þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-2838567
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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209 Redwood Shores Parkway
Redwood City, California
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94065
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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(Do not check if a smaller reporting company)
|
¨
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|
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 6.
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||
Item 1.
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Condensed Consolidated Financial Statements (Unaudited)
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(Unaudited)
(In millions, except par value data)
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September 30, 2017
|
|
March 31, 2017
(a)
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,067
|
|
|
$
|
2,565
|
|
Short-term investments
|
2,288
|
|
|
1,967
|
|
||
Receivables, net of allowances of $116 and $145, respectively
|
812
|
|
|
359
|
|
||
Other current assets
|
248
|
|
|
308
|
|
||
Total current assets
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5,415
|
|
|
5,199
|
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||
Property and equipment, net
|
444
|
|
|
434
|
|
||
Goodwill
|
1,711
|
|
|
1,707
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|
||
Acquisition-related intangibles, net
|
5
|
|
|
8
|
|
||
Deferred income taxes, net
|
248
|
|
|
286
|
|
||
Other assets
|
99
|
|
|
84
|
|
||
TOTAL ASSETS
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$
|
7,922
|
|
|
$
|
7,718
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
187
|
|
|
$
|
87
|
|
Accrued and other current liabilities
|
969
|
|
|
789
|
|
||
Deferred net revenue (online-enabled games)
|
1,116
|
|
|
1,539
|
|
||
Total current liabilities
|
2,272
|
|
|
2,415
|
|
||
Senior notes, net
|
991
|
|
|
990
|
|
||
Income tax obligations
|
122
|
|
|
104
|
|
||
Deferred income taxes, net
|
1
|
|
|
1
|
|
||
Other liabilities
|
148
|
|
|
148
|
|
||
Total liabilities
|
3,534
|
|
|
3,658
|
|
||
Commitments and contingencies (See Note 11)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value. 1,000 shares authorized; 308 and 308 shares issued and outstanding, respectively
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
817
|
|
|
1,049
|
|
||
Retained earnings
|
3,641
|
|
|
3,027
|
|
||
Accumulated other comprehensive loss
|
(73
|
)
|
|
(19
|
)
|
||
Total stockholders’ equity
|
4,388
|
|
|
4,060
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
7,922
|
|
|
$
|
7,718
|
|
(Unaudited)
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
(In millions, except per share data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
454
|
|
|
$
|
420
|
|
|
$
|
1,282
|
|
|
$
|
1,104
|
|
Service and other
|
505
|
|
|
478
|
|
|
1,126
|
|
|
1,065
|
|
||||
Total net revenue
|
959
|
|
|
898
|
|
|
2,408
|
|
|
2,169
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
300
|
|
|
317
|
|
|
364
|
|
|
407
|
|
||||
Service and other
|
89
|
|
|
84
|
|
|
179
|
|
|
173
|
|
||||
Total cost of revenue
|
389
|
|
|
401
|
|
|
543
|
|
|
580
|
|
||||
Gross profit
|
570
|
|
|
497
|
|
|
1,865
|
|
|
1,589
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
331
|
|
|
291
|
|
|
656
|
|
|
585
|
|
||||
Marketing and sales
|
160
|
|
|
143
|
|
|
281
|
|
|
271
|
|
||||
General and administrative
|
118
|
|
|
111
|
|
|
223
|
|
|
219
|
|
||||
Amortization of intangibles
|
2
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Total operating expenses
|
611
|
|
|
546
|
|
|
1,163
|
|
|
1,078
|
|
||||
Operating income (loss)
|
(41
|
)
|
|
(49
|
)
|
|
702
|
|
|
511
|
|
||||
Interest and other income (expense), net
|
3
|
|
