~~Cost Method Investments~~

Equity Securities without Readily Determinable Fair Values

The Company held direct investments in privately-held companies of ~~$18.5 million and $19.2~~$6.9 million as of June 30, ~~2017 and December 31, 2016, respectively,~~2018, which are accounted for ~~based on~~at cost, less impairment plus or minus adjustments resulting from observable price changes in orderly transactions for an identical or a similar investment of the ~~cost method and~~same issuer. These investments are included in Other assets in the accompanying condensed consolidated balance sheets. The Company periodically reviews these investments for ~~impairment. If~~impairment and observable price changes on a quarterly basis, and adjusts the Company determines that an other-than-temporary impairment has occurred, it will write-down the investment to its fair value. For the three months ended June 30, 2017, no cost method investments were determined to be impaired. For the six months ended June 30, 2017, certain cost method investments with a combined carrying value of $2.6 million were determined to be impaired and written down to their estimated fair values of $1.2 million. Accordingly, the Company recorded $1.4 million, respectively, in impairment charges during the six months ended June 30, 2017, which are included in Other (expense) income, net in the accompanying condensed consolidated statements of income.accordingly. For the three months ended June 30, 2016, no cost method investments were determined to be impaired. For the six months ended June 30, 2016, the Company determined that certain cost method investments were impaired and recorded a charge of $0.3 million, which was included in Other (expense) income, net in the accompanying condensed consolidated statements of income. During the three and six months ended June 30, ~~2017, certain~~2018, there were no adjustments resulting from observable price changes to the Company’s investments in privately-held companies without a readily determinable fair value. The fair value of these investments represents a Level 3 valuation as the assumptions used in ~~which the~~valuing these investments are not directly or indirectly observable. See Note 7 for detailed information on fair value measurements.

Equity Securities Accounted for at Net Asset Value

The Company held ~~direct~~equity interests in certain private equity funds of $9.9 million as of June 30, 2018 which are accounted for under the net asset value practical expedient. These investments ~~were acquired by third parties and as a result of these sales transactions the Company recorded gains of $0.1 million and $1.2 million, respectively, which were~~are included in Other ~~(expense) income, net,~~assets in the accompanying condensed consolidated balance sheets. The net asset value of these investments is determined using quarterly capital statements from the funds which are based on the Company’s contributions to the funds, allocation of ~~income.~~profit and loss and changes in fair value of the underlying fund investments.

For 2017, the Company’s investments in privately-held companies and private equity funds were previously classified as cost method investments and were $18.6 million as of December 31, 2017. Due to the Company's adoption of the accounting standard update for the recognition and measurement of financial assets and liabilities, effective January 1, 2018, these investments are now accounted for under the new basis of accounting referenced above. See Note 2 for detailed information regarding the Company's recent accounting pronouncements.

7. FAIR VALUE MEASUREMENTS

The authoritative guidance defines fair value as an exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Available-for-sale securities included in Level 2 are valued utilizing inputs obtained from an independent pricing service (the “Service”) which uses quoted market prices for identical or comparable instruments rather than direct observations of quoted prices in active markets. The Service applies a four level hierarchical pricing methodology to all of the Company’s fixed income securities based on the circumstances. The hierarchy starts with the highest priority pricing source, then subsequently uses inputs obtained from other third-party sources and large custodial institutions. The Service’s providers utilize a variety of inputs to determine their quoted prices. These inputs may include interest rates, known historical trades, yield curve information, benchmark data, prepayment speeds, credit quality and broker/dealer quotes. Substantially all of the Company’s available-for-sale investments are valued utilizing inputs obtained from the Service and accordingly are categorized as Level 2 in the table below. The Company periodically independently assesses the pricing obtained from the Service and historically has not adjusted the Service's pricing as a result of this assessment. Available-for-sale securities are included in Level 3 when relevant observable inputs for a security are not available.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of assets and liabilities within the fair value hierarchy. In certain instances, the inputs used to measure fair value may meet the definition of more than one level of the fair value hierarchy. The input with the lowest level priority is used to determine the applicable level in the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Recurring Basis


	As of June 30, 2017		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		As of June 30, 2018		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)								(In thousands)
Assets:
Cash and cash equivalents:
Cash	$	753,839	$	753,839	$	—	$	—	$	307,466	$	307,466	$	—	$	—
Money market funds	89,406		89,406		—		—		671,400		671,400		—		—
Corporate securities	1,526		—		1,526		—		5,844		—		5,844		—
Agency securities									299		—		299		—
Government securities									36,699		—		36,699		—
Available-for-sale securities:
Agency securities	478,767		—		478,767		—		368,016		—		368,016		—
Corporate securities	804,482		—		804,088		394		662,170		—		661,457		713
Municipal securities	3,977		—		3,977		—		2,508		—		2,508		—
Government securities	269,250		—		269,250		—		280,117		—		280,117		—
Prepaid expenses and other current assets:
Foreign currency derivatives	3,264		—		3,264		—		308		—		308		—
Total assets	$	2,404,511	$	843,245	$	1,560,872	$	394	$	2,334,827	$	978,866	$	1,355,248	$	713
Accrued expenses and other current liabilities:
Foreign currency derivatives	989		—		989		—		3,345		—		3,345		—
Total liabilities	$	989	$	—	$	989	$	—	$	3,345	$	—	$	3,345	$	—


