		)	—			(3		)
Total other comprehensive income (loss), net of tax	(3		)	6			(16		)	(13		)
Balance as of December 31, 2015	$	(6	)	$	12		$	(63	)	$	(57	)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended December 31, 2016 and 2015 are as follows (in millions):

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of March 31, 2016	$	1		$	14		$	(31	)	$	(16	)
Other comprehensive income (loss) before reclassifications	(4		)	66			(28		)	34
Amounts reclassified from accumulated other comprehensive income (loss)	(1		)	(18		)	—			(19		)
Total other comprehensive income (loss), net of tax	(5		)	48			(28		)	15
Balance as of December 31, 2016	$	(4	)	$	62		$	(59	)	$	(1	)

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of March 31, 2015	$	(3	)	$	21		$	(16	)	$	2
Other comprehensive income (loss) before reclassifications	(3		)	2			(47		)	(48		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(11		)	—			(11		)
Total other comprehensive income (loss), net of tax	(3		)	(9		)	(47		)	(59		)
Balance as of December 31, 2015	$	(6	)	$	12		$	(63	)	$	(57	)

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The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the three and nine months ended December 31, 2016 were as follows (in millions):

	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended December 31, 2016			Nine Months Ended December 31, 2016
(Gains) losses on available-for-sale securities
Interest and other income (expense), net	$	—		$	(1	)
Net of tax	$	—		$	(1	)
(Gains) losses on cash flow hedges from forward contracts
Net revenue	$	(9	)	$	(18	)
Research and development	1			—
Net of tax	$	(8	)	$	(18	)
Total net (gain) loss reclassified, net of tax	$	(8	)	$	(19	)

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the three and nine months ended December 31, 2015 were as follows (in millions):

	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended December 31, 2015			Nine Months Ended December 31, 2015
(Gains) losses on available-for-sale securities
Interest and other income (expense), net	$	1		$	—
Net of tax	$	1		$	—
(Gains) losses on cash flow hedges from forward contracts
Net revenue	$	(5	)	$	(19	)
Research and development	1			8
Net of tax	$	(4	)	$	(11	)
Total net (gain) loss reclassified, net of tax	$	(3	)	$	(11	)

(6) GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET

The changes in the carrying amount of goodwill for the nine months ended December 31, 2016 are as follows (in millions):

	As of March 31, 2016			Activity		Effects of Foreign Currency Translation			As of December 31, 2016
Goodwill	$	2,078		$	—	$	(6	)	$	2,072
Accumulated impairment	(368		)	—		—			(368		)
Total	$	1,710		$	—	$	(6	)	$	1,704

Goodwill represents the excess of the purchase price over the fair value of the underlying acquired net tangible and intangible assets. Goodwill is not amortized, but rather subject to at least an annual assessment for impairment by applying a fair value-based test.

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Acquisition-related intangibles consisted of the following (in millions):

	As of December 31, 2016							As of March 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Acquisition- Related Intangibles, Net		Gross Carrying Amount		Accumulated Amortization			Acquisition- Related Intangibles, Net
Developed and core technology	$	412	$	(412	)	$	—	$	412	$	(368	)	$	44
Trade names and trademarks	106		(97		)	9		106		(93		)	13
Registered user base and other intangibles	5		(5		)	—		5		(5		)	—
Carrier contracts and related	85		(85		)	—		85		(85		)	—
Total	$	608	$	(599	)	$	9	$	608	$	(551	)	$	57

Amortization of intangibles for the three and nine months ended December 31, 2016 and 2015 are classified in the Condensed Consolidated Statement of Operations as follows (in millions):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
Cost of service and other	$	—	$	9	$	16	$	25
Cost of product	18		3		27		10
Operating expenses	2		2		5		6
Total	$	20	$	14	$	48	$	41

During the three and nine months ended December 31, 2016, we determined that the carrying value of one of our acquisition-related intangible assets was not recoverable. The acquisition-related intangible asset was measured using Level 3 inputs and was written down to a fair value of zero as of December 31, 2016. We recognized an impairment charge of $15 million in cost of product revenue in our Condensed Consolidated Statements of Operations. During the three and nine months ended December 31, 2015, there were no impairment charges for acquisition-related intangible assets.

Acquisition-related intangible assets are amortized using the straight-line method over the lesser of their estimated useful lives or the agreement terms, typically from 2 to 14 years. As of December 31, 2016 and March 31, 2016, the weighted-average remaining useful life for acquisition-related intangible assets was approximately 1.6 years and 1.6 years, respectively.

As of December 31, 2016, future amortization of acquisition-related intangibles that will be recorded in the Condensed Consolidated Statement of Operations is estimated as follows (in millions):

Fiscal Year Ending March 31,
2017 (remaining three months)	$	1
2018	6
2019	2
Total	$	9

(7) ROYALTIES AND LICENSES

Our royalty expenses consist of payments to (1) content licensors, (2) independent software developers, and (3) co-publishing and distribution affiliates. License royalties consist of payments made to celebrities, professional sports organizations, movie studios and other organizations for our use of their trademarks, copyrights, personal publicity rights, content and/or other intellectual property. Royalty payments to independent software developers are payments for the development of intellectual property related to our games. Co-publishing and distribution royalties are payments made to third parties for the delivery of products.

Royalty-based obligations with content licensors and distribution affiliates are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made to thinly capitalized independent software developers and co-publishing affiliates are generally made in connection with the development of a particular product, and therefore, we are generally subject to development risk prior to the release of the product. Accordingly, payments that are due prior to completion of a product are

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generally expensed to research and development over the development period as the services are incurred. Payments due after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract. Prepaid royalties are classified as current assets to the extent that such amounts will be recognized in our Condensed Consolidated Statements of Operations within the next 12 months. Royalty liabilities are classified as current liabilities to the extent such royalty payments are contractually due within the next 12 months.

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through product and service sales. Any impairments or losses determined before the launch of a product are generally charged to research and development expense. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If impairment exists, then the assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.

During the three and nine months ended December 31, 2016, we determined that the carrying value of one of our royalty-based assets and previously unrecognized minimum royalty-based commitments were not recoverable. We recognized an impairment charge of $12 million on the asset and a loss of $10 million on the previously unrecognized minimum royalty-based commitment. Of the total $22 million loss, $10 million was included in cost of service revenue and $12 million was included in research and development expenses in our Condensed Consolidated Statements of Operations. During the three and nine months ended December 31, 2015, we did not recognize any material losses or impairment charges on royalty-based commitments, respectively.

The current and long-term portions of prepaid royalties and minimum guaranteed royalty-related assets, included in other current assets and other assets, consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Other current assets	$	31	$	54
Other assets	44		63
Royalty-related assets	$	75	$	117

At any given time, depending on the timing of our payments to our co-publishing and/or distribution affiliates, content licensors, and/or independent software developers, we classify any recognized unpaid royalty amounts due to these parties as accrued liabilities. The current and long-term portions of accrued royalties, included in accrued and other current liabilities and other liabilities, consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Accrued royalties	$	226	$	159
Other liabilities	102		118
Royalty-related liabilities	$	328	$	277

As of December 31, 2016, we were committed to pay approximately $1,338 million to content licensors, independent software developers, and co-publishing and/or distribution affiliates, but performance remained with the counterparty (i.e., delivery of the product or content or other factors) and such commitments were therefore not recorded in our Condensed Consolidated Financial Statements. See Note 11 for further information on our developer and licensor commitments.

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(8) BALANCE SHEET DETAILS

Inventories

Inventories as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Finished goods	$	34	$	32
Raw materials and work in process	1		1
Inventories	$	35	$	33

Property and Equipment, Net

Property and equipment, net, as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016			As of March 31, 2016
Computer, equipment and software	$	702		$	684
Buildings	312			313
Leasehold improvements	126			129
Equipment, furniture and fixtures, and other	80			80
Land	61			61
Construction in progress	8			15
	1,289			1,282
Less: accumulated depreciation	(865		)	(843		)
Property and equipment, net	$	424		$	439

During the three and nine months ended December 31, 2016, depreciation expense associated with property and equipment was $29 million and $86 million, respectively. During the three and nine months ended December 31, 2015 depreciation expense associated with property and equipment was $31 million and $91 million respectively.

Accrued and Other Current Liabilities

Accrued and other current liabilities as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Other accrued expenses	$	306	$	218
Accrued compensation and benefits	224		256
Accrued royalties	226		159
Deferred net revenue (other)	145		77
Accrued and other current liabilities	$	901	$	710

Deferred net revenue (other) includes the deferral of subscription revenue, advertising revenue, licensing arrangements, and other revenue for which revenue recognition criteria has not been met.

Deferred Net Revenue (Online-Enabled Games)

Deferred net revenue (online-enabled games) was $1,971 million and $1,458 million as of December 31, 2016 and March 31, 2016, respectively. Deferred net revenue (online-enabled games) generally includes the unrecognized revenue from bundled sales of online-enabled games for which we do not have VSOE for the obligation to provide unspecified updates. We recognize revenue from the sale of online-enabled games for which we do not have VSOE for the unspecified updates on a straight-line basis, generally over an estimated nine-month period beginning in the month after shipment for physical games sold through retail and an estimated six-month period for digitally-distributed games. However, we expense the cost of revenue related to these transactions generally during the period in which the product is delivered (rather than on a deferred basis).

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(9) INCOME TAXES

We estimate our annual effective tax rate at the end of each quarterly period, and we record the tax effect of certain discrete items, which are unusual or occur infrequently, in the interim period in which they occur, including changes in judgment about deferred tax valuation allowances. In addition, jurisdictions with a projected loss for the year, jurisdictions with a year-to-date loss where no tax benefit can be recognized, and jurisdictions where we are unable to estimate an annual effective tax rate are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections.

We recognize deferred tax assets and liabilities for both the expected impact of differences between the financial statement amount and the tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. We record a valuation allowance against deferred tax assets when it is considered more likely than not that all or a portion of our deferred tax assets will not be realized. In making this determination, we are required to give significant weight to evidence that can be objectively verified.

In addition to considering forecasts of future taxable income, we are also required to evaluate and quantify other possible sources of taxable income in order to assess the realization of our deferred tax assets, namely the reversal of existing deferred tax liabilities, the carry back of losses and credits as allowed under current tax law, and the implementation of tax planning strategies. Evaluating and quantifying these amounts involves significant judgments. Each source of income must be evaluated based on all positive and negative evidence; this evaluation involves assumptions about future activity.

In the fourth quarter of fiscal year 2016, we determined that the positive evidence overcame any negative evidence and concluded that it was more likely than not that the U.S. deferred tax assets were realizable. As a result, we released the valuation allowance against all of the U.S. federal deferred tax assets and a portion of the U.S. state deferred tax assets during the fourth quarter of fiscal year 2016, and we continue to believe those deferred tax assets are realizable as of December 31, 2016. We maintain a valuation allowance related to specific U.S. state deferred tax assets and foreign capital loss carryovers, due to uncertainty about the future realization of these assets.

The provision for income taxes reported for the three and nine months ended December 31, 2016 is based on our projected annual effective tax rate for fiscal year 2017, and also includes certain discrete items recorded during the period. Our effective tax rate for the three and nine months ended December 31, 2016 was 83.3 percent and 18.8 percent, respectively, as compared to 50.0 percent and 26.8 percent, respectively, for the same period of fiscal year 2016. The effective tax rate for the nine months ended December 31, 2016 was reduced, when compared to the statutory rate of 35.0 percent, due primarily to non-U.S. profits subject to a reduced or zero tax rate. The effective tax rate for the nine months ended December 31, 2015 was reduced, when compared to the statutory rate of 35.0 percent, by the utilization of U.S. deferred tax assets which were subject to a valuation allowance and non-U.S. profits subject to a reduced or zero tax rate. Conversely, the effective tax rate for the nine months ended December 31, 2015 was increased due to a discrete expense of $73 million, for excess tax benefits from stock-based compensation deductions allocated directly to contributed capital. The effective tax rate for the nine months ended December 31, 2016 differs from the same periods in fiscal year 2016 primarily due to the utilization of U.S. deferred tax assets in fiscal year 2016 which were subject to a valuation allowance and the discrete expense for excess tax benefits from stock-based compensation deductions allocated directly to contributed capital in fiscal year 2016.

During the three and nine months ended December 31, 2016, we recorded a net decrease of $3 million and a net increase of $15 million, respectively, in gross unrecognized tax benefits. The total gross unrecognized tax benefits as of December 31, 2016 is $346 million. A portion of our unrecognized tax benefits will affect our effective tax rate if they are recognized upon favorable resolution of the uncertain tax positions. As of December 31, 2016, if recognized, approximately $321 million of the unrecognized tax benefits would affect our effective tax rate and approximately $24 million would result in adjustments to deferred tax assets with corresponding adjustments to the valuation allowance.

During the nine months ended December 31, 2016, we recorded a net decrease of $3 million for accrued interest and penalties related to tax positions taken on our tax returns. As of December 31, 2016, the combined amount of accrued interest and penalties related to uncertain tax positions included in income tax obligations on our Condensed Consolidated Balance Sheet was approximately $12 million.

We file income tax returns in the United States, including various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions, including Canada, France, Germany, Switzerland and the United Kingdom. The IRS is currently examining our returns for fiscal years 2009 through 2011, and we remain subject to income tax examination by the IRS for fiscal years after 2013.

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We are also currently under income tax examination in the United Kingdom for fiscal years 2010 through 2014, and in France for fiscal years 2014 through 2016. We remain subject to income tax examination for several other jurisdictions including in Germany for fiscal years after 2012, in the United Kingdom for fiscal years after 2014, in Canada for fiscal years after 2008, and in Switzerland for fiscal years after 2007.

The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although potential resolution of uncertain tax positions involves multiple tax periods and jurisdictions, it is reasonably possible that a reduction of up to $50 million of unrecognized tax benefits may occur within the next 12 months, some of which, depending on the nature of the settlement or expiration of statutes of limitations, may affect the Company’s income tax provision and therefore benefit the resulting effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements.

(10) FINANCING ARRANGEMENTS

0.75% Convertible Senior Notes Due 2016

In July 2011, we issued $632.5 million aggregate principal amount of 0.75% Convertible Senior Notes due 2016 (the “Convertible Notes”). The Convertible Notes matured on July 15, 2016. The Convertible Notes were senior unsecured obligations which paid interest semiannually in arrears at a rate of 0.75% per annum on January 15 and July 15 of each year.

The Convertible Notes were convertible into cash and shares of our common stock based on an initial conversion value of 31.5075 shares of our common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $31.74 per share). Upon conversion of the Convertible Notes, holders received cash up to the principal amount of each Convertible Note, and any excess conversion value was delivered in shares of our common stock. The Convertible Notes do not contain any financial covenants.

Upon conversion of any Convertible Notes, we delivered cash up to the principal amount of the Convertible Notes and any excess conversion value was delivered in shares of our common stock. On July 15, 2016, we repaid the remaining principal balance on the Convertible Notes of $136 million and issued approximately 2.5 million shares of common stock to noteholders with a fair value of $193 million. During the six months ended September 30, 2016, we repaid $163 million of the principal balance of the Convertible Notes and issued approximately 2.9 million shares of common stock to noteholders with a fair value of $222 million, resulting in a loss on extinguishment of $0.3 million. There was no activity during the three months ended December 31, 2016.

The carrying and fair values of the Convertible Notes are as follows (in millions):

	As of December 31, 2016		As of March 31, 2016
Principal amount of Convertible Notes	$	—	$	163
Unamortized debt discount of the liability component	—		(2		)
Net carrying value of Convertible Notes	$	—	$	161
Fair value of Convertible Notes (Level 2)	$	—	$	338

Convertible Note Hedge and Warrants Issuance

In July 2011, we entered into certain agreements designed to reduce the potential dilution with respect to our common stock upon conversion of the Convertible Notes (“the Convertible Note Hedge”). We paid $107 million for the Convertible Note Hedge, which was recorded as an equity transaction. The Convertible Note Hedge, subject to customary anti-dilution adjustments, provided us with the option to acquire, on a net settlement basis, approximately 19.9 million shares of our common stock, equal to the number of shares of our common stock that notionally underlie the Convertible Notes at a strike price of $31.74, which corresponds to the conversion price of the Convertible Notes. During the three and six months ended September 30, 2016, we received 2.5 million and 2.9 million shares, of our common stock under the Convertible Note Hedge, respectively, and none during the three months ended December 31, 2016.

Separately, in July 2011 we also entered into privately negotiated warrant transactions with certain counterparties whereby we sold to independent third parties warrants (the “Warrants”) to acquire, subject to customary anti-dilution adjustments that are substantially the same as the anti-dilution provisions contained in the Convertible Notes, up to 19.9 million shares of our

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common stock (which is also equal to the number of shares of our common stock that notionally underlie the Convertible Notes), with a strike price of $41.14. We received proceeds of $65 million from the sale of the Warrants in fiscal year 2012. The Warrants had a dilutive effect with respect to our common stock to the extent that the market price per share of our common stock exceeded $41.14 on or prior to the expiration date of the Warrants. The Warrants automatically exercised on a net share settlement basis over a 60 trading day period that began on October 17, 2016 and ended on January 12, 2017. We issued a total of 9.6 million shares upon exercise of the Warrants, of which 7.9 million shares were issued during the three months ended December 31, 2016 and 1.7 million shares were issued subsequent to quarter end.

Effect of conversion on earning per share (“EPS”)

Prior to conversion of the Convertible Notes, we included the effect of the additional potential dilutive shares if our common stock price exceeded $31.74 per share using the treasury stock method. If the average price of our common stock exceeds $41.14 per share for a quarterly period, we also included the effect of the additional potential dilutive shares related to the Warrants using the treasury stock method. Prior to conversion, the Convertible Note Hedge was not considered for purposes of the EPS calculation, as its effect would have been anti-dilutive. Upon conversion, the Convertible Note Hedge offset the dilutive effect of the Notes when the stock price was above $31.74 per share. See Note 13 for additional information related to our EPS.

Senior Notes

In February 2016, we issued $600 million aggregate principal amount of 3.70% Senior Notes due March 1, 2021 (the “2021 Notes”) and $400 million aggregate principal amount of 4.80% Senior Notes due March 1, 2026 (the “2026 Notes,” and together with the 2021 Notes, the “Senior Notes”). Our proceeds were $989 million, net of discount of $2 million and issuance costs of $9 million. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2021 Notes and the 2026 Notes using the effective interest rate method. The effective interest rate is 3.94% for the 2021 Notes and 4.97% for the 2026 Notes. Interest is payable semiannually in arrears, on March 1 and September 1 of each year.

The carrying and fair values of the Senior Notes are as follows (in millions):

	As of December 31, 2016			As of March 31, 2016
Senior Notes:
3.70% Senior Notes due 2021	$	600		$	600
4.80% Senior Notes due 2026	400			400
Total principal amount	$	1,000		$	1,000
Unaccreted discount	(2		)	(2		)
Unamortized debt issuance costs	(8		)	(9		)
Net carrying value of Senior Notes	$	990		$	989
Fair value of Senior Notes (Level 2)	$	1,045		$	1,039

As of December 31, 2016, the remaining life of the 2021 Notes and 2026 Notes is approximately 4.2 years and 9.2 years, respectively.

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The Senior Notes are senior unsecured obligations and rank equally with all our other existing and future unsubordinated obligations and any indebtedness that we may incur from time to time under our Credit Facility.

The 2021 Notes and the 2026 Notes are redeemable at our option at any time prior to February 1, 2021 or December 1, 2025, respectively, subject to a make-whole premium. Within one and three months of maturity, we may redeem the 2021 Notes or the 2026 Notes, respectively, at a redemption price equal to 100% of the aggregate principal amount plus accrued and unpaid interest. In addition, upon the occurrence of a change of control repurchase event, the holders of the Senior Notes may require us to repurchase all or a portion of the Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The Senior Notes also include covenants that limit our ability to incur liens on assets and to enter into sale and leaseback transactions, subject to certain allowances.

Credit Facility

In March 2015, we entered into a $500 million senior unsecured revolving credit facility (“Credit Facility”) with a syndicate of banks. The Credit Facility terminates on March 19, 2020. The Credit Facility contains an option to arrange with existing lenders and/or new lenders to provide up to an aggregate of $250 million in additional commitments for revolving loans. Proceeds of loans made under the Credit Facility may be used for general corporate purposes.

The loans bear interest, at our option, at the base rate plus an applicable spread or an adjusted LIBOR rate plus an applicable spread, in each case with such spread being determined based on our consolidated leverage ratio for the preceding fiscal quarter. We are also obligated to pay other customary fees for a credit facility of this size and type. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted LIBOR rate. Principal, together with all accrued and unpaid interest, is due and payable on March 19, 2020.

The credit agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, incur subsidiary indebtedness, grant liens, dispose of all or substantially all assets and pay dividends or make distributions, in each case subject to customary exceptions for a credit facility of this size and type. We are also required to maintain compliance with a capitalization ratio and maintain a minimum level of total liquidity.

The credit agreement contains customary events of default, including among others, non-payment defaults, covenant defaults, cross-defaults to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults and a change of control default, in each case, subject to customary exceptions for a credit facility of this size and type. The occurrence of an event of default could result in the acceleration of the obligations under the credit facility, an obligation by any guarantors to repay the obligations in full and an increase in the applicable interest rate.

As of December 31, 2016, no amounts were outstanding under the Credit Facility. $2 million of debt issuance costs that were paid in connection with obtaining this credit facility are being amortized to interest expense over the 5-year term of the Credit Facility.   

Interest Expense

The following table summarizes our interest expense recognized for the three and nine months ended December 31, 2016 and 2015 that is included in interest and other income (expense), net on our Condensed Consolidated Statements of Operations (in millions):

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016			2015
Amortization of debt discount	—			(3		)	(2		)	(14		)
Amortization of debt issuance costs	(1		)	(1		)	(2		)	(2		)
Coupon interest expense	(10		)	(1		)	(31		)	(3		)
Other interest expense	(1		)	—			(1		)	—
Total interest expense	$	(12	)	$	(5	)	$	(36	)	$	(19	)

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(11) COMMITMENTS AND CONTINGENCIES

Lease Commitments

As of December 31, 2016, we leased certain facilities, furniture and equipment under non-cancelable operating lease agreements. We were required to pay property taxes, insurance and normal maintenance costs for certain of these facilities and any increases over the base year of these expenses on the remainder of our facilities.

Development, Celebrity, League and Content Licenses: Payments and Commitments

The products we produce in our studios are designed and created by our employee designers, artists, software programmers and by non-employee software developers (“independent artists” or “third-party developers”). We typically advance development funds to the independent artists and third-party developers during development of our games, usually in installment payments made upon the completion of specified development milestones. Contractually, these payments are generally considered advances against subsequent royalties on the sales of the products. These terms are set forth in written agreements entered into with the independent artists and third-party developers.

In addition, we have certain celebrity, league and content license contracts that contain minimum guarantee payments and marketing commitments that may not be dependent on any deliverables. Celebrities and organizations with whom we have contracts include, but are not limited to: FIFA (Fédération Internationale de Football Association), FIFPRO Foundation, FAPL (Football Association Premier League Limited), and DFL Deutsche Fußball Liga GmbH (German Soccer League) (professional soccer); Dr. Ing. h.c. F. Porsche AG, Ferrari S.p.A. (Need For Speed and Real Racing games); National Basketball Association (professional basketball); PGA TOUR (professional golf); National Hockey League and NHL Players’ Association (professional hockey); National Football League Properties and PLAYERS Inc. (professional football); Zuffa, LLC (Ultimate Fighting Championship); ESPN (content in EA SPORTS games); Disney Interactive (Star Wars); Fox Digital Entertainment, Inc. (The Simpsons); Universal Studios Inc. (Pets); and Respawn. These developer and content license commitments represent the sum of (1) the cash payments due under non-royalty-bearing licenses and services agreements and (2) the minimum guaranteed payments and advances against royalties due under royalty-bearing licenses and services agreements, the majority of which are conditional upon performance by the counterparty. These minimum guarantee payments and any related marketing commitments are included in the table below.

The following table summarizes our minimum contractual obligations as of December 31, 2016 (in millions): 

			Fiscal Years Ending March 31,
			2017
			(Remaining
	Total		three mos.)		2018		2019		2020		2021		2022		Thereafter
Unrecognized commitments
Developer/licensor commitments	$	1,338	$	50	$	284	$	295	$	251	$	182	$	196	$	80
Marketing commitments	469		6		76		109		89		92		73		24
Operating leases	220		8		38		33		30		28		22		61
Senior Notes interest	272		11		41		41		41		41		19		78
Other purchase obligations	115		17		44		15		10		7		4		18
Total unrecognized commitments	2,414		92		483		493		421		350		314		261
Recognized commitments
Senior Notes principal and interest	1,010		10		—		—		—		600		—		400
Licensing and lease obligations (a)	131		6		23		24		25		26		27		—
Total recognized commitments	1,141		16		23		24		25		626		27		400
Total commitments	$	3,555	$	108	$	506	$	517	$	446	$	976	$	341	$	661

The unrecognized amounts represented in the table above reflect our minimum cash obligations for the respective fiscal years, but do not necessarily represent the periods in which they will be recognized and expensed in our Condensed Consolidated Financial Statements. In addition, the amounts in the table above are presented based on the dates the amounts are contractually due as of December 31, 2016; however, certain payment obligations may be accelerated depending on the performance of our operating results. Furthermore, up to $32 million of the unrecognized amounts in the table above may be payable, at the licensor’s election, in shares of our common stock, subject to a $10 million maximum during any fiscal year. The number of shares to be issued will be based on fair market value at the time of issuance.

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In addition to what is included in the table above, as of December 31, 2016, we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $87 million, of which we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur.

Legal Proceedings

On July 29, 2010, Michael Davis, a former NFL running back, filed a putative class action in the United States District Court for the Northern District of California against the Company, alleging that certain past versions of Madden NFL included the images of certain retired NFL players without their permission. In March 2012, the trial court denied the Company’s request to dismiss the complaint on First Amendment grounds. In January 2015, that trial court decision was affirmed by the Ninth Circuit Court of Appeals and the case was remanded back to the United States District Court for the Northern District of California. On February 2, 2017, the United States District Court for the Northern District of California denied the plaintiffs’ motion for class certification.

We are also subject to claims and litigation arising in the ordinary course of business. We do not believe that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on our Condensed Consolidated Financial Statements.

(12)  STOCK-BASED COMPENSATION

Valuation Assumptions

We estimate the fair value of stock-based awards on the date of grant. We recognize compensation costs for stock-based awards to employees based on the grant-date fair value using a straight-line approach over the service period for which such awards are expected to vest.

The determination of the fair value of market-based restricted stock units, stock options and ESPP purchase rights is affected by assumptions regarding subjective and complex variables. Generally, our assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. We determine the fair value of our stock-based awards as follows:

• Restricted Stock Units. The fair value of restricted stock units is determined based on the quoted market price of our common stock on the date of grant.

• Market-Based Restricted Stock Units. Market-based restricted stock units consist of grants of performance-based restricted stock units to certain members of executive management that vest contingent upon the achievement of pre-determined market and service conditions (referred to herein as “market-based restricted stock units”). The fair value of our market-based restricted stock units is determined using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model are the risk-free interest rate, expected volatility, expected dividends and correlation coefficient.

• Stock Options and Employee Stock Purchase Plan. The fair value of stock options and stock purchase rights granted pursuant to our equity incentive plans and our 2000 Employee Stock Purchase Plan, as amended (“ESPP”), respectively, is determined using the Black-Scholes valuation model based on the multiple-award valuation method. Key assumptions of the Black-Scholes valuation model are the risk-free interest rate, expected volatility, expected term and expected dividends. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected term of the option. Expected volatility is based on a combination of historical stock price volatility and implied volatility of publicly-traded options on our common stock. Expected term is determined based on historical exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise behavior.

There were an insignificant number of stock options granted during the three and nine months ended December 31, 2016 and 2015.

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The estimated assumptions used in the Black-Scholes valuation model to value our ESPP purchase rights were as follows:

	ESPP Purchase Rights
	Nine Months Ended December 31,
	2016		2015
Risk-free interest rate	0.5 - 0.6%		0.3 - 0.4%
Expected volatility	29 - 32%		32	%
Weighted-average volatility	31	%	32	%
Expected term	6 - 12 months		6 - 11.5 months
Expected dividends	None		None

There were no market-based restricted stock units granted during the three months ended December 31, 2016 and 2015.

Stock-Based Compensation Expense

Employee stock-based compensation expense recognized during the three and nine months ended December 31, 2016 and 2015 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. In subsequent periods, if actual forfeitures differ from those estimates, an adjustment to stock-based compensation expense will be recognized at that time.

The following table summarizes stock-based compensation expense resulting from stock options, restricted stock units, market-based restricted stock units, and the ESPP purchase rights included in our Condensed Consolidated Statements of Operations (in millions):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
Cost of revenue	$	—	$	—	$	2	$	1
Research and development	27		26		81		77
Marketing and sales	8		5		23		17
General and administrative	13		11		38		36
Stock-based compensation expense	$	48	$	42	$	144	$	131

During the three months ended December 31, 2016, we recognized a $10 million deferred income tax benefit related to our stock-based compensation expense. During the three months ended December 31, 2015, we did not recognize any benefit from income taxes related to our stock-based compensation expense due to the U.S. valuation allowance.

During the nine months ended December 31, 2016, we recognized a $28 million deferred income tax benefit related to our stock-based compensation expense. During the nine months ended December 31, 2015, we did not recognize any benefit from income taxes related to our stock-based compensation expense due to the U.S. valuation allowance.

As of December 31, 2016, our total unrecognized compensation cost related to restricted stock units and market-based restricted stock units was $312 million and is expected to be recognized over a weighted-average service period of 1.6 years. Of the $312 million of unrecognized compensation cost, $40 million relates to market-based restricted stock units. As of December 31, 2016, our total unrecognized compensation cost related to stock options was $4 million and is expected to be recognized over a weighted-average service period of 0.7 years.

During the three and nine months ended December 31, 2016, we recognized $16 million and $53 million, respectively, of excess tax benefit from stock-based compensation deductions; this amount is reported in the financing activities on our Condensed Consolidated Statement of Cash Flows.

During the three and nine months ended December 31, 2015, we recognized $8 million and $73 million, respectively, of excess tax benefit from stock-based compensation deductions; this amount is reported in the financing activities on our Condensed Consolidated Statement of Cash Flows.

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Stock Options

The following table summarizes our stock option activity for the nine months ended December 31, 2016:

	Options (in thousands)		Weighted- Average Exercise Prices		Weighted- Average Remaining Contractual Term  (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of March 31, 2016	3,278		$	35.09
Granted	4		72.43
Exercised	(370	)	30.13
Forfeited, cancelled or expired	(31	)	35.78
Outstanding as of December 31, 2016	2,881		$	35.78	4.78	$	124
Vested and expected to vest	2,843		$	35.84	4.74	$	122
Exercisable as of December 31, 2016	2,326		$	36.81	4.20	$	98

The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price as of December 31, 2016, which would have been received by the option holders had all the option holders exercised their options as of that date. We issue new common stock from our authorized shares upon the exercise of stock options.

Restricted Stock Units

The following table summarizes our restricted stock unit activity for the nine months ended December 31, 2016:

	Restricted Stock Rights (in thousands)		Weighted- Average Grant Date Fair Values
Outstanding as of March 31, 2016	7,157		$	44.04
Granted	2,529		75.68
Vested	(3,658	)	36.39
Forfeited or cancelled	(487	)	56.76
Outstanding as of December 31, 2016	5,541		$	62.41

The weighted-average grant date fair values of restricted stock units granted during the three and nine months ended December 31, 2016 were $80.04 and $75.68, respectively.

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Market-Based Restricted Stock Units

Our market-based restricted stock units vest contingent upon the achievement of pre-determined market and service conditions. If these market conditions are not met but service conditions are met, the market-based restricted stock units will not vest; however, any compensation expense we have recognized to date will not be reversed. The number of shares of common stock to be received at vesting will range from zero percent to 200 percent of the target number of market-based restricted stock units based on our total stockholder return (“TSR”) relative to the performance of companies in the NASDAQ-100 Index for each measurement period, generally over a one-year, two-year cumulative and three-year cumulative period. In the table below, we present shares granted at 100 percent of target of the number of market-based restricted stock units that may potentially vest. The maximum number of shares of common stock that could vest is approximately 0.7 million for market-based restricted stock units granted during the nine months ended December 31, 2016. As of December 31, 2016, the maximum number of shares that could vest is approximately 1.3 million for market-based restricted stock units outstanding.