|
(3
|
)
|
|
9
|
|
|
(11
|
)
|
||||
Income (loss) before provision for (benefit from) income taxes
|
(38
|
)
|
|
(52
|
)
|
|
711
|
|
|
500
|
|
||||
Provision for (benefit from) income taxes
|
(16
|
)
|
|
(14
|
)
|
|
89
|
|
|
98
|
|
||||
Net income (loss)
|
$
|
(22
|
)
|
|
$
|
(38
|
)
|
|
$
|
622
|
|
|
$
|
402
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.07
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
2.01
|
|
|
$
|
1.34
|
|
Diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
1.99
|
|
|
$
|
1.28
|
|
Number of shares used in computation:
|
|
|
|
|
|
|
|
||||||||
Basic
|
309
|
|
|
301
|
|
|
309
|
|
|
301
|
|
||||
Diluted
|
309
|
|
|
301
|
|
|
313
|
|
|
315
|
|
(Unaudited)
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
(In millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
(22
|
)
|
|
$
|
(38
|
)
|
|
$
|
622
|
|
|
$
|
402
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Net losses on available-for-sale securities
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||
Net gains (losses) on derivative instruments
|
(34
|
)
|
|
(5
|
)
|
|
(90
|
)
|
|
17
|
|
||||
Foreign currency translation adjustments
|
32
|
|
|
(6
|
)
|
|
36
|
|
|
(11
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
(2
|
)
|
|
(13
|
)
|
|
(54
|
)
|
|
6
|
|
||||
Total comprehensive income (loss)
|
$
|
(24
|
)
|
|
$
|
(51
|
)
|
|
$
|
568
|
|
|
$
|
408
|
|
(Unaudited)
|
Six Months Ended
September 30, |
||||||
(In millions)
|
2017
|
|
2016
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
622
|
|
|
$
|
402
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, amortization and accretion
|
63
|
|
|
91
|
|
||
Stock-based compensation
|
110
|
|
|
96
|
|
||
Change in assets and liabilities:
|
|
|
|
||||
Receivables, net
|
(454
|
)
|
|
(493
|
)
|
||
Other assets
|
66
|
|
|
37
|
|
||
Accounts payable
|
104
|
|
|
133
|
|
||
Accrued and other liabilities
|
100
|
|
|
109
|
|
||
Deferred income taxes, net
|
40
|
|
|
20
|
|
||
Deferred net revenue (online-enabled games)
|
(423
|
)
|
|
(391
|
)
|
||
Net cash provided by operating activities
|
228
|
|
|
4
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Capital expenditures
|
(63
|
)
|
|
(69
|
)
|
||
Proceeds from maturities and sales of short-term investments
|
1,050
|
|
|
644
|
|
||
Purchase of short-term investments
|
(1,395
|
)
|
|
(824
|
)
|
||
Net cash used in investing activities
|
(408
|
)
|
|
(249
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Payment of convertible notes
|
—
|
|
|
(163
|
)
|
||
Proceeds from issuance of common stock
|
57
|
|
|
31
|
|
||
Cash paid to taxing authorities for shares withheld from employees
|
(105
|
)
|
|
(106
|
)
|
||
Repurchase and retirement of common stock
|
(303
|
)
|
|
(256
|
)
|
||
Net cash used in financing activities
|
(351
|
)
|
|
(494
|
)
|
||
Effect of foreign exchange on cash and cash equivalents
|
33
|
|
|
(8
|
)
|
||
Decrease in cash and cash equivalents
|
(498
|
)
|
|
(747
|
)
|
||
Beginning cash and cash equivalents
|
2,565
|
|
|
2,493
|
|
||
Ending cash and cash equivalents
|
$
|
2,067
|
|
|
$
|
1,746
|
|
Supplemental cash flow information:
|
|
|
|
||||
Cash paid during the period for income taxes, net
|
$
|
28
|
|
|
$
|
26
|
|
Cash paid during the period for interest
|
21
|
|
|
22
|
|
||
Non-cash investing activities:
|
|
|
|
||||
Change in accrued capital expenditures
|
$
|
(6
|
)
|
|
$
|
(17
|
)
|
|
Six months ended September 30,
|
||||||
(In millions):
|
2017
|
|
2016
|
||||
Excess tax benefit from stock-based compensation
|
$
|
42
|
|
|
$
|
37
|
|
Cash paid to taxing authorities for shares withheld from employees
|
105
|
|
|
106
|
|
||
Increase to net cash provided by operating activities and net cash used in financing activities
|
$
|
147
|
|
|
$
|
143
|
|
•
|
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.
