ELECTRONIC ARTS INC. [EA] Filings

10-Q 1 ea-20220630.htm 10-Q ea-20220630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the Quarterly Period Ended June 30, 2022


☐			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

94065

Redwood City

California

(Address of principal executive offices)

(Zip Code)

(650) 628-1500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value

NASDAQ Global Select Market

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ No ☐

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


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 5, 2022, there were 278,045,325 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.

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ELECTRONIC ARTS INC.

FORM 10-Q

FOR THE PERIOD ENDED JUNE 30, 2022

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		Page
Part I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2022 and March 31, 2022	3
	Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended June 30, 2022 and 2021	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended June 30, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements	8
	Report of Independent Registered Public Accounting Firm	26
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	43

Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 6.	Exhibits	56
Exhibit Index		57
Signature		58

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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)	June 30, 2022		March 31, 2022 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	2,082	$	2,732
Short-term investments	334		330
Receivables, net	579		650
Other current assets	522		439
Total current assets	3,517		4,151
Property and equipment, net	545		550
Goodwill	5,382		5,387
Acquisition-related intangibles, net	893		962
Deferred income taxes, net	2,327		2,243
Other assets	528		507
TOTAL ASSETS	$	13,192	$	13,800

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	70	$	101
Accrued and other current liabilities	1,215		1,388
Deferred net revenue (online-enabled games)	1,548		2,024
Total current liabilities	2,833		3,513
Senior notes, net	1,878		1,878
Income tax obligations	438		386
Deferred income taxes, net	1		1
Other liabilities	401		397
Total liabilities	5,551		6,175
Commitments and contingencies (See Note 11)
Stockholders’ equity:

Common stock, $0.01 par value. 1,000 shares authorized; 279 and 280 shares issued and outstanding, respectively	3		3
Additional paid-in capital	—		—
Retained earnings	7,567		7,607
Accumulated other comprehensive income (loss)	71		15
Total stockholders’ equity	7,641		7,625
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,192	$	13,800

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 June 30,
(In millions, except per share data)	2022		2021
Net revenue	$	1,767	$	1,551
Cost of revenue	314		315
Gross profit	1,453		1,236
Operating expenses:
Research and development	572		515
Marketing and sales	234		190
General and administrative	167		169

Amortization and impairment of intangibles	39		40
Total operating expenses	1,012		914
Operating income	441		322
Interest and other income (expense), net	(5)		(14)
Income before provision for income taxes	436		308
Provision for income taxes	125		104
Net income	$	311	$	204
Earnings per share:
Basic	$	1.11	$	0.71
Diluted	$	1.11	$	0.71
Number of shares used in computation:
Basic	279		286
Diluted	281		289

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

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(Unaudited)	Three Months Ended June 30,
(In millions)	2022		2021
Net income	$	311	$	204
Other comprehensive income (loss), net of tax:
Net gains (losses) on available-for-sale securities	(1)		—
Net gains (losses) on derivative instruments	90		6
Foreign currency translation adjustments	(33)		9
Total other comprehensive income (loss), net of tax	56		15
Total comprehensive income	$	367	$	219

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

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


(Unaudited)	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (loss)		Total Stockholders’ Equity
(In millions, except share data in thousands)	Shares	Amount
Balances as of March 31, 2022	280,051	$	3	$	—	$	7,607	$	15	$	7,625
Total comprehensive income	—	—		—		311		56		367
Stock-based compensation	—	—		125		—		—		125
Issuance of common stock	1,413	—		(103)		—		—		(103)
Repurchase and retirement of common stock	(2,512)	—		(22)		(298)		—		(320)
Cash dividends declared ($0.19 per common share)	—	—		—		(53)		—		(53)
Balances as of June 30, 2022	278,952	$	3	$	—	$	7,567	$	71	$	7,641