	As of December 31, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		As of December 31, 2017		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)								(In thousands)
Assets:
Cash and cash equivalents:
Cash	$	528,637	$	528,637	$	—	$	—	$	556,520	$	556,520	$	—	$	—
Money market funds	224,765		224,765		—		—		555,826		555,826		—		—
Corporate securities	82,693		—		82,693		—		2,784		—		2,784		—
Available-for-sale securities:
Agency securities	411,493		—		411,493		—		439,064		—		439,064		—
Corporate securities	840,966		—		839,968		998		807,692		—		807,299		393
Municipal securities	9,988		—		9,988		—		3,965		—		3,965		—
Government securities	444,618		—		444,618		—		366,123		—		366,123		—
Prepaid expenses and other current assets:
Foreign currency derivatives	2,506		—		2,506		—		2,498		—		2,498		—
Total assets	$	2,545,666	$	753,402	$	1,791,266	$	998	$	2,734,472	$	1,112,346	$	1,621,733	$	393
Accrued expenses and other current liabilities:
Foreign currency derivatives	4,435		—		4,435		—		814		—		814		—
Total liabilities	$	4,435	$	—	$	4,435	$	—	$	814	$	—	$	814	$	—

Research and Development Expenses

Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, June 30, June 30, 2017 June 30, 2017
2017 2016 2017 2016 vs. June 30, 2016 vs. June 30, 2016
(In thousands)
Research and development $ 106,696
$ 100,651
$ 209,365
$ 202,883
$ 6,045
$ 6,482



	Three Months Ended				Six Months Ended				Three Months Ended		Six Months Ended
	June 30,				June 30,				June 30, 2018		June 30, 2018
	2018		2017		2018		2017		vs. June 30, 2017		vs. June 30, 2017
	(In thousands)
Research and development	$	112,943	$	106,696	$	211,493	$	209,365	$	6,247	$	2,128

Research and development expenses ~~consisted~~consist primarily of personnel related costs and facility and equipment ~~costs and cloud capacity~~ costs directly related to our research and development activities. We expensed substantially all development costs included in the research and development of our products.

Research and development expenses increased during the three months ended June 30, ~~2017~~2018 compared to the three months ended June 30, ~~2016~~2017 primarily due to an increase in ~~compensation and other employee-related costs of $4.2 million primarily related to a net increase in headcount, an increase in~~ stock-based compensation of ~~$2.0~~$6.1 million and an increase in cloud capacity and delivery costs of ~~$1.9 million. These increases are~~$2.4 million, partially offset by a decrease in ~~facility~~compensation and ~~equipment~~other employee-related costs of ~~$2.1 million.~~

$2.7 million related to a net decrease in headcount. Research and development expenses increased during the six months ended June 30, ~~2017~~2018 compared to the six months ended June 30, ~~2016~~2017 primarily due to an increase in ~~compensation and other employee-related costs of $8.2 million primarily related to a net increase in headcount, an increase in~~ stock-based compensation of ~~$3.9~~$7.2 million and an increase in cloud capacity and delivery costs of ~~$1.9~~$4.5 million. These increases are partially offset by a decrease in compensation and other employee-related costs of $7.9 million related to a net decrease in headcount, and a decrease in facility and equipment costs of ~~$5.4 million and consulting fees of $2.2~~$1.0 million.

Sales, Marketing and Services Expenses

Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, June 30, June 30, 2017 June 30, 2017
2017 2016 2017 2016 vs. June 30, 2016 vs. June 30, 2016
(In thousands)
Sales, marketing and services $ 268,300
$ 245,921
$ 515,065
$ 479,848
$ 22,379
$ 35,217



	Three Months Ended				Six Months Ended				Three Months Ended		Six Months Ended
	June 30,				June 30,				June 30, 2018		June 30, 2018
	2018		2017		2018		2017		vs. June 30, 2017		vs. June 30, 2017
	(In thousands)
Sales, marketing and services	$	286,730	$	268,300	$	537,943	$	515,065	$	18,430	$	22,878

Sales, marketing and services expenses ~~consisted~~consist primarily of personnel related costs, including sales commissions, pre-sales support, the costs of marketing programs aimed at increasing revenue, such as brand development, advertising, trade shows, public relations and other market development programs and costs related to our facilities, equipment, information systems and cloud capacity and delivery costs that are directly related to our sales, marketing and services activities.

Sales, marketing and services expenses increased during the three months ended June 30, ~~2017~~2018 compared to the three months ended June 30, ~~2016~~2017 primarily due to an increase in compensation and other employee-related costs ~~including variable compensation~~ of ~~$20.5~~$9.8 million ~~resulting from a net increase~~due to our investment in ~~headcount related to go-to market investments to drive growth,~~sales capacity and demand generation, an increase in marketing programs of ~~$5.7~~$6.4 million and an increase in ~~cloud capacity costs~~stock-based compensation of ~~$3.5 million. These increases are~~$4.9 million, partially offset by a decrease in ~~certain facility and depreciation~~variable compensation of $4.9 million as a result of accounting for contract acquisition costs ~~of $7.4 million.~~

under the new revenue accounting guidance, which was adopted on January 1, 2018. Sales, marketing and services expenses increased during the six months ended June 30, ~~2017~~2018 compared to the six months ended June 30, ~~2016~~2017 primarily due to an increase in compensation and other employee-related costs ~~including variable~~of $20.6 million due to our investment in sales capacity and demand generation, an increase in stock-based compensation of ~~$30.3~~$6.9 million ~~resulting from a net increase in headcount related to go-to market investments to drive growth,~~and an increase in marketing programs of ~~$8.1~~$6.4 million, ~~and an increase in cloud capacity costs of $6.3 million. These increases are~~ partially offset by a decrease in ~~certain facility~~variable compensation of $9.0 million as a result of accounting for contract acquisition costs under the new revenue accounting guidance, which was adopted on January 1, 2018. See Notes 2 and ~~depreciation costs~~3 to our condensed consolidated financial statements for detailed information related to our adoption of ~~$12.3 million.~~the new revenue standard.