|
|
|
|
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
September 30, 2017 |
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Balance Sheet Classification
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Bank and time deposits
|
$
|
304
|
|
|
$
|
304
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cash equivalents
|
Money market funds
|
93
|
|
|
93
|
|
|
—
|
|
|
—
|
|
|
Cash equivalents
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
1,247
|
|
|
—
|
|
|
1,247
|
|
|
—
|
|
|
Short-term investments and cash equivalents
|
||||
U.S. Treasury securities
|
453
|
|
|
453
|
|
|
—
|
|
|
—
|
|
|
Short-term investments and cash equivalents
|
||||
U.S. agency securities
|
133
|
|
|
—
|
|
|
133
|
|
|
—
|
|
|
Short-term investments and cash equivalents
|
||||
Commercial paper
|
320
|
|
|
—
|
|
|
320
|
|
|
—
|
|
|
Short-term investments and cash equivalents
|
||||
Foreign government securities
|
101
|
|
|
—
|
|
|
101
|
|
|
—
|
|
|
Short-term investments
|
||||
Asset-backed securities
|
119
|
|
|
—
|
|
|
119
|
|
|
—
|
|
|
Short-term investments
|
||||
Certificates of deposit
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
Short-term investments
|
||||
Foreign currency derivatives
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
Other current assets and other assets
|
||||
Deferred compensation plan assets
(a)
|
10
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
Other assets
|
||||
Total assets at fair value
|
$
|
2,815
|
|
|
$
|
860
|
|
|
$
|
1,955
|
|
|
$
|
—
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
48
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
Accrued and other current liabilities and other liabilities
|
||||
Deferred compensation plan liabilities
(a)
|
10
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
||||
Total liabilities at fair value
|
$
|
58
|
|
|
$
|
10
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
|
|
|
|
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, 2017 |
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Balance Sheet Classification
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Bank and time deposits
|
$
|
233
|
|
|
$
|
233
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cash equivalents
|
Money market funds
|
405
|
|
|
405
|
|
|
—
|
|
|
—
|
|
|
Cash equivalents
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
963
|
|
|
—
|
|
|
963
|
|
|
—
|
|
|
Short-term investments and cash equivalents
|
||||
U.S. Treasury securities
|
460
|
|
|
460
|
|
|
—
|
|
|
—
|
|
|
Short-term investments and cash equivalents
|
||||
U.S. agency securities
|
172
|
|
|
—
|
|
|
172
|
|
|
—
|
|
|
Short-term investments and cash equivalents
|
||||
Commercial paper
|
270
|
|
|
—
|
|
|
270
|
|
|
—
|
|
|
Short-term investments and cash equivalents
|
||||
Foreign government securities
|
113
|
|
|
—
|
|
|
113
|
|
|
—
|
|
|
Short-term investments
|
||||
Asset-backed securities
|
135
|
|
|
—
|
|
|
135
|
|
|
—
|
|
|
Short-term investments
|
||||
Foreign currency derivatives
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
Other current assets and other assets
|
||||
Deferred compensation plan assets
(a)
|
8
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
Other assets
|
||||
Total assets at fair value
|
$
|
2,778
|
|
|
$
|
1,106
|
|
|
$
|
1,672
|
|
|
$
|
—
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
Accrued and other current liabilities and other liabilities
|
||||
Deferred compensation plan liabilities
(a)
|
9
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
||||
Total liabilities at fair value
|
$
|
17
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
|
(a)
|
The Deferred Compensation Plan assets consist of various mutual funds. See Note 13 in our Annual Report on Form 10-K for the fiscal year ended
March 31, 2017
, for additional information regarding our Deferred Compensation Plan.