(Unaudited)	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (loss)		Total Stockholders’ Equity
(In millions, except share data in thousands)	Shares	Amount
Balances as of March 31, 2021	286,465	$	3	$	—	$	7,887	$	(50)	$	7,840
Total comprehensive income	—	—		—		204		15		219
Stock-based compensation	—	—		125		—		—		125
Awards assumed upon acquisition	—	—		23		—		—		23
Issuance of common stock	1,209	—		(105)		—		—		(105)
Repurchase and retirement of common stock	(2,292)	—		(43)		(282)		—		(325)
Cash dividends declared ($0.17 per common share)	—	—		—		(49)		—		(49)
Balances as of June 30, 2021	285,382	$	3	$	—	$	7,760	$	(35)	$	7,728

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)	Three Months Ended June 30,
(In millions)	2022		2021
OPERATING ACTIVITIES
Net income	$	311	$	204
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, amortization, accretion and impairment	114		105
Stock-based compensation	125		125
Change in assets and liabilities:
Receivables, net	70		12
Other assets	(15)		(74)
Accounts payable	(16)		(19)
Accrued and other liabilities	(105)		(302)
Deferred income taxes, net	(86)		28
Deferred net revenue (online-enabled games)	(476)		(222)
Net cash used in operating activities	(78)		(143)
INVESTING ACTIVITIES
Capital expenditures	(59)		(44)
Proceeds from maturities and sales of short-term investments	87		507
Purchase of short-term investments	(93)		(285)
Acquisitions, net of cash acquired	—		(1,989)
Net cash used in investing activities	(65)		(1,811)
FINANCING ACTIVITIES
Proceeds from issuance of common stock	1		—
Cash dividends paid	(53)		(49)
Cash paid to taxing authorities for shares withheld from employees	(104)		(105)
Repurchase and retirement of common stock	(320)		(325)
Net cash used in financing activities	(476)		(479)
Effect of foreign exchange on cash and cash equivalents	(31)		11
Increase (decrease) in cash and cash equivalents	(650)		(2,422)
Beginning cash and cash equivalents	2,732		5,260
Ending cash and cash equivalents	$	2,082	$	2,838
Supplemental cash flow information:
Cash paid during the period for income taxes, net	$	36	$	134

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

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Electronic Arts is a global leader in digital interactive entertainment. We develop, market, publish and deliver games, content and services that can be experienced on game consoles, PCs, mobile phones and tablets. At our core is a portfolio of intellectual property from which we create innovative games and content that enable us to build on-going and meaningful relationships with a community of players, creators and viewers. Our portfolio includes brands that we either wholly own (such as Apex Legends, Battlefield, and The Sims) or license from others (such as Madden, Star Wars, and the 300+ licenses within our global football ecosystem). Through our live services offerings, we offer our players high-quality experiences designed to provide value to players and extend and enhance gameplay. These live services include extra content, subscription offerings and other revenue generated in addition to the sale of our base games and free-to-play games. In addition, we are focused on reaching more players whenever and wherever they want to play. We believe that we can add value to our network by making it easier for players to connect to a world of play by offering choice of business model, distribution channel and device.

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, 2023 contains 52 weeks and ends on April 1, 2023. Our results of operations for the fiscal year ended March 31, 2022 contained 52 weeks and ended on April 2, 2022. Our results of operations for the three months ended June 30, 2022 contained 13 weeks, and ended on July 2, 2022. Our results of operations for the three months ended June 30, 2021 contained 13 weeks and ended on July 3, 2021. 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, 2022, as filed with the United States Securities and Exchange Commission (“SEC”) on May 25, 2022.

Recently Adopted Accounting Standards

In November 2021, the FASB issued ASU 2021-10, Disclosures by Business Entities about Government Assistance (Topic 832). The amendments in this update establish Topic 832 and require additional disclosures regarding government grants and money contributions when entities accounted for transactions with a government by analogizing to a grant or contribution accounting model. We adopted ASU 2021-10 in the first quarter of fiscal year 2023 and elected to apply the amendments prospectively to all transactions within the scope of the amendment that are reflected in the financial statements at the date of adoption. The adoption did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures.