The following table summarizes our market-based restricted stock unit activity for the nine months ended December 31, 2016:

	Market-Based Restricted  Stock Units (in thousands)		Weighted- Average  Grant Date Fair Value
Outstanding as of March 31, 2016	636		$	64.49
Granted	353		98.04
Vested	(558	)	50.08
Vested above target	238		44.99
Forfeited or cancelled	(28	)	84.94
Outstanding as of December 31, 2016	641		$	87.37

Stock Repurchase Program

In May 2014, a special committee of our Board of Directors, on behalf of the full Board of Directors, authorized a two-year program to repurchase up to $750 million of our common stock. Since inception, we repurchased approximately 9.2 million shares for approximately $394 million under this program.

In May 2015, our Board of Directors authorized a program to repurchase up to $1 billion of our common stock. This stock repurchase program, which expires on May 31, 2017, supersedes and replaces the stock repurchase authorization approved in May 2014. Under this program, we may purchase stock in the open market or through privately-negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities and other market conditions. We are not obligated to repurchase any specific number of shares under this program and it may be modified, suspended or discontinued at any time. During the three and nine months ended December 31, 2016, we repurchased approximately 1.5 million and 5.0 million shares for approximately $127 million and $383 million, respectively. We continue to actively repurchase shares. As of December 31, 2016, $156 million was available to be repurchased under this program.

The following table summarizes total shares repurchased during the three and nine months ended December 31, 2016 and 2015:

	May 2014 Program			May 2015 Program			Total
(in millions)	Shares	Amount		Shares	Amount		Shares	Amount
Three months ended December 31, 2016	—	$	—	1.5	$	127	1.5	$	127
Nine months ended December 31, 2016	—	$	—	5.0	$	383	5.0	$	383
Three months ended December 31, 2015	—	$	—	1.8	$	126	1.8	$	126
Nine months ended December 31, 2015	1.0	$	57	4.8	$	327	5.8	$	384

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(13) EARNINGS (LOSS) PER SHARE

The following table summarizes the computations of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS is computed as net income divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based compensation plans including stock options, restricted stock, restricted stock units, ESPP purchase rights, warrants, and other convertible securities using the treasury stock method.

	Three Months Ended December 31,						Nine Months Ended December 30,
(In millions, except per share amounts)	2016			2015			2016		2015
Net income (loss)	$	(1	)	$	(45	)	$	401	$	257
Shares used to compute earnings (loss) per share:
Weighted-average common stock outstanding — basic	303			311			302		311
Dilutive potential common shares related to stock award plans and from assumed exercise of stock options	—			—			3		7
Dilutive potential common shares related to the Convertible Notes	—			—			1		8
Dilutive potential common shares related to the Warrants	—			—			8		7
Weighted-average common stock outstanding — diluted	303			311			314		333
Earnings (loss) per share:
Basic	$ (	0.00	)	$	(0.14	)	$	1.33	$	0.83
Diluted	$ (	0.00)		$	(0.14	)	$	1.28	$	0.77

As a result of our net loss for the three months ended December 31, 2016, we have excluded all potentially dilutive common shares from the diluted loss per share calculation as their inclusion would have had an antidilutive effect. Had we reported net income for this period, an additional 3 million shares of common stock related to our outstanding equity-based instruments and an additional 7 million shares related to the Warrants would have been included in the number of shares used to calculate Diluted EPS for the three months ended December 31, 2016.

As a result of our net loss for the three months ended December 31, 2015, we have excluded all potentially dilutive common shares from the diluted loss per share calculation as their inclusion would have had an antidilutive effect. Had we reported net income for this period, an additional 6 million shares of common stock related to our outstanding equity-based instruments, an additional 6 million shares of common stock related to the Notes, and an additional 8 million shares related to the Warrants would have been included in the number of shares used to calculate Diluted EPS for the three months ended December 31, 2015.

For the nine months ended December 31, 2016 and 2015, an immaterial amount of options to purchase, restricted stock units and restricted stock to be released were excluded from the treasury stock method computation of diluted shares as their inclusion would have had an antidilutive effect.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Electronic Arts Inc.:

We have reviewed the accompanying condensed consolidated balance sheet of Electronic Arts Inc. and subsidiaries as of December 31, 2016, the related condensed consolidated statements of operations and comprehensive income (loss) for the three-month and nine-month periods ended December 31, 2016 and January 2, 2016, and the related condensed consolidated statements of cash flows for the nine-month periods ended December 31, 2016 and January 2, 2016. These condensed consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Electronic Arts Inc. and subsidiaries as of April 2, 2016, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 26, 2016, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of April 2, 2016, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/   KPMG LLP

Santa Clara, California

February 7, 2017

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, made in this Quarterly Report are forward looking. Examples of forward-looking statements include statements related to industry prospects, our future economic performance including anticipated revenues and expenditures, results of operations or financial position, and other financial items, our business plans and objectives, including our intended product releases, and may include certain assumptions that underlie the forward-looking statements. We use words such as “anticipate,” “believe,” “expect,” “intend,” “estimate” (and the negative of any of these terms), “future” and similar expressions to help identify forward-looking statements. These forward-looking statements are subject to business and economic risk and reflect management’s current expectations, and involve subjects that are inherently uncertain and difficult to predict. Our actual results could differ materially from those in the forward-looking statements. We will not necessarily update information if any forward-looking statement later turns out to be inaccurate. Risks and uncertainties that may affect our future results include, but are not limited to, those discussed in this report under the heading “Risk Factors” in Part II, Item 1A, as well as in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 as filed with the Securities and Exchange Commission (“SEC”) on May 27, 2016 and in other documents we have filed with the SEC.

OVERVIEW

The following overview is a high-level discussion of our operating results, as well as some of the trends and drivers that affect our business. Management believes that an understanding of these trends and drivers provides important context for our results for the three and nine months ended December 31, 2016, as well as our future prospects. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this Form 10-Q, including in the remainder of “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” “Risk Factors,” and the Condensed Consolidated Financial Statements and related Notes. Additional information can be found in the “Business” section of our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 as filed with the SEC on May 27, 2016 and in other documents we have filed with the SEC.

About Electronic Arts

We are a global leader in digital interactive entertainment. We develop, market, publish and distribute games content and services that can be played by consumers on a variety of platforms, which include consoles (such as the PlayStation from Sony and the Xbox from Microsoft), PCs, mobile phones and tablets. Some of our games are based on our wholly-owned intellectual property (e.g., Battlefield, Mass Effect, Need for Speed, The Sims and Plants vs. Zombies), and some of our games leverage content that we license from others (e.g., FIFA, Madden NFL and Star Wars). We also publish and distribute games developed by third parties (e.g., Titanfall). Our products and services may be purchased through multiple distribution channels, including physical and online retailers, platform providers such as console manufacturers, providers of free-to-download PC games, mobile carriers and directly through Origin, our own digital distribution platform.

Financial Results

Our key financial results for our quarter ended December 31, 2016 were as follows:

• Total net revenue was $1,149 million, up 7 percent year-over-year. On a constant currency basis, we estimate that total net revenue would have been $1,164 million, up 9 percent year over year.

• Digital revenue was $685 million, up 20 percent year-over-year.

• International net revenue was $588 million, down 5 percent year-over-year. On a constant currency basis, we estimate that international net revenue would have been $603 million, down 3 percent year over year.

• Gross margin was 55.1 percent, up 6.1 percent year-over-year.

• Operating expenses were $637 million, up 15 percent year-over-year. On a constant currency basis, we estimate that total operating expenses would have been $644 million, up 16 percent year over year.

• Net loss was $1 million, with diluted loss per share of $0.00.

• Total cash, cash equivalents and short-term investments was $4,219 million.

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From time to time, we will make comparisons of current periods to prior periods with reference to constant currency. Constant currency comparisons are based on translating local currency amounts in the current period at actual foreign exchange rates from the prior comparable period. We evaluate our financial performance on a constant currency basis in order to facilitate period-to-period comparisons without regard to the impact of changing foreign currency exchange rates.

Trends in Our Business

Digital Transformation. Our business continues to transform from a traditional packaged goods business model to one in which our games and services are sold and delivered digitally, with additional content, features and services helping to extend the life of our packaged goods and digital games. For example, the Ultimate Team mode incorporated into iterations of our FIFA, Madden NFL and NHL franchises and expansion packs available digitally for our Star Wars, Battlefield and Sims franchises have kept many of our players engaged with those games for longer periods of time. Our digital transformation is also creating opportunities in platforms, content models and modalities of play. For example, we have leveraged franchises typically associated with consoles and traditional PC gaming, such as FIFA, Madden NFL, The Sims, SimCity and Star Wars, to create mobile and PC free-to-download games that are monetized through a business model through which we sell incremental content and/or features in discrete transactions. We also provide our EA Access service for the Xbox One and Origin Access service on PC which offer players access to a selection of EA games and other benefits for a monthly or annual fee.

Our digital transformation also gives us the opportunity to strengthen our player network. We are investing in a technology foundation to enable us to build player relationships that can last for years instead of for days or weeks by connecting our players to us and to each other. This connection allows us to market and deliver content and services for popular franchises like FIFA, Battlefield and Star Wars to our players more efficiently. That same foundation also enables new player-centric ways to discover and try new experiences, such as our subscription-based EA Access and Origin Access services.

We significantly increased our digital net revenue from $1,833 million in fiscal year 2014 to $2,199 million in fiscal year 2015 and $2,409 million during fiscal year 2016. We expect this portion of our business to continue to grow through fiscal year 2017 and beyond as we continue to focus on developing and monetizing products and services that can be delivered digitally.

Foreign Currency Exchange Rates. International sales are a fundamental part of our business, and the strengthening of the U.S. dollar (particularly relative to the Euro, British pound sterling, Australian dollar, Chinese yuan and South Korean won) has a negative impact on our reported international net revenue, but a positive impact on our reported international operating expenses (particularly the Swedish krona and Canadian dollar) because these amounts are translated at lower rates as compared to periods in which the U.S. dollar is weaker. Volatility in exchange rates remains elevated as compared to historical standards, and macroeconomic events like the United Kingdom’s vote to leave the European Union are injecting even more uncertainty. While we use foreign currency hedging contracts to mitigate some foreign currency exchange risk, these activities are limited in the protection that they provide us and can themselves result in losses.

Mobile and PC Free-to-Download Games. The proliferation of mobile phones and tablets has significantly increased the consumer base for mobile games. The broad consumer acceptance of business models which allow consumers to try new games with no up-front cost and pay for additional content or in-game items, has led to growth in the mobile gaming industry. Likewise, the mass introduction and wide consumer acceptance of free-to-download, micro-transaction-based PC games played over the Internet has also broadened our consumer base. We expect revenue generated from mobile and PC free-to-download games to remain an important part of our business.

We track an estimate of monthly active users (“MAUs”) for our mobile business, which we believe is a useful indicator of player engagement trends for that business. For the three months ended December 31, 2016, we had average MAUs of over 160 million. MAUs are the aggregate number of individuals who accessed a particular game on a particular device in the last 30 days as of the measurement date. For our calculation, an individual who either plays two of our games on a single device, or the same game on two devices in the relevant period, would be counted as two users. Average MAUs for a particular period is the average of the MAUs at each month-end during that period. MAUs are calculated using internal company data based on tracking the activity of user accounts. We also include in this calculation data provided by our third party publishing partners for certain games that we develop, but we exclude information from third party titles that we publish. From time to time, we adjust the calculation for user activity that is inconsistent with our methodology. We believe that the numbers are reasonable estimates of our user base for the applicable period of measurement; however, factors relating to user activity may impact these numbers. Our methodology for calculating MAUs may differ from the methodology used by other companies to calculate this metric.     

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Concentration of Sales Among the Most Popular Games. In all major segments of our industry, we see a large portion of games sales concentrated on the most popular titles, and many of those titles are sequels of prior games. Similarly, a significant portion of our revenue historically has been derived from games and services based on a few popular franchises, several of which we have released on an annual or bi-annual basis. For example, in fiscal year 2016, net revenue generated from the sale of products and services associated with our three largest franchises accounted for approximately 55 percent of our net revenue. We expect this trend to continue.

Recurring Revenue Sources.  Our business model includes revenue that we deem recurring in nature, such as revenue from our annualized titles (such as FIFA and Madden NFL) and associated services, our ongoing mobile business and subscription programs. We have greater confidence in our ability to forecast revenue from these areas of our business than for new offerings.  As we continue to leverage the digital transformation in our industry and incorporate new content models and modalities of play into our games, our goal is to continue to look for opportunities to expand the recurring portion of our business.

Net Sales.  In order to improve transparency into our business, we disclose an operating performance metric, net sales.  Net sales is defined as the net amount of products and services sold digitally or sold-in physically in the period.

Net sales were $2.07 billion for the three months ended December 31, 2016, driven by sales of Battlefield 1 and FIFA 17 during the quarter. Net sales increased $267 million or 15%, from the three months ended December 31, 2015 due primarily to stronger sales associated with our first-person shooter titles and FIFA franchise. Digital net sales were $1.10 billion for the three months ended December 31, 2016, an increase of $288 million or 36% from the three months ended December 31, 2015. The increase in digital net sales was driven by year-over-year growth in full game downloads, primarily from stronger full game downloads of Battlefield 1 as compared to Star Wars Battlefront, and approximately $50 million of digital net sales from the FIFA launch captured this fiscal quarter, rather than in the second fiscal quarter, as was the case in fiscal 2016.

Recent Developments

Stock Repurchase Program. In May 2015, our Board of Directors authorized a program to repurchase up to $1 billion of our common stock. This stock repurchase program expires on May 31, 2017. During the three months ended December 31, 2016, we repurchased approximately 1.5 million shares for approximately $127 million under this program. During the nine months ended December 31, 2016, we repurchased approximately 5.0 million shares for approximately $383 million under this program. We continue to actively repurchase shares.

In February 2016, we announced a new $500 million stock repurchase program. This new program was incremental to the existing two-year $1 billion stock repurchase program announced in May 2015. We completed repurchases under the February 2016 program during the quarter ended March 31, 2016. We repurchased approximately 7.8 million shares for approximately $500 million under this new program.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenue and expenses during the reporting periods. The policies discussed below are considered by management to be critical because they are not only important to the portrayal of our financial condition and results of operations, but also because application and interpretation of these policies requires both management judgment and estimates of matters that are inherently uncertain and unknown. As a result, actual results may differ materially from our estimates.

Revenue Recognition, Sales Returns and Allowances, and Bad Debt Reserves

We derive revenue principally from sales of interactive software games, and related content (e.g., micro-transactions) and services on consoles (such as the PlayStation from Sony and the Xbox from Microsoft), PCs, mobile phones and tablets. We evaluate revenue recognition based on the criteria set forth in FASB Accounting Standards Codification (“ASC”) 605, Revenue Recognition and ASC 985-605, Software: Revenue Recognition. We classify our revenue as either product revenue or service and other revenue.

Product revenue. Our product revenue includes revenue associated with the sale of software games or related content, whether delivered via a physical disc (e.g., packaged goods) or delivered digitally (e.g., full-game downloads, extra-content), and licensing of game software to third-parties. Product revenue also includes revenue from mobile full game downloads that do not require our hosting support (e.g., premium mobile games) in order to utilize the game or related content (i.e. can be played with or without an Internet connection), and sales of tangible products such as hardware, peripherals, or collectors’ items.

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Service and other revenue. Our service revenue includes revenue recognized from time-based subscriptions and games or related content that requires our hosting support in order to utilize the game or related content (i.e., can only be played with an Internet connection). This includes (1) entitlements to content that are accessed through hosting services (e.g., micro-transactions for Internet-based, social network and free-to-download mobile games), (2) massively multi-player online (“MMO”) games (both software game and subscription sales), (3) subscriptions for our Battlefield Premium, EA Access, and Pogo-branded online game services, and (4) allocated service revenue from sales of software games with an online service element (i.e., “matchmaking” service). Our other revenue includes advertising and non-software licensing revenue.

With respect to the allocated service revenue from sales of software games with a matchmaking service mentioned above, our allocation of proceeds between product and service revenue for presentation purposes is based on management’s best estimate of the selling price of the matchmaking service with the residual value allocated to product revenue. Our estimate of the selling price of the matchmaking service is comprised of several factors including, but not limited to, prior selling prices for the matchmaking service, prices charged separately by other third-party vendors for similar service offerings, and a cost-plus-margin approach. We review the estimated selling price of the online matchmaking service on a regular basis and use this methodology consistently to allocate revenue between product and service for software game sales with a matchmaking service.

We evaluate and recognize revenue when all four of the following criteria are met:

• Evidence of an arrangement. Evidence of an agreement with the customer that reflects the terms and conditions to deliver the related products or services must be present.

• Fixed or determinable fee. If a portion of the arrangement fee is not fixed or determinable, we recognize revenue as the amount becomes fixed or determinable.

• Collection is deemed probable. Collection is deemed probable if we expect the customer to be able to pay amounts under the arrangement as those amounts become due. If we determine that collection is not probable as the amounts become due, we generally conclude that collection becomes probable upon cash collection.

• Delivery. For packaged goods, delivery is considered to occur when a product is shipped and the risk of loss and rewards of ownership have transferred to the customer. For digital downloads, delivery is considered to occur when the software is made available to the customer for download. For services and other, delivery is generally considered to occur as the service is delivered, which is determined based on the underlying service obligation. If there is significant uncertainty of acceptance, revenue is recognized once acceptance is reasonably assured.

Online-Enabled Games

The majority of our software games and related content have online connectivity whereby a consumer may be able to download unspecified content or updates on a when-and-if-available basis (“unspecified updates”) for use with the original game software. In addition, we may also offer an online matchmaking service that permits consumers to play against each other via the Internet without a separate fee. U.S. GAAP requires us to account for the consumer’s right to receive unspecified updates or the matchmaking service for no additional fee as a “bundled” sale, or multiple-element arrangement.

We have an established historical pattern of providing unspecified updates (e.g., player roster updates to Madden NFL 17) to online-enabled games and related content at no additional charge to the consumer. We do not have vendor-specific objective evidence of fair value (“VSOE”) for these unspecified updates, and thus, as required by U.S. GAAP, we recognize revenue from the sale of these online-enabled games and related content over the period we expect to offer the unspecified updates to the consumer (“estimated offering period”).

Estimated Offering Period

Because the offering period is not an explicitly defined period, we must make an estimate of the offering period. Determining the estimated offering period is inherently subjective and is subject to regular revision based on historical online usage. For example, in determining the estimated offering period for unspecified updates associated with our online-enabled games, we consider the period of time consumers are online as online connectivity is required. On an annual basis, we review consumers’ online gameplay of all online-enabled games that have been released 12 to 24 months prior to the evaluation date. For example, if our evaluation date is April 1, 2016, we evaluate all online-enabled games released between April 1, 2014 and March 31, 2015. Based on this population of games, for all players that register the game online within the first six months of release of

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the game to the general public, we compute the weighted-average number of days for each online-enabled game, based on when a player initially registers the game online to when that player last plays the game online. We then compute the weighted-average number of days for all online-enabled games by multiplying the weighted-average number of days for each online-enabled game by its relative percentage of total units sold from these online-enabled games (i.e., a game with more units sold will have a higher weighting to the overall computation than a game with fewer units sold). Under a similar computation, we also consider the estimated period of time between the date a game unit is sold to a reseller and the date the reseller sells the game unit to an end consumer (i.e., time in channel). Based on these two calculations we then consider the method of distribution. For example, physical software games sold at retail would have a composite offering period equal to the online gameplay plus time in channel as opposed to digitally distributed software games which are delivered immediately via digital download and thus have no concept of channel. Additionally, we consider results from prior analyses, known and expected online gameplay trends, as well as disclosed service periods for competitors’ games in determining the estimated offering period for future sales.

While we consistently apply this methodology, inherent assumptions used in this methodology include which online-enabled games to sample, whether to use only units that have registered online, whether to weight the number of days for each game, whether to weight the days based on the units sold of each game, determining the period of time between the date of sale to reseller and the date of sale to the consumer and assessing online gameplay trends.

We recognize revenue from the sale of online-enabled games for which we do not have VSOE for the unspecified updates on a straight-line basis, generally over an estimated nine-month period beginning in the month after shipment for physical games sold through retail and an estimated six-month period for digitally-distributed games.

Deferred Net Revenue (online-enabled games)

Because the majority of our sales are subject to a deferral period of generally six to nine months, our deferred net revenue (online-enabled games) balance is material. This balance increases from period to period by the revenue being deferred for current sales and is reduced by the recognition of revenue from prior sales that were deferred (i.e., the “net change” in the deferred balance). However, given the seasonal sales nature of our business, the net change in the deferred balance may be material from period to period. For example, because our sales have historically been highest in the fiscal third quarter, the deferred net revenue (online-enabled games) balance generally increases significantly in the third fiscal quarter. Similarly, because sales have historically been lowest in the first fiscal quarter, the deferred net revenue (online-enabled games) balance generally decreases significantly in the first fiscal quarter of a fiscal year.

Other Multiple-Element Arrangements

In some of our multiple-element arrangements, we sell tangible products with software and/or software-related offerings. These tangible products are generally either peripherals or ancillary collectors’ items, such as figurines and comic books. Revenue for these arrangements is allocated to each separate unit of accounting for each deliverable using the relative selling prices of each deliverable in the arrangement based on the selling price hierarchy described below. If the arrangement contains more than one software deliverable, the arrangement consideration is allocated to the software deliverables as a group and then allocated to each software deliverable.

We determine the selling price for a tangible product deliverable based on the following selling price hierarchy: VSOE (i.e., the price we charge when the tangible product is sold separately) if available, third-party evidence (“TPE”) of fair value (i.e., the price charged by others for similar tangible products) if VSOE is not available, or our best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. Determining the BESP is a subjective process that is based on multiple factors including, but not limited to, recent selling prices and related discounts, market conditions, customer classes, sales channels and other factors. Provided the other three revenue recognition criteria other than delivery have been met, we recognize revenue upon delivery to the customer as we have no further obligations.

We must make assumptions and judgments in order to (1) determine whether and when each element is delivered, (2) determine whether VSOE exists for each undelivered element, and (3) allocate the total price among the various elements, as applicable. Changes to any of these assumptions and judgments, or changes to the elements in the arrangement, could cause a material increase or decrease in the amount of revenue that we report in a particular period.

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Principal Agent Considerations

We evaluate sales of our interactive software games via third party storefronts, including digital storefronts such as Microsoft’s Xbox Games Store, Sony PSN, Apple App Store, and Google Play, in order to determine whether or not we are acting as the primary obligor in the sale to the end consumer, which we consider in determining if revenue should be reported gross or net of fees retained by the storefront. Key indicators that we evaluate in determining gross versus net treatment include but are not limited to the following:

• The party responsible for delivery/fulfillment of the product or service to the end consumer

• The party responsible for the billing, collection of fees and refunds to the end consumer

• The storefront and Terms of Sale that govern the end consumer’s purchase of the product or service

• The party that sets the pricing with the end consumer and has credit risk

Based on evaluation of the above indicators, we have determined that generally the third party is considered the primary obligor to end consumers for the sale of our interactive software games. We therefore report revenue related to these arrangements net of the fees retained by the storefront.

Sales Returns and Allowances and Bad Debt Reserves

We reduce revenue for estimated future returns and price protection which may occur with our distributors and retailers (“channel partners”). Price protection represents our practice to provide our channel partners with a credit allowance to lower their wholesale price on a particular product that they have not resold to end consumers. The amount of the price protection is generally the difference between the old wholesale price and the new reduced wholesale price. In certain countries for our PC and console packaged goods software products, we also have a practice of allowing channel partners to return older software products in the channel in exchange for a credit allowance. As a general practice, we do not give cash refunds.

When evaluating the adequacy of sales returns and price protection allowances, we analyze the following: historical credit allowances, current sell-through of our channel partners’ inventory of our software products, current trends in retail and the video game industry, changes in customer demand, acceptance of our software products, and other related factors. In addition, we monitor the volume of sales to our channel partners and their inventories, as substantial overstocking in the distribution channel could result in high returns or higher price protection in subsequent periods.

In the future, actual returns and price protections may materially exceed our estimates as unsold software products in the distribution channels are exposed to rapid changes in consumer preferences, market conditions or technological obsolescence due to new platforms, product updates or competing software products. While we believe we can make reliable estimates regarding these matters, these estimates are inherently subjective. Accordingly, if our estimates change, our returns and price protection allowances would change and would impact the total net revenue, accounts receivable and deferred net revenue that we report.

We determine our allowance for doubtful accounts by evaluating the following: customer creditworthiness, current economic trends, historical experience, age of current accounts receivable balances, and changes in financial condition or payment terms of our customers. Significant management judgment is required to estimate our allowance for doubtful accounts in any accounting period. The amount and timing of our bad debt expense and cash collection could change significantly as a result of a change in any of the evaluation factors mentioned above.

Royalties and Licenses

Our royalty expenses consist of payments to (1) content licensors, (2) independent software developers, and (3) co-publishing and distribution affiliates. License royalties consist of payments made to celebrities, professional sports organizations, movie studios and other organizations for our use of their trademarks, copyrights, personal publicity rights, content and/or other intellectual property. Royalty payments to independent software developers are payments for the development of intellectual property related to our games. Co-publishing and distribution royalties are payments made to third parties for the delivery of products.

Royalty-based obligations with content licensors and distribution affiliates are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Significant judgment is required to estimate the effective royalty rate for a particular contract. Because the computation of effective royalty rates requires us to project future revenue, it is inherently subjective as

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our future revenue projections must anticipate a number of factors, including (1) the total number of titles subject to the contract, (2) the timing of the release of these titles, (3) the number of software units and amount of extra content that we expect to sell, which can be impacted by a number of variables, including product quality, number of platforms we release on, the timing of the title’s release and competition, and (4) future pricing. Determining the effective royalty rate for our titles is particularly challenging due to the inherent difficulty in predicting the popularity of entertainment products. Furthermore, if we conclude that we are unable to make a reasonably reliable forecast of projected net revenue, we recognize royalty expense at the greater of contract rate or on a straight-line basis over the term of the contract. Accordingly, if our future revenue projections change, our effective royalty rates would change, which could impact the amount and timing of royalty expense we recognize.

Prepayments made to thinly capitalized independent software developers and co-publishing affiliates are generally made in connection with the development of a particular product, and therefore, we are generally subject to development risk prior to the release of the product. Accordingly, payments that are due prior to completion of a product are generally expensed to research and development over the development period as the services are incurred. Payments due after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract. Royalty liabilities are classified as current liabilities to the extent such royalty payments are contractually due within the next 12 months.

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through product and service sales. Any impairments or losses determined before the launch of a product are generally charged to research and development expense. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If impairment exists, then the assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.

Income Taxes

We recognize deferred tax assets and liabilities for both (1) the expected impact of differences between the financial statement amount and the tax basis of assets and liabilities and (2) the expected future tax benefit to be derived from tax losses and tax credit carryforwards. We record a valuation allowance against deferred tax assets when it is considered more likely than not that all or a portion of our deferred tax assets will not be realized. In making this determination, we are required to give significant weight to evidence that can be objectively verified.

In addition to considering forecasts of future taxable income, we are also required to evaluate and quantify other possible sources of taxable income in order to assess the realization of our deferred tax assets, namely the reversal of existing deferred tax liabilities, the carry back of losses and credits as allowed under current tax law, and the implementation of tax planning strategies. Evaluating and quantifying these amounts involves significant judgments. Each source of income must be evaluated based on all positive and negative evidence; this evaluation involves assumptions about future activity.

In the fourth quarter of fiscal year 2016, we realized significant U.S. pre-tax income for both the fourth quarter and the fiscal year ended March 31, 2016. As of March 31, 2016, we had reported positive operating performance in the U.S. for two consecutive fiscal years and had also reported a cumulative three-year U.S. pre-tax profit. In addition, during the fourth quarter of fiscal year 2016, we completed our financial plan for fiscal year 2017 and expect continued positive operating performance in the U.S. We also considered forecasts of future taxable income and evaluated the utilization of tax credit carryforwards prior to their expiration. After considering these factors, we determined that the positive evidence overcame any negative evidence and concluded that it was more likely than not that the U.S. deferred tax assets were realizable. As a result, we released the valuation allowance against all of the U.S. federal deferred tax assets and a portion of the U.S. state deferred tax assets during the fourth quarter of fiscal year 2016. We continue to maintain a valuation allowance related to specific U.S. state deferred tax assets and foreign capital loss carryovers, due to uncertainty about the future realization of these assets.

Historically, we have considered all undistributed earnings of our foreign subsidiaries to be indefinitely reinvested outside of the United States and, accordingly, no U.S. taxes have been provided thereon. During the fourth quarter of fiscal year 2016 we reevaluated our intent to indefinitely reinvest all earnings of foreign subsidiary companies, and concluded that a portion of earnings of certain subsidiaries will no longer be considered to be indefinitely reinvested. We currently intend to continue to indefinitely reinvest a substantial majority of the undistributed earnings of our foreign subsidiaries outside of the United States.

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In the ordinary course of our business, there are many transactions and calculations where the tax law and ultimate tax determination is uncertain. As part of the process of preparing our Condensed Consolidated Financial Statements, we are required to estimate our income taxes in each jurisdiction in which we operate prior to the completion and filing of tax returns for such periods. This process requires estimating both our geographic mix of income and our uncertain tax positions in each jurisdiction where we operate. These estimates involve complex issues and require us to make judgments about the likely application of the tax law to our situation, as well as with respect to other matters, such as anticipating the positions that we will take on tax returns prior to our actually preparing the returns and the outcomes of disputes with tax authorities. The ultimate resolution of these issues may take extended periods of time due to examinations by tax authorities and statutes of limitations. In addition, changes in our business, including acquisitions, changes in our international corporate structure, changes in the geographic location of business functions or assets, changes in the geographic mix and amount of income, as well as changes in our agreements with tax authorities, valuation allowances, applicable accounting rules, applicable tax laws and regulations, rulings and interpretations thereof, developments in tax audit and other matters, and variations in the estimated and actual level of annual pre-tax income can affect the overall effective income tax rate.

RESULTS OF OPERATIONS

Our fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest March 31. Our results of operations for the fiscal year ending March 31, 2017 contains 52 weeks and ends on April 1, 2017. Our results of operations for the fiscal year ended March 31, 2016 contained 53 weeks and ended on April 2, 2016. Our results of operations for the three months ended December 31, 2016 and 2015 contained 13 weeks each and ended on December 31, 2016 and January 2, 2016, respectively. Our results of operations for the nine months ended December 31, 2016 and 2015 contained 39 and 40 weeks, respectively, and ended on December 31, 2016 and January 2, 2016, respectively. For simplicity of disclosure, all fiscal periods are referred to as ending on a calendar month end.

Net Revenue

Net revenue consists of sales generated from (1) video games sold as packaged goods or as digital downloads and designed for play on consoles (such as the PlayStation from Sony and the Xbox from Microsoft) and PCs, (2) video games for mobile phones and tablets, (3) separate software products and extra-content and online game services associated with these products, (4) licensing our game software to third parties, (5) allowing other companies to manufacture and sell our products in conjunction with other products, and (6) advertisements on our online web pages and in our games. We recognize revenue from the sale of online-enabled games for which we do not have VSOE for the unspecified updates on a straight-line basis, generally over an estimated nine-month period beginning in the month after shipment for physical games sold through retail and an estimated six-month period for digitally-delivered games and content.

We provide two different measures of our Net Revenue. (1) Net Revenue by Product revenue and Service and other revenue, and (2) Net Revenue by Revenue Composition, which is primarily based on method of distribution.  Management places a greater emphasis and focus on assessing our business through a review of the Net Revenue by Revenue Composition (Packaged goods and other, and Digital) than by Net Revenue by Product revenue and Service and other revenue.

Net Revenue Quarterly Analysis

Net Revenue

For the three months ended December 31, 2016, net revenue was $1,149 million and increased$79 million, or 7 percent, as compared to the three months ended December 31, 2015. This increase was driven by a $154 million increase in revenue primarily from the Battlefield, Titanfall, and UFC franchises. This increase was partially offset by a $75 million decrease in revenue primarily from Rory McIlroy PGA Tour and The Simpsons Tapped Out, andThe Sims, Dragon Age, and Star Wars franchises.

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Net Revenue by Product Revenue and Service and Other Revenue

Our net revenue by product revenue and service and other revenue for the three months ended December 31, 2016 and 2015 was as follows (in millions):

	Three Months Ended December 31,
	2016		2015		$ Change		% Change
Net revenue:
Product	$	649	$	625	$	24	4	%
Service and other	500		445		55		12	%
Total net revenue	$	1,149	$	1,070	$	79	7	%

Product Revenue

For the three months ended December 31, 2016, product net revenue was $649 million, primarily driven by FIFA 17, Battlefield 1, and Madden NFL 17. Product net revenue increased$24 million, or 4 percent, as compared to the three months ended December 31, 2015. This increase was driven by a $124 million increase primarily from Battlefield 1 and Titanfall 2. This increase was partially offset by a $100 million decrease primarily from Star Wars Battlefront and Rory McIlroy PGA Tour, andthe FIFA and Dragon Age franchises.