|
|
As of September 30, 2017
|
|
As of March 31, 2017
|
||||||||||||||||||||||||||||
|
Cost or
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
|
Cost or
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
||||||||||||||||||||
|
Gains
|
|
Losses
|
|
Gains
|
|
Losses
|
|
|||||||||||||||||||||||
Corporate bonds
|
$
|
1,235
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1,234
|
|
|
$
|
944
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
943
|
|
U.S. Treasury securities
|
410
|
|
|
—
|
|
|
(1
|
)
|
|
409
|
|
|
414
|
|
|
—
|
|
|
(1
|
)
|
|
413
|
|
||||||||
U.S. agency securities
|
132
|
|
|
—
|
|
|
(1
|
)
|
|
131
|
|
|
152
|
|
|
—
|
|
|
(1
|
)
|
|
151
|
|
||||||||
Commercial paper
|
268
|
|
|
—
|
|
|
—
|
|
|
268
|
|
|
212
|
|
|
—
|
|
|
—
|
|
|
212
|
|
||||||||
Foreign government securities
|
101
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|
113
|
|
|
—
|
|
|
—
|
|
|
113
|
|
||||||||
Asset-backed securities
|
119
|
|
|
—
|
|
|
—
|
|
|
119
|
|
|
135
|
|
|
—
|
|
|
—
|
|
|
135
|
|
||||||||
Certificates of deposit
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Short-term investments
|
$
|
2,291
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
2,288
|
|
|
$
|
1,970
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
1,967
|
|
|
As of September 30, 2017
|
|
As of March 31, 2017
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
Short-term investments
|
|
|
|
|
|
|
|
||||||||
Due within 1 year
|
$
|
1,592
|
|
|
$
|
1,591
|
|
|
$
|
1,237
|
|
|
$
|
1,236
|
|
Due 1 year through 5 years
|
696
|
|
|
694
|
|
|
721
|
|
|
719
|
|
||||
Due after 5 years
|
3
|
|
|
3
|
|
|
12
|
|
|
12
|
|
||||
Short-term investments
|
$
|
2,291
|
|
|
$
|
2,288
|
|
|
$
|
1,970
|
|
|
$
|
1,967
|
|
|
As of September 30, 2017
|
|
As of March 31, 2017
|
||||||||||||||||||||
|
Notional Amount
|
|
Fair Value
|
|
Notional Amount
|
|
Fair Value
|
||||||||||||||||
|
|
Asset
|
|
Liability
|
|
|
Asset
|
|
Liability
|
||||||||||||||
Forward contracts to purchase
|
$
|
167
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
185
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Forward contracts to sell
|
$
|
1,146
|
|
|
$
|
1
|
|
|
$
|
48
|
|
|
$
|
840
|
|
|
$
|
19
|
|
|
$
|
3
|
|
|
As of September 30, 2017
|
|
As of March 31, 2017
|
||||||||||||||||||||
|
Notional Amount
|
|
Fair Value
|
|
Notional Amount
|
|
Fair Value
|
||||||||||||||||
|
|
Asset
|
|
Liability
|
|
|
Asset
|
|
Liability
|
||||||||||||||
Forward contracts to purchase
|
$
|
139
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
87
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward contracts to sell
|
$
|
425
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
166
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Statement of Operations Classification
|
|
Amount of Gain (Loss) Recognized in the Statement of Operations
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||
Foreign currency forward contracts not designated as hedging instruments
|
Interest and other income (expense), net
|
|
$
|
(3
|
)
|
|
$
|
3
|
|
|
$
|
(9
|
)
|
|
$
|
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 June 30, 2017
|
$
|
(3
|
)
|
|
$
|
(24
|
)
|
|
$
|
(44
|
)
|
|
$
|
(71
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(29
|
)
|
|
32
|
|
|
3