Other Recently Issued Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805). The amendments in this update require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. This update is effective for us beginning in the first quarter of fiscal year 2024. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new standard on our Condensed Consolidated Financial Statements and related disclosures.

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(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 June 30, 2022 and March 31, 2022, 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
	As of June 30, 2022		Quoted Prices in Active Markets for Identical Financial Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Balance Sheet Classification
			(Level 1)		(Level 2)		(Level 3)
Assets
Bank and time deposits	$	53	$	53	$	—	$	—	Cash equivalents
Money market funds	11		11		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	132		—		132		—		Short-term investments
U.S. Treasury securities	103		103		—		—		Short-term investments and cash equivalents
U.S. agency securities	3		—		3		—		Short-term investments
Commercial paper	32		—		32		—		Short-term investments and cash equivalents
Foreign government securities	18		—		18		—		Short-term investments
Asset-backed securities	37		—		37		—		Short-term investments
Certificates of deposit	16		—		16		—		Short-term investments
Foreign currency derivatives	156		—		156		—		Other current assets and other assets
Deferred compensation plan assets (a)	23		23		—		—		Other assets
Total assets at fair value	$	584	$	190	$	394	$	—
Liabilities
Foreign currency derivatives	$	13	$	—	$	13	$	—	Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	24		24		—		—		Other liabilities
Total liabilities at fair value	$	37	$	24	$	13	$	—

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			Fair Value Measurements at Reporting Date Using
	As of March 31, 2022		Quoted Prices in Active Markets for Identical Financial Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Balance Sheet Classification
			(Level 1)		(Level 2)		(Level 3)
Assets
Bank and time deposits	$	55	$	55	$	—	$	—	Cash equivalents
Money market funds	257		257		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	116		—		116		—		Short-term investments
U.S. Treasury securities	104		104		—		—		Short-term investments and cash equivalents

Commercial paper	51		—		51		—		Short-term investments and cash equivalents
Foreign government securities	17		—		17		—		Short-term investments
Asset-backed securities	38		—		38		—		Short-term investments
Certificates of deposit	18		—		18		—		Short-term investments
Foreign currency derivatives	63		—		63		—		Other current assets and other assets
Deferred compensation plan assets (a)	21		21		—		—		Other assets
Total assets at fair value	$	740	$	437	$	303	$	—
Liabilities
Foreign currency derivatives	$	14	$	—	$	14	$	—	Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)	22		22		—		—		Other liabilities
Total liabilities at fair value	$	36	$	22	$	14	$	—

(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, 2022, for additional information regarding our Deferred Compensation Plan.

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(3) FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of June 30, 2022 and March 31, 2022, our cash and cash equivalents were $2,082 million and $2,732 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 June 30, 2022 and March 31, 2022 (in millions):


	As of June 30, 2022								As of March 31, 2022
	Cost or Amortized Cost		Gross Unrealized				Fair Value		Cost or Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses						Gains		Losses
Corporate bonds	$	133	$	—	$	(1)	$	132	$	117	$	—	$	(1)	$	116
U.S. Treasury securities	101		—		(1)		100		103		—		(1)		102
U.S. agency securities	3		—		—		3		—		—		—		—
Commercial paper	28		—		—		28		39		—		—		39
Foreign government securities	18		—		—		18		17		—		—		17
Asset-backed securities	38		—		(1)		37		38		—		—		38
Certificates of deposit	16		—		—		16		18		—		—		18
Short-term investments	$	337	$	—	$	(3)	$	334	$	332	$	—	$	(2)	$	330

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of June 30, 2022 and March 31, 2022 (in millions):


	As of June 30, 2022				As of March 31, 2022
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments
Due within 1 year	$	262	$	260	$	250	$	249
Due 1 year through 5 years	71		70		77		76
Due after 5 years	4		4		5		5
Short-term investments	$	337	$	334	$	332	$	330

(4) DERIVATIVE FINANCIAL INSTRUMENTS

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, Japanese yen, Chinese yuan, South Korean won and Polish zloty. 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 three months or less and are transacted near month-end. We do not use foreign currency forward contracts for speculative trading purposes.