General and Administrative Expenses

Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, June 30, June 30, 2017 June 30, 2017
2017 2016 2017 2016 vs. June 30, 2016 vs. June 30, 2016
(In thousands)
General and administrative $ 81,146
$ 78,883
$ 157,655
$ 157,158
$ 2,263
$ 497



	Three Months Ended				Six Months Ended				Three Months Ended			Six Months Ended
	June 30,				June 30,				June 30, 2018			June 30, 2018
	2018		2017		2018		2017		vs. June 30, 2017			vs. June 30, 2017
	(In thousands)
General and administrative	$	77,340	$	81,146	$	141,067	$	157,655	$	(3,806	)	$	(16,588	)

General and administrative expenses ~~consisted~~consist primarily of personnel related costs and expenses related to outside consultants assisting with information systems, as well as accounting and legal fees.

General and administrative expenses ~~increased for~~decreased during the three months ended June 30, ~~2017~~2018 compared to the three months ended June 30, ~~2016~~2017 primarily due to ~~an increase~~a decrease in professional ~~services.~~

fees of $2.5 million and a decrease in facilities costs of $1.5 million. General and administrative expenses ~~remained consistent for~~decreased during the six months ended June 30, ~~2017~~2018 compared to the six months ended June 30, ~~2016.~~2017 primarily due to a decrease in professional fees of $7.7 million, a decrease in compensation and other employee-related costs of $2.9 million primarily related to a net decrease in headcount, and a decrease in facilities costs of $2.3 million.

Restructuring Expenses

Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, June 30, June 30, 2017 June 30, 2017
2017 2016 2017 2016 vs. June 30, 2016 vs. June 30, 2016
(In thousands)
Restructuring $ 2,140
$ 3,580
$ 10,126
$ 49,136
$ (1,440 ) $ (39,010 )



	Three Months Ended				Six Months Ended				Three Months Ended		Six Months Ended
	June 30,				June 30,				June 30, 2018		June 30, 2018
	2018		2017		2018		2017		vs. June 30, 2017		vs. June 30, 2017
	(In thousands)
Restructuring	$	7,437	$	2,140	$	13,624	$	10,126	$	5,297	$	3,498

During the three and six months ended June 30, ~~2017,~~2018, we incurred costs of ~~$1.8~~$1.3 million and ~~$7.5~~$2.3 million, respectively, related to our initiatives intended to accelerate the transformation to a cloud-based subscription business, increase strategic focus, and improve operational efficiency. In addition, we incurred costs of $6.2 million and $11.3 million, respectively, related to ~~operational initiatives designed to improve infrastructure scalability and cost saving efficiencies.~~the consolidation of leased facilities. The charges ~~primarily~~ related to employee ~~severance. Total charges~~severance were substantially completed as of the first quarter of 2018; however, we could continue to incur lease losses related to ~~this initiative are expected to be approximately $16.0 million. As~~the consolidation of ~~June 30, 2017, total charges incurred since inception were $7.5 million.~~

All remaining costs for the three and six months ended June 30, 2017 and 2016 relate to other restructuring plans, wherein the majority of the activities related to these previous programs are substantially complete.leased facilities during fiscal year 2018.

~~2017~~2018 Operating Expense Outlook

When comparing the third quarter of ~~2017~~2018 to the third quarter of ~~2016,~~2017, we currently expect ~~an overall increase in~~ Operating expenses to increase with ~~an expected increase in Sales,~~respect to sales, marketing and services ~~related~~expenses due to ~~go-to market investments~~our continued investment in demand generation, sales capacity in order to ~~drive~~support our growth and transition and cloud infrastructure, while remaining consistent ~~in the other functional areas.~~with respect to general and administrative and research and development expenses.

Interest Income

Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, June 30, June 30, 2017 June 30, 2017
2017 2016 2017 2016 vs. June 30, 2016 vs. June 30, 2016
(In thousands)
Interest income $ 5,560
$ 4,164
$ 11,172

$ 7,915
$ 1,396
$ 3,257



	Three Months Ended				Six Months Ended				Three Months Ended		Six Months Ended
	June 30,				June 30,				June 30, 2018		June 30, 2018
	2018		2017		2018		2017		vs. June 30, 2017		vs. June 30, 2017
	(In thousands)
Interest income	$	9,402	$	5,560	$	18,133	$	11,172	$	3,842	$	6,961

Interest income primarily consists of interest earned on our cash, cash equivalents and investment balances. Interest income increased for the three and six months ended June 30, ~~2017~~2018 compared to the three and six months ended June 30, ~~2016~~2017 mostly due to ~~overall balances and~~ higher yields on investments. See Note 6 to our condensed consolidated financial statements for ~~investment information.~~additional details regarding our investments.