Service and Other Revenue

For the three months ended December 31, 2016, service and other net revenue was $500 million, primarily driven by FIFA Ultimate Team, Star Wars: Galaxy of Heroes and Madden Ultimate Team. Service and other net revenue for the three months ended December 31, 2016increased$55 million, or 12 percent, as compared to the three months ended December 31, 2015. This increase was driven by an $84 million increase primarily from FIFA Ultimate Team andtheStar Wars, Plants vs. Zombies, and NBA Live franchises. This increase was partially offset by a $29 million decrease primarily from The Simpsons Tapped Out Madden Ultimate Team, Battlefield 4 Premium, and Titanfall.

Supplemental Net Revenue by Revenue Composition

As we continue to evolve our business and more of our products are delivered to consumers digitally via the Internet, we place a greater emphasis and focus on assessing our business through a review of net revenue by revenue composition.

Our net revenue by revenue composition for the three months ended December 31, 2016 and 2015 was as follows (in millions):

	Three Months Ended December 31,
	2016		2015		$ Change			% Change
Full game downloads	$	169	$	112	$	57		51	%
Extra content	267		241		26			11	%
Subscriptions, advertising, and other	102		89		13			15	%
Mobile	147		127		20			16	%
Total Digital	$	685	$	569	$	116		20	%
Packaged goods and other	$	464	$	501	$	(37	)	(7	)%
Net revenue	$	1,149	$	1,070	$	79		7	%

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Digital Net Revenue

Digital net revenue includes full-game downloads, extra content, subscriptions, advertising and other, and mobile revenue. Digital net revenue includes internally-developed and co-published game software distributed through our direct-to-consumer platform Origin, distributed wirelessly through mobile carriers, or licensed to our third-party publishing partners who distribute our games digitally.

For the three months ended December 31, 2016, digital net revenue was $685 million primarily driven by FIFA Ultimate Team, Battlefield 1, FIFA Online 3 in Asia, and Star Wars: Galaxy of Heroes. Digital net revenue for the three months ended December 31, 2016increased$116 million, or 20 percent, as compared to the three months ended December 31, 2015. This increase is due to (1) a $57 million or 51 percentincrease in full-game download net revenue primarily driven by Battlefield 1, (2) a $26 million or 11 percentincrease in extra content net revenue primarily driven by our Ultimate Team game mode and Star Wars Battlefront, (3) a $20 million or 16 percentincrease in mobile net revenue primarily driven by Star Wars: Galaxy of Heroes, and(4)a $13 million or 15 percentincrease in subscriptions, advertising, and other net revenue.

Packaged Goods and Other Net Revenue

Packaged goods and other net revenue includes revenue from software that is distributed physically. This includes (1) net revenue from our internally-developed and co-published game software distributed physically through traditional channels such as brick and mortar retailers, (2) our software licensing revenue from third parties (for example, makers of console platforms, personal computers or computer accessories) who include certain of our products for sale with their products (“OEM bundles”), and (3) revenue through our Switzerland distribution business. Other net revenue includes our non-software licensing revenue.

For the three months ended December 31, 2016, packaged goods and other net revenue was $464 million, primarily driven by FIFA 17, Battlefield 1 and Madden NFL 17. Packaged goods and other net revenue for the three months ended December 31, 2016decreased$37 million, or 7 percent, as compared to the three months ended December 31, 2015. This decrease was driven by a $110 million decrease in sales primarily from the Star Wars, FIFA, Need for Speed, and The Sims franchises. This decrease was partially offset by a $73 million increase primarily from the Titanfall and Battlefield franchises.

Net Revenue Year-to-Date Analysis

Net Revenue

For the nine months ended December 31, 2016, net revenue was $3,318 million and increased$230 million, or 7 percent, as compared to the nine months ended December 31, 2015. This increase was driven by a $605 million increase in revenue primarily from the Star Wars, Need for Speed and UFC franchises. This increase was partially offset by a $375 million decrease in revenue primarily from theBattlefield, The Sims, and NHL franchises, and The Simpsons Tapped Out and Rory McIlroy PGA Tour.

Net Revenue by Product Revenue and Service and Other Revenue

Our net revenue by product revenue and service and other net revenue for the nine months ended December 31, 2016 and 2015 was as follows (in millions):

	Nine Months Ended December 31,
	2016		2015		$ Change			% Change
Net revenue:
Product	$	1,753	$	1,802	$	(49	)	(3	)%
Service and other	1,565		1,286		279			22	%
Total net revenue	$	3,318	$	3,088	$	230		7	%

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Product Revenue

For the nine months ended December 31, 2016, product net revenue was $1,753 million, primarily driven by Star WarsBattlefront, FIFA 16, and FIFA 17. Product net revenue decreased$49 million, or 3 percent, as compared to the nine months ended December 31, 2015. This decrease was driven by a $456 million decrease primarily from the Dragon Age, FIFA, Battlefield, and The Sims franchises. This decrease was partially offset by a $407 million increase primarily from Star Wars Battlefront and the UFC franchise.

Service and Other Revenue

For the nine months ended December 31, 2016, service and other net revenue was $1,565 million, primarily driven by FIFA Ultimate Team, Need for Speed 2015, and Star Wars: Galaxy of Heroes. Service and other net revenue for the nine months ended December 31, 2016increased$279 million, or 22 percent, as compared to the nine months ended December 31, 2015. This increase was driven by a $361 million increase primarily from Need for Speed 2015, FIFA Ultimate Team andtheStar Wars franchise. This increase was partially offset by an $82 million decrease primarily from The Simpsons Tapped Out, Titanfall, and The Sims FreePlay, and the Battlefield franchise.

Our net revenue by revenue composition for the nine months ended December 31, 2016 and 2015 was as follows (in millions):

	Nine Months Ended December 31,
	2016		2015		$ Change			% Change
Full game downloads	$	400	$	313	$	87		28	%
Extra content	807		745		62			8	%
Subscriptions, advertising, and other	272		244		28			11	%
Mobile	461		392		69			18	%
Total Digital	$	1,940	$	1,694	$	246		15	%
Packaged goods and other	$	1,378	$	1,394	$	(16	)	(1	)%
Net revenue	$	3,318	$	3,088	$	230		7	%

Digital Net Revenue

For the nine months ended December 31, 2016, digital net revenue was $1,940 million primarily driven by FIFA Ultimate Team, FIFA Online 3 in Asia, and Star Wars: Galaxy of Heroes. Digital net revenue for the nine months ended December 31, 2016increased$246 million, or 15 percent, as compared to the nine months ended December 31, 2015. This increase is due to (1) an $87 million or 28 percentincrease in full-game download net revenue primarily driven by Battlefield 1, Star Wars Battlefront, and Need for Speed 2015, partially offset by Battlefield Hardline, (2) a $69 million or 18 percentincrease in mobile net revenue primarily driven by Star Wars: Galaxy of Heroes, (3) a $62 million or 8 percentincrease in extra content net revenue primarily driven by our Ultimate Team game mode and Star War Battlefront, and (4) a $28 million or 11 percentincrease in subscriptions, advertising, and other net revenue.

Packaged Goods and Other Net Revenue

For the nine months ended December 31, 2016, packaged goods and other net revenue was $1,378 million, primarily driven by FIFA 16, Star Wars Battlefront, and FIFA 17. Packaged goods and other net revenue for the nine months ended December 31, 2016decreased$16 million, or 1 percent, as compared to the nine months ended December 31, 2015.

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Cost of Revenue Quarterly Analysis

Cost of revenue for the three months ended December 31, 2016 and 2015 was as follows (in millions):

	December 31, 2016		% of Related  Net Revenue		December 31, 2015		% of Related  Net Revenue		% Change		Change as a % of Related Net Revenue
Cost of revenue:
Product	$	389	59.9	%	$	439	70.2	%	(11.4	)%	(10.3	)%
Service and other	127		25.4	%	107		24.0	%	18.7	%	1.4	%
Total cost of revenue	$	516	44.9	%	$	546	51.0	%	(5.5	)%	(6.1	)%

Cost of Product Revenue

Cost of product revenue consists of (1) inventory costs, (2) certain royalty expenses for celebrities, professional sports, movie studios and other organizations, and independent software developers, (3) manufacturing royalties, net of volume discounts and other vendor reimbursements, (4) expenses for defective products, (5) write-offs of post launch prepaid royalty costs and losses on previously unrecognized licensed intellectual property commitments, (6) amortization of certain intangible assets, (7) personnel-related costs, and (8) warehousing and distribution costs. We generally recognize volume discounts when they are earned from the manufacturer (typically in connection with the achievement of unit-based milestones); whereas other vendor reimbursements are generally recognized as the related revenue is recognized.

Cost of product revenue decreased by $50 million, or 11.4 percent during the three months ended December 31, 2016, as compared to the three months ended December 31, 2015. This decrease was primarily due to a decrease in royalty costs associated with Star Wars Battlefront,which was launched during the three months ended December 31, 2015, partially offset by the recognition of a $15 million impairment charge on an acquisition-related intangible asset, as well an increase in royalty costs associated with FIFA 17 and Titanfall 2.

Cost of Service and Other Revenue

Cost of service and other revenue consists primarily of (1) royalty costs, (2) data center, bandwidth and server costs associated with hosting our online games and websites, (3) inventory costs, (4) platform processing fees from operating our website-based games on third party platforms, and (5) credit card fees associated with our service revenue.

Cost of service and other revenue increased by $20 million, or 18.7 percent during the three months ended December 31, 2016, as compared to the three months ended December 31, 2015. The increase was primarily due to the recognition of an impairment charge of $10 million on a royalty-based asset, and an increase in royalty costs associated with FIFA Ultimate Team and Star Wars Galaxy of Heroes.

Total Cost of Revenue as a Percentage of Total Net Revenue

During the three months ended December 31, 2016, total cost of revenue as a percentage of total net revenue decreased by 6.1 percent as compared to the three months ended December 31, 2015. This decrease was primarily due to an increase in the proportion of our digital revenues to packaged goods and other revenues, as well as lower royalties expense associated with our current quarter revenue mix as compared to the three months ended December 31, 2015.

Cost of Revenue Year-to-Date Analysis

Cost of revenue for the nine months ended December 31, 2016 and 2015 was as follows (in millions):

	December 31, 2016		% of Related  Net Revenue		December 31, 2015		% of Related  Net Revenue		% Change		Change as a % of Related Net Revenue
Cost of revenue:
Product	$	796	45.4	%	$	868	48.2	%	(8.3	)%	(2.8	)%
Service and other	300		19.2	%	260		20.2	%	15.4	%	(1.0	)%
Total cost of revenue	$	1,096	33.0	%	$	1,128	36.5	%	(2.8	)%	(3.5	)%

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Cost of Product Revenue

Cost of product revenue decreased by $72 million or 8.3 percent during the nine months ended December 31, 2016, as compared to the nine months ended December 31, 2015. This decrease was primarily due to a decrease in royalty costs associated with Star Wars Battlefront, offset by the recognition of a $15 million impairment charge on an acquisition-related intangible asset, as well an increase in royalty costs associated with FIFA 17 and Titanfall 2.

Cost of Service and Other Revenue

Cost of service and other revenue increased by $40 million, or 15.4 percent during the nine months ended December 31, 2016, as compared to the nine months ended December 31, 2015. The increase was primarily due to the recognition of a $10 million impairment charge on a royalty-based asset, and an increase in royalty costs associated with FIFA Ultimate Team and Star Wars: Galaxy of Heroes during the nine months ended December 31, 2016.

Total Cost of Revenue as a Percentage of Total Net Revenue

During the nine months ended December 31, 2016, total cost of revenue as a percentage of total net revenue decreased by 3.5 percent as compared to the nine months ended December 31, 2015. This decrease was primarily due to an increase in the proportion of our digital revenues to packaged goods and other revenues, as well as lower royalties expense associated with our current year revenue mix as compared to the nine months ended December 31, 2015.

Research and Development

Research and development expenses consist of expenses incurred by our production studios for personnel-related costs, related overhead costs, contracted services, depreciation and any impairment of prepaid royalties for pre-launch products. Research and development expenses for our online products include expenses incurred by our studios consisting of direct development and related overhead costs in connection with the development and production of our online games. Research and development expenses also include expenses associated with our digital platform, software licenses and maintenance, and management overhead.

Research and development expenses for the three and nine months ended December 31, 2016 and 2015 were as follows (in millions):

	December 31, 2016		% of Net Revenue		December 31, 2015		% of Net Revenue		$ Change		% Change
Three months ended	$	285	25	%	$	266	25	%	$	19	7	%
Nine months ended	$	870	26	%	$	827	27	%	$	43	5	%

Research and development expenses increased by $19 million, or 7 percent, during the three months ended December 31, 2016, as compared to the three months ended December 31, 2015. This $19 million increase was primarily due to a $12 million loss on a previously unrecognized minimum royalty-based commitment and impairment on a royalty-based asset, an increase of $6 million in development advances to third-party developers, and a $5 million increase in personnel-related costs primarily resulting from an increase in headcount.

Research and development expenses increased by $43 million, or 5 percent, during the nine months ended December 31, 2016, as compared to the nine months ended December 31, 2015. This $43 million increase was primarily due to a $27 million increase in contracted services primarily driven by an increase in development advances to third-party developers primarily related to Star Wars, a $12 million loss on a previously unrecognized minimum royalty-based commitment and impairment on a royalty-based asset, and a $6 million increase in personnel-related costs primarily resulting from an increase in headcount. These increases were partially offset by an $8 million loss from our cash flow hedging activities incurred during the nine months ended December 31, 2015.

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Marketing and Sales

Marketing and sales expenses consist of personnel-related costs, related overhead costs, advertising, marketing and promotional expenses, net of qualified advertising cost reimbursements from third parties.

Marketing and sales expenses for the three and nine months ended December 31, 2016 and 2015 were as follows (in millions):

	December 31, 2016		% of Net Revenue		December 31, 2015		% of Net Revenue		$ Change		% Change
Three months ended	$	240	21	%	$	190	18	%	$	50	26	%
Nine months ended	$	511	15	%	$	469	15	%	$	42	9	%

Marketing and sales expenses increased by $50 million, or 26 percent, during the three months ended December 31, 2016, as compared to the three months ended December 31, 2015. This $50 million increase was primarily driven by an increase in advertising expenses for Battlefield 1, Titanfall 2, and FIFA 17 during the three months ended December 31, 2016, partially offset by advertising expenses for Star Wars Battlefront and Need for Speed 2015 during the three months ended December 31, 2015.

Marketing and sales expenses increased by $42 million, or 9 percent, during the nine months ended December 31, 2016, as compared to the nine months ended December 31, 2015. This $42 million increase was driven by an increase in advertising expenses for Battlefield 1 and Titanfall 2 during the nine months ended December 31, 2016, partially offset by advertising expenses for Star Wars Battlefront and Need for Speed 2015 during the nine months ended December 31, 2015.

General and Administrative

General and administrative expenses consist of personnel and related expenses of executive and administrative staff, corporate functions such as finance, legal, human resources, and information technology, related overhead costs, fees for professional services such as legal and accounting, and allowances for doubtful accounts.

General and administrative expenses for the three and nine months ended December 31, 2016 and 2015 were as follows (in millions):

	December 31, 2016		% of Net Revenue		December 31, 2015		% of Net Revenue		$ Change		% Change
Three months ended	$	110	10	%	$	97	9	%	$	13	13	%
Nine months ended	$	329	10	%	$	296	10	%	$	33	11	%

General and administrative expenses increased by $13 million, or 13 percent, during the three months ended December 31, 2016, as compared to the three months ended December 31, 2015. This $13 million increase was primarily due to an $8 million increase in facility-related costs primarily due to office expansions and a $6 million increase in contracted services.

General and administrative expenses increased by $33 million, or 11 percent, during the nine months ended December 31, 2016, as compared to the nine months ended December 31, 2015. This $33 million increase was primarily due to (1) a $13 million increase in facility-related expense primarily due to office expansions, (2) an $11 million increase in contracted services primarily due to higher legal expenses, and (3) a $7 million increase in personnel-related costs resulting from an increase in headcount.

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Income Taxes

Provision for (benefit from) income taxes for the three and nine months ended December 31, 2016 and 2015 were as follows (in millions):

	December 31, 2016			Effective Tax Rate		December 31, 2015		Effective Tax Rate
Three months ended	$	(5	)	83.3	%	$	15	50.0	%
Nine months ended	$	93		18.8	%	$	94	26.8	%

The provision for (benefit from) income taxes reported for the three and nine months ended December 31, 2016 is based on our projected annual effective tax rate for fiscal year 2017, and also includes certain discrete items recorded during the period. Our effective tax rate for the three and nine months ended December 31, 2016 was 83.3 percent and 18.8 percent, respectively, as compared to 50.0 percent and 26.8 percent, respectively, for the same period of fiscal year 2016. The effective tax rate for the nine months ended December 31, 2016 was reduced, when compared to the statutory rate of 35.0 percent, due primarily to non-U.S. profits subject to a reduced or zero tax rate. The effective tax rate for the nine months ended December 31, 2015 was reduced, when compared to the statutory rate of 35.0 percent, by the utilization of U.S. deferred tax assets which were subject to a valuation allowance and non-U.S. profits subject to a reduced or zero tax rate. Conversely, the effective tax rate for the nine months ended December 31, 2015 was increased due to a discrete expense of $73 million, for excess tax benefits from stock-based compensation deductions allocated directly to contributed capital. The effective tax rate for the nine months ended December 31, 2016 differs from the same periods in fiscal year 2016 primarily due to the utilization of U.S. deferred tax assets in fiscal year 2016 which were subject to a valuation allowance and the discrete expense for excess tax benefits from stock-based compensation deductions allocated directly to contributed capital in fiscal year 2016.

Recent proposals to lower the U.S. corporate income tax rate would require us to reduce our net deferred tax assets upon enactment of new tax legislation, with a corresponding, one-time, non-cash increase in income tax expense.

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LIQUIDITY AND CAPITAL RESOURCES

(In millions)	As of December 31, 2016			As of March 31, 2016			Increase/(Decrease)
Cash and cash equivalents	$	2,483		$	2,493		$	(10	)
Short-term investments	1,736			1,341			395
Total	$	4,219		$	3,834		$	385
Percentage of total assets	55		%	54		%

	Nine Months Ended December 31,
(In millions)	2016			2015			Change
Net cash provided by operating activities	$	976		$	827		$	149
Net cash used in investing activities	(498		)	(83		)	(415		)
Net cash used in financing activities	(460		)	(518		)	58
Effect of foreign exchange on cash and cash equivalents	(28		)	(31		)	3
Net increase (decrease) in cash and cash equivalents	$	(10	)	$	195		$	(205	)

Changes in Cash Flow

Operating Activities. Net cash provided by operating activities increased by $149 million during the nine months ended December 31, 2016 as compared to the nine months ended December 31, 2015. The increase is primarily driven by a $226 million increase in sales related to FIFA 17, Battlefield 1, and Titanfall 2 and an increase in accounts receivable collections due to the timing of game launches, during the three months ended December 31, 2016. This was partially offset by a $114 million decrease in accounts receivable collections due to the timing of game launches during the first six months of fiscal year 2017 as compared to fiscal year 2016. Accounts receivables for Battlefield Hardline, whichlaunched in March 2015, was collected in the six months ended September 30, 2015. There was no comparable launch in March 2016.

Investing Activities. Net cash used in investing activities increased by $415 million during the nine months ended December 31, 2016 as compared to the nine months ended December 31, 2015 primarily driven by a $645 millionincrease in the purchase of short-term investments and a $31 million increase in capital expenditures. This was partially offset by a $261 millionincrease in proceeds from the sales and maturities of short-term investments.

Financing Activities. Net cash used in financing activities decreased by $58 million during the nine months ended December 31, 2016 as compared to the nine months ended December 31, 2015 primarily due to a $130 million decrease in repayments related to our Convertible Notes during the nine months ended December 31, 2016 as compared to the nine months ended December 31, 2015. This decrease was partially offset by a $53 milliondecrease in proceeds from the exercise of stock options and a $20 milliondecrease in excess tax benefit from stock-based compensation recognized during the nine months ended December 31, 2016 as compared to the nine months ended December 31, 2015.

Short-term Investments

Due to our mix of fixed and variable rate securities, our short-term investment portfolio is susceptible to changes in short-term interest rates. As of December 31, 2016, our short-term investments had gross unrealized losses of $4 million, or less than 1 percent of the total in short-term investments, and gross unrealized gains of less than $1 million, or less than 1 percent of the total in short-term investments. From time to time, we may liquidate some or all of our short-term investments to fund operational needs or other activities, such as capital expenditures, business acquisitions or stock repurchase programs. Depending on which short-term investments we liquidate to fund these activities, we could recognize a portion, or all, of the gross unrealized gains or losses.

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Convertible Notes and Convertible Note Hedge

In July 2011, we issued $632.5 million aggregate principal amount of Convertible Notes. On July 15, 2016, we repaid the remaining principal balance on the Convertible Notes of $136 million and issued approximately 2.5 million shares of common stock to noteholders with a fair value of $193 million. During the six months ended September 30, 2016, we repaid $163 million of the principal balance of the Convertible Notes and issued approximately 2.9 million shares of common stock to noteholders with a fair value of $222 million, resulting in a loss on extinguishment of $0.3 million. There was no activity during the three months ended December 31, 2016. We also received and cancelled approximately 2.5 million and 2.9 million shares of common stock from the exercise of the Convertible Note Hedge during the three and six months ended September 30, 2016.

Warrants

We had outstanding Warrants with independent third parties to acquire up to 19.9 million shares of our common stock (which is also equal to the number of shares of our common stock that notionally underlie the Convertible Notes), with a strike price of $41.14. The Warrants had a dilutive effect with respect to our common stock to the extent that the market price per share of our common stock exceeded $41.14 on or prior to the expiration date of the Warrants. The Warrants automatically exercised on a net share settlement basis over a 60 trading day period that began on October 17, 2016 and ended on January 12, 2017. We issued a total of 9.6 million shares under the Warrants, of which 7.9 million shares were issued during the three months ended December 31, 2016 and 1.7 million shares were issued subsequent to quarter end.

Senior Notes

In February 2016, we issued $600 million aggregate principal amount of the 2021 Notes and $400 million aggregate principal amount of the 2026 Notes. We used the net proceeds of $990 million for general corporate purposes, including the payment of amounts due upon conversion of our Convertible Notes and the repurchase of our common stock, including under the $500 million stock repurchase program approved in February 2016 and completed in March 2016. The effective interest rate is 3.94% for the 2021 Notes and 4.97% for the 2026 Notes. Interest is payable semiannually in arrears, on March 1 and September 1 of each year.

Credit Facility

In March 2015, we entered into a $500 million senior unsecured revolving credit facility with a syndicate of banks. As of December 31, 2016, no amounts were outstanding under the credit facility.

See Note 10 - Financing Arrangements to the Condensed Consolidated Financial Statements in this Form 10-Q as it relates to the above items, which is incorporated by reference into this Item 2.

Financial Condition

We believe that our cash, cash equivalents, short-term investments, cash generated from operations and available financing facilities will be sufficient to meet our operating requirements for at least the next 12 months, including working capital requirements, capital expenditures, debt repayment obligations, and potentially, future acquisitions, stock repurchases, or strategic investments. We may choose at any time to raise additional capital to repay debt, strengthen our financial position, facilitate expansion, repurchase our stock, pursue strategic acquisitions and investments, and/or to take advantage of business opportunities as they arise. There can be no assurance, however, that such additional capital will be available to us on favorable terms, if at all, or that it will not result in substantial dilution to our existing stockholders.

As of December 31, 2016, approximately $2.4 billion of our cash, cash equivalents, and short-term investments were domiciled in foreign tax jurisdictions. While we have no plans to repatriate these funds to the United States in the short term, if we choose to do so, we may be required to accrue and pay additional taxes on any portion of the repatriation where no United States income tax had been previously provided.

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In May 2015, our Board of Directors authorized a program to repurchase up to $1 billion of our common stock. This stock repurchase program expires on May 31, 2017. Under this program, we may purchase stock in the open market or through privately-negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities and other market conditions. We are not obligated to repurchase any specific number of shares under this program and it may be modified, suspended or discontinued at any time. During the three and nine months ended December 31, 2016, we repurchased approximately 1.5 million and 5.0 million shares for approximately $127 million and $383 million, respectively. We continue to actively repurchase shares. As of December 31, 2016, $156 million was available to be repurchased under this program.

We have a “shelf” registration statement on Form S-3 on file with the SEC. This shelf registration statement, which includes a base prospectus, allows us at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in a prospectus supplement accompanying the base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes, including for working capital, financing capital expenditures, research and development, marketing and distribution efforts, and if opportunities arise, for acquisitions or strategic alliances. Pending such uses, we may invest the net proceeds in interest-bearing securities. In addition, we may conduct concurrent or other financings at any time.

Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties including, but not limited to, those related to customer demand and acceptance of our products, our ability to collect our accounts receivable as they become due, successfully achieving our product release schedules and attaining our forecasted sales objectives, the impact of acquisitions and other strategic transactions in which we may engage, the impact of competition, economic conditions in the United States and abroad, the seasonal and cyclical nature of our business and operating results, risks of product returns and the other risks described in the “Risk Factors” section, included in Part II, Item 1A of this report.

Contractual Obligations and Commercial Commitments

Note 11 - Commitments and Contingencies to the Condensed Consolidated Financial Statements in this Form 10-Q as it relates to our contractual obligations and commercial commitments is incorporated by reference into this Item 2.

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OFF-BALANCE SHEET COMMITMENTS

As of December 31, 2016, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues and expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

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Item 3:     Quantitative and Qualitative Disclosures About Market Risk

MARKET RISK

We are exposed to various market risks, including changes in foreign currency exchange rates, interest rates and market prices, which have experienced significant volatility. Market risk is the potential loss arising from changes in market rates and market prices. We employ established policies and practices to manage these risks. Foreign currency forward contracts are used to hedge anticipated exposures or mitigate some existing exposures subject to foreign exchange risk as discussed below. While we do not hedge our short-term investment portfolio, we protect our short-term investment portfolio against different market risks, including interest rate risk as discussed below. Our cash and cash equivalents portfolio consists of highly liquid investments with insignificant interest rate risk and original or remaining maturities of three months or less at the time of purchase. We do not enter into derivatives or other financial instruments for speculative trading purposes and do not hedge our market price risk relating to marketable equity securities, if any.

Foreign Currency Exchange Risk

Foreign Currency Exchange Rates. International sales are a fundamental part of our business, and the strengthening of the U.S. dollar (particularly relative to the Euro, British pound sterling, Australian dollar, Chinese yuan and South Korean won) has a negative impact on our reported international net revenue, but a positive impact on our reported international operating expenses (particularly the Swedish krona and Canadian dollar) because these amounts are translated at lower rates as compared to periods in which the U.S. dollar is weaker. While we use foreign currency hedging contracts to mitigate some foreign currency exchange risk, these activities are limited in the protection that they provide us and can themselves result in losses.

Cash Flow Hedging Activities. We hedge a portion of our foreign currency risk related to forecasted foreign-currency-denominated sales and expense transactions by purchasing foreign currency forward contracts that generally have maturities of 18 months or less. These transactions are designated and qualify as cash flow hedges. Our hedging programs are designed to reduce, but do not entirely eliminate, the impact of currency exchange rate movements in net revenue and research and development expenses.

Balance Sheet Hedging Activities. We use foreign currency forward contracts to mitigate foreign currency risk associated with foreign-currency-denominated monetary assets and liabilities, including third party receivables and payables as well as intercompany balances. The foreign currency forward contracts generally have a contractual term of three months or less and are transacted near month-end.

We believe the counterparties to our foreign currency forward contracts are creditworthy multinational commercial banks. While we believe the risk of counterparty nonperformance is not material, a sustained decline in the financial stability of financial institutions as a result of disruption in the financial markets could affect our ability to secure creditworthy counterparties for our foreign currency hedging programs.

Notwithstanding our efforts to mitigate some foreign currency exchange risks, there can be no assurance that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. As of December 31, 2016, a hypothetical adverse foreign currency exchange rate movement of 10 percent or 20 percent would have resulted in potential declines in the fair value on our foreign currency forward contracts used in cash flow hedging of $82 million or $164 million, respectively. As of December 31, 2016, a hypothetical adverse foreign currency exchange rate movement of 10 percent or 20 percent would have resulted in potential losses on our foreign currency forward contracts used in balance sheet hedging of $81 million or $162 million, respectively. This sensitivity analysis assumes an adverse shift of all foreign currency exchange rates; however, all foreign currency exchange rates do not always move in such manner and actual results may differ materially. See Note 4 - Derivative Financial Instruments to the Condensed Consolidated Financial Statements in this Form 10-Q as it relates to our derivative financial instruments, which is incorporated by reference into this Item 3.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our short-term investment portfolio. We manage our interest rate risk by maintaining an investment portfolio generally consisting of debt instruments of high credit quality and relatively short maturities. However, because short-term investments mature relatively quickly and are required to be reinvested at the then-current market rates, interest income on a portfolio consisting of short-term investments is more subject to market fluctuations than a portfolio of longer term investments. Additionally, the contractual terms of the investments do not permit the issuer to call, prepay or otherwise settle the investments at prices less than the stated par value. Our investments are held for purposes other than trading. Also, we do not use derivative financial instruments in our short-term investment portfolio.

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As of December 31, 2016, our short-term investments were classified as available-for-sale securities and, consequently, were recorded at fair value with unrealized gains or losses resulting from changes in fair value reported as a separate component of accumulated other comprehensive income (loss), net of tax, in stockholders’ equity.

Notwithstanding our efforts to manage interest rate risks, there can be no assurance that we will be adequately protected against risks associated with interest rate fluctuations. At any time, a sharp change in interest rates could have a significant impact on the fair value of our investment portfolio. The following table presents the hypothetical changes in the fair value of our short-term investment portfolio as of December 31, 2016, arising from potential changes in interest rates. The modeling technique estimates the change in fair value from immediate hypothetical parallel shifts in the yield curve of plus or minus 50 basis points (“BPS”), 100 BPS, and 150 BPS.

(In millions)	Valuation of Securities Given an Interest Rate Decrease of X Basis Points						Fair Value as of December 31, 2016		Valuation of Securities Given an Interest Rate Increase of X Basis Points
	(150 BPS)		(100 BPS)		(50 BPS)				50 BPS		100 BPS		150 BPS
Corporate bonds	$	851	$	848	$	844	$	840	$	837	$	833	$	830
U.S. Treasury securities	408		405		402		399		396		393		390
U.S. agency securities	165		164		163		162		162		160		159
Commercial paper	117		116		116		116		116		116		116
Foreign government securities	124		124		123		124		122		122		121
Asset-backed securities	97		96		96		95		94		94		93
Total short-term investments	$	1,762	$	1,753	$	1,744	$	1,736	$	1,727	$	1,718	$	1,709

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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures, believe that as of the end of the period covered by this report, our disclosure controls and procedures were effective in providing the requisite reasonable assurance that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding the required disclosure.

Changes in internal control over financial reporting

There has been no change in our internal controls over financial reporting identified in connection with our evaluation that occurred during the fiscal quarter ended December 31, 2016 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

Limitations on effectiveness of disclosure controls

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. These limitations include the possibility of human error, the circumvention or overriding of the controls and procedures and reasonable resource constraints. In addition, because we have designed our system of controls based on certain assumptions, which we believe are reasonable, about the likelihood of future events, our system of controls may not achieve its desired purpose under all possible future conditions. Accordingly, our disclosure controls and procedures provide reasonable assurance, but not absolute assurance, of achieving their objectives.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The information under the subheading “Legal Proceedings” in Note 11 - Commitments and Contingencies to the Condensed Consolidated Financial Statements in this Form 10-Q is incorporated by reference into this Part II.

Item 1A. Risk Factors

Our business is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occurs, our business or financial performance could be harmed, our actual results could differ materially from our expectations and the market value of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties not currently known to us or that we currently do not believe could be material that may harm our business or financial performance.

Our business is intensely competitive and “hit” driven. If we do not deliver “hit” products and services, or if consumers prefer our competitors’ products or services over our own, our operating results could suffer.

Competition in our industry is intense. Many new products and services are regularly introduced in each major industry segment (console, mobile and PC free-to-download), but only a relatively small number of “hit” titles account for a significant portion of total revenue in each segment. Our competitors range from large established companies to emerging start-ups, and we expect new competitors to continue to emerge throughout the world. If our competitors develop and market more successful products or services, offer competitive products or services at lower price points, or if we do not continue to develop consistently high-quality and well-received products and services, our revenue, margins, and profitability will decline.

