Discontinued Operations

3 Months Ended

Mar. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

On January 31, 2017, the Company completed the Spin-off of the GoTo Business. Refer to Note 1 for additional information regarding the Spin-off. The financial results of the GoTo Business are presented as (Loss) income from discontinued operations, net of income tax expense in the condensed consolidated statements of income. The following table presents the financial results of the GoTo Business through the date of the Spin-off for the indicated periods and do not include corporate overhead allocations:

Major classes of line items constituting (Loss) income from discontinued operations related to the GoTo Business

	Three Months Ended March 31,
	2017			2016
	(in thousands)
Net revenues	$	58,215		$	166,905
Cost of net revenues	15,456			39,281
Gross margin	42,759			127,624
Operating expenses:
Research and development	9,108			21,727
Sales, marketing and services	20,881			58,821
General and administrative	7,636			12,960
Amortization of other intangible assets	1,176			3,674
Restructuring	3,189			509
Separation	40,573			14,231
Total operating expenses	82,563			111,922
(Loss) income from discontinued operations before income taxes	(39,804		)	15,702
Income tax expense	2,900			5,493
(Loss) income from discontinued operations, net of income tax	$	(42,704	)	$	10,209

The Company has incurred significant costs in connection with the separation of its GoTo Business. These costs relate primarily to third-party advisory and consulting services, retention payments to certain employees, incremental stock-based compensation and other costs directly related to the separation of the GoTo Business. The Company incurred $0.3 million and $0.5 million of separation costs during the three months ended March 31, 2017 and 2016, respectively, which are included in continuing operations. The Company also incurred an additional $40.6 million and $14.2 million of separation costs during the three months ended March 31, 2017 and 2016, respectively, which are included in discontinued operations.

The assets and liabilities of the GoTo Business have been classified as discontinued operations as of December 31, 2016. The current liabilities of discontinued operations reflect accrued separation costs that are expected to be paid during the second quarter of 2017. There were no other assets or liabilities of the GoTo Business that are reflected on the Company's condensed consolidated balance sheet as of March 31, 2017.

Carrying amounts of major classes of assets and liabilities included as part of discontinued operations related to the GoTo Business

	March 31, 2017		December 31, 2016
	(in thousands)
Assets
Current assets:
Cash	$	—	$	120,861
Accounts receivable, net	—		44,734
Prepaid expenses and other current assets	—		14,094
Total current assets of discontinued operations	—		179,689
Property and equipment, net	—		81,866
Goodwill	—		380,917
Other intangible assets, net	—		54,312
Deferred tax assets, net	—		18,496
Other assets	—		3,340
Long-term assets of discontinued operations	$	—	$	538,931
Total major classes of assets of discontinued operations	$	—	$	718,620
Liabilities
Current liabilities:
Accounts payable	$	13,820	$	11,333
Accrued expenses and other current liabilities	—		46,088
Current portion of deferred revenues	—		115,249
Total current liabilities of discontinued operations	13,820		172,670
Long-term portion of deferred revenues	—		4,224
Other liabilities	—		3,484
Long-term liabilities of discontinued operations	$	—	$	7,708
Total major classes of liabilities of discontinued operations	$	13,820	$	180,378

As a result of the Spin-off, the Company recorded a $479.4 million reduction in retained earnings which included net assets of $466.0 million as of January 31, 2017. Of this amount, $28.5 million represents cash transferred to the GoTo Business, with the remainder considered a non-cash activity in the Condensed Consolidated Statements of Cash Flows. The Spin-off also resulted in a reduction of Accumulated other comprehensive loss associated with foreign currency translation adjustments of $13.4 million, which was reclassified to Retained earnings.

Citrix and GetGo entered into several agreements in connection with the Spin-off, including a transition services agreement ("TSA"), separation and distribution agreement, tax matters agreement, intellectual property matters agreement, and an employee matters agreement. Pursuant to the TSA, Citrix, GetGo and their respective subsidiaries are providing various services to each other on an interim, transitional basis. Services being provided by Citrix include, among others, finance, information technology and certain other administrative services. The services generally commenced on February 1, 2017 and are generally expected to terminate within 12 months of that date. Billings by Citrix under the TSA are not expected to be material.

The following table presents the changes in Total stockholders' equity during the three months ended March 31, 2017:

	(in thousands)
Balance as of December 31, 2016	$	2,608,727
Cumulative-effect adjustment from adoption of accounting standard on stock-based compensation	386
Distribution of the net assets of the GoTo Business	(465,974		)
Shares issued under stock-based compensation plans	902
Stock-based compensation expense	36,012
Temporary equity reclassification	79,495
Stock repurchases, net	(500,000		)
Restricted shares turned in for tax withholding	(56,950		)
Other comprehensive gain, net of tax	4,370
Net income	27,621
Other	(847		)
Balance as of March 31, 2017	$	1,733,742