Interest Expense



	Three Months Ended						Six Months Ended						Three Months Ended			Six Months Ended
	June 30,						June 30,						June 30, 2018			June 30, 2018
	2018			2017			2018			2017			vs. June 30, 2017			vs. June 30, 2017
	(In thousands)
Interest expense	$	(20,542	)	$	(12,007	)	$	(40,878	)	$	(23,560	)	$	(8,535	)	$	(17,318	)

Interest expense primarily consists of interest paid on our Convertible Notes, 2027 Notes and our credit facility. Interest expense increased for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 due to borrowings related to our 2027 Notes. See Note 11 to our condensed consolidated financial statements for additional details regarding debt.

Other (Expense) Income, Net

Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, June 30, June 30, 2017 June 30, 2017
2017 2016 2017 2016 vs. June 30, 2016 vs. June 30, 2016
(In thousands)
Other (expense) income, net $ (1,141 ) $ (272 ) $ 2,185
$ (1,275 ) $ (869 ) $ 3,460



	Three Months Ended						Six Months Ended					Three Months Ended			Six Months Ended
	June 30,						June 30,					June 30, 2018			June 30, 2018
	2018			2017			2018			2017		vs. June 30, 2017			vs. June 30, 2017
	(In thousands)
Other (expense) income, net	$	(2,537	)	$	(1,141	)	$	(5,549	)	$	2,185	$	(1,396	)	$	(7,734	)

Other (expense) income, net is primarily comprised of gains (losses) from remeasurement of foreign currency ~~transaction,~~transactions, realized losses related to changes in the fair value of our investments that have a decline in fair value considered other-than-temporary and recognized gains (losses) related to our investments, which was not material for all periods presented.

The change in Other (expense) income, net during the three months ended June 30, ~~2017~~2018 compared to the three months ended June 30, ~~2016~~2017 was ~~not significant.~~

primarily driven by impairment charges related to our strategic investments of $0.4 million, an increase in losses on our available-for-sale investments of $0.3 million and an increase in net losses on remeasurement and settlements of foreign currency transactions of $0.2 million. The change in Other (expense) income, net during the six months ended June 30, ~~2017~~2018 compared to the six months ended June 30, ~~2016 is~~2017 was primarily driven by ~~a decrease~~an increase in net losses on remeasurement and settlements of foreign currency ~~transactions.~~transactions of $4.2 million and an increase in losses on our available-for-sale investments of $1.7 million.

Income Taxes

We are required to estimate our income taxes in each of the jurisdictions in which we operate as part of the process of preparing our condensed consolidated financial statements. We maintain certain strategic management and operational activities in overseas subsidiaries and our foreign earnings are taxed at rates that are generally lower than in the United States. ~~We do~~

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (the “2017 Tax Act”) into law effective January 1, 2018. The 2017 Tax Act significantly revised the U.S. tax code by, in part but not ~~expect~~limited to: reducing the U.S. corporate maximum tax rate from 35% to ~~remit~~21%, imposing a mandatory one-time transition tax on certain un-repatriated earnings ~~from our~~of foreign ~~subsidiaries.~~

~~In March 2016,~~subsidiaries, modifying executive compensation deduction limitations, and repealing the ~~Financial~~deduction for domestic production activities. Under Accounting Standards ~~Board~~Codification 740, Income Taxes, we must recognize the effects of tax law changes in the period in which the new legislation is enacted.

The SEC staff acknowledged the challenges companies face incorporating the effects of the 2017 Tax Act by their financial reporting deadlines. In response, on December 22, 2017, the SEC staff issued ~~an accounting standard update on~~Staff Accounting Bulletin No. 118 (“SAB 118”) to address the ~~accounting~~application of ~~stock-based compensation~~U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to ~~provide guidance that changes the~~complete accounting for certain ~~aspects of share-based payments to employees. The guidance requires, among other things, the recognition of the~~ income tax effects of ~~awards~~the 2017 Tax Act. We are applying the guidance in SAB 118 when accounting for the ~~income statement when~~enactment-date effects of the ~~awards vest or are settled, thus eliminating additional paid-in capital pools. We adopted this standard in~~2017 Tax Act. At June 30, 2018, we have not completed our accounting for all of the ~~first quarter of 2017. There was no material impact upon adoption of this guidance since the recognition of income~~ tax effects of ~~awards was~~the 2017 Tax Act. However, we made what we believe to be a reasonable estimate of certain effects of the 2017 Tax Act. We consider all of these amounts to be provisional due to the complexity of the calculations and pending authoritative guidance. We will continue to evaluate the data and guidance to refine the income tax impact of the 2017 Tax Act. Pursuant to SAB 118, we will complete the accounting for the tax effects of all of the provisions of the 2017 Tax Act within the required measurement period not ~~materially different~~to extend beyond one year from the enactment date.

The 2017 Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income provides that an entity may make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years, or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. Given the complexity of the GILTI provisions, we are still evaluating the effects of the GILTI provisions and have not yet determined our accounting policy. As of June 30, 2018, because we are still evaluating the GILTI provisions and our analysis of future taxable income that is subject to GILTI, we included federal and state GILTI provisional amounts ~~previously recorded~~related to current-year operations only in our ~~financial statements.~~estimated annual effective tax rate and have not provided additional GILTI on deferred items.