We maintain a relatively limited product portfolio in an effort to focus on developing high-quality products with the potential to become “hits”. High-quality titles, even if highly-reviewed, may not turn into “hit” products. Many “hit” products within our industry are iterations of prior hit products with large established consumer bases and significant brand recognition, which makes competing in certain product categories challenging. In addition, hit products or services of our competitors may take a larger share of consumer spending than we anticipate, which could cause our products and services to underperform relative to revenue expectations. Publishing a relatively small number of major titles each year also concentrates risk in those titles and means each major title has greater associated risk. The increased importance of extra content and live services revenue to our business heightens this risk as extra content and live services for poorly-received or underperforming games may generate lower than expected sales. A significant portion of our revenue has historically been derived from games and services based on a few popular franchises. For example, in fiscal year 2016, net revenue generated from the sale of products and services associated with our three largest franchises accounted for approximately 55 percent of our net revenue. The underperformance of a single major title and the associated extra content may have a large adverse impact on our financial results.

Our operating results will be adversely affected if we do not consistently meet our product development schedules or if key events, sports seasons or movies that we tie our product release schedules to are delayed, cancelled or poorly received.

Our ability to meet product development schedules is affected by a number of factors both within and outside our control, including feedback from our players, the creative processes involved, the coordination of large and sometimes geographically dispersed development teams, the complexity of our products and the platforms for which they are developed, the need to fine-tune our products prior to their release, and, in certain cases, approvals from third parties. We have experienced development delays for our products in the past, which caused us to delay or cancel release dates. We also seek to release certain products in conjunction with key events, such as the beginning of a sports season, major sporting event, or the release of a related movie. If such a key event were delayed, cancelled or poorly received, our sales would likely suffer materially. Any failure to meet anticipated production or release schedules would likely result in a delay of revenue and/or possibly a significant shortfall in our revenue, increase our development and/or marketing expenses, harm our profitability, and cause our operating results to be materially different than anticipated.

Our business is highly seasonal with the highest percentage of our sales occurring in the quarter ending in December. While our sales generally follow this seasonal trend, there can be no assurance that this trend will continue. If we miss key selling periods for products, for any reason, including product delays, product cancellations, or delayed introduction of a new platform for which we have developed products, our sales are likely to suffer significantly. Additionally, macroeconomic conditions or the occurrence of unforeseen events that negatively impact retailer or consumer buying patterns during the quarter ending in December are likely to harm our financial performance disproportionately.

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Our business is dependent on the success and availability of platforms developed by third parties, as well as our ability to develop commercially successful products and services for these platforms.

The success of our business is driven in part by the commercial success and adequate supply of platforms developed by third parties. Our success also depends on our ability to accurately predict which platforms will be successful in the marketplace, our ability to develop commercially successful products and services for these platforms and our ability to effectively manage the transition from current generation platforms to next generation platforms. We must make product development decisions and commit significant resources well in advance of anticipated platform release dates and may incur significant expense to adjust our product portfolio and development efforts in response to changing consumer platform preferences. Additionally, we may enter into certain exclusive licensing arrangements that affect our ability to deliver or market products or services on certain platforms. A platform for which we are developing products and services may not succeed as expected or new platforms may take market share and game software consumers away from platforms for which we have devoted significant resources. If consumer demand for the platforms for which we are developing products and services is lower than our expectations, we may be unable to fully recover the investments we have made in developing our products and services, and our financial performance will be harmed. Alternatively, a platform for which we have not devoted significant resources could be more successful than we had initially anticipated, causing us to not be able to take advantage of meaningful revenue opportunities.

Technology changes rapidly in our business and if we fail to anticipate orsuccessfully implement new technologies in our games or adopt new business strategies, distribution technologies or methods, the quality, timeliness andcompetitiveness of our products and services may suffer.

Rapid technology changes in our industry require us to anticipate, sometimes years in advance, which technologies we must implement and take advantage of in order to make our products and services competitive in the market. We have invested, and in the future may invest, in new business strategies, technologies, products, and services. Such endeavors may involve significant risks and uncertainties, and no assurance can be given that the technology we choose to adopt and the products and services that we pursue will be successful and will not materially adversely affect our reputation, financial condition, and operating results. We also may miss opportunities to adopt technology, or develop products and services that become popular with consumers, which could adversely affect our revenues. It may take significant time and resources to shift our focus to such technologies, putting us at a competitive disadvantage.

Our product development usually starts with particular platforms and distribution methods in mind, and a range of technical development and game feature goals that we hope to be able to achieve. We may not be able to achieve these goals, or our competition may be able to achieve them more quickly and effectively than we can. In either case, our products and services may be technologically inferior to our competitors’, less appealing to consumers, or both. If we cannot achieve our technology goals within the original development schedule for our products and services, then we may delay their release until these goals can be achieved, which may delay or reduce revenue and increase our development expenses. Alternatively, we may increase the resources employed in research and development in an attempt to accelerate our development of new technologies, either to preserve our product or service launch schedule or to keep up with our competition, which would increase our development expenses.

Security breaches and cyber threats could harm our reputation and adversely affect our business. 

As our digital business grows, we continually face cyber risks and threats that seek to damage, disrupt or gain access to our networks, our products and services, and supporting infrastructure.  Our business partners, including our channel partners, also are subject to these risks.  Such cyber risks and threats may be difficult to detect. Any failure to prevent or mitigate security breaches or cyber risk could result in interruptions to the services we provide, degrade the user experience, cause our users to lose confidence in our products, as well as significant legal and financial exposure.  This could harm our business and reputation, disrupt our relationships with partners and diminish our competitive position. 

Successful exploitation of our systems can have other negative effects upon the products, services and user experience we offer.  In particular, the virtual economies that we have established in many of our games are subject to abuse, exploitation and other forms of fraudulent activity that can negatively impact our business.  Virtual economies involve the use of virtual currency and/or virtual assets that can be redeemed by a player within a particular game or game service.  The abuse or exploitation of our virtual economies include the illegitimate generation and sale of virtual items in black markets. Our online services have been impacted by in-game exploits and the use of automated processes to generate virtual currency illegitimately in the past, which

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were traded in black markets.  These kinds of activities and the steps that we take to address these issues may result in a loss of anticipated revenue, interfere with players’ enjoyment of a balanced game environment and cause reputational harm.

We may experience outages and disruptions of our online services that may harm our business.

We are investing and expect to continue to invest in technology, hardware and software to support the online functionality of our portfolio of products and services. Launching and operating games and services with online features, developing related technologies and implementing online business initiatives is expensive and complex. Execution of these initiatives could result in operational failures and other issues impacting the technical stability of our products and services. In addition, having the necessary infrastructure to support the online functionality of our products and services is vital to our growth and success. Our products and services could be adversely impacted by outages, disruptions and failures in our network and related infrastructure, as well as in the online platforms or services of key business partners who offer or support our products and services.

Our business is subject to currency fluctuations.

International sales are a fundamental part of our business. For our fiscal year ended March 31, 2016, international net revenue comprised 57 percent of our total net revenue, and we expect international sales to continue to account for a significant portion of our total net revenue. As a result of our international sales, and also the denomination of our foreign investments and our cash and cash equivalents in foreign currencies, we are exposed to the effects of fluctuations in foreign currency exchange rates. Strengthening of the U.S. dollar, particularly relative to the Euro, British pound sterling, Australian dollar, Chinese yuan and South Korean won, has a negative impact on our reported international net revenue but a positive impact on our reported international operating expenses (particularly when the U.S. dollar strengthens against the Swedish krona and the Canadian dollar) because these amounts are translated at lower rates. We use foreign currency hedging contracts to mitigate some foreign currency risk. However, these activities are limited in the protection they provide us from foreign currency fluctuations and can themselves result in losses.

Declines or fluctuations in the recurring portion of our business may have a negative impact on our financial and operating results.

Our business model includes revenue that we deem recurring in nature, such as revenue from our annualized titles (e.g., FIFA and Madden NFL), and associated services, and ongoing mobile businesses.  While we are confident in our ability to forecast the revenue from these areas of our business with greater certainty than for new offerings, we cannot provide assurances that consumers will purchase these games and services on a consistent basis. Furthermore, we may cease to offer games and services that we previously had deemed to be recurring in nature. Consumer purchases of our games and services may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our games and services, our ability to improve and innovate our annualized titles, our ability to adapt our games and services to new platforms, outages and disruptions of our online services, the games and services offered by our competitors, our marketing and advertising efforts or declines in consumer activity generally as a result of economic downturns, among others. Any decline or fluctuation in the recurring portion of our business may have a negative impact on our financial and operating results.

Our adoption of new business models could fail to produce our desired financial returns.

From time to time we seek to establish and implement new business models. Forecasting our revenues and profitability for any new business models is inherently uncertain and volatile. Our actual revenue and profit for these businesses may be significantly greater or less than our forecasts. Additionally, these new business models could fail, resulting in the loss of our investment in the development and infrastructure needed to support these new business models, as well as the opportunity cost of diverting management and financial resources away from more successful and established businesses.

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If we are unable to maintain or acquire licenses to include intellectual property owned by others in our games, or to maintain or acquire the rights to publish or distribute games developed by others, our business may be harmed.

Many of our products and services are based on or incorporate intellectual property owned by others. For example, our EA SPORTS products include rights licensed from major sports leagues and players’ associations and our Star Wars products include rights licensed from Disney. Competition for these licenses and rights is intense. If we are unable to maintain these licenses and rights or obtain additional licenses or rights with significant commercial value, our revenue, profitability and cash flows may decline significantly. Competition for these licenses also may increase the amounts that we must pay to licensors and developers, through higher minimum guarantees or royalty rates, which could significantly increase our costs and reduce our profitability.

If external game developers fail to meet product development schedules or are unable to honor their obligations to us, our financial results may be harmed.

We may contract with external game developers to develop our games or to publish or distribute their games.  While we maintain contractual protections, we have less control over the product development schedules of these games developed by external game developers, and we depend on their ability to meet product development schedules.  If these developers cannot meet product development schedules, acquire certain approvals or are otherwise unable to honor their obligations to us, we may delay or cancel previously announced games, which could result in a delay or significant shortfall in anticipated revenue, harm our profitability and reputation, and cause our financial results to be materially affected.

Our business could be adversely affected if our consumer protection, data privacy and security practices are not adequate, or perceived as being inadequate, to prevent data breaches, or by the application of consumer protection and data privacy and security laws generally.

In the course of our business, we collect, process, store and use consumer and other information, including personal information, passwords and credit card information. Although we take measures to protect this information from unauthorized access, acquisition, disclosure and misuse, our security controls, policies and practices may not be able to prevent the improper or unauthorized access, acquisition or disclosure of such information. In addition, third party vendors and business partners which in the course of our business receive access to information that we collect also may not prevent data security breaches with respect to the information we provide them or fully enforce our policies, contractual obligations and disclosures regarding the collection, use, storage, transfer and retention of personal data. The unauthorized access, acquisition or disclosure of this information could significantly harm our reputation, compel us to comply with disparate breach notification laws and otherwise subject us to proceedings by governmental entities or others and substantial legal liability. A perception that we do not adequately secure consumer and other information could result in a loss of current or potential consumers and business partners, as well as a loss of anticipated revenues. Our key business partners also face these risks with respect to information they collect and data security breaches with respect to such information could cause reputational harm to them and negatively impact our ability to offer our products and services through their platforms.

We are also subject to payment card association rules and obligations pursuant to contracts with payment card processors. Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for the cost of associated expenses and penalties. In addition, if we fail to follow payment card industry security standards, even if no consumer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.

In addition, data privacy, security and consumer-protection laws are evolving, and the interpretation and application of these laws in the United States, Europe and elsewhere are often uncertain, contradictory and changing. It is possible that these laws may be interpreted or applied in a manner that is adverse to us or otherwise inconsistent with our practices, which could result in litigation, regulatory investigations and potential legal liability or require us to change our practices in a manner adverse to our business. As a result, our reputation may be harmed, we could incur substantial costs, and we could lose both consumers and revenue.

Negative player perceptions about our brands, products, services and/or business practices may damage our business and the costs incurred in addressing player concerns may increase our operating expenses.

Player expectations regarding the quality, performance and integrity of our products and services are high. Players may be critical of our brands, products, services and/or business practices for a wide variety of reasons. These negative player reactions

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may not be foreseeable or within our control to manage effectively, including perceptions about gameplay fairness, negative player reactions to game content, components and services, or objections to certain of our business practices. In the past, we have taken actions, including delaying the release of our games and discontinuing services for our games, after taking into consideration, among other things, feedback from the player community even if those decisions negatively impacted our operating results in the short term. We expect to continue to take actions to address concerns as appropriate, including actions that may result in additional expenditures and the loss of revenue. Negative player sentiment about our business practices also can lead to investigations from regulatory agencies and consumer groups, as well as litigation, which, regardless of their outcome, may be costly, damaging to our reputation and harm our business.

If we release defective products or services, our operating results could suffer.

Our products and services are extremely complex software programs, and are difficult to develop and distribute. We have quality controls in place to detect defects in our products and services before they are released. Nonetheless, these quality controls are subject to human error, overriding, and reasonable resource or technical constraints. Therefore, these quality controls and preventative measures may not be effective in detecting all defects in our products and services before they have been released into the marketplace. In such an event, we could be required to or may find it necessary to offer a refund for the product or service, suspend the availability or sale of the product or service or expend significant resources to cure the defect, each of which could significantly harm our business and operating results.

During console system transition periods, our operating results have been volatile. Any inability to offset declining sales from legacy generation consoles could negatively impact our operating results.

Historically, new video game console systems have been developed and released every few years, which has caused the video game software market to be cyclical as well. In these periods of transition, sales of software for legacy generation console systems typically slow or decline in response to the anticipated and actual introduction of new consoles and new generation software sales typically stabilize after new consoles are widely established with the consumer base.

In November 2013 Sony released the PlayStation 4 and Microsoft released the Xbox One. Consistent with previous periods of console transition, we have seen consumers purchase fewer products and services for legacy generation consoles (i.e., the PlayStation 3 and Xbox 360, respectively) as the current generation consoles have gained consumer acceptance. During our 2016 fiscal year, sales associated with these legacy generation consoles declined significantly, and these declines have continued during our 2017 fiscal year. Any inability to offset declining sales from legacy generation consoles could negatively impact our operating results.

Our business is subject to regulation and the adoption of proposed legislation we oppose could negatively impact our business.

We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet. In addition, laws and regulations relating to user privacy, data collection, retention, electronic commerce, virtual items and currency, consumer protection, content, advertising, localization, and information security have been adopted or are being considered for adoption by many countries throughout the world. These laws could harm our business by limiting the products we are able to offer to our consumers or the manner in which we offer these products. The costs of compliance with these laws may increase in the future as a result of changes in interpretation. Furthermore, any failure on our part to comply with these laws or the application of these laws in an unanticipated manner may harm our business and result in penalties or significant legal liability.

We are subject to laws in certain foreign countries, and adhere to industry standards in the United States, that mandate rating requirements or set other restrictions on the advertisement or distribution of interactive entertainment software based on content. In addition, certain foreign countries allow government censorship of interactive entertainment software products. Adoption of ratings systems, censorship or restrictions on distribution of interactive entertainment software based on content could harm our business by limiting the products we are able to offer to our customers. In addition, compliance with new and possibly inconsistent regulations for different territories could be costly, delay or prevent the release of our products in those territories.

In addition, we may include additional competitive modes in our games and manage competitions based on our games and services. Although we structure and operate these skill based competitions with applicable laws in mind, our skill based competitions in the future could become subject to evolving rules and regulations and expose us to significant liability, penalties and reputational harm.

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If we do not continue to attract and retain key personnel, we will be unable toeffectively conduct our business.

The market for technical, creative, marketing and other personnel essential to the development and marketing of our products and services and management of our businesses is extremely competitive. Our leading position within the interactive entertainment industry makes us a prime target for recruiting our executives as well as key creative and technical talent. If we cannot successfully recruit and retain the employees we need, or replace key employees following their departure, our ability to develop and manage our business will be impaired.

If our marketing and advertising efforts fail to resonate with our customers, our business and operating results could be adversely affected.

Our products and services are marketed worldwide through a diverse spectrum of advertising and promotional programs such as online and mobile advertising, television advertising, retail merchandising, marketing through websites, event sponsorship and direct communications with our consumers including via email. Our ability to sell our products and services is dependent in part upon the success of these programs. If the marketing for our products and services fails to resonate with our customers, particularly during the critical holiday season or during other key selling periods, or if advertising rates or other media placement costs increase, these factors could have a material adverse impact on our business and operating results.

A significant portion of our sales are made to a relatively small number ofcustomers, and disruptions to sales through these customers could negatively impact our business.

We derive a significant percentage of our net revenue through sales to our top customers. The concentration of a significant percentage of our sales through one, or a few, large customers could lead to a short-term disruption to our business if certain of these customers significantly reduced their purchases or ceased to carry our products. We also could be more vulnerable to collection risk if one or more of these large customers became unable to pay for our products or declared bankruptcy. Additionally, receivables from our customers generally increase in our December fiscal quarter as sales of our games and services generally increase in anticipation of the holiday season. Having a significant portion of our net revenue concentrated in sales through a few customers could reduce our negotiating leverage with these customers. If one or more of our key customers experience deterioration in their business, or become unable to obtain sufficient financing to maintain their operations, our business could be harmed.

Our channel partners have significant influence over the products and services that we offer on their platforms.

Our agreements with our channel partners typically give them significant control over the approval, manufacturing and distribution of the products and services that we develop for their platform. In particular, our arrangements with Sony and Microsoft could, in certain circumstances, leave us unable to get our products and services approved, manufactured and distributed to customers. For our digital products and services delivered via digital channels such as Sony’s PlayStation Store, Microsoft’s Xbox Store, Apple’s App Store and the Google Play store, each respective channel partner has policies and guidelines that control the promotion and distribution of these titles and the features and functionalities that we are permitted to offer through the channel.

Moreover, certain of our channel partners can determine and change unilaterally certain key terms and conditions, including the ability to change their user and developer policies and guidelines. In many cases our channel partners also set the rates that we must pay to provide our games and services through their online channels, and retain flexibility to change their fee structures or adopt different fee structures for their online channels, which could adversely impact our costs, profitability and margins. In addition, our channel partners control the information technology systems through which online sales of our products and service channels are captured. If our channel partners establish terms that restrict our offerings through their channels, significantly impact the financial terms on which these products or services are offered to our customers, or their information technology systems fail or cause an unanticipated delay in reporting, our business and/or financial results could be harmed.

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Our business is subject to risks generally associated with the entertainment industry, any of which could significantly harm our operating results.

Our business is subject to risks that are generally associated with the entertainment industry, many of which are beyond our control. These risks could negatively impact our operating results and include: the popularity, price and timing of our games; economic conditions that adversely affect discretionary consumer spending; changes in consumer demographics; the availability and popularity of other forms of entertainment; and critical reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted.

We rely on business partners in many areas of our business and our business may be harmed if they are unable to honor their obligations to us or their actions may put us at risk.

We rely on various business partners, including third-party service providers, vendors, licensing partners, development partners, and licensees in many areas of our business. In addition, we may have disputes with our business partners that may impact our business and/or financial results. Their actions may put our business and our reputation at risk. In many cases, our business partners may be given access to sensitive and proprietary information in order to provide services and support to our teams, and they may misappropriate our information and engage in unauthorized use of it. In addition, the failure of these third parties to provide adequate services and technologies, or the failure of the third parties to adequately maintain or update their services and technologies, could result in a disruption to our business operations. Further, disruptions in the financial markets, economic downturns, poor business decisions, or reputational harm may adversely affect our business partners and they may not be able to continue honoring their obligations to us or we may cease our arrangements with them. Alternative arrangements and services may not be available to us on commercially reasonable terms or we may experience business interruptions upon a transition to an alternative partner or vendor. If we lose one or more significant business partners, our business could be harmed.

We may be subject to claims of infringement of third-party intellectual property rights, which could harm our business.

From time to time, third parties may claim that we have infringed their intellectual property rights. For example, patent holding companies may assert patent claims against us in which they seek to monetize patents they have purchased or otherwise obtained. Although we take steps to avoid knowingly violating the intellectual property rights of others, it is possible that third parties still may claim infringement. In addition, our products often utilize complex, cutting-edge technology that may be subject to intellectual property claims.

Existing or future infringement claims against us, whether valid or not, may be time consuming and expensive to defend. Such claims or litigations could require us to pay damages and other costs, stop selling the affected products, redesign those products to avoid infringement, or obtain a license, all of which could be costly and harm our business. In addition, many patents have been issued that may apply to potential new modes of delivering, playing or monetizing game software products and services, such as those that we produce or would like to offer in the future. We may discover that future opportunities to provide new and innovative modes of game play and game delivery to consumers may be precluded by existing patents that we are unable to license on reasonable terms.

From time to time we may become involved in other legal proceedings, which couldadversely affect us.

We are currently, and from time to time in the future may become, subject to legal proceedings, claims, litigation and government investigations or inquiries, which could be expensive, lengthy, and disruptive to normal business operations. In addition, the outcome of any legal proceedings, claims, litigation, investigations or inquiries may be difficult to predict and could have a material adverse effect on our business, operating results, or financial condition.

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Acquisitions, investments, divestitures and other strategic transactions could result inoperating difficulties and other negativeconsequences.

We may make acquisitions or enter into other strategic transactions including (1) acquisitions of companies, businesses, intellectual properties, and other assets, (2) minority investments in strategic partners, and (3) investments in new interactive entertainment businesses as part of our long-term business strategy. These transactions involve significant challenges and risks including that the transaction does not advance our business strategy, that we do not realize a satisfactory return on our investment, that we acquire unknown liabilities, diversion of management’s attention from our other businesses, the incurrence of debt, contingent liabilities or amortization expenses, write-offs of goodwill, intangibles, or acquired in-process technology, or other increased cash and non-cash expenses. In addition, we may not integrate these businesses successfully, including experiencing difficulty in the integration of business systems and technologies, the integration and retention of new employees, or in the maintenance of key business and customer relationships. These events could harm our operating results or financial condition. We also may divest or sell assets or a business and we may have difficulty selling such assets or business on acceptable terms in a timely manner. This could result in a delay in the achievement of our strategic objectives, cause us to incur additional expense, or the sale of such assets or business at a price or on terms that are less favorable than we anticipated.

Our products and brands are subject to the threat of piracy, unauthorized copying and other forms of intellectual property infringement.

We regard our products and brands as proprietary and take measures to protect our products, brands and other confidential information from infringement. We are aware that some unauthorized copying of our products and brands occurs, and if a significantly greater amount were to occur, it could negatively impact our business.

Piracy and other forms of unauthorized copying and use of our content and brands are persistent problems for us, and policing is difficult. Further, the laws of some countries in which our products are or may be distributed either do not protect our products and intellectual property rights to the same extent as the laws of the United States, or are poorly enforced. Legal protection of our rights may be ineffective in such countries. In addition, although we take steps to enforce and police our rights, factors such asthe proliferation of technology designed to circumvent the protection measures used in our products, the availability of broadband access to the Internet, the refusal of Internet service providers or platform holders to remove infringing content in certain instances, and the proliferation of online channels through which infringing product is distributed all have contributed to an expansion in unauthorized copying of our products and brands.

We may experience outages and disruptions of our infrastructure that may harm our business.

We may be subject to outrages or disruptions of our infrastructure, including information technology system failures and network disruptions. These may be caused by natural disasters, cyber-incidents, weather events, power disruptions, telecommunications failures, acts of terrorism or other events. System redundancy may be ineffective or inadequate, and the Company’s disaster recovery planning may not be sufficient for all eventualities. Such failures or disruptions could prevent access to our products, services or online stores selling our products and services.  Our corporate headquarters in Redwood City, CA and our studio in Burnaby, British Columbia are located in seismically active regions, and certain of our game development activities and other essential business operations are conducted at these locations. An event that results in the disruption of any of our critical business or information technology systems could harm our ability to conduct normal business operations.

We utilize debt financing and such indebtedness could adversely impact our business and financial condition.

We have $1 billion in senior unsecured notes outstanding as well as an unsecured committed $500 million revolving credit facility. While the facility is currently undrawn, we may use the proceeds of any future borrowings for general corporate purposes. We may also enter into other financial instruments in the future.

Our indebtedness could affect our financial condition and future financial results by, among other things:

• Requiring the dedication of a substantial portion of any cash flow from operations to the payment of principal of, and interest on, our indebtedness, thereby reducing the availability of such cash flow to fund our growth strategy, working capital, capital expenditures and other general corporate purposes;

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• Utilizing funds that are domiciled in foreign tax jurisdictions in order to make the cash payments upon any repayment of our indebtedness. If we were to choose to use such funds, we would be required to accrue any additional taxes on any portion of the repatriation where no United States income tax had been previously provided; and

• Limiting our flexibility in planning for, or reacting to, changes in our business and our industry.

The agreements governing our indebtedness impose restrictions on us and require us to maintain compliance with specified covenants. In particular, the revolving credit facility includes a maximum capitalization ratio and minimum liquidity requirements. Our ability to comply with these covenants may be affected by events beyond our control. If we breach any of these covenants and do not obtain a waiver from the lenders or noteholders, then, subject to applicable cure periods, our outstanding indebtedness may be declared immediately due and payable. In addition, changes by any rating agency to our credit rating may negatively impact the value and liquidity of both our debt and equity securities, as well as the potential costs associated with any potential refinancing our indebtedness. Downgrades in our credit rating could also restrict our ability to obtain additional financing in the future and could affect the terms of any such financing.

Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition.

We are subject to taxes in the United States and in various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax provision, tax assets, and accruals for other taxes, and there are many transactions and calculations where the ultimate tax determination is uncertain. Our effective income tax rate could be adversely affected by our profit levels, by changes in our business, reorganization of our business and operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the elections we make, changes in applicable tax laws, or changes in the valuation allowance for deferred tax assets, as well as other factors. We are also required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States and foreign jurisdictions. Furthermore, we are regularly subject to audit by tax authorities with respect to both income and such other non-income taxes. Adverse changes in our effective income tax rate, unfavorable audit results or tax rulings, or other changes resulting in significant additional tax liabilities could have material adverse effects upon our earnings, cash flows, and financial condition.

Our reported financial results could be adversely affected by changes infinancial accounting standards.

Our reported financial results are impacted by the accounting standards promulgated by the SEC and national accounting standards bodies and the methods, estimates, and judgments that we use in applying our accounting policies. For example, accounting standards affecting software revenue recognition have affected and could continue to significantly affect the way we account for revenue and costs related to our products and services. We recognize all of the revenue from bundled sales (i.e., online-enabled games that include updates on a when-and-if-available basis or a matchmaking service) on a deferred basis over an estimated offering period. The related costs of revenues are expensed as incurred instead of deferred and recognized ratably. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace existing revenue recognition guidance in U.S. GAAP when it becomes effective. While we have not yet determined the effect of the new standard on our Consolidated Financial Statements, we believe the new standard, as amended, will require us to materially change the way we account for revenue by requiring us to recognize more revenue upon delivery of the primary product than we currently do under current accounting standards. The new standard, as amended, will also likely result in a larger portion of our revenues presented as service revenue rather than product revenue.

As we enhance, expand and diversify our business and product offerings, the application of existing or future financial accounting standards, particularly those relating to the way we account for revenue, costs and taxes, could have a significant adverse effect on our reported results although not necessarily on our cash flows.

Our stock price has been volatile and may continue to fluctuate significantly.

The market price of our common stock historically has been, and we expect will continue to be, subject to significant fluctuations. These fluctuations may be due to factors specific to us (including those discussed in the risk factors above, as well as others not currently known to us or that we currently do not believe are material), to changes in securities analysts’ earnings estimates or ratings, to our results or future financial guidance falling below our expectations and analysts’ and investors’ expectations, to factors affecting the entertainment, computer, software, Internet, media or electronics industries, to our ability to successfully integrate any acquisitions we may make, or to national or international economic conditions. In particular, economic downturns may contribute to the public stock markets experiencing extreme price and trading volume volatility. These broad market fluctuations have and could continue to adversely affect the market price of our common stock.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Stock Purchase Programs

In May 2015, our Board of Directors authorized a program to repurchase up to $1 billion of our common stock. This stock repurchase program, which expires on May 31, 2017. Under this program, we may purchase stock in the open market or through privately-negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities and other market conditions. We are not obligated to repurchase any specific number of shares under this program and it may be modified, suspended or discontinued at any time. During the three and nine months ended December 31, 2016, we repurchased approximately 1.5 million and 5.0 million shares for approximately $127 million and $383 million, respectively. We continue to actively repurchase shares.

The following table summarizes the number of shares repurchased during the three months ended December 31, 2016:

Fiscal Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Dollar Value that May Still Be Purchased Under the Program (in millions)
October 2 - October 29, 2016	472,564	$	83.80	472,564	$	243
October 30 - November 26, 2016	483,002	$	79.47	483,002	$	204
November 27 - December 31, 2016	611,969	$	79.23	611,969	$	156
	1,567,535	$	80.68	1,567,535

Transactions Related to Exercise of Warrants

We issued a total of 9.6 million shares upon exercise of the Warrants, of which 7.9 million shares were issued during the three months ended December 31, 2016 and 1.7 million shares were issued subsequent to quarter end.

For more information regarding the Warrants, please see “Note 10 - Financing Arrangements” to the Condensed Consolidated Financial Statements in this Form 10-Q.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 6. Exhibits

The exhibits listed in the accompanying index to exhibits on Page 62 are filed or incorporated by reference as part of this report.

60

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ELECTRONIC ARTS INC.
	(Registrant)
	/s/ Blake Jorgensen
DATED:	Blake Jorgensen
February 7, 2017	Executive Vice President,
	Chief Financial Officer

61

ELECTRONIC ARTS INC.

FORM 10-Q

FOR THE PERIOD ENDED DECEMBER 31, 2016

EXHIBIT INDEX

		Incorporated by Reference
Number	Exhibit Title	Form	File No.	Filing Date	Filed Herewith
10.1*	Transition Agreement for Gabrielle Toledano, dated November 18, 2016				X
15.1	Awareness Letter of KPMG LLP, Independent Registered Public Accounting Firm				X
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
Additional exhibits furnished with this report:
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
101.INS†	XBRL Instance Document				X
101.SCH†	XBRL Taxonomy Extension Schema Document				X
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB†	XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document				X

* Management contract or compensatory plan or arrangement

† Attached as Exhibit 101 to this Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2016 are the following formatted in eXtensible Business Reporting Language (“XBRL”): (1) Condensed Consolidated Balance Sheets, (2) Condensed Consolidated Statements of Operations, (3) Condensed Consolidated Statements of Comprehensive Income (Loss), (4) Condensed Consolidated Statements of Cash Flows, and (5) Notes to Condensed Consolidated Financial Statements.

62

EX-10.1

Exhibit 10.1

TRANSITION AGREEMENT

This TRANSITION AGREEMENT (“Agreement”), including and incorporating by reference Attachment A, and the definitions for the capitalized terms set forth therein, is made by and between Electronic Arts Inc., a Delaware corporation, with its principal place of business at 209 Redwood Shores Parkway, Redwood City, California 94065-1175 (“EA”) and Employee. This Agreement is made as of the Agreement Date and shall become effective as of the Effective Date.

A.    Employee has been employed by EA since the Employment Start Date.

B.    EA and Employee desire to reach an agreement as to the rights, benefits and obligations of the parties arising out of or relating to Employee’s employment by EA and the transition and severance of such employment.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, EA and Employee agree as follows:

1.Transition and Termination of Employment Relationship. Employee acknowledges and agrees that Employee will remain employed by EA in the position of Executive Vice President until December 1, 2016. From December 2, 2016, and ending on the Termination Date, Employee shall remain employed at EA in the capacity of Special Advisor, but will no longer have responsibility for human resources or facilities matters, except for the services outlined in the paragraph below (“Transition Period”).

During the Transition Period, Employee will provide assistance and support to EA and will perform such duties and projects as assigned and directed by EA’s Chief Executive Officer or his designee.

Employee agrees that, during the entire period from the Agreement Date to the Termination Date, Employee will not, without EA’s prior written consent, engage in any outside work projects or activities as an employee, partner, board member, consultant or in any similar capacity in any business except for unpaid volunteer work for a charity or non-profit organization. Employee shall be permitted to continue to engage in any outside work projects or activities that were previously approved by EA. Subject to EA’s prior written consent, Employee may engage in freelance consulting work, or board advising or participation, on a limited, part-time contract basis for another company that does not compete, directly or indirectly, with EA.