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Cash Flow Hedging Activities

Certain of our forward contracts are designated and qualify as cash flow hedges. 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 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 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 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 net revenue or research and development expenses, 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 June 30, 2022						As of March 31, 2022
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability

Forward contracts to purchase	$	261	$	—	$	11	$	375	$	4	$	3



Forward contracts to sell	$	1,917	$	153	$	—	$	1,829	$	52	$	6

The effects of cash flow hedge accounting in our Condensed Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021 are as follows (in millions):


	Three Months Ended June 30,
	2022				2021
	Net revenue		Research and development		Net revenue		Research and development
Total amounts presented in our Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	1,767	$	572	$	1,551	$	515
Gains (losses) on foreign currency forward contracts designated as cash flow hedges	$	19	$	(3)	$	(19)	$	8

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 June 30, 2022						As of March 31, 2022
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability
Forward contracts to purchase	$	361	$	2	$	1	$	496	$	6	$	—


Forward contracts to sell	$	323	$	1	$	1	$	400	$	1	$	5

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The effect of foreign currency forward contracts not designated as hedging instruments in our Condensed Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021 was as follows (in millions):


	Three Months Ended June 30,
	2022		2021
	Interest and other income (expense), net
Total amounts presented in our Condensed Consolidated Statements of Operations in which the effects of balance sheet hedges are recorded	$	(5)	$	(14)
Gain (losses) on foreign currency forward contracts not designated as hedging instruments	$	13	$	(7)

(5) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended June 30, 2022 and 2021 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, 2022	$	(3)	$	47	$	(29)	$	15
Other comprehensive income (loss) before reclassifications	(1)		106		(33)		72
Amounts reclassified from accumulated other comprehensive income (loss)	—		(16)		—		(16)
Total other comprehensive income (loss), net of tax	(1)		90		(33)		56
Balances as of June 30, 2022	$	(4)	$	137	$	(62)	$	71


	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, 2021	$	—	$	(29)	$	(21)	$	(50)
Other comprehensive income (loss) before reclassifications	—		(5)		9		4
Amounts reclassified from accumulated other comprehensive income (loss)	—		11		—		11
Total other comprehensive income (loss), net of tax	—		6		9		15
Balances as of June 30, 2021	$	—	$	(23)	$	(12)	$	(35)

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the three months ended June 30, 2022 and 2021 were as follows (in millions):


	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021




(Gains) losses on foreign currency forward contracts designated as cash flow hedges
Net revenue	$	(19)	$	19
Research and development	3		(8)






Total net (gain) loss reclassified, net of tax	$	(16)	$	11

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(6) GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET

The changes in the carrying amount of goodwill for the three months ended June 30, 2022 are as follows (in millions):


	As of March 31, 2022		Activity		Effects of Foreign Currency Translation		As of June 30, 2022
Goodwill	$	5,755	$	—	$	(5)	$	5,750
Accumulated impairment	(368)		—		—		(368)
Total	$	5,387	$	—	$	(5)	$	5,382

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


	As of June 30, 2022						As of March 31, 2022
	Gross Carrying Amount		Accumulated Amortization and Impairments		Acquisition- Related Intangibles, Net		Gross Carrying Amount		Accumulated Amortization and Impairments		Acquisition- Related Intangibles, Net
Finite-lived acquisition-related intangibles
Developed and core technology	$	1,102	$	(683)	$	419	$	1,102	$	(643)	$	459
Trade names and trademarks	609		(234)		375		609		(212)		397
Registered user base and other intangibles	56		(37)		19		56		(30)		26

Total finite-lived acquisition-related intangibles	$	1,767	$	(954)	$	813	$	1,767	$	(885)	$	882
Indefinite-lived acquisition-related intangibles
In-process research and development	$	80	$	—	$	80	$	80	$	—	$	80
Total acquisition-related intangibles, net	$	1,847	$	(954)	$	893