Our continuing operations effective tax rate was ~~4.8%~~18.7% and ~~16.1%~~4.8% for the three months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The ~~decrease~~increase in the effective tax rate when comparing the three months ended June 30, ~~2017~~2018 to the three months ended June 30, ~~2016~~2017 was ~~in part~~primarily due to ~~a change in~~favorable tax items unique to the ~~combination of income between our U.S. and foreign operations. The decrease was also due to~~period ended June 30, 2017 including a $9.8 million ~~net~~ tax benefit ~~primarily~~for Swiss statutory purposes related to ~~an international statutory tax transaction recognized in the three months ended June 30, 2017.~~ foreign exchange losses.

Our continuing operations effective tax rate was ~~23.6%~~11.1% and ~~15.9%~~23.6% for the six months ended June 30, ~~2017~~2018 and ~~June 30, 2016,~~2017, respectively. The ~~increase~~decrease in the effective tax rate when comparing the six months ended June 30, ~~2017~~2018 to the six months ended June 30, ~~2016~~2017 was ~~primarily~~generally due to ~~certain items in~~tax charges unique to the ~~six months~~period ended ~~June 30, 2017. These amounts include a $46.1 million income tax charge to establish a valuation allowance due to a change in expectation~~March 31, 2017 because of ~~realizability of state R&D credits arising from~~ the separation of the GoTo ~~Business. This charge was partially offset by an $18.5 million benefit due to~~Business and the ~~adoption of the accounting standard update requiring recognition of income~~lower U.S. corporate tax effects related to stock-based compensation when the awards vest or settle. This charge was also partially offset by a $9.8 million net tax benefit primarily related to an international statutory tax transaction.rate effective January 1, 2018.

Our net unrecognized tax benefits totaled ~~$76.1~~$83.2 million and ~~$69.8~~$77.8 million as of June 30, ~~2017~~2018 and December 31, ~~2016~~2017, respectively. All amounts included in the balance at June 30, ~~2017~~2018 for tax positions would affect the annual effective tax rate if recognized. We have ~~$3.4~~$4.1 million accrued for the payment of interest ~~and penalties~~ as of June 30, ~~2017.~~2018.

We and one or more of our subsidiaries are subject to U.S. federal income taxes in the United States, as well as income taxes of multiple state and foreign jurisdictions. We are currently not ~~subject to a U.S. federal income tax examination.~~under examination by the United States Internal Revenue Service. With few exceptions, we are generally not under examination for state and local income tax, or non-U.S. jurisdictions by tax authorities for years prior to ~~2013.~~2014.

In the ordinary course of global business, there are transactions for which the ultimate tax outcome is uncertain; thus, judgment is required in determining the worldwide provision for income taxes. We provide for income taxes on transactions based on our estimate of the probable liability. We adjust ~~our~~the provision as appropriate for changes that impact our underlying judgments. Changes that impact provision estimates include such items as jurisdictional interpretations on tax filing positions

based on the results of tax audits and general tax authority rulings. Due to the evolving nature of tax rules combined with the large number of jurisdictions in which we operate, it is possible that our ~~estimates~~estimate of our tax liability and the realizability of our deferred tax assets could change in the future, which may result in additional tax liabilities and adversely affect our results of operations, financial condition or cash flows.

At June 30, ~~2017,~~2018, we had ~~$176.5~~$106.8 million in net deferred tax ~~assets from continuing operations.~~assets. The authoritative guidance requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. We review deferred tax assets periodically for recoverability and ~~make~~makes estimates and judgments regarding the expected geographic sources of taxable income and gains from investments, as well as tax planning strategies in assessing the need for a valuation allowance. If the estimates and assumptions used in our determination change in the future, we could be required to revise our estimates of the valuation allowances against our deferred tax assets and adjust our provisions for additional income taxes.

Our effective tax rate generally differs from the U.S. federal statutory rate ~~of 35%~~primarily due ~~primarily~~ to lower tax rates on earnings generated by our foreign operations that are taxed primarily in Switzerland. ~~We have not provided for U.S. taxes for those earnings because we plan to reinvest all of those earnings indefinitely outside the United States.~~ From time to time, there may be other items that impact our effective tax rate, such as the items specific to the current period discussed above.

Subsequent Event

On July 24th, 2018, the U.S. Ninth Circuit Court of Appeals overturned the U.S. Tax Court’s unanimous decision in Altera v. Commissioner, where the Tax Court held the Treasury regulation requiring participants in a qualified cost sharing arrangement share stock-based compensation costs to be invalid. Consequently, we are evaluating how the appellate decision applies to our facts and circumstances and we currently expect this decision to increase our effective tax rate beginning in the period ended September 30, 2018.

Liquidity and Capital Resources

During the six months ended June 30, 2018, we generated continuing operating cash flows of $528.0 million. These continuing operating cash flows related primarily to net income from continuing operations of $251.1 million, adjusted for, among other things, non-cash charges, stock-based compensation expense of $91.6 million, depreciation and amortization expenses of $86.3 million, the effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies of $6.0 million and deferred income tax expense of $5.8 million. Also contributing to these cash inflows was a change in operating assets and liabilities of $62.2 million, net of effect of our acquisitions. The change in our net operating assets and liabilities was primarily a result of an inflow in accounts receivable of $182.5 million driven by an increase in collections from higher prior period bookings. This inflow is partially offset by an outflow in income taxes, net of $72.4 million due to decreases in income taxes payable and an increase in prepaid taxes, as well as changes in deferred revenue of $41.1 million mostly due to the upfront recognition of term licenses per the new revenue standard as well as seasonality. Our continuing investing activities provided $202.4 million of cash consisting primarily of cash received from the net proceeds from the sale of investments of $302.6 million, partially offset by cash paid for acquisitions of $66.0 million and cash paid for the purchase of property and equipment of $32.9 million. Our financing activities used cash of $820.5 million primarily due to cash paid for stock repurchases of $765.0 million and cash paid for tax withholding on vested stock awards of $49.9 million.