The employment relationship between Employee and EA shall terminate on May 17, 2017 provided that such employment relationship will terminate earlier than such date if, prior to that date, either: (a) Employee voluntarily terminates her employment with EA; (b) Employee breaches the terms and conditions of this Agreement; or (c) Employee accepts alternate employment outside of EA. The actual date on which Employee’s employment with EA terminates shall herein be referred to as the “Termination Date.”

2.Salary During the Transition Period. Employee acknowledges and agrees that, during the Transition Period, she will receive a reduced salary as determined by EA, in its sole discretion, to be

Transition Agreement1    Gabrielle Toledano (100666)

California (Rev. October 2016)

commensurate with her reduced responsibilities, and such salary will be paid to her in accordance with EA’s normal payroll practices for all other employees.

Employee acknowledges and agrees that: (i) as of December 2, 2016 and for the remainder of the Transition Period, she will not be eligible for, and will not accrue, any Paid Time Off; and (ii) in her final paycheck following her Termination Date, she will receive a payment for any remaining unused Paid Time Off that accrued as of December 2, 2016, at the rate of her salary immediately prior to the Transition Period.

Employee further acknowledges and agrees that, pursuant to the terms of EA Bonus Plan, Employee will not be entitled to receive a bonus payment of any kind, in whole or in part, for EA’s fiscal year 2017.

3.Transition Period, Equity Award Vesting. Provided the Employee meets her obligations during the Transition Period under this Agreement up to and including the Termination Date, the Employee’s equity awards will continue to vest up until the Termination Date as described in Attachment A, subject to the terms and conditions applicable to such awards.

4.Health Benefits. Employee’s health benefits will continue through December 31, 2016. Employee will not be eligible for EA health benefits for the remainder of the Transition Period.

5.General Release of Claims. In consideration of the obligations of EA set forth in this Agreement, Employee hereby completely releases and forever discharges EA, its subsidiary, predecessor, successor, and related corporations, divisions and entities, and each of their current and former officers, directors, employees, agents, investors, attorneys, shareholders, founders, administrators, affiliates, divisions, and assigns (collectively referred to as “Releasees”) from any and all legally waivable claims, complaints, rights, duties, obligations, demands, actions, liabilities and causes of action of any kind whatsoever, whether presently known and unknown, suspected or unsuspected, which Employee may have or have ever had against Releasees (“Claims”), including without limitation: (i) any and all Claims arising from or connected with Employee’s employment by EA, the extension of such employment and the termination of such employment, whether based in common law, tort, or contract (express or implied), or on federal, state or local laws or regulations, up until and including the Effective Date; (ii) any and all Claims with respect to any of the Employee’s outstanding equity awards; (iii) any and all Claims arising out of any dispute over tax withholding on any payments provided to Employee pursuant to this Agreement; and (iv) any and all Claims for attorneys’ fees and costs. Employee has been advised that this release does not apply to any rights or claims that may arise after the Effective Date. This release also does not apply to claims that cannot be released as a matter of law. Employee further acknowledges and agrees that the consideration provided by EA in this Agreement exceeds the compensation and benefits to which Employee would be entitled under any agreement with EA or under any of EA’s policies, practices or benefit plans.

Employee understands and agrees that the Claims released by Employee include, but are not limited to, claims of wrongful discharge, emotional distress, defamation, harassment, discrimination, retaliation, breach of contract or covenant of good faith and fair dealing, claims under Title VII of the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1963, the Civil Rights Act of 1866, as amended, the Americans with Disabilities Act (“ADA”), the Age Discrimination in Employment Act (“ADEA”), the Family and Medical Leave Act (“FMLA”), the California Family Rights Act (“CFRA”), the California Fair Employment and Housing Act (“FEHA”), the Employee Retirement Income Security Act, and any other laws and regulations relating to employment provided that such Claims are waivable in

Transition Agreement2    Gabrielle Toledano (100666)

California (Rev. October 2016)

accordance with applicable laws. Employee further acknowledges and agrees that Employee has received all leave to which Employee is entitled under all federal, state, and local laws and regulations related to leave from employment, including, but not limited to, the FMLA, the CFRA, and California worker’s compensation and paid family leave laws. This provision is intended by the parties to be all encompassing and to act as a full and total release of any claim, whether specifically enumerated herein or not, that Employee might have or has had, that exists or has existed on or to the Effective Date.

6.Waiver of California Civil Code. Employee hereby expressly waives the provision of California Civil Code Section 1542 which provides as follows:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by his or her must have materially affected his or her settlement with the debtor.

Employee acknowledges that the waiver of this Section of the California Civil Code is an essential and material term of this release, and that Employee has read this provision, and intends these consequences even as to unknown claims which may exist at the time of this release.

7.No Pending Lawsuits and Covenant Not to Sue. Employee represents that Employee has no lawsuits, administrative charges, claims or actions pending in Employee’s name, or on behalf of any other person or entity, against EA or any of the other Releasees as of the Effective Date.

Employee agrees that she will not file, cause to be filed, maintain or permit to be filed or maintained on her behalf any charge, claim or action against Releasees based on or relating to Claims released by Employee in this Agreement.

Employee agrees that Employee will not knowingly encourage, counsel or assist any attorneys or their clients in the presentation or prosecution of any charges, claims or actions by any third party against any of the Releasees, unless: (i) Employee has a nonwaivable right to provide such encouragement, counsel or assistance under applicable law; or (ii) Employee is subject to a valid subpoena or court order to do so provided that Employee shall notify EA within three (3) business days of her receipt of any such subpoena or order.

Nothing in this Agreement shall be interpreted or applied in a manner that affects or limits Employee's right to file or participate in any charge before the U.S. Equal Employment Opportunity Commission ("EEOC") or other federal, state, or local agency before which Employee’s right to file or participate in charges cannot be limited. Employee is not and will not be entitled to any monetary relief on her own behalf resulting from any charge, claim or action filed by Employee, any agency (including but not limited to the EEOC) or any other person or entity based on or relating to Claims released by Employee in this Agreement. Employee specifically assigns to EA her right to any monetary recovery resulting from any such charge, claim or action.

If Employee files, causes to be filed, maintains or permits to be filed or maintained on her behalf any charge, claim or action against Releasees based on or relating to Claims released by Employee in this Agreement, Employee shall be required to immediately repay in full to EA any consideration provided to Employee pursuant to this Agreement, regardless of the outcome of such charge, claim or action.

Transition Agreement3    Gabrielle Toledano (100666)

California (Rev. October 2016)

8.Confidentiality. Employee and EA understand and agree that this Agreement will need to be filed with the Securities and Exchange Commission and that its confidentiality cannot be protected. Except as otherwise agreed to by the parties hereto in writing, until the Agreement is publicly filed or described by EA, the contents, terms and conditions of this Agreement must be kept confidential by Employee and may not be disclosed except to her spouse, accountant, or attorneys or pursuant to subpoena or court order and except to the extent disclosed by the Company publicly pursuant to applicable laws and regulations. Employee and EA (on behalf of itself, its executive officers and directors) agree that if any such party is asked for information concerning this Agreement, that party will direct them to review EA's public filings related thereto. Any breach of this confidentiality provision shall be deemed a material breach of this Agreement.

9.Non-Disparagement. Employee agrees that Employee will not make statements or representations to any other person, entity or firm which may cast EA, or its directors, officers, agents or employees, in an unfavorable light, which are offensive, or which could adversely affect EA’s name or reputation or the name or reputation of any director, officer, agent or employee of EA; provided that, if the provisions of the National Labor Relations Act (“NLRA”) protecting employee conduct apply to Employee, nothing in this Agreement is intended to prohibit Employee from engaging in such conduct. The parties agree that the provisions of this Paragraph 9 are material terms of this Agreement.

10.Non-Solicitation. Employee agrees that until the Termination Date, and for one year thereafter, she will not recruit, solicit or induce, or attempt to induce, any employee or employees of EA to terminate their employment with, or otherwise cease their relationship with, EA.

11.Cooperation with EA. Employee agrees that: (i) Employee will cooperate with EA, its agents and its attorneys with respect to any matters in which Employee was involved during Employee’s employment with EA or about which Employee has information; (ii) Employee will provide upon request from EA all such information or information about any such matter; (iii) Employee will make herself available to assist EA with any litigation or potential litigation relating to any action or omission by Employee as an EA employee; and (iv) Employee will testify truthfully in any legal proceeding related to her employment with EA.

12.Tax Payments. EA makes no representations or warranties with respect to the tax consequences of any payments provided to Employee under the terms of this Agreement. Employee agrees and understands that Employee is responsible for payment, if any, of applicable taxes or penalties on the payments made by EA under this Agreement. Employee further agrees to indemnify and hold EA harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments or recoveries by any government agency against EA for any amounts claimed due on account of: (i) Employee’s failure to pay, or Employee’s delayed payment of, applicable taxes; or (ii) damages sustained by EA by reason of any such claims, including attorneys’ fees and costs.

13.Payment of Wages and Receipt of All Benefits. Except for any wages to be paid after the Effective Date, including Employee's final paycheck, the amounts set forth in Attachment A, Employee acknowledges and agrees that EA has already paid to Employee any and all undisputed wages, salary, bonuses, accrued, but unused, paid time off, reimbursable expenses, and any and all other benefit payments and/or other payments or compensation earned by Employee, and that no further payments or amounts are owed or will be owed. Employee agrees that, to the extent there is any claim for unpaid wages, there is a bona fide and good-faith dispute as to whether such wages are due, and, based on this dispute and the consideration provided to Employee under this Agreement, Employee releases and waives any and all claims regarding any alleged unpaid wages and any corresponding penalties, interest, or

Transition Agreement4    Gabrielle Toledano (100666)

California (Rev. October 2016)

attorneys’ fees. Employee further acknowledges and agrees that any and all equity awards that remained unvested as of the earlier of May 17, 2017 or the Employee’s Termination Date will be forfeited and the Employee does not have a continued right to the awards or any underlying shares of EA common stock.

14.Return of Property and Confidentiality. Employee represents that no later than the Termination Date, Employee will return to EA, and will not possess, any records, documents, specifications, or any confidential material or any equipment or other property of EA. Employee further represents that Employee has complied with and will continue to comply with the terms of the Proprietary Information Agreement signed by Employee, and will preserve as confidential all confidential information pertaining to the business of EA and its customers, licensees and affiliates. Employee acknowledges and agrees that the Proprietary Information Agreement will continue in full force and effect following her separation from the employ of EA.

15.No Lien or Assignment By Employee. Employee warrants and represents that there are no liens or claims of lien in law or equity or otherwise of or against any of the claims or causes of action released herein. Employee acknowledges and agrees that this Agreement, and any of the rights hereunder, may not be assigned or otherwise transferred, in whole or in part by Employee.

16.Arbitration. Any and all controversies arising out of or relating to the validity, interpretation, enforceability, or performance of this Agreement will be solely and finally settled by means of binding arbitration in the State of California in accordance with the Employment Arbitration Rules and Proceduresof the Judicial Arbitration and Mediation Services (JAMS) in effect at the time of filing of the demand for arbitration or the California Code of Civil Procedure, with each party being responsible for its own attorneys’ fees and costs of arbitration. The prevailing party shall be entitled to injunctive relief to enforce the arbitration award. The parties hereby agree to waive their rights to have any dispute under this Agreement resolved in a judicial proceeding.

17.Equitable Relief. Each party acknowledges and agrees that a breach of any term or condition of this Agreement may cause the non-breaching party irreparable harm for which its remedies at law may be inadequate. Each party hereby agrees that the non-breaching party will be entitled, in addition to any other remedies available to it at law or in equity, to seek injunctive relief to prevent the breach or threatened breach of the other party’s obligations hereunder. Notwithstanding paragraph 16, above, the parties may seek injunctive relief through the civil court rather than through private arbitration if necessary to prevent irreparable harm.

18.No Admission. The execution of this Agreement and the performance of its terms shall in no way be construed as an admission of guilt or liability by either Employee or EA. Both parties expressly disclaim any liability for claims by the other.

19.Voluntary Execution, Right to Revoke and Deadline for Execution. Employee understands and agrees that:

a. Employee executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of EA or any third party, with the full intent of releasing all of Employee’s claims against EA and any of the other Releasees;

b. Employee has had an opportunity to consult with an attorney, if the Employee wishes;

c. Employee has carefully read and understands the scope and effect of the provisions of this Agreement;

d. Employee is fully aware of the contents and legal effect of this Agreement;

Transition Agreement5    Gabrielle Toledano (100666)

California (Rev. October 2016)

e. Employee has been allowed to consider this Agreement for twenty-one (21) days before signing it;

f. If Employee signs this document before that twenty-one (21) day period expires, Employee does so voluntarily and knowingly;

g. Any amendments (whether material or immaterial) to the Agreement agreed upon by the parties on or prior to the Deadline for Employee’s Signature shall not restart the running of the twenty-one (21) day period; and

h. Employee has not relied upon any representations or statements made by EA that are not specifically set forth in this Agreement.

Employeefurther acknowledges and agrees that:

a. Employee is not entitled to any of the consideration set forth under this Agreement if the Agreement is not executed by Employee and received by EA by the Deadline for the Employee’s Signature set forth in Attachment A.

b. If Employee timely executes the Agreement, Employee may revoke her acceptance of the Agreement by delivering written revocation to EA within seven (7) days from the date on which Employee signs this Agreement.

c. Upon the expiration of that seven (7) day period, this Agreement binds the parties.

20.Miscellaneous. This Agreement represents the complete understanding of Employee and EA with respect to its subject matter. This Agreement supersedes all prior and contemporaneous agreements, negotiations and understandings (whether written or oral) between the Releasees and Employee (or her attorneys and agents) with respect to the subject matter hereof except for the New Hire/Proprietary Information Agreement. This Agreement may only be amended in a writing signed by Employee and a duly authorized representative of EA. This Agreement will be construed and enforced in accordance with the laws of the State of California, without regard to choice-of-law provisions. This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. Payments and benefits provided under this Agreement are intended to qualify for the short-term deferral exemption under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); to the extent any such payments or benefits are deemed to be deferred compensation subject to the Section 409A, the applicable provisions of this Agreement shall be applied, construed and administered so that such payments or benefits are provided in compliance with the applicable requirements of Section 409A. If any provision of this Agreement is held by a court of competent jurisdiction to be void or unenforceable for any reason, the remaining provisions of this Agreement shall continue with full force and effect.

ELECTRONIC ARTS INC.        GABRIELLE TOLEDANO

By:     /s/ Jacob J. Schatz                By:     /s/ Gabrielle Toledano

Name:     Jacob J. Schatz                    Name:     Gabrielle Toledano

Title:     SVP, General Counsel & Corporate Secretary    Date:     November 17, 2016

Date:     November 18, 2016

Transition Agreement6    Gabrielle Toledano (100666)

California (Rev. October 2016)

TRANSITION AGREEMENT

ATTACHMENT A

Employee Gabrielle Toledano

Agreement Date: November 14, 2016

Deadline for Employee’s Signature: December 5, 2016

Effective Date of Agreement: The eighth (8th) day after the Agreement is signed by Employee

Employment Start Date: February 20, 2006

Transition Period: December 2, 2016 to the Termination Date.

Termination Date: The employment relationship between Employee and EA shall terminate on May 17, 2017 provided that such employment relationship will terminate earlier than such date if, prior to that date: (a) Employee voluntarily terminates her employment with EA or (b) Employee breaches the terms and conditions of this Agreement or (c) Employee accepts alternate employment outside of EA. The actual date on which Employee’s employment with EA terminates is referred to as the “Termination Date.”

Stock Vesting to Continue Through: On the earlier of (i) May 16, 2017 or (ii) the Termination Date (“Continued Vesting Date”). Any equity awards or portion thereof that are not earned and/or vested by the Continued Vesting Date will be immediately forfeited, and the Employee will have no continued right to the awards or any shares of EA common stock underlying the forfeited awards. The exercise of any vested options post Termination Date is subject to the applicable stock option agreements.

Health Benefits: Will terminate on December 31, 2016.

Transition Agreement7    Gabrielle Toledano (100666)

California (Rev. October 2016)

EX-15.1

Exhibit 15.1

Awareness Letter of KPMG LLP, Independent Registered Public Accounting Firm

Electronic Arts Inc.

Redwood City, California:

With respect to the subject registration statements on Form S‑8 (Nos. 333‑183077, 333‑176181, 333‑168680, 333‑161229, 333‑152757, 333‑145182, 333‑138532, 333‑127156, 333‑117990, 333‑107710, 333‑99525, 333‑67430, 333‑44222, 333‑39432, 333-190355, and 333-213044) and the registration statement on Form S‑3 (No. 333‑199995) of Electronic Arts Inc., we acknowledge our awareness of the use therein of our report dated February 7, 2017 related to our review of interim financial information included in the Form 10‑Q for the quarterly period ended December 31, 2016.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

/s/ KPMG LLP

Santa Clara, California

February 7, 2017

EX-31.1

Exhibit 31.1

ELECTRONIC ARTS INC.

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a) of the Exchange Act

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Andrew Wilson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Electronic Arts Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 7, 2017	By:	/s/ Andrew Wilson
		Andrew Wilson
		Chief Executive Officer

EX-31.2

Exhibit 31.2

ELECTRONIC ARTS INC.

Certification of Executive Vice President, Chief Financial Officer

Pursuant to Rule 13a-14(a) of the Exchange Act

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Blake Jorgensen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Electronic Arts Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 7, 2017	By:	/s/ Blake Jorgensen
		Blake Jorgensen
		Executive Vice President,
		Chief Financial Officer

EX-32.1

Exhibit 32.1

ELECTRONIC ARTS INC.

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Electronic Arts Inc. on Form 10-Q for the period ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew Wilson, Chief Executive Officer of Electronic Arts Inc., certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Electronic Arts Inc. for the periods presented therein.

/s/ Andrew Wilson

Andrew Wilson

Chief Executive Officer

Electronic Arts Inc.

February 7, 2017

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Electronic Arts and will be retained by Electronic Arts and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

ELECTRONIC ARTS INC.

Certification of Executive Vice President, Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Electronic Arts Inc. on Form 10-Q for the period ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Blake Jorgensen, Executive Vice President and Chief Financial Officer of Electronic Arts Inc., certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Electronic Arts Inc. for the periods presented therein.

/s/ Blake Jorgensen

Blake Jorgensen

Executive Vice President,

Chief Financial Officer

Electronic Arts Inc.

February 7, 2017

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Electronic Arts and will be retained by Electronic Arts and furnished to the Securities and Exchange Commission or its staff upon request.

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Document And Entity Information - shares	9 Months Ended
	Dec. 31, 2016	Feb. 02, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	EA
Entity Registrant Name	ELECTRONIC ARTS INC.
Entity Central Index Key	0000712515
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		308,264,527

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
ASSETS:
Cash and cash equivalents	$ 2,483	$ 2,493	[1]
Short-term investments	1,736	1,341	[1]
Receivables, net of allowances of $196 and $159, respectively	587	233	[1]
Inventories	35	33	[1]
Other current assets	260	254	[1]
Total current assets	5,101	4,354	[1]
Property and equipment, net	424	439
Goodwill	1,704	1,710	[1]
Acquisition-related intangibles, net	9	57	[1]
Deferred income taxes, net	386	387	[1]
Other assets	95	103	[1]
TOTAL ASSETS	7,719	7,050	[1]
LIABILITIES:
Accounts payable	65	89	[1]
Accrued and other current liabilities	901	710	[1]
0.75% Convertible senior notes due 2016, net	0	161	[1]
Deferred net revenue (online-enabled games)	1,971	1,458	[1]
Total current liabilities	2,937	2,418	[1]
Senior notes, net	990	989
Income tax obligations	87	80	[1]
Deferred income taxes, net	2	2	[1]
Other liabilities	154	163	[1]
TOTAL LIABILITIES	4,170	3,652	[1]
Commitments and contingencies (See Note 11)			[1]
0.75% Convertible senior notes due 2016 (See Note 10)	0	2	[1]
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value. 1,000 shares authorized; 307 and 301 shares issued and outstanding, respectively	3	3	[1]
Additional paid-in capital	1,086	1,349	[1]
Retained earnings	2,461	2,060	[1]
Accumulated other comprehensive loss	(1)	(16)
Total stockholders' equity	3,549	3,396	[1]
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 7,719	$ 7,050	[1]

[1] Derived from audited Consolidated Financial Statements.

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions, $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Receivables, allowances	$ 196	$ 159
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10	10
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	307	301
Common stock, shares outstanding	301	301

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Condensed Consolidated Statements Of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Net revenue:
Product	$ 649	$ 625	$ 1,753	$ 1,802
Service and other	500	445	1,565	1,286
Total net revenue	1,149	1,070	3,318	3,088
Cost of revenue:
Product	389	439	796	868
Service and other	127	107	300	260
Total cost of revenue	516	546	1,096	1,128
Gross profit	633	524	2,222	1,960
Operating expenses:
Research and development	285	266	870	827
Marketing and sales	240	190	511	469
General and administrative	110	97	329	296
Amortization of intangibles	2	2	5	6
Total operating expenses	637	555	1,715	1,598
Operating income (loss)	(4)	(31)	507	362
Interest and other income (expense), net	(2)	1	(13)	(11)
Income (loss) before provision for (benefit from) income taxes	(6)	(30)	494	351
Provision for (benefit from) income taxes	(5)	15	93	94
Net income (loss)	$ (1)	$ (45)	$ 401	$ 257
Earnings (loss) per share:
Basic	$ 0.00	$ (0.14)	$ 1.33	$ 0.83
Diluted	$ 0.00	$ (0.14)	$ 1.28	$ 0.77
Number of shares used in computation:
Basic	303	311	302	311
Diluted	303	311	314	333

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Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Net income (loss)	$ (1)	$ (45)	$ 401	$ 257
Other comprehensive income (loss), net of tax:
Change in unrealized net gains and losses on available-for-sale securities	(5)	(4)	(4)	(3)
Reclassification adjustment for realized net gains and losses on available-for-sale securities	0	1	(1)	0
Change in unrealized net gains and losses on derivative instruments	39	10	66	2
Reclassification adjustment for realized net gains and losses on derivative instruments	(8)	(4)	(18)	(11)
Foreign currency translation adjustments	(17)	(16)	(28)	(47)
Total other comprehensive income (loss), net of tax	9	(13)	15	(59)
Total comprehensive income (loss)	$ 8	$ (58)	$ 416	$ 198

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Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Dec. 31, 2016		Dec. 31, 2015
OPERATING ACTIVITIES
Net income	$ 401		$ 257
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	140		149
Stock-based compensation	144		131
Loss on conversion of senior notes	0		8
Change in assets and liabilities:
Receivables, net	(367)		(268)
Inventories	(2)		(6)
Other assets	42		42
Accounts payable	(6)		70
Accrued and other liabilities	111		(124)
Deferred income taxes, net	0		6
Deferred net revenue (online-enabled games)	513		562
Net cash provided by operating activities	976		827
INVESTING ACTIVITIES
Capital expenditures	(94)		(63)
Proceeds from maturities and sales of short-term investments	968		707
Purchase of short-term investments	(1,372)		(727)
Net cash used in investing activities	(498)		(83)
FINANCING ACTIVITIES
Payment of convertible notes	(163)		(293)
Proceeds from issuance of common stock	33		86
Excess tax benefit from stock-based compensation	53		73
Repurchase and retirement of common stock	(383)		(384)
Net cash used in financing activities	(460)		(518)
Effect of foreign exchange on cash and cash equivalents	(28)		(31)
Increase (decrease) in cash and cash equivalents	(10)		195
Beginning cash and cash equivalents	2,493	[1]	2,068
Ending cash and cash equivalents	2,483		2,263
Supplemental cash flow information:
Cash paid during the period for income taxes, net	51		28
Cash paid during the period for interest	23		3
Non-cash Investing activities
Change in accrued capital expenditures	$ (16)		$ (8)

[1] Derived from audited Consolidated Financial Statements.

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Description Of Business And Basis Of Presentation

9 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description Of Business And Basis Of Presentation

(1) DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

We are a global leader in digital interactive entertainment. We develop, market, publish and distribute games, content and services that can be played by consumers on a variety of platforms, which include consoles (such as the PlayStation from Sony, and the Xbox from Microsoft), PCs, mobile phones and tablets. Some of our games are based on our wholly-owned intellectual property (e.g., Battlefield, Mass Effect, Need for Speed, The Sims and Plants vs. Zombies), and some of our games leverage content that we license from others (e.g., FIFA, Madden NFL and Star Wars). We also publish and distribute games developed by third parties (e.g., Titanfall). Our products and services may be purchased through multiple distribution channels, including physical and online retailers, platform providers such as console manufacturers, providers of free-to-download PC games, mobile carriers and directly through Origin, our own digital distribution platform.

Our fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest March 31. Our results of operations for the fiscal year ending March 31, 2017 contains 52 weeks and ends on April 1, 2017. Our results of operations for the fiscal year ended March 31, 2016 contained 53 weeks and ended on April 2, 2016. Our results of operations for the three months ended December 31, 2016 and 2015 contained 13 weeks each and ended on December 31, 2016 and January 2, 2016, respectively. Our results of operations for the nine months ended December 31, 2016 and 2015 contained 39 and 40 weeks, respectively, and ended on December 31, 2016 and January 2, 2016, respectively. For simplicity of disclosure, all fiscal periods are referred to as ending on a calendar month end.

The Condensed Consolidated Financial Statements are unaudited and reflect all adjustments (consisting only of normal recurring accruals unless otherwise indicated) that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the amounts reported in these Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. The results of operations for the current interim periods are not necessarily indicative of results to be expected for the current year or any other period.

These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, as filed with the United States Securities and Exchange Commission (“SEC”) on May 27, 2016.

Impact of Recently Issued Accounting Standards

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, related to simplifications of employee share-based payment accounting. This pronouncement eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures, and minimum statutory tax withholding requirements. The pronouncement is effective for annual periods (and for interim periods within those annual periods) beginning after December 15, 2016. We will adopt this new standard in the first quarter of fiscal year 2018. We are currently evaluating the impact of this new standard on our Consolidated Financial Statements and related disclosures.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. This update is effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Statements of Cash Flows.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update is intended to reduce the existing diversity in practice in how certain transactions are classified in the statement of cash flows. This update is effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted, provided that all of the amendments are adopted in the same period. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Statements of Cash Flows.

In March 2016, the FASB issued ASU 2016-04, Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products. The amendments in the ASU are designed to provide guidance and eliminate diversity in the accounting for derecognition of prepaid stored-value product liabilities. Typically, a prepaid stored-value product liability is to be derecognized when it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. This is when the likelihood of the product holder exercising its remaining rights becomes remote. This estimate shall be updated at the end of each period. The amendments in this ASU are effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825-10), which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The ASU also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments.

The requirements will be effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. We are currently evaluating the impact of this new standard on our Consolidated Financial Statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. We currently anticipate adopting the standard using the cumulative effect transition method. This new revenue standard, as amended by ASU 2015-14, is effective in the first quarter of fiscal year 2019. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the guidance in the new revenue standard on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance in the new revenue standard regarding an entity’s identification of its performance obligations in a contract, as well as an entity’s evaluation of the nature of its promise to grant a license of intellectual property and whether or not that revenue is recognized over time or at a point in time. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients, which amends the guidance in the new revenue standard on collectibility, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues that were raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as the new revenue standard. While we are currently evaluating the impact of the new revenue standard, as amended, on our Consolidated Financial Statements and related disclosures, we believe the adoption of the new standard will have a significant impact on the accounting for certain transactions with multiple elements or “bundled” arrangements (for example, sales of online-enabled games for which we do not have vendor-specific objective evidence of fair value (“VSOE”) for unspecified future updates) because the requirement to have VSOE for undelivered elements under current accounting standards is eliminated under the new standard. Accordingly, we may be required to recognize as revenue a portion of the sales price upon delivery of the software, as compared to the current requirement of recognizing the entire sales price ratably over an estimated offering period. In addition, based upon what we expect to be our performance obligations under the new standard, as amended, we believe that upon adoption, a larger portion of our bundled arrangements will be presented as service revenue instead of product revenue in our Consolidated Statements of Operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this standard to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

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Fair Value Measurements

9 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

(2) FAIR VALUE MEASUREMENTS

There are various valuation techniques used to estimate fair value, the primary one being the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability. We measure certain financial and nonfinancial assets and liabilities at fair value on a recurring and nonrecurring basis.

Fair Value Hierarchy

The three levels of inputs that may be used to measure fair value are as follows:

• Level 1. Quoted prices in active markets for identical assets or liabilities.

• Level 2. Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities.

• Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of December 31, 2016 and March 31, 2016, our assets and liabilities that were measured and recorded at fair value on a recurring basis were as follows (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, 2016		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	230	$	230	$	—	$	—	Cash equivalents
Money market funds	556		556		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	843		—		843		—		Short-term investments and cash equivalents
U.S. Treasury securities	440		440		—		—		Short-term investments and cash equivalents
U.S. agency securities	162		—		162		—		Short-term investments
Commercial paper	136		—		136		—		Short-term investments and cash equivalents
Foreign government securities	136		—		136		—		Short-term investments and cash equivalents
Asset-backed securities	95		—		95		—		Short-term investments
Foreign currency derivatives	57		—		57		—		Other current assets and other assets
Deferred compensation plan assets (a)	10		10		—		—		Other assets
Total assets at fair value	$	2,665	$	1,236	$	1,429	$	—
Liabilities
Foreign currency derivatives	10		—		10		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	11		11		—		—		Other liabilities
Total liabilities at fair value	$	21	$	11	$	10	$	—

			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 March 31, 2016		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	345	$	345	$	—	$	—	Cash equivalents
Money market funds	143		143		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	623		—		623		—		Short-term investments and cash equivalents
U.S. Treasury securities	407		407		—		—		Short-term investments and cash equivalents
U.S. agency securities	170		—		170		—		Short-term investments and cash equivalents
Commercial paper	81		—		81		—		Short-term investments and cash equivalents
Foreign government securities	122		—		122		—		Short-term investments and cash equivalents
Foreign currency derivatives	16		—		16		—		Other current assets and other assets
Deferred compensation plan assets (a)	8		8		—		—		Other assets
Total assets at fair value	$	1,915	$	903	$	1,012	$	—
Liabilities
Foreign currency derivatives	10		—		10		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	9		9		—		—		Other liabilities
Total liabilities at fair value	$	19	$	9	$	10	$	—

(a) The Deferred Compensation Plan assets consist of various mutual funds. See Note 15 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, for additional information regarding our Deferred Compensation Plan.

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Financial Instruments

9 Months Ended

Dec. 31, 2016

Financial Instruments [Abstract]

Financial Instruments

(3) FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of December 31, 2016 and March 31, 2016, our cash and cash equivalents were $2,483 million and $2,493 million, respectively. Cash equivalents were valued using quoted market prices or other readily available market information.

Short-Term Investments

Short-term investments consisted of the following as of December 31, 2016 and March 31, 2016 (in millions):

	As of December 31, 2016									As of March 31, 2016
	Cost or Amortized Cost		Gross Unrealized					Fair Value		Cost or Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses							Gains		Losses
Corporate bonds	$	842	$	—	$	(2	)	$	840	$	620	$	1	$	—	$	621
U.S. Treasury securities	400		—		(1		)	399		389		1		—		390
U.S. agency securities	163		—		(1		)	162		167		—		—		167
Commercial paper	116		—		—			116		50		—		—		50
Foreign government securities	124		—		—			124		113		—		—		113
Asset-backed securities	95		—		—			95		—		—		—		—
Short-term investments	$	1,740	$	—	$	(4	)	$	1,736	$	1,339	$	2	$	—	$	1,341

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of December 31, 2016 and March 31, 2016 (in millions):

	As of December 31, 2016				As of March 31, 2016
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments
Due in 1 year or less	$	928	$	928	$	571	$	571
Due in 1-2 years	419		418		461		462
Due in 2-3 years	306		304		295		296
Due in 3-4 years	87		86		12		12
Short-term investments	$	1,740	$	1,736	$	1,339	$	1,341

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Derivative Financial Instruments

9 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

(4) DERIVATIVE FINANCIAL INSTRUMENTS

The assets or liabilities associated with our derivative instruments and hedging activities are recorded at fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. As discussed below, the accounting for gains and losses resulting from changes in fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge accounting.

We transact business in various foreign currencies and have significant international sales and expenses denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency forward contracts, generally with maturities of 18 months or less, to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in certain foreign currencies. Our cash flow risks are primarily related to fluctuations in the Euro, British pound sterling, Canadian dollar, Swedish krona, Australian dollar, Chinese yuan and South Korean won. In addition, we utilize foreign currency forward contracts to mitigate foreign currency exchange risk associated with foreign-currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. The foreign currency forward contracts not designated as hedging instruments generally have a contractual term of approximately 3 months or less and are transacted near month-end. We do not use foreign currency forward contracts for speculative trading purposes.