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
—
|
|
|
(34
|
)
|
|
32
|
|
|
(2
|
)
|
||||
Balance as of September 30, 2017
|
$
|
(3
|
)
|
|
$
|
(58
|
)
|
|
$
|
(12
|
)
|
|
$
|
(73
|
)
|
|
Unrealized Net Gains (Losses) on Available-for-Sale Securities
|
|
Unrealized Net Gains (Losses) on Derivative Instruments
|
|
Foreign Currency Translation Adjustments
|
|
Total
|
||||||||
Balances as of June 30, 2016
|
$
|
3
|
|
|
$
|
36
|
|
|
$
|
(36
|
)
|
|
$
|
3
|
|
Other comprehensive income (loss) before reclassifications
|
(1
|
)
|
|
(1
|
)
|
|
(6
|
)
|
|
(8
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(1
|
)
|
|
(4
|
)
|
|
—
|
|
|
(5
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
(2
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|
(13
|
)
|
||||
Balance as of September 30, 2016
|
$
|
1
|
|
|
$
|
31
|
|
|
$
|
(42
|
)
|
|
$
|
(10
|
)
|
|
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, 2017
|
$
|
(3
|
)
|
|
$
|
32
|
|
|
$
|
(48
|
)
|
|
$
|
(19
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(68
|
)
|
|
46
|
|
|
(22
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
(22
|
)
|
|
(10
|
)
|
|
(32
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
—
|
|
|
(90
|
)
|
|
36
|
|
|
(54
|
)
|
||||
Balance as of September 30, 2017
|
$
|
(3
|
)
|
|
$
|
(58
|
)
|
|
$
|
(12
|
)
|
|
$
|
(73
|
)
|
|
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
|
1
|
|
|
27
|
|
|
(11
|
)
|
|
17
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(1
|
)
|
|
(10
|
)
|
|
—
|
|
|
(11
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
—
|
|
|
17
|
|
|
(11
|
)
|
|
6
|
|
||||
Balance as of September 30, 2016
|
$
|
1
|
|
|
$
|
31
|
|
|
$
|
(42
|
)
|
|
$
|
(10
|
)
|
|
|
Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
|
||||||
Statement of Operations Classification
|
|
Three Months Ended
September 30, 2017 |
|
Six Months Ended
September 30, 2017 |
||||
(Gains) losses on cash flow hedges from forward contracts
|
|
|
|
|
||||
Net revenue
|
|
$
|
(3
|
)
|
|
$
|
(22
|
)
|
Research and development
|
|
(2
|
)
|
|
—
|
|
||
Total, net of tax
|
|
$
|
(5
|
)
|
|
$
|
(22
|
)
|
|
|
|
|
|
||||
(Gains) losses on foreign currency translation
|
|
|
|
|
||||
Interest and other income (expense), net
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
Total, net of tax
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
|
|
|
|
||||
Total net (gain) loss reclassified, net of tax
|
|
$
|
(5
|
)
|
|
$
|
(32
|
)
|
|
|
Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
|
||||||
Statement of Operations Classification
|
|
Three Months Ended
September 30, 2016 |
|
Six Months Ended
September 30, 2016 |
||||
(Gains) losses on available-for-sale securities
|
|
|
|
|
||||
Interest and other income (expense), net
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Total, net of tax
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
||||
(Gains) losses on cash flow hedges from forward contracts
|
|
|
|
|
||||
Net revenue
|
|
$
|
(4
|
)
|
|
$
|
(9
|
)
|
Research and development
|
|
—
|
|
|
(1
|
)
|
||
Total, net of tax
|
|
$
|
(4
|
)
|
|
$
|
(10
|
)
|
|
|
|
|
|
||||
Total net (gain) loss reclassified, net of tax
|
|
$
|
(5
|
)
|
|
$
|
(11
|
)
|
|
As of
March 31, 2017 |
|
Activity
|
|
Effects of Foreign Currency Translation
|
|
As of
September 30, 2017 |
||||||||
Goodwill