During the six months ended June 30, 2017, we generated continuing operating cash flows of $455.8 million. These continuing operating cash flows related primarily to net income from continuing operations of $179.2 million, adjusted for, among other things, non-cash charges, depreciation and amortization expenses of $78.4 million, stock-based compensation expense of $75.5 million and deferred income tax expense of $56.6 million. Also contributing to these cash inflows was a change in operating assets and liabilities of $45.4 million, net of effect of our acquisitions. The change in our net operating assets and liabilities was primarily a result of an inflow in accounts receivable of $140.5 million driven by an increase in collections from higher prior period bookings and changes in deferred revenue of $26.1 million. These inflows are partially offset by changes in income taxes, net of $73.6 million mostly due to a decrease in income taxes payable and an increase in prepaid taxes, changes in accrued expenses and other liabilities of $20.5 million primarily due to a decrease in employee-related accruals, changes in other assets of $9.6 million due to an increase in long-term prepaid assets and changes in accounts payable of $9.3 million due to the timing of payments. Our continuing investing activities provided $48.2 million of cash consisting primarily of net proceeds from the sale of investments of $152.4 million, partially offset by cash paid for acquisitions of $60.4 million and cash paid for the purchase of property and equipment of $38.7 million. Our financing activities used cash of $561.6 million primarily due to cash paid for stock repurchases of $500.0 million, repayments on our credit facility of ~~95.0~~$95.0 million, cash paid for tax withholding on vested stock awards of $60.5 million, and the transfer of cash to the GoTo Business resulting from the separation of $28.5 million, partially offset by proceeds from the credit facility of $125.0 million.

~~During~~Senior Notes

On November 15, 2017, we issued $750.0 million of the ~~six months ended~~2027 Notes. The 2027 Notes accrue interest at a rate of 4.5% per annum. Interest on the 2027 Notes is due semi-annually on June ~~30, 2016,~~1 and December 1 of each year, beginning on June 1, 2018. The net proceeds from this offering were approximately $741.0 million, after deducting the underwriting discount and estimated offering expenses payable by us. Net proceeds from this offering were used to repurchase shares of our common stock through an ASR transaction which we ~~generated continuing operating cash flows~~entered into with the ASR Counterparty on November 13, 2017. The 2027 Notes will mature on December 1, 2027, unless earlier redeemed or repurchased in accordance with their terms prior to such date. We may redeem the 2027 Notes at our option at any time in whole or from time to time in part prior to September 1, 2027 at a redemption price equal to the greater of ~~$501.3 million. These continuing operating cash flows related primarily~~(a) 100% of the aggregate principal amount of the 2027 Notes to ~~net income from continuing operations~~be redeemed and (b) the sum of ~~$179.5 million, adjusted for, among~~the present values of the remaining scheduled payments under such 2027 Notes, plus in each case, accrued and unpaid interest to, but excluding, the redemption date. Among other ~~things, non-cash charges, depreciation and amortization expenses~~terms, under certain circumstances, holders of ~~$94.1 million and stock-based compensation expense~~the 2027 Notes may require us to repurchase their 2027 Notes upon the occurrence of ~~$74.4 million. Also contributing to these cash inflows was~~ a change ~~in operating assets~~of control prior to maturity for cash at a repurchase price equal to 101% of the principal amount of the 2027 Notes to be repurchased plus accrued and ~~liabilities of $154.1 million, net of effect of~~unpaid interest to, but excluding, the repurchase date. See Note 11 to our acquisitions. The change in our net operating assets and liabilities was primarily a result of an inflow in accounts receivable of $163.0 million driven by an increase in collections from higher prior period bookings. Our continuing investing activities used $211.2 million of cash consisting primarily of net purchases of investments of $138.2 million, cash paidcondensed consolidated financial statements for additional details on the purchase of property and equipment of $48.7 million, and cash paid for licensing agreements and technology $24.6 million. Our financing activities used cash of $31.7 million primarily due to cash paid for tax withholding on vested stock awards of $43.8 million and cash paid for stock repurchases of $28.7 million, partially offset by the issuance of common stock under our employee stock-based compensation plans of $30.6 million.

2027 Notes.

Credit Facility

On January 7, 2015, we entered into a credit agreement ~~or Credit Agreement,~~ with Bank of America, N.A., as Administrative Agent, and the other lenders party thereto from time to time collectively, the Lenders. The Credit Agreement provides for a $250.0 million unsecured revolving credit facility for a term of five years. ~~During the six months ended June 30, 2017, we drew $125.0 million, of which we repaid $95.0 million as of as of June 30, 2017.~~ We may elect to increase the revolving credit facility by up to $250.0 million if existing or new lenders provide additional revolving commitments in accordance with the terms of the Credit Agreement. The proceeds of borrowings under the Credit Agreement may be used for working capital and general corporate purposes, including acquisitions. Borrowings under the Credit Agreement will bear interest at a rate equal to either (a) a customary London interbank offered rate formula or (b) a customary base rate formula, plus the applicable margin with respect thereto, in each case as set forth in the Credit Agreement. ~~The weighted average interest rate for the period that amounts were~~As of June 30, 2018, there was no amount outstanding under the Credit ~~Facility was 1.96%. As of June 30, 2017, there was $30.0 million outstanding under the credit facility.~~Facility.