Cash Flow Hedging Activities

Certain of our forward contracts are designated and qualify as cash flow hedges. The effectiveness of the cash flow hedge contracts, including time value, is assessed monthly using regression analysis, as well as other timing and probability criteria. To qualify for hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative assets or liabilities associated with our hedging activities are recorded at fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. The effective portion of gains or losses resulting from changes in the fair value of these hedges is initially reported, net of tax, as a component of accumulated other comprehensive income (loss) in stockholders’ equity. The gross amount of the effective portion of gains or losses resulting from changes in the fair value of these hedges is subsequently reclassified into net revenue or research and development expenses, as appropriate, in the period when the forecasted transaction is recognized in our Condensed Consolidated Statements of Operations. In the event that the gains or losses in accumulated other comprehensive income (loss) are deemed to be ineffective, the ineffective portion of gains or losses resulting from changes in fair value, if any, is reclassified to interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. In the event that the underlying forecasted transactions do not occur, or it becomes remote that they will occur, within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from accumulated other comprehensive income (loss) to interest and other income (expense), net, in our Condensed Consolidated Statements of Operations.

Total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting designation are as follows (in millions):

	As of December 31, 2016						As of March 31, 2016
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability
Forward contracts to purchase	$	177	$	—	$	8	$	148	$	5	$	1
Forward contracts to sell	$	700	$	44	$	1	$	685	$	11	$	9

The net impact of the effective portion of gains and losses from our cash flow hedging activities in our Condensed Consolidated Statements of Operations was a gain of $8 million for the three months ended December 31, 2016 and a gain of $4 million for the three months ended December 31, 2015.

The net impact of the effective portion of gains and losses from our cash flow hedging activities in our Condensed Consolidated Statements of Operations was a gain of $18 million for the nine months ended December 31, 2016 and a gain of $11 million for the nine months ended December 31, 2015.

During the three and nine months ended December 31, 2016 and 2015, we reclassified an immaterial amount of the ineffective portion of gains or losses resulting from changes in fair value into interest and other income (expense), net.

The amount excluded from the assessment of hedge effectiveness during three and nine months ended December 31, 2016 and 2015 and recognized in interest and other income (expense), net, was immaterial.

Balance Sheet Hedging Activities

Our foreign currency forward contracts that are not designated as hedging instruments are accounted for as derivatives whereby the fair value of the contracts are reported as other current assets or accrued and other current liabilities on our Condensed Consolidated Balance Sheets, and gains and losses resulting from changes in the fair value are reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. The gains and losses on these foreign currency forward contracts generally offset the gains and losses in the underlying foreign-currency-denominated monetary assets and liabilities, which are also reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations.

Total gross notional amounts and fair values for currency derivatives that are not designated as hedging instruments are accounted for as follows (in millions):

	As of December 31, 2016						As of March 31, 2016
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability
Forward contracts to purchase	$	143	$	—	$	1	$	108	$	—	$	—
Forward contracts to sell	$	681	$	13	$	—	$	159	$	—	$	—

The effect of foreign currency forward contracts not designated as hedging instruments in our Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2016 and 2015, was as follows (in millions):

	Statement of Operations Classification	Amount of Gain (Loss) Recognized in the Statement of Operations
		Three Months Ended December 31,				Nine Months Ended December 31,
		2016		2015		2016		2015
Foreign currency forward contracts not designated as hedging instruments	Interest and other income (expense), net	$	49	$	13	$	50	$	15

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Accumulated Other Comprehensive Income

9 Months Ended

Dec. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Comprehensive Income (Loss)

(5) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended December 31, 2016 and 2015 are as follows (in millions):

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of September 30, 2016	$	1		$	31		$	(42	)	$	(10	)
Other comprehensive income (loss) before reclassifications	(5		)	39			(17		)	17
Amounts reclassified from accumulated other comprehensive income (loss)	—			(8		)	—			(8		)
Total other comprehensive income (loss), net of tax	(5		)	31			(17		)	9
Balance as of December 31, 2016	$	(4	)	$	62		$	(59	)	$	(1	)

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of September 30, 2015	$	(3	)	$	6		$	(47	)	$	(44	)
Other comprehensive income (loss) before reclassifications	(4		)	10			(16		)	(10		)
Amounts reclassified from accumulated other comprehensive income (loss)	1			(4		)	—			(3		)
Total other comprehensive income (loss), net of tax	(3		)	6			(16		)	(13		)
Balance as of December 31, 2015	$	(6	)	$	12		$	(63	)	$	(57	)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended December 31, 2016 and 2015 are as follows (in millions):

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of March 31, 2016	$	1		$	14		$	(31	)	$	(16	)
Other comprehensive income (loss) before reclassifications	(4		)	66			(28		)	34
Amounts reclassified from accumulated other comprehensive income (loss)	(1		)	(18		)	—			(19		)
Total other comprehensive income (loss), net of tax	(5		)	48			(28		)	15
Balance as of December 31, 2016	$	(4	)	$	62		$	(59	)	$	(1	)

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of March 31, 2015	$	(3	)	$	21		$	(16	)	$	2
Other comprehensive income (loss) before reclassifications	(3		)	2			(47		)	(48		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(11		)	—			(11		)
Total other comprehensive income (loss), net of tax	(3		)	(9		)	(47		)	(59		)
Balance as of December 31, 2015	$	(6	)	$	12		$	(63	)	$	(57	)

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the three and nine months ended December 31, 2016 were as follows (in millions):

	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended December 31, 2016			Nine Months Ended December 31, 2016
(Gains) losses on available-for-sale securities
Interest and other income (expense), net	$	—		$	(1	)
Net of tax	$	—		$	(1	)
(Gains) losses on cash flow hedges from forward contracts
Net revenue	$	(9	)	$	(18	)
Research and development	1			—
Net of tax	$	(8	)	$	(18	)
Total net (gain) loss reclassified, net of tax	$	(8	)	$	(19	)

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the three and nine months ended December 31, 2015 were as follows (in millions):

	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended December 31, 2015			Nine Months Ended December 31, 2015
(Gains) losses on available-for-sale securities
Interest and other income (expense), net	$	1		$	—
Net of tax	$	1		$	—
(Gains) losses on cash flow hedges from forward contracts
Net revenue	$	(5	)	$	(19	)
Research and development	1			8
Net of tax	$	(4	)	$	(11	)
Total net (gain) loss reclassified, net of tax	$	(3	)	$	(11	)

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Goodwill And Acquisition-Related Intangibles, Net

9 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Acquisition-Related Intangibles, Net

(6) GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET

The changes in the carrying amount of goodwill for the nine months ended December 31, 2016 are as follows (in millions):

	As of March 31, 2016			Activity		Effects of Foreign Currency Translation			As of December 31, 2016
Goodwill	$	2,078		$	—	$	(6	)	$	2,072
Accumulated impairment	(368		)	—		—			(368		)
Total	$	1,710		$	—	$	(6	)	$	1,704

Goodwill represents the excess of the purchase price over the fair value of the underlying acquired net tangible and intangible assets. Goodwill is not amortized, but rather subject to at least an annual assessment for impairment by applying a fair value-based test.

Acquisition-related intangibles consisted of the following (in millions):

	As of December 31, 2016							As of March 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Acquisition- Related Intangibles, Net		Gross Carrying Amount		Accumulated Amortization			Acquisition- Related Intangibles, Net
Developed and core technology	$	412	$	(412	)	$	—	$	412	$	(368	)	$	44
Trade names and trademarks	106		(97		)	9		106		(93		)	13
Registered user base and other intangibles	5		(5		)	—		5		(5		)	—
Carrier contracts and related	85		(85		)	—		85		(85		)	—
Total	$	608	$	(599	)	$	9	$	608	$	(551	)	$	57

Amortization of intangibles for the three and nine months ended December 31, 2016 and 2015 are classified in the Condensed Consolidated Statement of Operations as follows (in millions):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
Cost of service and other	$	—	$	9	$	16	$	25
Cost of product	18		3		27		10
Operating expenses	2		2		5		6
Total	$	20	$	14	$	48	$	41

During the three and nine months ended December 31, 2016, we determined that the carrying value of one of our acquisition-related intangible assets was not recoverable. The acquisition-related intangible asset was measured using Level 3 inputs and was written down to a fair value of zero as of December 31, 2016. We recognized an impairment charge of $15 million in cost of product revenue in our Condensed Consolidated Statements of Operations. During the three and nine months ended December 31, 2015, there were no impairment charges for acquisition-related intangible assets.

Acquisition-related intangible assets are amortized using the straight-line method over the lesser of their estimated useful lives or the agreement terms, typically from 2 to 14 years. As of December 31, 2016 and March 31, 2016, the weighted-average remaining useful life for acquisition-related intangible assets was approximately 1.6 years and 1.6 years, respectively.

As of December 31, 2016, future amortization of acquisition-related intangibles that will be recorded in the Condensed Consolidated Statement of Operations is estimated as follows (in millions):

Fiscal Year Ending March 31,
2017 (remaining three months)	$	1
2018	6
2019	2
Total	$	9

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Royalties And Licenses

9 Months Ended

Dec. 31, 2016

Royalties And Licenses [Abstract]

Royalties And Licenses

(7) ROYALTIES AND LICENSES

Our royalty expenses consist of payments to (1) content licensors, (2) independent software developers, and (3) co-publishing and distribution affiliates. License royalties consist of payments made to celebrities, professional sports organizations, movie studios and other organizations for our use of their trademarks, copyrights, personal publicity rights, content and/or other intellectual property. Royalty payments to independent software developers are payments for the development of intellectual property related to our games. Co-publishing and distribution royalties are payments made to third parties for the delivery of products.

Royalty-based obligations with content licensors and distribution affiliates are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of revenue at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made to thinly capitalized independent software developers and co-publishing affiliates are generally made in connection with the development of a particular product, and therefore, we are generally subject to development risk prior to the release of the product. Accordingly, payments that are due prior to completion of a product are generally expensed to research and development over the development period as the services are incurred. Payments due after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract. Prepaid royalties are classified as current assets to the extent that such amounts will be recognized in our Condensed Consolidated Statements of Operations within the next 12 months. Royalty liabilities are classified as current liabilities to the extent such royalty payments are contractually due within the next 12 months.

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through product and service sales. Any impairments or losses determined before the launch of a product are generally charged to research and development expense. Impairments or losses determined post-launch are charged to cost of revenue. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. If impairment exists, then the assets are written down to fair value. Unrecognized minimum royalty-based commitments are accounted for as executory contracts, and therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e., cease use) or the contractual rights to use the intellectual property are terminated.

During the three and nine months ended December 31, 2016, we determined that the carrying value of one of our royalty-based assets and previously unrecognized minimum royalty-based commitments were not recoverable. We recognized an impairment charge of $12 million on the asset and a loss of $10 million on the previously unrecognized minimum royalty-based commitment. Of the total $22 million loss, $10 million was included in cost of service revenue and $12 million was included in research and development expenses in our Condensed Consolidated Statements of Operations. During the three and nine months ended December 31, 2015, we did not recognize any material losses or impairment charges on royalty-based commitments, respectively.

The current and long-term portions of prepaid royalties and minimum guaranteed royalty-related assets, included in other current assets and other assets, consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Other current assets	$	31	$	54
Other assets	44		63
Royalty-related assets	$	75	$	117

At any given time, depending on the timing of our payments to our co-publishing and/or distribution affiliates, content licensors, and/or independent software developers, we classify any recognized unpaid royalty amounts due to these parties as accrued liabilities. The current and long-term portions of accrued royalties, included in accrued and other current liabilities and other liabilities, consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Accrued royalties	$	226	$	159
Other liabilities	102		118
Royalty-related liabilities	$	328	$	277

As of December 31, 2016, we were committed to pay approximately $1,338 million to content licensors, independent software developers, and co-publishing and/or distribution affiliates, but performance remained with the counterparty (i.e., delivery of the product or content or other factors) and such commitments were therefore not recorded in our Condensed Consolidated Financial Statements. See Note 11 for further information on our developer and licensor commitments.

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Balance Sheet Details

9 Months Ended

Dec. 31, 2016

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Details

(8) BALANCE SHEET DETAILS

Inventories

Inventories as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Finished goods	$	34	$	32
Raw materials and work in process	1		1
Inventories	$	35	$	33

Property and Equipment, Net

Property and equipment, net, as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016			As of March 31, 2016
Computer, equipment and software	$	702		$	684
Buildings	312			313
Leasehold improvements	126			129
Equipment, furniture and fixtures, and other	80			80
Land	61			61
Construction in progress	8			15
	1,289			1,282
Less: accumulated depreciation	(865		)	(843		)
Property and equipment, net	$	424		$	439

During the three and nine months ended December 31, 2016, depreciation expense associated with property and equipment was $29 million and $86 million, respectively. During the three and nine months ended December 31, 2015 depreciation expense associated with property and equipment was $31 million and $91 million respectively.

Accrued and Other Current Liabilities

Accrued and other current liabilities as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Other accrued expenses	$	306	$	218
Accrued compensation and benefits	224		256
Accrued royalties	226		159
Deferred net revenue (other)	145		77
Accrued and other current liabilities	$	901	$	710

Deferred net revenue (other) includes the deferral of subscription revenue, advertising revenue, licensing arrangements, and other revenue for which revenue recognition criteria has not been met.

Deferred Net Revenue (Online-Enabled Games)

Deferred net revenue (online-enabled games) was $1,971 million and $1,458 million as of December 31, 2016 and March 31, 2016, respectively. Deferred net revenue (online-enabled games) generally includes the unrecognized revenue from bundled sales of online-enabled games for which we do not have VSOE for the obligation to provide unspecified updates. We recognize revenue from the sale of online-enabled games for which we do not have VSOE for the unspecified updates on a straight-line basis, generally over an estimated nine-month period beginning in the month after shipment for physical games sold through retail and an estimated six-month period for digitally-distributed games. However, we expense the cost of revenue related to these transactions generally during the period in which the product is delivered (rather than on a deferred basis).

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Income Taxes

9 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

(9) INCOME TAXES

We estimate our annual effective tax rate at the end of each quarterly period, and we record the tax effect of certain discrete items, which are unusual or occur infrequently, in the interim period in which they occur, including changes in judgment about deferred tax valuation allowances. In addition, jurisdictions with a projected loss for the year, jurisdictions with a year-to-date loss where no tax benefit can be recognized, and jurisdictions where we are unable to estimate an annual effective tax rate are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections.

We recognize deferred tax assets and liabilities for both the expected impact of differences between the financial statement amount and the tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. We record a valuation allowance against deferred tax assets when it is considered more likely than not that all or a portion of our deferred tax assets will not be realized. In making this determination, we are required to give significant weight to evidence that can be objectively verified.

In addition to considering forecasts of future taxable income, we are also required to evaluate and quantify other possible sources of taxable income in order to assess the realization of our deferred tax assets, namely the reversal of existing deferred tax liabilities, the carry back of losses and credits as allowed under current tax law, and the implementation of tax planning strategies. Evaluating and quantifying these amounts involves significant judgments. Each source of income must be evaluated based on all positive and negative evidence; this evaluation involves assumptions about future activity.

In the fourth quarter of fiscal year 2016, we determined that the positive evidence overcame any negative evidence and concluded that it was more likely than not that the U.S. deferred tax assets were realizable. As a result, we released the valuation allowance against all of the U.S. federal deferred tax assets and a portion of the U.S. state deferred tax assets during the fourth quarter of fiscal year 2016, and we continue to believe those deferred tax assets are realizable as of December 31, 2016. We maintain a valuation allowance related to specific U.S. state deferred tax assets and foreign capital loss carryovers, due to uncertainty about the future realization of these assets.

The provision for income taxes reported for the three and nine months ended December 31, 2016 is based on our projected annual effective tax rate for fiscal year 2017, and also includes certain discrete items recorded during the period. Our effective tax rate for the three and nine months ended December 31, 2016 was 83.3 percent and 18.8 percent, respectively, as compared to 50.0 percent and 26.8 percent, respectively, for the same period of fiscal year 2016. The effective tax rate for the nine months ended December 31, 2016 was reduced, when compared to the statutory rate of 35.0 percent, due primarily to non-U.S. profits subject to a reduced or zero tax rate. The effective tax rate for the nine months ended December 31, 2015 was reduced, when compared to the statutory rate of 35.0 percent, by the utilization of U.S. deferred tax assets which were subject to a valuation allowance and non-U.S. profits subject to a reduced or zero tax rate. Conversely, the effective tax rate for the nine months ended December 31, 2015 was increased due to a discrete expense of $73 million, for excess tax benefits from stock-based compensation deductions allocated directly to contributed capital. The effective tax rate for the nine months ended December 31, 2016 differs from the same periods in fiscal year 2016 primarily due to the utilization of U.S. deferred tax assets in fiscal year 2016 which were subject to a valuation allowance and the discrete expense for excess tax benefits from stock-based compensation deductions allocated directly to contributed capital in fiscal year 2016.

During the three and nine months ended December 31, 2016, we recorded a net decrease of $3 million and a net increase of $15 million, respectively, in gross unrecognized tax benefits. The total gross unrecognized tax benefits as of December 31, 2016 is $346 million. A portion of our unrecognized tax benefits will affect our effective tax rate if they are recognized upon favorable resolution of the uncertain tax positions. As of December 31, 2016, if recognized, approximately $321 million of the unrecognized tax benefits would affect our effective tax rate and approximately $24 million would result in adjustments to deferred tax assets with corresponding adjustments to the valuation allowance.

During the nine months ended December 31, 2016, we recorded a net decrease of $3 million for accrued interest and penalties related to tax positions taken on our tax returns. As of December 31, 2016, the combined amount of accrued interest and penalties related to uncertain tax positions included in income tax obligations on our Condensed Consolidated Balance Sheet was approximately $12 million.

We file income tax returns in the United States, including various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions, including Canada, France, Germany, Switzerland and the United Kingdom. The IRS is currently examining our returns for fiscal years 2009 through 2011, and we remain subject to income tax examination by the IRS for fiscal years after 2013.

We are also currently under income tax examination in the United Kingdom for fiscal years 2010 through 2014, and in France for fiscal years 2014 through 2016. We remain subject to income tax examination for several other jurisdictions including in Germany for fiscal years after 2012, in the United Kingdom for fiscal years after 2014, in Canada for fiscal years after 2008, and in Switzerland for fiscal years after 2007.

The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although potential resolution of uncertain tax positions involves multiple tax periods and jurisdictions, it is reasonably possible that a reduction of up to $50 million of unrecognized tax benefits may occur within the next 12 months, some of which, depending on the nature of the settlement or expiration of statutes of limitations, may affect the Company’s income tax provision and therefore benefit the resulting effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements.

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Financing Arrangement

9 Months Ended

Dec. 31, 2016

Debt Instruments [Abstract]

Financing Arrangement

(10) FINANCING ARRANGEMENTS

0.75% Convertible Senior Notes Due 2016

In July 2011, we issued $632.5 million aggregate principal amount of 0.75% Convertible Senior Notes due 2016 (the “Convertible Notes”). The Convertible Notes matured on July 15, 2016. The Convertible Notes were senior unsecured obligations which paid interest semiannually in arrears at a rate of 0.75% per annum on January 15 and July 15 of each year.

The Convertible Notes were convertible into cash and shares of our common stock based on an initial conversion value of 31.5075 shares of our common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $31.74 per share). Upon conversion of the Convertible Notes, holders received cash up to the principal amount of each Convertible Note, and any excess conversion value was delivered in shares of our common stock. The Convertible Notes do not contain any financial covenants.

Upon conversion of any Convertible Notes, we delivered cash up to the principal amount of the Convertible Notes and any excess conversion value was delivered in shares of our common stock. On July 15, 2016, we repaid the remaining principal balance on the Convertible Notes of $136 million and issued approximately 2.5 million shares of common stock to noteholders with a fair value of $193 million. During the six months ended September 30, 2016, we repaid $163 million of the principal balance of the Convertible Notes and issued approximately 2.9 million shares of common stock to noteholders with a fair value of $222 million, resulting in a loss on extinguishment of $0.3 million. There was no activity during the three months ended December 31, 2016.

The carrying and fair values of the Convertible Notes are as follows (in millions):

	As of December 31, 2016		As of March 31, 2016
Principal amount of Convertible Notes	$	—	$	163
Unamortized debt discount of the liability component	—		(2		)
Net carrying value of Convertible Notes	$	—	$	161
Fair value of Convertible Notes (Level 2)	$	—	$	338

Convertible Note Hedge and Warrants Issuance

In July 2011, we entered into certain agreements designed to reduce the potential dilution with respect to our common stock upon conversion of the Convertible Notes (“the Convertible Note Hedge”). We paid $107 million for the Convertible Note Hedge, which was recorded as an equity transaction. The Convertible Note Hedge, subject to customary anti-dilution adjustments, provided us with the option to acquire, on a net settlement basis, approximately 19.9 million shares of our common stock, equal to the number of shares of our common stock that notionally underlie the Convertible Notes at a strike price of $31.74, which corresponds to the conversion price of the Convertible Notes. During the three and six months ended September 30, 2016, we received 2.5 million and 2.9 million shares, of our common stock under the Convertible Note Hedge, respectively, and none during the three months ended December 31, 2016.

Separately, in July 2011 we also entered into privately negotiated warrant transactions with certain counterparties whereby we sold to independent third parties warrants (the “Warrants”) to acquire, subject to customary anti-dilution adjustments that are substantially the same as the anti-dilution provisions contained in the Convertible Notes, up to 19.9 million shares of our common stock (which is also equal to the number of shares of our common stock that notionally underlie the Convertible Notes), with a strike price of $41.14. We received proceeds of $65 million from the sale of the Warrants in fiscal year 2012. The Warrants had a dilutive effect with respect to our common stock to the extent that the market price per share of our common stock exceeded $41.14 on or prior to the expiration date of the Warrants. The Warrants automatically exercised on a net share settlement basis over a 60 trading day period that began on October 17, 2016 and ended on January 12, 2017. We issued a total of 9.6 million shares upon exercise of the Warrants, of which 7.9 million shares were issued during the three months ended December 31, 2016 and 1.7 million shares were issued subsequent to quarter end.

Effect of conversion on earning per share (“EPS”)

Prior to conversion of the Convertible Notes, we included the effect of the additional potential dilutive shares if our common stock price exceeded $31.74 per share using the treasury stock method. If the average price of our common stock exceeds $41.14 per share for a quarterly period, we also included the effect of the additional potential dilutive shares related to the Warrants using the treasury stock method. Prior to conversion, the Convertible Note Hedge was not considered for purposes of the EPS calculation, as its effect would have been anti-dilutive. Upon conversion, the Convertible Note Hedge offset the dilutive effect of the Notes when the stock price was above $31.74 per share. See Note 13 for additional information related to our EPS.

Senior Notes

In February 2016, we issued $600 million aggregate principal amount of 3.70% Senior Notes due March 1, 2021 (the “2021 Notes”) and $400 million aggregate principal amount of 4.80% Senior Notes due March 1, 2026 (the “2026 Notes,” and together with the 2021 Notes, the “Senior Notes”). Our proceeds were $989 million, net of discount of $2 million and issuance costs of $9 million. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2021 Notes and the 2026 Notes using the effective interest rate method. The effective interest rate is 3.94% for the 2021 Notes and 4.97% for the 2026 Notes. Interest is payable semiannually in arrears, on March 1 and September 1 of each year.

The carrying and fair values of the Senior Notes are as follows (in millions):

	As of December 31, 2016			As of March 31, 2016
Senior Notes:
3.70% Senior Notes due 2021	$	600		$	600
4.80% Senior Notes due 2026	400			400
Total principal amount	$	1,000		$	1,000
Unaccreted discount	(2		)	(2		)
Unamortized debt issuance costs	(8		)	(9		)
Net carrying value of Senior Notes	$	990		$	989
Fair value of Senior Notes (Level 2)	$	1,045		$	1,039

As of December 31, 2016, the remaining life of the 2021 Notes and 2026 Notes is approximately 4.2 years and 9.2 years, respectively.

The Senior Notes are senior unsecured obligations and rank equally with all our other existing and future unsubordinated obligations and any indebtedness that we may incur from time to time under our Credit Facility.

The 2021 Notes and the 2026 Notes are redeemable at our option at any time prior to February 1, 2021 or December 1, 2025, respectively, subject to a make-whole premium. Within one and three months of maturity, we may redeem the 2021 Notes or the 2026 Notes, respectively, at a redemption price equal to 100% of the aggregate principal amount plus accrued and unpaid interest. In addition, upon the occurrence of a change of control repurchase event, the holders of the Senior Notes may require us to repurchase all or a portion of the Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The Senior Notes also include covenants that limit our ability to incur liens on assets and to enter into sale and leaseback transactions, subject to certain allowances.

Credit Facility

In March 2015, we entered into a $500 million senior unsecured revolving credit facility (“Credit Facility”) with a syndicate of banks. The Credit Facility terminates on March 19, 2020. The Credit Facility contains an option to arrange with existing lenders and/or new lenders to provide up to an aggregate of $250 million in additional commitments for revolving loans. Proceeds of loans made under the Credit Facility may be used for general corporate purposes.

The loans bear interest, at our option, at the base rate plus an applicable spread or an adjusted LIBOR rate plus an applicable spread, in each case with such spread being determined based on our consolidated leverage ratio for the preceding fiscal quarter. We are also obligated to pay other customary fees for a credit facility of this size and type. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted LIBOR rate. Principal, together with all accrued and unpaid interest, is due and payable on March 19, 2020.

The credit agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, incur subsidiary indebtedness, grant liens, dispose of all or substantially all assets and pay dividends or make distributions, in each case subject to customary exceptions for a credit facility of this size and type. We are also required to maintain compliance with a capitalization ratio and maintain a minimum level of total liquidity.

The credit agreement contains customary events of default, including among others, non-payment defaults, covenant defaults, cross-defaults to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults and a change of control default, in each case, subject to customary exceptions for a credit facility of this size and type. The occurrence of an event of default could result in the acceleration of the obligations under the credit facility, an obligation by any guarantors to repay the obligations in full and an increase in the applicable interest rate.

As of December 31, 2016, no amounts were outstanding under the Credit Facility. $2 million of debt issuance costs that were paid in connection with obtaining this credit facility are being amortized to interest expense over the 5-year term of the Credit Facility.   

Interest Expense

The following table summarizes our interest expense recognized for the three and nine months ended December 31, 2016 and 2015 that is included in interest and other income (expense), net on our Condensed Consolidated Statements of Operations (in millions):

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016			2015
Amortization of debt discount	—			(3		)	(2		)	(14		)
Amortization of debt issuance costs	(1		)	(1		)	(2		)	(2		)
Coupon interest expense	(10		)	(1		)	(31		)	(3		)
Other interest expense	(1		)	—			(1		)	—
Total interest expense	$	(12	)	$	(5	)	$	(36	)	$	(19	)

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Commitments And Contingencies

9 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

(11) COMMITMENTS AND CONTINGENCIES

Lease Commitments

As of December 31, 2016, we leased certain facilities, furniture and equipment under non-cancelable operating lease agreements. We were required to pay property taxes, insurance and normal maintenance costs for certain of these facilities and any increases over the base year of these expenses on the remainder of our facilities.

Development, Celebrity, League and Content Licenses: Payments and Commitments

The products we produce in our studios are designed and created by our employee designers, artists, software programmers and by non-employee software developers (“independent artists” or “third-party developers”). We typically advance development funds to the independent artists and third-party developers during development of our games, usually in installment payments made upon the completion of specified development milestones. Contractually, these payments are generally considered advances against subsequent royalties on the sales of the products. These terms are set forth in written agreements entered into with the independent artists and third-party developers.

In addition, we have certain celebrity, league and content license contracts that contain minimum guarantee payments and marketing commitments that may not be dependent on any deliverables. Celebrities and organizations with whom we have contracts include, but are not limited to: FIFA (Fédération Internationale de Football Association), FIFPRO Foundation, FAPL (Football Association Premier League Limited), and DFL Deutsche Fußball Liga GmbH (German Soccer League) (professional soccer); Dr. Ing. h.c. F. Porsche AG, Ferrari S.p.A. (Need For Speed and Real Racing games); National Basketball Association (professional basketball); PGA TOUR (professional golf); National Hockey League and NHL Players’ Association (professional hockey); National Football League Properties and PLAYERS Inc. (professional football); Zuffa, LLC (Ultimate Fighting Championship); ESPN (content in EA SPORTS games); Disney Interactive (Star Wars); Fox Digital Entertainment, Inc. (The Simpsons); Universal Studios Inc. (Pets); and Respawn. These developer and content license commitments represent the sum of (1) the cash payments due under non-royalty-bearing licenses and services agreements and (2) the minimum guaranteed payments and advances against royalties due under royalty-bearing licenses and services agreements, the majority of which are conditional upon performance by the counterparty. These minimum guarantee payments and any related marketing commitments are included in the table below.

The following table summarizes our minimum contractual obligations as of December 31, 2016 (in millions): 

			Fiscal Years Ending March 31,
			2017
			(Remaining
	Total		three mos.)		2018		2019		2020		2021		2022		Thereafter
Unrecognized commitments
Developer/licensor commitments	$	1,338	$	50	$	284	$	295	$	251	$	182	$	196	$	80
Marketing commitments	469		6		76		109		89		92		73		24
Operating leases	220		8		38		33		30		28		22		61
Senior Notes interest	272		11		41		41		41		41		19		78
Other purchase obligations	115		17		44		15		10		7		4		18
Total unrecognized commitments	2,414		92		483		493		421		350		314		261
Recognized commitments
Senior Notes principal and interest	1,010		10		—		—		—		600		—		400
Licensing and lease obligations (a)	131		6		23		24		25		26		27		—
Total recognized commitments	1,141		16		23		24		25		626		27		400
Total commitments	$	3,555	$	108	$	506	$	517	$	446	$	976	$	341	$	661

The unrecognized amounts represented in the table above reflect our minimum cash obligations for the respective fiscal years, but do not necessarily represent the periods in which they will be recognized and expensed in our Condensed Consolidated Financial Statements. In addition, the amounts in the table above are presented based on the dates the amounts are contractually due as of December 31, 2016; however, certain payment obligations may be accelerated depending on the performance of our operating results. Furthermore, up to $32 million of the unrecognized amounts in the table above may be payable, at the licensor’s election, in shares of our common stock, subject to a $10 million maximum during any fiscal year. The number of shares to be issued will be based on fair market value at the time of issuance.

In addition to what is included in the table above, as of December 31, 2016, we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $87 million, of which we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur.

Legal Proceedings

On July 29, 2010, Michael Davis, a former NFL running back, filed a putative class action in the United States District Court for the Northern District of California against the Company, alleging that certain past versions of Madden NFL included the images of certain retired NFL players without their permission. In March 2012, the trial court denied the Company’s request to dismiss the complaint on First Amendment grounds. In January 2015, that trial court decision was affirmed by the Ninth Circuit Court of Appeals and the case was remanded back to the United States District Court for the Northern District of California. On February 2, 2017, the United States District Court for the Northern District of California denied the plaintiffs’ motion for class certification.

We are also subject to claims and litigation arising in the ordinary course of business. We do not believe that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on our Condensed Consolidated Financial Statements.

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Stock-Based Compensation

9 Months Ended

Dec. 31, 2016

Share-based Compensation [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

(12)  STOCK-BASED COMPENSATION

Valuation Assumptions

We estimate the fair value of stock-based awards on the date of grant. We recognize compensation costs for stock-based awards to employees based on the grant-date fair value using a straight-line approach over the service period for which such awards are expected to vest.

The determination of the fair value of market-based restricted stock units, stock options and ESPP purchase rights is affected by assumptions regarding subjective and complex variables. Generally, our assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. We determine the fair value of our stock-based awards as follows:

• Restricted Stock Units. The fair value of restricted stock units is determined based on the quoted market price of our common stock on the date of grant.

• Market-Based Restricted Stock Units. Market-based restricted stock units consist of grants of performance-based restricted stock units to certain members of executive management that vest contingent upon the achievement of pre-determined market and service conditions (referred to herein as “market-based restricted stock units”). The fair value of our market-based restricted stock units is determined using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model are the risk-free interest rate, expected volatility, expected dividends and correlation coefficient.

• Stock Options and Employee Stock Purchase Plan. The fair value of stock options and stock purchase rights granted pursuant to our equity incentive plans and our 2000 Employee Stock Purchase Plan, as amended (“ESPP”), respectively, is determined using the Black-Scholes valuation model based on the multiple-award valuation method. Key assumptions of the Black-Scholes valuation model are the risk-free interest rate, expected volatility, expected term and expected dividends. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected term of the option. Expected volatility is based on a combination of historical stock price volatility and implied volatility of publicly-traded options on our common stock. Expected term is determined based on historical exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise behavior.