|
$
|
2,075
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
2,079
|
|
Accumulated impairment
|
(368
|
)
|
|
—
|
|
|
—
|
|
|
(368
|
)
|
||||
Total
|
$
|
1,707
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
1,711
|
|
|
As of September 30, 2017
|
|
As of March 31, 2017
|
||||||||||||||||||||
|
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
|
|
|
$
|
(412
|
)
|
|
$
|
—
|
|
Trade names and trademarks
|
106
|
|
|
(101
|
)
|
|
5
|
|
|
106
|
|
|
(98
|
)
|
|
8
|
|
||||||
Registered user base and other intangibles
|
5
|
|
|
(5
|
)
|
|
—
|
|
|
5
|
|
|
(5
|
)
|
|
—
|
|
||||||
Carrier contracts and related
|
85
|
|
|
(85
|
)
|
|
—
|
|
|
85
|
|
|
(85
|
)
|
|
—
|
|
||||||
Total
|
$
|
608
|
|
|
$
|
(603
|
)
|
|
$
|
5
|
|
|
$
|
608
|
|
|
$
|
(600
|
)
|
|
$
|
8
|
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cost of service and other
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Cost of product
|
—
|
|
|
4
|
|
|
—
|
|
|
9
|
|
||||
Operating expenses
|
2
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Total
|
$
|
2
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
28
|
|
Fiscal Year Ending March 31,
|
|
||
2018 (remaining six months)
|
$
|
3
|
|
2019
|
2
|
|
|
Total
|
$
|
5
|
|
|
As of
September 30, 2017 |
|
As of
March 31, 2017 |
||||
Other current assets
|
$
|
47
|
|
|
$
|
79
|
|
Other assets
|
38
|
|
|
39
|
|
||
Royalty-related assets
|
$
|
85
|
|
|
$
|
118
|
|
|
As of
September 30, 2017 |
|
As of
March 31, 2017 |
||||
Accrued royalties
|
$
|
183
|
|
|
$
|
165
|
|
Other liabilities
|
85
|
|
|
97
|
|
||
Royalty-related liabilities
|
$
|
268
|
|
|
$
|
262
|
|
|
As of
September 30, 2017 |
|
As of
March 31, 2017 |
||||
Computer, equipment and software
|
$
|
726
|
|
|
$
|
723
|
|
Buildings
|
327
|
|
|
316
|
|
||
Leasehold improvements
|
136
|
|
|
126
|
|
||
Equipment, furniture and fixtures, and other
|
80
|
|
|
82
|
|
||
Land
|
61
|
|
|
61
|
|
||
Construction in progress
|
6
|
|
|
7
|
|
||
|
1,336
|
|
|
1,315
|
|
||
Less: accumulated depreciation
|
(892
|
)
|
|
(881
|
)
|
||
Property and equipment, net
|
$
|
444
|
|
|
$
|
434
|
|
|
As of
September 30, 2017 |
|
As of
March 31, 2017 |
||||
Other accrued expenses
|
$
|
374
|
|
|
$
|
210
|
|
Accrued compensation and benefits
|
186
|
|
|
267
|
|
||
Accrued royalties
|
183
|
|
|
165
|
|
||
Deferred net revenue (other)
|
226
|
|
|
147
|
|
||
Accrued and other current liabilities
|
$
|
969
|
|
|
$
|
789
|
|
|
As of
September 30, 2017 |
|
As of
March 31, 2017 |
||||
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
|
(7
|
)
|
|
(8
|
)
|
||
Net carrying value of Senior Notes
|
$
|
991
|
|
|
$
|
990
|
|
|
|
|
|
||||
Fair value of Senior Notes (Level 2)
|
$
|
1,069
|
|
|
$
|
1,054
|
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Amortization of debt discount
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Amortization of debt issuance costs
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Coupon interest expense
|
(11
|
)
|
|
(10
|
)
|
|
(21
|
)
|
|
(21
|
)
|
||||
Total interest expense
|
$
|
(11
|
)
|
|
$
|
(11
|
)
|
|
$
|
(22
|
)
|
|
$
|
(24
|
)
|
|
|
|
Fiscal Years Ending March 31,
|
||||||||||||||||||||||||||||
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
(Remaining
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Total
|
|
six mos.)