The Credit Agreement ~~requires~~contains certain financial covenants that require us to maintain a consolidated leverage ratio of not more than 3.5:1.0 and a consolidated interest coverage ratio of not less than 3.0:1.0. The Credit Agreement includes customary events of default, with corresponding grace periods in certain circumstances, including, without limitation, payment defaults, cross-defaults, the occurrence of a change of control and bankruptcy-related defaults. The Lenders are entitled to accelerate repayment of the loans under the Credit Agreement upon the occurrence of any of the events of default. In addition, the Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to grant liens, merge or consolidate, dispose of all or substantially all of our assets, change our business and incur subsidiary indebtedness, in each case subject to customary exceptions for a credit facility of this size and type. We were in compliance with these covenants as of June 30, 2018. In addition, the Credit Agreement contains customary representations and warranties. Please see Note 1211 to our condensed consolidated financial statements for additional details on our Credit Agreement.

Convertible ~~Senior~~ Notes Offering

In April 2014, we completed a private placement of $1.44 billion principal amount of 0.500% Convertible Senior Notes due 2019, or the Convertible Notes. The net proceeds from this offering were approximately $1.42 billion ~~(including the proceeds from the Over-Allotment Option),~~ after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us. We used approximately $82.6 million of the net proceeds to pay the cost of certain bond hedges entered into in connection with the offering (after such cost was partially offset by the proceeds to us from certain warrant transactions). ~~Please see~~See Note 11 to our condensed consolidated financial statements for additional details on the Convertible Notes offering and the related bond hedges and warrant transactions.

We used the remainder of the net proceeds from the offering and a portion of our existing cash and investments to purchase an aggregate of approximately $1.5 billion of our common stock under our share repurchase program. We used approximately $101.0 million to purchase shares of our common stock from certain purchasers of the Convertible Notes in privately negotiated transactions concurrently with the closing of the offering, and the remaining $1.4 billion to purchase additional shares of our common stock through an accelerated share repurchase transaction, ~~or the ASR,~~ which we entered into with Citibank, N.A., or Citibank, on April 25, ~~2014.~~2014, and which is discussed in further detail in Note 11 to our consolidated financial statements.

The last reported sale price of our common stock for at least 20 trading days during the period of 30 consecutive trading days ending on June 30, 2018 was greater than or equal to $93.48 (130% of the conversion price) on each applicable trading day. As a result, each holder of our Convertible Notes has the ~~structure~~right to convert any portion of its Convertible Notes (in minimum denominations of $1,000 in principal amount or an integral multiple thereof) during the ~~Reverse Morris Trust (RMT) transaction with LogMeIn, Inc., and the notification on October 10, 2016 to noteholders in accordance with the Indenture,~~calendar quarter ending September 30, 2018. The period during which the Convertible Notes ~~became convertible~~will be eligible for conversion pursuant to this sales price condition will terminate on September 30, 2018 unless the sales price condition is met for the calendar quarter then ended. On or after October 15, 2018 until ~~the earlier of (1)~~ the close of business on the ~~business~~second scheduled trading day immediately preceding the ~~ex-dividend~~maturity date, ~~for the distribution~~holders of ~~the outstanding shares of GetGo common stock to our stockholders by way of a pro rata dividend, and (2) our announcement that such distribution will not take place, even though~~ the Convertible Notes ~~were not otherwise convertible~~may convert their notes at ~~December 31, 2016.~~

~~The conversion period for~~any time, regardless of whether the Convertible Notes that commenced on October 10, 2016 in connection with the distribution terminated as of the close of business on January 31, 2017. As a result, the Convertible Notes were reclassified to Other liabilities from Current liabilities and the amount previously recorded as Temporary equity was reclassified to Stockholders' equity as of June 30, 2017. The distribution also resulted in an adjustment to the conversion rate for the Convertible Notes under the terms of the Indenture. As a result of this adjustment, the conversion rate for the Convertible Notes was re-set as of the opening of business on February 1, 2017 to 13.9061 shares of our common stock per $1,000 principal amount of Convertible Notes, which corresponds to a conversionsales price ~~of $71.91 per share of common stock. Similar adjustments were made to the conversion rates for the convertible note hedge and warrant transactions as of the opening of business on February 1, 2017.~~condition is met.

Historically, significant portions of our cash inflows were generated by our operations. We currently expect this trend to continue throughout ~~2017.~~2018. We believe that our existing cash and investments together with cash flows expected from continuing operations will be sufficient to meet expected operating and capital expenditure requirements and service our short term debt obligations for the next 12

months. We continue to search for suitable acquisition candidates and could acquire or make investments in companies we believe are related to our strategic objectives. We could from time to time continue to seek to raise additional funds through the issuance of debt or equity securities for larger acquisitions, potential redemption of our Convertible Notes and for general corporate purposes.