There were an insignificant number of stock options granted during the three and nine months ended December 31, 2016 and 2015.

The estimated assumptions used in the Black-Scholes valuation model to value our ESPP purchase rights were as follows:

	ESPP Purchase Rights
	Nine Months Ended December 31,
	2016		2015
Risk-free interest rate	0.5 - 0.6%		0.3 - 0.4%
Expected volatility	29 - 32%		32	%
Weighted-average volatility	31	%	32	%
Expected term	6 - 12 months		6 - 11.5 months
Expected dividends	None		None

There were no market-based restricted stock units granted during the three months ended December 31, 2016 and 2015.

Stock-Based Compensation Expense

Employee stock-based compensation expense recognized during the three and nine months ended December 31, 2016 and 2015 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. In subsequent periods, if actual forfeitures differ from those estimates, an adjustment to stock-based compensation expense will be recognized at that time.

The following table summarizes stock-based compensation expense resulting from stock options, restricted stock units, market-based restricted stock units, and the ESPP purchase rights included in our Condensed Consolidated Statements of Operations (in millions):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
Cost of revenue	$	—	$	—	$	2	$	1
Research and development	27		26		81		77
Marketing and sales	8		5		23		17
General and administrative	13		11		38		36
Stock-based compensation expense	$	48	$	42	$	144	$	131

During the three months ended December 31, 2016, we recognized a $10 million deferred income tax benefit related to our stock-based compensation expense. During the three months ended December 31, 2015, we did not recognize any benefit from income taxes related to our stock-based compensation expense due to the U.S. valuation allowance.

During the nine months ended December 31, 2016, we recognized a $28 million deferred income tax benefit related to our stock-based compensation expense. During the nine months ended December 31, 2015, we did not recognize any benefit from income taxes related to our stock-based compensation expense due to the U.S. valuation allowance.

As of December 31, 2016, our total unrecognized compensation cost related to restricted stock units and market-based restricted stock units was $312 million and is expected to be recognized over a weighted-average service period of 1.6 years. Of the $312 million of unrecognized compensation cost, $40 million relates to market-based restricted stock units. As of December 31, 2016, our total unrecognized compensation cost related to stock options was $4 million and is expected to be recognized over a weighted-average service period of 0.7 years.

During the three and nine months ended December 31, 2016, we recognized $16 million and $53 million, respectively, of excess tax benefit from stock-based compensation deductions; this amount is reported in the financing activities on our Condensed Consolidated Statement of Cash Flows.

During the three and nine months ended December 31, 2015, we recognized $8 million and $73 million, respectively, of excess tax benefit from stock-based compensation deductions; this amount is reported in the financing activities on our Condensed Consolidated Statement of Cash Flows.

Stock Options

The following table summarizes our stock option activity for the nine months ended December 31, 2016:

	Options (in thousands)		Weighted- Average Exercise Prices		Weighted- Average Remaining Contractual Term  (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of March 31, 2016	3,278		$	35.09
Granted	4		72.43
Exercised	(370	)	30.13
Forfeited, cancelled or expired	(31	)	35.78
Outstanding as of December 31, 2016	2,881		$	35.78	4.78	$	124
Vested and expected to vest	2,843		$	35.84	4.74	$	122
Exercisable as of December 31, 2016	2,326		$	36.81	4.20	$	98

The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price as of December 31, 2016, which would have been received by the option holders had all the option holders exercised their options as of that date. We issue new common stock from our authorized shares upon the exercise of stock options.

Restricted Stock Units

The following table summarizes our restricted stock unit activity for the nine months ended December 31, 2016:

	Restricted Stock Rights (in thousands)		Weighted- Average Grant Date Fair Values
Outstanding as of March 31, 2016	7,157		$	44.04
Granted	2,529		75.68
Vested	(3,658	)	36.39
Forfeited or cancelled	(487	)	56.76
Outstanding as of December 31, 2016	5,541		$	62.41

The weighted-average grant date fair values of restricted stock units granted during the three and nine months ended December 31, 2016 were $80.04 and $75.68, respectively.

Market-Based Restricted Stock Units

Our market-based restricted stock units vest contingent upon the achievement of pre-determined market and service conditions. If these market conditions are not met but service conditions are met, the market-based restricted stock units will not vest; however, any compensation expense we have recognized to date will not be reversed. The number of shares of common stock to be received at vesting will range from zero percent to 200 percent of the target number of market-based restricted stock units based on our total stockholder return (“TSR”) relative to the performance of companies in the NASDAQ-100 Index for each measurement period, generally over a one-year, two-year cumulative and three-year cumulative period. In the table below, we present shares granted at 100 percent of target of the number of market-based restricted stock units that may potentially vest. The maximum number of shares of common stock that could vest is approximately 0.7 million for market-based restricted stock units granted during the nine months ended December 31, 2016. As of December 31, 2016, the maximum number of shares that could vest is approximately 1.3 million for market-based restricted stock units outstanding.

The following table summarizes our market-based restricted stock unit activity for the nine months ended December 31, 2016:

	Market-Based Restricted  Stock Units (in thousands)		Weighted- Average  Grant Date Fair Value
Outstanding as of March 31, 2016	636		$	64.49
Granted	353		98.04
Vested	(558	)	50.08
Vested above target	238		44.99
Forfeited or cancelled	(28	)	84.94
Outstanding as of December 31, 2016	641		$	87.37

Stock Repurchase Program

In May 2014, a special committee of our Board of Directors, on behalf of the full Board of Directors, authorized a two-year program to repurchase up to $750 million of our common stock. Since inception, we repurchased approximately 9.2 million shares for approximately $394 million under this program.

In May 2015, our Board of Directors authorized a program to repurchase up to $1 billion of our common stock. This stock repurchase program, which expires on May 31, 2017, supersedes and replaces the stock repurchase authorization approved in May 2014. Under this program, we may purchase stock in the open market or through privately-negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities and other market conditions. We are not obligated to repurchase any specific number of shares under this program and it may be modified, suspended or discontinued at any time. During the three and nine months ended December 31, 2016, we repurchased approximately 1.5 million and 5.0 million shares for approximately $127 million and $383 million, respectively. We continue to actively repurchase shares. As of December 31, 2016, $156 million was available to be repurchased under this program.

The following table summarizes total shares repurchased during the three and nine months ended December 31, 2016 and 2015:

	May 2014 Program			May 2015 Program			Total
(in millions)	Shares	Amount		Shares	Amount		Shares	Amount
Three months ended December 31, 2016	—	$	—	1.5	$	127	1.5	$	127
Nine months ended December 31, 2016	—	$	—	5.0	$	383	5.0	$	383
Three months ended December 31, 2015	—	$	—	1.8	$	126	1.8	$	126
Nine months ended December 31, 2015	1.0	$	57	4.8	$	327	5.8	$	384

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Earnings (Loss) Per Share

9 Months Ended

Dec. 31, 2016

Earnings Per Share Reconciliation [Abstract]

Earnings (Loss) Per Share

(13) EARNINGS (LOSS) PER SHARE

The following table summarizes the computations of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS is computed as net income divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based compensation plans including stock options, restricted stock, restricted stock units, ESPP purchase rights, warrants, and other convertible securities using the treasury stock method.

	Three Months Ended December 31,						Nine Months Ended December 30,
(In millions, except per share amounts)	2016			2015			2016		2015
Net income (loss)	$	(1	)	$	(45	)	$	401	$	257
Shares used to compute earnings (loss) per share:
Weighted-average common stock outstanding — basic	303			311			302		311
Dilutive potential common shares related to stock award plans and from assumed exercise of stock options	—			—			3		7
Dilutive potential common shares related to the Convertible Notes	—			—			1		8
Dilutive potential common shares related to the Warrants	—			—			8		7
Weighted-average common stock outstanding — diluted	303			311			314		333
Earnings (loss) per share:
Basic	$ (	0.00	)	$	(0.14	)	$	1.33	$	0.83
Diluted	$ (	0.00)		$	(0.14	)	$	1.28	$	0.77

As a result of our net loss for the three months ended December 31, 2016, we have excluded all potentially dilutive common shares from the diluted loss per share calculation as their inclusion would have had an antidilutive effect. Had we reported net income for this period, an additional 3 million shares of common stock related to our outstanding equity-based instruments and an additional 7 million shares related to the Warrants would have been included in the number of shares used to calculate Diluted EPS for the three months ended December 31, 2016.

As a result of our net loss for the three months ended December 31, 2015, we have excluded all potentially dilutive common shares from the diluted loss per share calculation as their inclusion would have had an antidilutive effect. Had we reported net income for this period, an additional 6 million shares of common stock related to our outstanding equity-based instruments, an additional 6 million shares of common stock related to the Notes, and an additional 8 million shares related to the Warrants would have been included in the number of shares used to calculate Diluted EPS for the three months ended December 31, 2015.

For the nine months ended December 31, 2016 and 2015, an immaterial amount of options to purchase, restricted stock units and restricted stock to be released were excluded from the treasury stock method computation of diluted shares as their inclusion would have had an antidilutive effect.

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Description Of Business And Basis Of Presentation (Policies)

9 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Impact of recently issued accounting standards

Impact of Recently Issued Accounting Standards

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, related to simplifications of employee share-based payment accounting. This pronouncement eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures, and minimum statutory tax withholding requirements. The pronouncement is effective for annual periods (and for interim periods within those annual periods) beginning after December 15, 2016. We will adopt this new standard in the first quarter of fiscal year 2018. We are currently evaluating the impact of this new standard on our Consolidated Financial Statements and related disclosures.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. This update is effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Statements of Cash Flows.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update is intended to reduce the existing diversity in practice in how certain transactions are classified in the statement of cash flows. This update is effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted, provided that all of the amendments are adopted in the same period. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Statements of Cash Flows.

In March 2016, the FASB issued ASU 2016-04, Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products. The amendments in the ASU are designed to provide guidance and eliminate diversity in the accounting for derecognition of prepaid stored-value product liabilities. Typically, a prepaid stored-value product liability is to be derecognized when it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. This is when the likelihood of the product holder exercising its remaining rights becomes remote. This estimate shall be updated at the end of each period. The amendments in this ASU are effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825-10), which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The ASU also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments.

The requirements will be effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2017. We are currently evaluating the impact of this new standard on our Consolidated Financial Statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. We currently anticipate adopting the standard using the cumulative effect transition method. This new revenue standard, as amended by ASU 2015-14, is effective in the first quarter of fiscal year 2019. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the guidance in the new revenue standard on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance in the new revenue standard regarding an entity’s identification of its performance obligations in a contract, as well as an entity’s evaluation of the nature of its promise to grant a license of intellectual property and whether or not that revenue is recognized over time or at a point in time. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients, which amends the guidance in the new revenue standard on collectibility, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues that were raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as the new revenue standard. While we are currently evaluating the impact of the new revenue standard, as amended, on our Consolidated Financial Statements and related disclosures, we believe the adoption of the new standard will have a significant impact on the accounting for certain transactions with multiple elements or “bundled” arrangements (for example, sales of online-enabled games for which we do not have vendor-specific objective evidence of fair value (“VSOE”) for unspecified future updates) because the requirement to have VSOE for undelivered elements under current accounting standards is eliminated under the new standard. Accordingly, we may be required to recognize as revenue a portion of the sales price upon delivery of the software, as compared to the current requirement of recognizing the entire sales price ratably over an estimated offering period. In addition, based upon what we expect to be our performance obligations under the new standard, as amended, we believe that upon adoption, a larger portion of our bundled arrangements will be presented as service revenue instead of product revenue in our Consolidated Statements of Operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this standard to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. We are currently evaluating the timing of adoption and impact of this new standard on our Consolidated Financial Statements and related disclosures.

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Fair Value Measurements (Tables)

9 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Assets And Liabilities Measured On Recurring Basis

			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 March 31, 2016		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	345	$	345	$	—	$	—	Cash equivalents
Money market funds	143		143		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	623		—		623		—		Short-term investments and cash equivalents
U.S. Treasury securities	407		407		—		—		Short-term investments and cash equivalents
U.S. agency securities	170		—		170		—		Short-term investments and cash equivalents
Commercial paper	81		—		81		—		Short-term investments and cash equivalents
Foreign government securities	122		—		122		—		Short-term investments and cash equivalents
Foreign currency derivatives	16		—		16		—		Other current assets and other assets
Deferred compensation plan assets (a)	8		8		—		—		Other assets
Total assets at fair value	$	1,915	$	903	$	1,012	$	—
Liabilities
Foreign currency derivatives	10		—		10		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	9		9		—		—		Other liabilities
Total liabilities at fair value	$	19	$	9	$	10	$	—

			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, 2016		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	230	$	230	$	—	$	—	Cash equivalents
Money market funds	556		556		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	843		—		843		—		Short-term investments and cash equivalents
U.S. Treasury securities	440		440		—		—		Short-term investments and cash equivalents
U.S. agency securities	162		—		162		—		Short-term investments
Commercial paper	136		—		136		—		Short-term investments and cash equivalents
Foreign government securities	136		—		136		—		Short-term investments and cash equivalents
Asset-backed securities	95		—		95		—		Short-term investments
Foreign currency derivatives	57		—		57		—		Other current assets and other assets
Deferred compensation plan assets (a)	10		10		—		—		Other assets
Total assets at fair value	$	2,665	$	1,236	$	1,429	$	—
Liabilities
Foreign currency derivatives	10		—		10		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	11		11		—		—		Other liabilities
Total liabilities at fair value	$	21	$	11	$	10	$	—

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Financial Instruments (Tables)

9 Months Ended

Dec. 31, 2016

Financial Instruments [Abstract]

Fair Value Of Short-Term Investments

Short-term investments consisted of the following as of December 31, 2016 and March 31, 2016 (in millions):

	As of December 31, 2016									As of March 31, 2016
	Cost or Amortized Cost		Gross Unrealized					Fair Value		Cost or Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses							Gains		Losses
Corporate bonds	$	842	$	—	$	(2	)	$	840	$	620	$	1	$	—	$	621
U.S. Treasury securities	400		—		(1		)	399		389		1		—		390
U.S. agency securities	163		—		(1		)	162		167		—		—		167
Commercial paper	116		—		—			116		50		—		—		50
Foreign government securities	124		—		—			124		113		—		—		113
Asset-backed securities	95		—		—			95		—		—		—		—
Short-term investments	$	1,740	$	—	$	(4	)	$	1,736	$	1,339	$	2	$	—	$	1,341

Fair Value Of Short-Term Investments By Stated Maturity Date Schedule

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of December 31, 2016 and March 31, 2016 (in millions):

	As of December 31, 2016				As of March 31, 2016
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments
Due in 1 year or less	$	928	$	928	$	571	$	571
Due in 1-2 years	419		418		461		462
Due in 2-3 years	306		304		295		296
Due in 3-4 years	87		86		12		12
Short-term investments	$	1,740	$	1,736	$	1,339	$	1,341

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Derivative Financial Instruments (Tables)

9 Months Ended

Dec. 31, 2016

Derivative Financial Instruments [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]

Total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting designation are as follows (in millions):

	As of December 31, 2016						As of March 31, 2016
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability
Forward contracts to purchase	$	177	$	—	$	8	$	148	$	5	$	1
Forward contracts to sell	$	700	$	44	$	1	$	685	$	11	$	9

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block]

Total gross notional amounts and fair values for currency derivatives that are not designated as hedging instruments are accounted for as follows (in millions):

	As of December 31, 2016						As of March 31, 2016
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability
Forward contracts to purchase	$	143	$	—	$	1	$	108	$	—	$	—
Forward contracts to sell	$	681	$	13	$	—	$	159	$	—	$	—

The effect of foreign currency forward contracts not designated as hedging instruments in our Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2016 and 2015, was as follows (in millions):

	Statement of Operations Classification	Amount of Gain (Loss) Recognized in the Statement of Operations
		Three Months Ended December 31,				Nine Months Ended December 31,
		2016		2015		2016		2015
Foreign currency forward contracts not designated as hedging instruments	Interest and other income (expense), net	$	49	$	13	$	50	$	15

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Dec. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Components of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended December 31, 2016 and 2015 are as follows (in millions):

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of September 30, 2016	$	1		$	31		$	(42	)	$	(10	)
Other comprehensive income (loss) before reclassifications	(5		)	39			(17		)	17
Amounts reclassified from accumulated other comprehensive income (loss)	—			(8		)	—			(8		)
Total other comprehensive income (loss), net of tax	(5		)	31			(17		)	9
Balance as of December 31, 2016	$	(4	)	$	62		$	(59	)	$	(1	)

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of September 30, 2015	$	(3	)	$	6		$	(47	)	$	(44	)
Other comprehensive income (loss) before reclassifications	(4		)	10			(16		)	(10		)
Amounts reclassified from accumulated other comprehensive income (loss)	1			(4		)	—			(3		)
Total other comprehensive income (loss), net of tax	(3		)	6			(16		)	(13		)
Balance as of December 31, 2015	$	(6	)	$	12		$	(63	)	$	(57	)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended December 31, 2016 and 2015 are as follows (in millions):

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of March 31, 2016	$	1		$	14		$	(31	)	$	(16	)
Other comprehensive income (loss) before reclassifications	(4		)	66			(28		)	34
Amounts reclassified from accumulated other comprehensive income (loss)	(1		)	(18		)	—			(19		)
Total other comprehensive income (loss), net of tax	(5		)	48			(28		)	15
Balance as of December 31, 2016	$	(4	)	$	62		$	(59	)	$	(1	)

	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of March 31, 2015	$	(3	)	$	21		$	(16	)	$	2
Other comprehensive income (loss) before reclassifications	(3		)	2			(47		)	(48		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(11		)	—			(11		)
Total other comprehensive income (loss), net of tax	(3		)	(9		)	(47		)	(59		)
Balance as of December 31, 2015	$	(6	)	$	12		$	(63	)	$	(57	)

Reclassification out of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the three and nine months ended December 31, 2016 were as follows (in millions):

	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended December 31, 2016			Nine Months Ended December 31, 2016
(Gains) losses on available-for-sale securities
Interest and other income (expense), net	$	—		$	(1	)
Net of tax	$	—		$	(1	)
(Gains) losses on cash flow hedges from forward contracts
Net revenue	$	(9	)	$	(18	)
Research and development	1			—
Net of tax	$	(8	)	$	(18	)
Total net (gain) loss reclassified, net of tax	$	(8	)	$	(19	)

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the three and nine months ended December 31, 2015 were as follows (in millions):

	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended December 31, 2015			Nine Months Ended December 31, 2015
(Gains) losses on available-for-sale securities
Interest and other income (expense), net	$	1		$	—
Net of tax	$	1		$	—
(Gains) losses on cash flow hedges from forward contracts
Net revenue	$	(5	)	$	(19	)
Research and development	1			8
Net of tax	$	(4	)	$	(11	)
Total net (gain) loss reclassified, net of tax	$	(3	)	$	(11	)

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Goodwill And Acquisition-Related Intangibles, Net (Tables)

9 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule Of Changes In The Carrying Amount Of Goodwill

The changes in the carrying amount of goodwill for the nine months ended December 31, 2016 are as follows (in millions):

	As of March 31, 2016			Activity		Effects of Foreign Currency Translation			As of December 31, 2016
Goodwill	$	2,078		$	—	$	(6	)	$	2,072
Accumulated impairment	(368		)	—		—			(368		)
Total	$	1,710		$	—	$	(6	)	$	1,704

Schedule Of Acquisition-Related Intangibles

Acquisition-related intangibles consisted of the following (in millions):

	As of December 31, 2016							As of March 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Acquisition- Related Intangibles, Net		Gross Carrying Amount		Accumulated Amortization			Acquisition- Related Intangibles, Net
Developed and core technology	$	412	$	(412	)	$	—	$	412	$	(368	)	$	44
Trade names and trademarks	106		(97		)	9		106		(93		)	13
Registered user base and other intangibles	5		(5		)	—		5		(5		)	—
Carrier contracts and related	85		(85		)	—		85		(85		)	—
Total	$	608	$	(599	)	$	9	$	608	$	(551	)	$	57

Schedule Of Amoritization Of Intangibles

Amortization of intangibles for the three and nine months ended December 31, 2016 and 2015 are classified in the Condensed Consolidated Statement of Operations as follows (in millions):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
Cost of service and other	$	—	$	9	$	16	$	25
Cost of product	18		3		27		10
Operating expenses	2		2		5		6
Total	$	20	$	14	$	48	$	41

Schedule Of Future Amortization Of Acquisition-Related Intangibles

As of December 31, 2016, future amortization of acquisition-related intangibles that will be recorded in the Condensed Consolidated Statement of Operations is estimated as follows (in millions):

Fiscal Year Ending March 31,
2017 (remaining three months)	$	1
2018	6
2019	2
Total	$	9

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Royalties And Licenses (Tables)

9 Months Ended

Dec. 31, 2016

Royalties And Licenses [Abstract]

Schedule Of Royalty-Related Assets

The current and long-term portions of prepaid royalties and minimum guaranteed royalty-related assets, included in other current assets and other assets, consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Other current assets	$	31	$	54
Other assets	44		63
Royalty-related assets	$	75	$	117

Schedule Of Royalty-Related Liabilities

The current and long-term portions of accrued royalties, included in accrued and other current liabilities and other liabilities, consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Accrued royalties	$	226	$	159
Other liabilities	102		118
Royalty-related liabilities	$	328	$	277

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Balance Sheet Details (Tables)

9 Months Ended

Dec. 31, 2016

Balance Sheet Related Disclosures [Abstract]

Inventories Schedule

Inventories as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Finished goods	$	34	$	32
Raw materials and work in process	1		1
Inventories	$	35	$	33

Property And Equipment, Net Schedule

Property and equipment, net, as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016			As of March 31, 2016
Computer, equipment and software	$	702		$	684
Buildings	312			313
Leasehold improvements	126			129
Equipment, furniture and fixtures, and other	80			80
Land	61			61
Construction in progress	8			15
	1,289			1,282
Less: accumulated depreciation	(865		)	(843		)
Property and equipment, net	$	424		$	439

Accrued And Other Current Liabilities Schedule

Accrued and other current liabilities as of December 31, 2016 and March 31, 2016 consisted of (in millions):

	As of December 31, 2016		As of March 31, 2016
Other accrued expenses	$	306	$	218
Accrued compensation and benefits	224		256
Accrued royalties	226		159
Deferred net revenue (other)	145		77
Accrued and other current liabilities	$	901	$	710

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Financing Arrangement (Tables)

9 Months Ended

Dec. 31, 2016

Debt Instruments [Abstract]

Carrying Values Of Liability And Equity Components Of Notes

The carrying and fair values of the Convertible Notes are as follows (in millions):

	As of December 31, 2016		As of March 31, 2016
Principal amount of Convertible Notes	$	—	$	163
Unamortized debt discount of the liability component	—		(2		)
Net carrying value of Convertible Notes	$	—	$	161
Fair value of Convertible Notes (Level 2)	$	—	$	338

Schedule of Carrying Values Of Liability and Equity Components of Senior Notes [Table Text Block]

The carrying and fair values of the Senior Notes are as follows (in millions):

	As of December 31, 2016			As of March 31, 2016
Senior Notes:
3.70% Senior Notes due 2021	$	600		$	600
4.80% Senior Notes due 2026	400			400
Total principal amount	$	1,000		$	1,000
Unaccreted discount	(2		)	(2		)
Unamortized debt issuance costs	(8		)	(9		)
Net carrying value of Senior Notes	$	990		$	989
Fair value of Senior Notes (Level 2)	$	1,045		$	1,039

Schedule Of Interest Expense

The following table summarizes our interest expense recognized for the three and nine months ended December 31, 2016 and 2015 that is included in interest and other income (expense), net on our Condensed Consolidated Statements of Operations (in millions):

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016			2015
Amortization of debt discount	—			(3		)	(2		)	(14		)
Amortization of debt issuance costs	(1		)	(1		)	(2		)	(2		)
Coupon interest expense	(10		)	(1		)	(31		)	(3		)
Other interest expense	(1		)	—			(1		)	—
Total interest expense	$	(12	)	$	(5	)	$	(36	)	$	(19	)

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Commitments And Contingencies (Tables)

9 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Minimum Contractual Obligations

The following table summarizes our minimum contractual obligations as of December 31, 2016 (in millions): 

			Fiscal Years Ending March 31,
			2017
			(Remaining
	Total		three mos.)		2018		2019		2020		2021		2022		Thereafter
Unrecognized commitments
Developer/licensor commitments	$	1,338	$	50	$	284	$	295	$	251	$	182	$	196	$	80
Marketing commitments	469		6		76		109		89		92		73		24
Operating leases	220		8		38		33		30		28		22		61
Senior Notes interest	272		11		41		41		41		41		19		78
Other purchase obligations	115		17		44		15		10		7		4		18
Total unrecognized commitments	2,414		92		483		493		421		350		314		261
Recognized commitments
Senior Notes principal and interest	1,010		10		—		—		—		600		—		400
Licensing and lease obligations (a)	131		6		23		24		25		26		27		—
Total recognized commitments	1,141		16		23		24		25		626		27		400
Total commitments	$	3,555	$	108	$	506	$	517	$	446	$	976	$	341	$	661

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Stock-Based Compensation (Tables)

9 Months Ended

Dec. 31, 2016

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of assumptions used in the Black-Scholes valuation model

	ESPP Purchase Rights
	Nine Months Ended December 31,
	2016		2015
Risk-free interest rate	0.5 - 0.6%		0.3 - 0.4%
Expected volatility	29 - 32%		32	%
Weighted-average volatility	31	%	32	%
Expected term	6 - 12 months		6 - 11.5 months
Expected dividends	None		None

Schedule Of Stock-Based Compensation Expense By Statement Of Operations

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
Cost of revenue	$	—	$	—	$	2	$	1
Research and development	27		26		81		77
Marketing and sales	8		5		23		17
General and administrative	13		11		38		36
Stock-based compensation expense	$	48	$	42	$	144	$	131

Employee Stock Option [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Disclosure Of Stock-Based Compensation Arrangements By Stock-Based Payment Award

	Options (in thousands)		Weighted- Average Exercise Prices		Weighted- Average Remaining Contractual Term  (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of March 31, 2016	3,278		$	35.09
Granted	4		72.43
Exercised	(370	)	30.13
Forfeited, cancelled or expired	(31	)	35.78
Outstanding as of December 31, 2016	2,881		$	35.78	4.78	$	124
Vested and expected to vest	2,843		$	35.84	4.74	$	122
Exercisable as of December 31, 2016	2,326		$	36.81	4.20	$	98

Restricted Stock Rights [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Disclosure Of Stock-Based Compensation Arrangements By Stock-Based Payment Award

	Restricted Stock Rights (in thousands)		Weighted- Average Grant Date Fair Values
Outstanding as of March 31, 2016	7,157		$	44.04
Granted	2,529		75.68
Vested	(3,658	)	36.39
Forfeited or cancelled	(487	)	56.76
Outstanding as of December 31, 2016	5,541		$	62.41

Market-Based Restricted Stock Units [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Disclosure Of Stock-Based Compensation Arrangements By Stock-Based Payment Award

	Market-Based Restricted  Stock Units (in thousands)		Weighted- Average  Grant Date Fair Value
Outstanding as of March 31, 2016	636		$	64.49
Granted	353		98.04
Vested	(558	)	50.08
Vested above target	238		44.99
Forfeited or cancelled	(28	)	84.94
Outstanding as of December 31, 2016	641		$	87.37

Repurchase Program, Total [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Disclosure Of Stock-Based Compensation Arrangements By Stock-Based Payment Award

	May 2014 Program			May 2015 Program			Total
(in millions)	Shares	Amount		Shares	Amount		Shares	Amount
Three months ended December 31, 2016	—	$	—	1.5	$	127	1.5	$	127
Nine months ended December 31, 2016	—	$	—	5.0	$	383	5.0	$	383
Three months ended December 31, 2015	—	$	—	1.8	$	126	1.8	$	126
Nine months ended December 31, 2015	1.0	$	57	4.8	$	327	5.8	$	384

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Earnings (Loss) Per Share (Tables)

9 Months Ended

Dec. 31, 2016

Earnings Per Share Reconciliation [Abstract]

Computation Of Basic Earnings (Loss) And Diluted Earnings (Loss) Per Share

The following table summarizes the computations of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS is computed as net income divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based compensation plans including stock options, restricted stock, restricted stock units, ESPP purchase rights, warrants, and other convertible securities using the treasury stock method.

	Three Months Ended December 31,						Nine Months Ended December 30,
(In millions, except per share amounts)	2016			2015			2016		2015
Net income (loss)	$	(1	)	$	(45	)	$	401	$	257
Shares used to compute earnings (loss) per share:
Weighted-average common stock outstanding — basic	303			311			302		311
Dilutive potential common shares related to stock award plans and from assumed exercise of stock options	—			—			3		7
Dilutive potential common shares related to the Convertible Notes	—			—			1		8
Dilutive potential common shares related to the Warrants	—			—			8		7
Weighted-average common stock outstanding — diluted	303			311			314		333
Earnings (loss) per share:
Basic	$ (	0.00	)	$	(0.14	)	$	1.33	$	0.83
Diluted	$ (	0.00)		$	(0.14	)	$	1.28	$	0.77

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Description Of Business And Basis Of Presentation Fiscal Period (Details)	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Fiscal Period
Current and Prior Years Fiscal Period (in weeks)			52	53
Current and Prior Years Fiscal Quarter Period (in weeks)	13	13	39	40
Minimum
Fiscal Period
Fiscal Year			52
Maximum
Fiscal Period
Fiscal Year			53

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(Fair Value Of Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) - USD ($) $ in Millions		Dec. 31, 2016	Mar. 31, 2016
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Total assets at fair value		$ 2,665	$ 1,915
Total liabilities at fair value		21	19
Quoted Prices In Active Markets For Identical Financial Instruments (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Total assets at fair value		1,236	903
Total liabilities at fair value		11	9
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Total assets at fair value		1,429	1,012
Total liabilities at fair value		10	10
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Total assets at fair value		0	0
Total liabilities at fair value		0	0
Short-term investments | Significant Other Observable Inputs (Level 2) | U.S. agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Available-for-sale of securities		162
Short-term investments | Significant Other Observable Inputs (Level 2) | Asset-backed Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Asset-backed securities		95
Short-Term Investments And Cash Equivalents | Quoted Prices In Active Markets For Identical Financial Instruments (Level 1) | U.S. Treasury securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Available-for-sale of securities		440	407
Short-Term Investments And Cash Equivalents | Significant Other Observable Inputs (Level 2) | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Available-for-sale of securities		843	623
Short-Term Investments And Cash Equivalents | Significant Other Observable Inputs (Level 2) | U.S. agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Available-for-sale of securities			170
Short-Term Investments And Cash Equivalents | Significant Other Observable Inputs (Level 2) | Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Available-for-sale of securities		136	81
Short-Term Investments And Cash Equivalents | Significant Other Observable Inputs (Level 2) | Foreign Government Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Available-for-sale of securities		136	122
Cash Equivalents | Quoted Prices In Active Markets For Identical Financial Instruments (Level 1) | Bank Time Deposits [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Cash equivalents		230	345
Cash Equivalents | Quoted Prices In Active Markets For Identical Financial Instruments (Level 1) | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Cash equivalents		556	143
Other Current Assets and Other Assets [Domain] | Significant Other Observable Inputs (Level 2) | Foreign currency derivatives
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Foreign currency derivatives, assets		57	16
Other assets | Quoted Prices In Active Markets For Identical Financial Instruments (Level 1) | Deferred compensation plan assets
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Deferred compensation plan assets	[1]	10	8
Accrued and Other Current Liabilities and Other Liabilities | Significant Other Observable Inputs (Level 2) | Foreign currency derivatives
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Foreign currency derivatives, liabilities		10	10
Other liabilities | Quoted Prices In Active Markets For Identical Financial Instruments (Level 1) | Deferred Compensation Plan Liabilities
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value, Deferred compensation plan assets	[1]	$ 11	$ 9

[1] The Deferred Compensation Plan assets consist of various mutual funds. See Note 15 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, for additional information regarding our Deferred Compensation Plan.

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Financial Instruments (Narrative) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016		Dec. 31, 2015	Mar. 31, 2015
Financial Instruments
Cash and Cash Equivalents, at Carrying Value	$ 2,483	$ 2,493	[1]	$ 2,263	$ 2,068

[1] Derived from audited Consolidated Financial Statements.

