DISCONTINUED OPERATIONS

On January 31, 2017, the Company completed the Spin-off and its financial results are presented as (Loss) income from discontinued operations, net of income tax expense in the 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:




		2017			2016
	(in thousands)
Net revenues		$	58,215		$	682,185
Cost of net revenues		15,456			154,652
Gross margin		42,759			527,533
Operating expenses:
Research and development		9,108			93,892
Sales, marketing and services		20,881			209,475
General and administrative		7,636			63,270
Amortization of other intangible assets		1,176			14,097
Restructuring		3,189			3,721
Separation		40,573			54,084
Total operating expenses		82,563			438,539
(Loss) income from discontinued operations before income taxes		(39,804		)	88,994
Income tax expense		2,900			22,737
(Loss) income from discontinued operations, net of income tax		$	(42,704	)	$	66,257

The Company incurred significant costs in connection with the separation of its GoTo Business, which were primarily included in discontinued operations. 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. During the years ended December 31, 2017 and 2016, the Company incurred $0.5 million and $2.5 million of separation costs in continuing operations, which are included in General and administrative expense in the accompanying consolidated statements of income.

As a result of the Spin-off, the Company recorded a $475.2 million reduction in retained earnings which included net assets of $461.8 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 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.