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||||||
Unrecognized commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Developer/licensor commitments
|
$
|
1,061
|
|
|
$
|
78
|
|
|
$
|
296
|
|
|
$
|
243
|
|
|
$
|
206
|
|
|
$
|
194
|
|
|
$
|
43
|
|
|
$
|
1
|
|
Marketing commitments
|
422
|
|
|
26
|
|
|
115
|
|
|
103
|
|
|
77
|
|
|
74
|
|
|
27
|
|
|
—
|
|
||||||||
Operating leases
|
231
|
|
|
18
|
|
|
41
|
|
|
37
|
|
|
37
|
|
|
30
|
|
|
22
|
|
|
46
|
|
||||||||
Senior Notes interest
|
237
|
|
|
17
|
|
|
41
|
|
|
41
|
|
|
41
|
|
|
20
|
|
|
19
|
|
|
58
|
|
||||||||
Other purchase obligations
|
97
|
|
|
14
|
|
|
28
|
|
|
22
|
|
|
10
|
|
|
5
|
|
|
4
|
|
|
14
|
|
||||||||
Total unrecognized commitments
|
2,048
|
|
|
153
|
|
|
521
|
|
|
446
|
|
|
371
|
|
|
323
|
|
|
115
|
|
|
119
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Recognized commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Senior Notes principal and interest
|
1,003
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
600
|
|
|
—
|
|
|
—
|
|
|
400
|
|
||||||||
Licensing obligations
|
114
|
|
|
12
|
|
|
24
|
|
|
25
|
|
|
26
|
|
|
27
|
|
|
—
|
|
|
—
|
|
||||||||
Total recognized commitments
|
1,117
|
|
|
15
|
|
|
24
|
|
|
25
|
|
|
626
|
|
|
27
|
|
|
—
|
|
|
400
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total commitments
|
$
|
3,165
|
|
|
$
|
168
|
|
|
$
|
545
|
|
|
$
|
471
|
|
|
$
|
997
|
|
|
$
|
350
|
|
|
$
|
115
|
|
|
$
|
519
|
|
•
|
Restricted Stock Units
and
Performance-Based Restricted Stock Units
. The fair value of restricted stock units and performance-based restricted stock units (other than market-based 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.
|
|
|
ESPP Purchase Rights
|
||||
|
|
Three Months Ended
September 30, |
||||
|
|
2017
|
|
2016
|
||
Risk-free interest rate
|
|
1.13 - 1.24%
|
|
|
0.5 - 0.6%
|
|
Expected volatility
|
|
28
|
%
|
|
29 - 32%
|
|
Weighted-average volatility
|
|
28
|
%
|
|
31
|
%
|
Expected term
|
|
6 - 12 months
|
|
|
6 - 12 months
|
|
Expected dividends
|
|
None
|
|
|
None
|
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cost of revenue
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Research and development
|
36
|
|
|
27
|
|
|
64
|
|
|
54
|
|
||||
Marketing and sales
|
9
|
|
|
8
|
|
|
16
|
|
|
15
|
|
||||
General and administrative
|
16
|
|
|
12
|
|
|
28
|
|
|
25
|
|
||||
Stock-based compensation expense
|
$
|
62
|
|
|
$
|
48
|
|
|
$
|
110
|
|
|
$
|
96
|
|
|
|
Options
(in thousands)
|
|
Weighted-
Average
Exercise Prices
|
|
Weighted-
Average
Remaining
Contractual
Term (in years)
|
|
Aggregate
Intrinsic Value
(in millions)
|
|||||
Outstanding as of March 31, 2017
|
|
2,377
|
|
|
$
|
33.35
|
|
|
|
|
|
||
Granted
|
|
2
|
|
|
105.99
|
|
|
|
|
|
|||
Exercised
|
|
(744
|
)
|
|
40.47
|
|
|
|
|
|
|||
Forfeited, cancelled or expired
|
|
(2
|
)
|
|
46.31
|
|
|
|
|
|
|||
Outstanding as of September 30, 2017
|
|
1,633
|
|
|
$
|
30.19
|
|
|
5.91
|
|
$
|
143
|
|
Vested and expected to vest
|
|
1,633
|
|
|
$
|
30.19
|
|
|
5.91
|
|
$
|
143
|
|
Exercisable as of September 30, 2017
|
|
1,553
|
|
|
$
|
30.40
|
|
|
5.90
|
|
$
|
136
|
|
|
|
Restricted
Stock Rights
(in thousands)
|
|
Weighted-
Average Grant
Date Fair Values
|
|||
Outstanding as of March 31, 2017
|
|
5,153
|