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Financial Instruments (Fair Value Of Short-Term Investments) (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Dec. 31, 2016	Mar. 31, 2016
Financial Instruments
Fair Value	$ 1,736	$ 1,341	[1]
Short-term investments
Financial Instruments
Cost or Amortized Cost	1,740	1,339
Gross Unrealized Gains	0	2
Gross Unrealized Losses	(4)	0
Fair Value	1,736	1,341
Short-term investments | Corporate bonds
Financial Instruments
Cost or Amortized Cost	842	620
Gross Unrealized Gains	0	1
Gross Unrealized Losses	(2)	0
Fair Value	840	621
Short-term investments | U.S. Treasury securities
Financial Instruments
Cost or Amortized Cost	400	389
Gross Unrealized Gains	0	1
Gross Unrealized Losses	(1)	0
Fair Value	399	390
Short-term investments | U.S. agency securities
Financial Instruments
Cost or Amortized Cost	163	167
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(1)	0
Fair Value	162	167
Short-term investments | Commercial paper
Financial Instruments
Cost or Amortized Cost	116	50
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	116	50
Short-term investments | Foreign Government Debt Securities [Member]
Financial Instruments
Cost or Amortized Cost	124	113
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	124	113
Short-term investments | Asset-backed Securities [Member]
Financial Instruments
Cost or Amortized Cost	95	0
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	$ 95	$ 0

[1] Derived from audited Consolidated Financial Statements.

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Financial Instruments (Fair Value Of Short-Term Investments By Stated Maturity Date Schedule) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Financial Instruments
Short-term investments, Fair Value	$ 1,736	$ 1,341	[1]
Due in 1 year or less [Member]
Financial Instruments
Due in 1 year or less, Amortized Cost	928	571
Due in 1 year or less, Fair Value	928	571
Due in 1-2 years [Member]
Financial Instruments
Available-for-sale Securities, Debt Maturities, Year Two Through Five, Amortized Cost Basis	419	461
Available-for-sale Securities, Debt Maturities, Year Two Through Five, Fair Value	418	462
Due in 2-3 years [Member]
Financial Instruments
Available-for-sale Securities, Debt Maturities, Year Two Through Five, Amortized Cost Basis	306	295
Available-for-sale Securities, Debt Maturities, Year Two Through Five, Fair Value	304	296
Due in 3-4 years [Member]
Financial Instruments
Available-for-sale Securities, Debt Maturities, Year Two Through Five, Amortized Cost Basis	87	12
Available-for-sale Securities, Debt Maturities, Year Two Through Five, Fair Value	86	12
Short-term investments
Financial Instruments
Short-term investments, Amortized Cost	1,740	1,339
Short-term investments, Fair Value	$ 1,736	$ 1,341

[1] Derived from audited Consolidated Financial Statements.

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Derivative Financial Instruments (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Derivative
Foreign Currency Forward Contracts Maximum Maturity Period			18 months
Maturity period of foreign currency forward contracts, Maximum			3 months
Cash Flow Hedging [Member]
Derivative
Gain (Loss) on Foreign Currency Derivatives Recorded in Earnings, Net	$ 8	$ 4	$ 18	$ 11

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Derivative Financial Instruments Gross Notional Amounts and Fair Values for Currency Derivatives (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Foreign exchange forward contracts to purchase [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Fair value of foreign currency contracts outstanding, Assets	$ 0	$ 5
Fair value of foreign currency contracts outstanding, Liabilities	8	1
Foreign exchange forward contracts to sell [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Fair value of foreign currency contracts outstanding, Assets	44	11
Fair value of foreign currency contracts outstanding, Liabilities	1	9
Designated as Hedging Instrument [Member] | Foreign exchange forward contracts to purchase [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional amount	177	148
Designated as Hedging Instrument [Member] | Foreign exchange forward contracts to sell [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional amount	700	685
United States Dollar [Member] | Not Designated as Hedging Instrument [Member] | Foreign exchange forward contracts to purchase [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional amount	143	108
United States Dollar [Member] | Not Designated as Hedging Instrument [Member] | Foreign exchange forward contracts to sell [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, Notional amount	681	159
Balance Sheet Hedging [Member] | Not Designated as Hedging Instrument [Member] | Foreign exchange forward contracts to purchase [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative Asset, Current	0	0
Derivative Liability, Current	1	0
Balance Sheet Hedging [Member] | Not Designated as Hedging Instrument [Member] | Foreign exchange forward contracts to sell [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative Asset, Current	13	0
Derivative Liability, Current	$ 0	$ 0

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Location of Income (Expense) Recognized in Income on Derivative, Non-Designated Hedging Instruments (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Interest and Other Income (Expense), net
Derivative
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	$ 49	$ 13	$ 50	$ 15

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Changes in Accumulated Other Comprehensive Income by Component (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	$ (10)	$ (44)	$ (16)	$ 2
Other comprehensive income (loss) before reclassifications	17	(10)	34	(48)
Amounts reclassified from accumulated other comprehensive income (loss)	(8)	(3)	(19)	(11)
Total other comprehensive income (loss), net of tax	9	(13)	15	(59)
Ending balance	(1)	(57)	(1)	(57)
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	1	(3)	1	(3)
Other comprehensive income (loss) before reclassifications	(5)	(4)	(4)	(3)
Amounts reclassified from accumulated other comprehensive income (loss)	0	1	(1)	0
Total other comprehensive income (loss), net of tax	(5)	(3)	(5)	(3)
Ending balance	(4)	(6)	(4)	(6)
Unrealized Gains (Losses) on Derivative Instruments [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	31	6	14	21
Other comprehensive income (loss) before reclassifications	39	10	66	2
Amounts reclassified from accumulated other comprehensive income (loss)	(8)	(4)	(18)	(11)
Total other comprehensive income (loss), net of tax	31	6	48	(9)
Ending balance	62	12	62	12
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	(42)	(47)	(31)	(16)
Other comprehensive income (loss) before reclassifications	(17)	(16)	(28)	(47)
Amounts reclassified from accumulated other comprehensive income (loss)	0	0	0	0
Total other comprehensive income (loss), net of tax	(17)	(16)	(28)	(47)
Ending balance	$ (59)	$ (63)	$ (59)	$ (63)

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Effects on net income of amounts reclassified from accumulated other comprehensive income (loss) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss)	$ (8)	$ (3)	$ (19)	$ (11)
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss)	0	1	(1)	0
Unrealized Gains (Losses) on Available-for-Sale Securities [Member] | Interest Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss)	0	1	(1)	0
Unrealized Gains (Losses) on Derivative Instruments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss)	(8)	(4)	(18)	(11)
Unrealized Gains (Losses) on Derivative Instruments [Member] | Sales Revenue, Net
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss)	(9)	(5)	(18)	(19)
Unrealized Gains (Losses) on Derivative Instruments [Member] | Research And Development [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss)	$ 1	$ 1	$ 0	$ 8

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Goodwill And Acquisition-Related Intangibles, Net (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2016	Mar. 31, 2016
Minimum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life		2 years
Maximum
Finite-Lived Intangible Assets
Finite-Lived Intangible Asset, Useful Life		14 years
Weighted Average
Finite-Lived Intangible Assets
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		1 year 7 months	1 year 7 months
Fair Value, Inputs, Level 3 [Member]
Finite-Lived Intangible Assets
Impairment of Intangible Assets, Finite-lived	$ 15	$ 15

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Goodwill And Acquisition-Related Intangibles, Net (Schedule Of Changes In The Carrying Amount Of Goodwill) (Details) $ in Millions	9 Months Ended
	Dec. 31, 2016 USD ($)
Goodwill [Roll Forward]
Goodwill, Gross, Beginning balance	$ 2,078
Accumulated impairment, beginning balance	(368)
Goodwill, Net, Beginning balance	1,710	[1]
Goodwill acquired	0
Effects of foreign currency translation	(6)
Goodwill, Gross, Ending balance	2,072
Accumulated impairment, ending balance	(368)
Goodwill, Net, Ending balance	$ 1,704

[1] Derived from audited Consolidated Financial Statements.

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Goodwill And Acquisition-Related Intangibles, Net (Schedule Of Acquisition-Related Intangibles) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Finite-Lived Intangible Assets
Gross carrying amount	$ 608	$ 608
Accumulated amortization	(599)	(551)
Acquisition-related intangibles, net	9	57	[1]
Developed And Core Technology
Finite-Lived Intangible Assets
Gross carrying amount	412	412
Accumulated amortization	(412)	(368)
Acquisition-related intangibles, net	0	44
Trade Names And Trademarks
Finite-Lived Intangible Assets
Gross carrying amount	106	106
Accumulated amortization	(97)	(93)
Acquisition-related intangibles, net	9	13
Registered User Base And Other Intangibles
Finite-Lived Intangible Assets
Gross carrying amount	5	5
Accumulated amortization	(5)	(5)
Acquisition-related intangibles, net	0	0
Carrier Contracts And Related
Finite-Lived Intangible Assets
Gross carrying amount	85	85
Accumulated amortization	(85)	(85)
Acquisition-related intangibles, net	$ 0	$ 0

[1] Derived from audited Consolidated Financial Statements.

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Goodwill And Acquisition-Related Intangibles, Net (Schedule Of Amortization Of Intangible Assets) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	$ 2	$ 2	$ 5	$ 6
Cost of service and other
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	0	9	16	25
Cost of product
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	18	3	27	10
Operating expenses
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	2	2	5	6
Total amortization
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	$ 20	$ 14	$ 48	$ 41

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Goodwill And Acquisition-Related Intangibles, Net (Schedule Of Future Amortization Of Acquisition-Related Intangibles) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016	[1]
Goodwill and Intangible Assets Disclosure [Abstract]
2017 (remaining three months)	$ 1
2018	6
2019	2
Total	$ 9	$ 57

[1] Derived from audited Consolidated Financial Statements.

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Royalties And Licenses (Narrative) (Details) $ in Millions	3 Months Ended	9 Months Ended
	Dec. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Royalties And Licenses
Royalty-Based Asset Impairment Charge and Loss On Previously Minimum Unrecognized Royalty-Based Commitment	$ 22	$ 22
Unrecorded Unconditional Purchase Obligation	2,414	2,414
Developer/Licensor Commitments - Royalty Bearing Only
Royalties And Licenses
Unrecorded Unconditional Purchase Obligation	1,338	1,338
Research And Development [Member]
Royalties And Licenses
Royalty-Based Asset Impairment Charge	12	12
Cost of service revenue [Member]
Royalties And Licenses
Loss On Previously Unrecognized Minimum Royalty-Based Commitment	$ 10	$ 10

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Royalties And Licenses (Schedule Of Royalty-Related Assets) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Royalties and Licenses
Royalty-related assets	$ 75	$ 117
Other Current Assets
Royalties and Licenses
Royalty-related assets	31	54
Other assets
Royalties and Licenses
Royalty-related assets	$ 44	$ 63

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Royalties And Licenses (Schedule Of Royalty-Related Liabilities) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Royalty Related Liabilities
Royalty-related liabilities	$ 328	$ 277
Accrued royalties
Royalty Related Liabilities
Royalty-related liabilities	226	159
Other liabilities
Royalty Related Liabilities
Royalty-related liabilities	$ 102	$ 118

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Balance Sheet Details (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Mar. 31, 2016	[1]
Balance Sheet Related Disclosures [Abstract]
Depreciation expense	$ 29	$ 31	$ 86	$ 91
Deferred Revenue, Current	$ 1,971		$ 1,971		$ 1,458

[1] Derived from audited Consolidated Financial Statements.

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Balance Sheet Details (Inventories Schedule) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Balance Sheet Related Disclosures [Abstract]
Finished goods	$ 34	$ 32
Raw materials and work in process	1	1
Inventories	$ 35	$ 33	[1]

[1] Derived from audited Consolidated Financial Statements.

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Balance Sheet Details (Property And Equipment, Net Schedule) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Property and Equipment, Net [Line Items]
Property and equipment, gross	$ 1,289	$ 1,282
Less: accumulated depreciation	(865)	(843)
Property and equipment, net	424	439
Computer, equipment and software
Property and Equipment, Net [Line Items]
Property and equipment, gross	702	684
Buildings
Property and Equipment, Net [Line Items]
Property and equipment, gross	312	313
Leasehold improvements
Property and Equipment, Net [Line Items]
Property and equipment, gross	126	129
Equipment, furniture and fixtures, and other
Property and Equipment, Net [Line Items]
Property and equipment, gross	80	80
Land
Property and Equipment, Net [Line Items]
Property and equipment, gross	61	61
Construction in progress
Property and Equipment, Net [Line Items]
Property and equipment, gross	$ 8	$ 15

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Balance Sheet Details (Accrued And Other Current Liabilities Schedule) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Balance Sheet Related Disclosures [Abstract]
Other accrued expenses	$ 306	$ 218
Accrued compensation and benefits	224	256
Accrued royalties	226	159
Deferred net revenue (other)	145	77
Accrued and other current liabilities	$ 901	$ 710	[1]

[1] Derived from audited Consolidated Financial Statements.

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Income Taxes (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Income Tax Footnote Disclosure [Line Items]
Effective tax rates	83.30%	50.00%	18.80%	26.80%
United States statutory tax rate	35.00%	35.00%	35.00%	35.00%
Excess Tax Benefit from Share-based Compensation, Financing Activities	$ 16	$ 8	$ 53	$ 73
Unrecognized tax benefits, period increase (decrease)	3		15
Gross unrecognized tax benefits	346		346
Amount of unrecognized tax benefits that would affect the effective tax rate	321		321
The total amount of unrecognized tax benefits that, if recognized, would result in adjustments to deferred tax assets with corresponding adjustments to the valuation allowance			24
Unrecognized tax benefits income tax penalties and interest accrued increase (decrease)			3
Combined amount of accrued interest and penalties related to uncertain tax positions	12		12
Maximum
Income Tax Footnote Disclosure [Line Items]
Amount of unrecognized tax benefits for which it is reasonably possible that there will be a reduction within the next 12 months	$ 50		$ 50

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Financing Arrangement (0.75% Convertible Senior Notes Due 2016) (Details)	1 Months Ended		3 Months Ended	6 Months Ended	9 Months Ended
	Jul. 31, 2016 USD ($) shares	Jul. 31, 2011	Sep. 30, 2016 shares	Sep. 30, 2016 USD ($) shares	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jul. 14, 2011 USD ($) $ / shares
Financing Arrangements
Repayments of Convertible Debt					$ 163,000,000	$ 293,000,000
Gain (Loss) on Extinguishment of Debt					$ 0	$ 8,000,000
Convertible Debt
Financing Arrangements
Principal amount							$ 633,000,000
Contractual interest rate of 0.75% Convertible Senior Notes due 2016							0.75%
Debt Instrument, Frequency of Periodic Payment		semiannually
Debt Instrument, Issuance Date		Jul. 14, 2011
Convertible Senior Notes due description		2016
Conversion rate of Notes		31.5075
Face amount of Notes							$ 1,000
Debt Instrument, Convertible, Conversion Price | $ / shares							$ 31.74
Repayments of Convertible Debt	$ 136,000,000			$ 163,000,000
Debt Conversion, Converted Instrument, Shares Issued | shares	2,500,000		2,500,000	2,900,000
Debt Conversion, Converted Instrument, Amount	$ 193,000,000			$ 222,000,000
Gain (Loss) on Extinguishment of Debt				$ (300,000)

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Financing Arrangement (Carrying Values Of Liability And Equity Components Of Notes) (Details) - Convertible Debt - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Financing Arrangements
Principal amount of Convertible Senior Notes	$ 0.0	$ 163.0
Unamortized debt discount of the liability component	0.0	2.0
Net carrying value of Convertible Notes	0.0	161.0
Fair value of Convertible Senior Notes	$ 0.0	$ 338.0

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Financing Arrangement (Convertible Note Hedge and Warrants Issuance) (Details) $ / shares in Units, $ in Millions	1 Months Ended		3 Months Ended	6 Months Ended	9 Months Ended
	Jul. 31, 2016 shares	Jul. 31, 2011 USD ($)	Sep. 30, 2016 shares	Sep. 30, 2016 shares	Dec. 31, 2016 shares	Jan. 12, 2017 shares	Jul. 14, 2011 $ / shares shares
Financing Arrangements
Greater Than Or Equal to Trading Days For Automatic Exercise of Warrants					60
Investment Warrants Expiration Date Range Start					Oct. 17, 2016
Investment Warrants Expiration Date Range End					Jan. 12, 2017
Convertible Note Hedge
Financing Arrangements
Amount paid for Convertible Note Hedge | $		$ 107
Warrants
Financing Arrangements
Strike price of warrants | $ / shares							$ 41.14
Proceeds from Warrants transaction | $		$ 65
Warrants - Total Issued [Member]
Financing Arrangements
Shares covered by warrants issuance					9,600,000
Warrants - Underlying
Financing Arrangements
Shares covered by warrants issuance							19,900,000
Warrants - Issued
Financing Arrangements
Shares covered by warrants issuance					7,900,000
Convertible Debt
Financing Arrangements
Debt Conversion, Converted Instrument, Shares Issued	2,500,000		2,500,000	2,900,000
Debt Instrument, Convertible, Conversion Price | $ / shares							$ 31.74
Subsequent Event [Member] | Warrants - Issued
Financing Arrangements
Shares covered by warrants issuance						1,700,000

XML

Financing Arrangement (Senior Notes) (Details) - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	Feb. 29, 2016	Dec. 31, 2016	Mar. 31, 2016	Feb. 24, 2016
Debt Instrument [Line Items]
Senior Notes, Noncurrent		$ 990	$ 989
Proceeds from Issuance of Senior Long-term Debt	$ 989
2021 Notes
Debt Instrument [Line Items]
Effective interest rate				3.94%
Debt Instrument, Convertible, Remaining Discount Amortization Period		4 years 2 months
Long-term Debt				$ 600
Debt Instrument, Interest Rate, Stated Percentage				3.70%
Debt Instrument, Maturity Date	Mar. 01, 2021
2026 Notes
Debt Instrument [Line Items]
Effective interest rate				4.97%
Debt Instrument, Convertible, Remaining Discount Amortization Period		9 years 2 months
Long-term Debt				$ 400
Debt Instrument, Interest Rate, Stated Percentage				4.80%
Debt Instrument, Maturity Date	Mar. 01, 2026
Senior Notes
Debt Instrument [Line Items]
Debt Instrument, Issuance Date	Feb. 24, 2016
Long-term Debt				$ 1,000
Debt Instrument, Unamortized Discount (Premium), Net		$ (2)	(2)	(2)
Debt Issuance Costs, Noncurrent, Net		(8)	(9)	$ (9)
Debt Instrument, Fair Value Disclosure		$ 1,045	$ 1,039
Senior Notes, Frequency of Periodic Payment	semiannually
Debt Instrument, Redemption Price, Percentage		100.00%
Change of control repurchase event
Debt Instrument [Line Items]
Debt Instrument, Redemption Price, Percentage		101.00%

XML

Financing Arrangement (Line of Credit Facility) (Details) - Revolving Credit Facility [Member] $ in Millions	9 Months Ended
	Dec. 31, 2016 USD ($)
Line of Credit Facility [Line Items]
Credit Facility, Maximum Borrowing Capacity	$ 500
Option To Request Additional Commitments On Credit Facility	250
Debt issuance costs	$ 2
Credit Facility, Initiation Date	Mar. 19, 2015
Credit Facility, Expiration Date	Mar. 19, 2020
Line of Credit Facility Term	5 years

XML

Financing Arrangement (Schedule Of Interest Expense Related To Notes) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Debt Instruments [Abstract]
Amortization of debt discount	$ 0	$ (3)	$ (2)	$ (14)
Amortization of debt issuance costs	(1)	(1)	(2)	(2)
Coupon interest expense	(10)	(1)	(31)	(3)
Interest Expense, Other	(1)	0	(1)	0
Total interest expense	$ (12)	$ (5)	$ (36)	$ (19)

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Commitments And Contingencies (Narrative) (Details) $ in Millions	Dec. 31, 2016 USD ($)
Loss Contingencies [Line Items]
Unrecorded Unconditional Purchase Obligation	$ 2,414
Amount of potential cash payments that could result from unrecognized tax benefits	87
Unrecorded Unconditional Purchase Obligation Payable in Common Stock Per Year | Maximum
Loss Contingencies [Line Items]
Unrecorded Unconditional Purchase Obligation	10
Unrecorded Unconditional Purchase Obligation Payable in Common Stock | Maximum
Loss Contingencies [Line Items]
Unrecorded Unconditional Purchase Obligation	$ 32

XML

Commitments And Contingencies (Minimum Contractual Obligations) (Details) $ in Millions	Dec. 31, 2016 USD ($)
Long Term Purchase Commitments
Unrecorded Total	$ 2,414
Unrecorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	92
Unrecorded Unconditional Purchase Obligation, Due in Next Rolling Twelve Months	483
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Two	493
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Three	421
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Four	350
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Five	314
Unrecorded Unconditional Purchase Obligation, Due in Rolling after Year Five	261
Recorded Total	1,141
Recorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	16
Recorded Unconditional Purchase Obligation, Due in Next Rolling Twelve Months	23
Recorded Unconditional Purchase Obligation, Due in Rolling Year Two	24
Recorded Unconditional Purchase Obligation, Due in Rolling Year Three	25
Recorded Unconditional Purchase Obligation, Due in Rolling Year Four	626
Recorded Unconditional Purchase Obligation, Due in Rolling Year Five	27
Recorded Unconditional Purchase Obligation, Due in Rolling after Year Five	400
TotalUnconditionalPurchaseObligationBalanceSheetAmount	3,555
TotalUnconditionalPurchaseObligationBalanceSheetAmountRemainingForCurrentFiscalYear	108
Total Unconditional PurchaseObligationBalanceSheetAmountOneYearAfterFiscalYearEnd	506
Total Unconditional Purchase Obligation Balance Sheet Amount Two Years After Fiscal Year End	517
TotalUnconditionalPurchaseObligationBalanceSheetAmountThreeYearsAfterFiscalYearEnd	446
TotalUnconditionalPurchaseObligationBalanceSheetAmountFourYearsAfterFiscalYearEnd	976
Total Unconditional Purchase Obligation Balance Sheet Amount Five Years After Fiscal Year End	341
TotalUnconditionalPurchaseObligationBalanceSheetAmountThereafter	661
Developer/Licensor Commitments - Royalty and Non-Royalty Bearing
Long Term Purchase Commitments
Unrecorded Total	1,338
Unrecorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	50
Unrecorded Unconditional Purchase Obligation, Due in Next Rolling Twelve Months	284
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Two	295
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Three	251
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Four	182
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Five	196
Unrecorded Unconditional Purchase Obligation, Due in Rolling after Year Five	80
Marketing
Long Term Purchase Commitments
Unrecorded Total	469
Unrecorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	6
Unrecorded Unconditional Purchase Obligation, Due in Next Rolling Twelve Months	76
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Two	109
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Three	89
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Four	92
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Five	73
Unrecorded Unconditional Purchase Obligation, Due in Rolling after Year Five	24
Operating leases
Long Term Purchase Commitments
Unrecorded Total	220
Unrecorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	8
Unrecorded Unconditional Purchase Obligation, Due in Next Rolling Twelve Months	38
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Two	33
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Three	30
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Four	28
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Five	22
Unrecorded Unconditional Purchase Obligation, Due in Rolling after Year Five	61
Senior Notes Interest
Long Term Purchase Commitments
Unrecorded Total	272
Unrecorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	11
Unrecorded Unconditional Purchase Obligation, Due in Next Rolling Twelve Months	41
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Two	41
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Three	41
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Four	41
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Five	19
Unrecorded Unconditional Purchase Obligation, Due in Rolling after Year Five	78
Other unrecorded purchase obligations
Long Term Purchase Commitments
Unrecorded Total	115
Unrecorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	17
Unrecorded Unconditional Purchase Obligation, Due in Next Rolling Twelve Months	44
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Two	15
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Three	10
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Four	7
Unrecorded Unconditional Purchase Obligation, Due in Rolling Year Five	4
Unrecorded Unconditional Purchase Obligation, Due in Rolling after Year Five	18
Senior Notes and Interest
Long Term Purchase Commitments
Recorded Total	1,010
Senior Notes Interest
Long Term Purchase Commitments
Recorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	10
Senior Notes
Long Term Purchase Commitments
Recorded Unconditional Purchase Obligation, Due in Rolling Year Four	600
Recorded Unconditional Purchase Obligation, Due in Rolling after Year Five	400
Licensing and lease obligations
Long Term Purchase Commitments
Recorded Total	131
Recorded Unconditional Purchase Obligation, Due in Remainder of Fiscal Year	6
Recorded Unconditional Purchase Obligation, Due in Next Rolling Twelve Months	23
Recorded Unconditional Purchase Obligation, Due in Rolling Year Two	24
Recorded Unconditional Purchase Obligation, Due in Rolling Year Three	25
Recorded Unconditional Purchase Obligation, Due in Rolling Year Four	26
Recorded Unconditional Purchase Obligation, Due in Rolling Year Five	27
Recorded Unconditional Purchase Obligation, Due in Rolling after Year Five	$ 0

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Stock-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended		32 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	May 04, 2015	May 05, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Excess Tax Benefit from Share-based Compensation, Financing Activities	$ 16	$ 8	$ 53	$ 73
Market-Based Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to stock options and restricted stock rights	$ 40		$ 40		$ 40
Weighted-average grant date fair values of restricted stock rights granted			$ 98.04
Maximum number of common shares to be earned during the performance period, Grants			0.7
Maximum number of common shares to be earned during the performance period, outstanding			1.3
Market-Based Restricted Stock Units [Member] | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage range of shares received at vesting based on total stockholder return ("TSR")	0.00%		0.00%		0.00%
Market-Based Restricted Stock Units [Member] | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage range of shares received at vesting based on total stockholder return ("TSR")	200.00%		200.00%		200.00%
Market-Based Restricted Stock Units [Member] | Target
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target of presented shares granted that may potentially vest	100.00%		100.00%		100.00%
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to stock options and restricted stock rights	$ 4		$ 4		$ 4
Weighted-average service period			8 months
Restricted Stock Rights [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to stock options and restricted stock rights	$ 312		$ 312		$ 312
Weighted-average service period			1 year 7 months
Weighted-average grant date fair values of restricted stock rights granted	$ 80.04		$ 75.68
May 2014 Repurchase Program [Member] [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Amount of common stock authorized for repurchase							$ 750
Stock Repurchased and Retired During Period, Shares	0.0	0.0	0.0	1.0	9.2
Repurchase and retirement of common stock	$ 0	$ 0	$ 0	$ 57	$ 394
May 2015 Repurchase Program [Member] [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Amount of common stock authorized for repurchase						$ 1,000
Stock Repurchased and Retired During Period, Shares	1.5	1.8	5.0	4.8
Repurchase and retirement of common stock	$ 127	$ 126	$ 383	$ 327
Repurchase Program, Total [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Repurchased and Retired During Period, Shares	1.5	1.8	5.0	5.8
Repurchase and retirement of common stock	$ 127	$ 126	$ 383	$ 384
Stock-based compensation expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred Income Tax Expense (Benefit)	$ 10		$ 28

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Stock-Based Compensation (Schedule Of Assumptions Used In Black-Scholes Model) (Details) - Employee Stock [Member]	9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Volatility Rate	31.00%	32.00%
Expected dividends	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum	0.50%	0.30%
Expected volatility, minimum	29.00%	32.00%
Expected Term	6 months	6 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate, maximum	0.60%	0.40%
Expected volatility, maximum	32.00%	32.00%
Expected Term	12 months	11 months 15 days

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Stock-Based Compensation (Schedule Of Stock-Based Compensation Expense By Statement Of Operations) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 48	$ 42	$ 144	$ 131
Cost of Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	0	0	2	1
Research And Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	27	26	81	77
Marketing and Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	8	5	23	17
General And Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 13	$ 11	$ 38	$ 36

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Stock-Based Compensation (Schedule Of Stock Option Activity) (Details) $ / shares in Units, shares in Thousands, $ in Millions	9 Months Ended
	Dec. 31, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Options, Outstanding, Beginning Balance | shares	3,278
Options, Granted | shares	4
Options, Exercised | shares	(370)
Options, Forfeited, cancelled or expired | shares	(31)
Options, Outstanding, Ending Balance | shares	2,881
Options, Vested and expected to vest | shares	2,843
Options, Exercisable | shares	2,326
Weighted-average exercise price of options outstanding, beginning balance | $ / shares	$ 35.09
Weighted-average exercise price of options granted during period | $ / shares	72.43
Weighted-average exercise price of options exercised during the period | $ / shares	30.13
Weighted-average exercise price of options forfeited, cancelled or expired during the period | $ / shares	35.78
Weighted-average exercise price of options outstanding, ending balance | $ / shares	35.78
Weighted-average exercise price of options vested and expected to vest | $ / shares	35.84
Weighted-average exercise price of options exercisable | $ / shares	$ 36.81
Weighted-average remaining contractual term of options outstanding	4 years 9 months 10 days
Weighted-average remaining contractual term of options vested and expected to vest	4 years 8 months 25 days
Weighted-average remaining contractual term of options exercisable	4 years 2 months 12 days
Aggregate intrinsic value of options outstanding | $	$ 124
Aggregate intrinsic value of options vested and expected to vest | $	122
Aggregate intrinsic value of options exercisable | $	$ 98

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Stock-Based Compensation (Schedule Of Restricted Stock Rights Activity, Excluding Performance-Based Activity) (Details) - Restricted Stock Rights [Member] - $ / shares shares in Thousands	3 Months Ended	9 Months Ended
	Dec. 31, 2016	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding balance		7,157
Granted		2,529
Vested		(3,658)
Forfeited or cancelled		(487)
Outstanding balance	5,541	5,541
Weighted-average grant date fair value, beginning balance		$ 44.04
Weighted-average grant date fair values of restricted stock rights granted	$ 80.04	75.68
Weighted-average grant date fair value, vested during period		36.39
Weighted-average grant date fair value, forfeited or cancelled during period		56.76
Weighted-average grant date fair value, ending balance	$ 62.41	$ 62.41

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Stock-Based Compensation (Schedule Of Market-Based Restricted Stock Unit Activity) (Details) - Market-Based Restricted Stock Units [Member] shares in Thousands	9 Months Ended
	Dec. 31, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding balance | shares	636
Granted | shares	353
Vested | shares	(558)
Share-based compensation Arrangement, Equity instruments other than options, Excess Vesting | shares	238
Forfeited or cancelled | shares	(28)
Outstanding balance | shares	641
Weighted-average grant date fair value, beginning balance | $ / shares	$ 64.49
Weighted-average grant date fair values of market-based restricted stock rights granted | $ / shares	98.04
Weighted-average grant date fair value, vested during period | $ / shares	50.08
Share-based compensation Arrangement, Equity instruments other than options, Excess Vesting, Weighted Average Grant Date Fair Value | $ / shares	44.99
Weighted-average grant date fair value, forfeited or cancelled during period | $ / shares	84.94
Weighted-average grant date fair value, ending balance | $ / shares	$ 87.37

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Stock-Based Compensation Schedule of Share Repurchases (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended		32 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016
Equity, Class of Treasury Stock [Line Items]
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 156		$ 156		$ 156
May 2014 Repurchase Program [Member] [Member]
Equity, Class of Treasury Stock [Line Items]
Stock Repurchased and Retired During Period, Value	$ 0	$ 0	$ 0	$ 57	$ 394
Stock Repurchased and Retired During Period, Shares	0.0	0.0	0.0	1.0	9.2
May 2015 Repurchase Program [Member] [Member]
Equity, Class of Treasury Stock [Line Items]
Stock Repurchased and Retired During Period, Value	$ 127	$ 126	$ 383	$ 327
Stock Repurchased and Retired During Period, Shares	1.5	1.8	5.0	4.8
Repurchase Program, Total
Equity, Class of Treasury Stock [Line Items]
Stock Repurchased and Retired During Period, Value	$ 127	$ 126	$ 383	$ 384
Stock Repurchased and Retired During Period, Shares	1.5	1.8	5.0	5.8

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Earnings (Loss) Per Share (Narrative) (Details) - shares shares in Millions	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	3	6
Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		6
Warrants
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	7	8

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Earnings (Loss) Per Share Earnings (Loss) Per Share (Computation Of Basic Earnings And Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share
Net income (loss)	$ (1)	$ (45)	$ 401	$ 257
Weighted Average Number of Shares Outstanding, Basic	303	311	302	311
Dilutive potential common shares related to stock award plans and from assumed exercise of stock options	0	0	3	7
Weighted Average Number of Shares Outstanding, Diluted	303	311	314	333
Basic	$ 0.00	$ (0.14)	$ 1.33	$ 0.83
Diluted	$ 0.00	$ (0.14)	$ 1.28	$ 0.77
Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share
Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants	0	0	1	8
Warrants
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share
Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants	0	0	8	7