Cash, Cash Equivalents and Investments

June 30, 2017 December 31, 2016 2017 Compared to 2016
(In thousands)
Cash, cash equivalents and investments $ 2,401,247
$ 2,543,160
$ (141,913 )



	June 30, 2018		December 31, 2017		2018 Compared to 2017
	(In thousands)
Cash, cash equivalents and investments	$	2,334,519	$	2,731,974	$	(397,455	)

The decrease in Cash, cash equivalents and investments when comparing June 30, ~~2017~~2018 to December 31, ~~2016,~~2017, is primarily due to cash paid for stock repurchases of ~~$500.0~~$765.0 million, ~~repayments on our credit facility~~cash paid for acquisitions of ~~$95.0~~$66.0 million and property and equipment of $32.9 million and cash paid for tax withholding on vested stock awards of ~~$60.5 million and cash paid for acquisitions of $60.4~~$49.9 million, partially offset by cash provided by our continuing operating activities of ~~$455.8 million and proceeds from our credit facility of $125.0~~$528.0 million.

As of June 30, ~~2017~~2018, ~~$2.32 billion~~$524.4 million of the ~~$2.40~~$2.33 billion of Cash, cash equivalents and investments was held by our foreign subsidiaries. IfAs a result of the 2017 Tax Act, the cash, cash equivalents and investments held by our foreign subsidiaries can be repatriated without incurring any additional U.S. federal tax. Upon repatriation of these funds, we could be subject to foreign and U.S. state income taxes. The amount of taxes due is dependent on the amount and manner of the repatriation, as well as the locations from which the funds are ~~needed for our operations in the United States, we would be required to accrue~~repatriated and pay U.S. taxes to repatriate these funds. Our current plans are not expected to require repatriation of cash and investments to fund our U.S. operations and, as a result, we intend to permanently reinvest our foreign earnings.received. We generally invest our cash and cash equivalents in investment grade, highly liquid securities to allow for flexibility in the event of immediate cash needs. Our short-term and long-term investments primarily consist of interest-bearing securities.

~~Fair Value Measurements~~

~~Level 1.~~ ~~Observable inputs such as quoted prices in active markets for identical assets or liabilities;~~

~~Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and~~

~~Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.~~

Available-for-sale securities included in Level 2 are valued utilizing inputs obtained from an independent pricing service, or the Service, which uses quoted market prices for identical or comparable instruments rather than direct observations of quoted prices in active markets. The Service applies a four level hierarchical pricing methodology to all of our fixed income securities based on the circumstances. The hierarchy starts with the highest priority pricing source, then subsequently uses inputs obtained from other third-party sources and large custodial institutions. The Service’s providers utilize a variety of inputs to determine their quoted prices. These inputs may include interest rates, known historical trades, yield curve information, benchmark data, prepayment speeds, credit quality and broker/dealer quotes. Substantially all of our available-for-sale investments are valued utilizing inputs obtained from the Service and accordingly are categorized as Level 2. We periodically independently assess the pricing obtained from the Service and historically have not adjusted the Service's pricing as a result of this assessment. Available-for-sale securities are included in Level 3 when relevant observable inputs for a security are not available.

Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of assets and liabilities within the fair value hierarchy. In certain instances, the inputs used to measure fair value may meet the definition of more than one level of the fair value hierarchy. The input with the lowest level priority is used to determine the applicable level in the fair value hierarchy.

~~Assets and Liabilities Measured at Fair Value on a Recurring Basis~~

Our fixed income available-for-sale security portfolio generally consists of investment grade securities from diverse issuers with a minimum credit rating of A-/A3 and a weighted average credit rating of AA-/Aa3. We value these securities based on pricing from the Service, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value, and accordingly, we classify all of our fixed income available-for-sale securities as Level 2.

We measure our cash flow hedges, which are classified as Prepaid expenses and other current assets and Accrued expenses and other current liabilities, at fair value based on indicative prices in active markets (Level 2 inputs).

~~Assets Measured at Fair Value on a Non-recurring Basis Using Significant Unobservable Inputs (Level 3)~~

No cost method investments were determined to be impaired during the three months ended June 30, 2017 and 2016. During the six months ended June 30, 2017, certain cost method investments with a combined carrying value of $2.6 million, were determined to be impaired and written down to their estimated fair values of $1.2 million. Accordingly, we recorded $1.4 million of impairment charges during the six months ended June 30, 2017, which are included in Other (expense) income, net in the accompanying condensed consolidated statements of income. For the six months ended June 30, 2016, we determined that certain cost method investments were impaired and recorded a charge of $0.3 million, which was included in Other (expense) income, net in the accompanying condensed consolidated statements of income. In determining the fair value of cost method investments, we consider many factors including but not limited to operating performance of the investee, the amount of cash that the investee has on-hand, the ability to obtain additional financing and the overall market conditions in which the investee operates. The fair value of the cost method investments represent a Level 3 valuation as the assumptions used in valuing these investments were not directly or indirectly observable.

For certain intangible assets where the unamortized balances exceeded the undiscounted future net cash flows, we measure the amount of the impairment by calculating the amount by which the carrying values exceed the estimated fair values, which are based on projected discounted future net cash flows. These non-recurring fair value measurements are categorized as Level 3 significant unobservable inputs. See Note 9 to our condensed consolidated financial statements for detailed information related to Goodwill and Other Intangible Assets.

~~Accounts Receivable, Net~~

June 30, 2017 December 31, 2016 2017 Compared to 2016
(In thousands)
Accounts receivable $ 545,363
$ 687,089
$ (141,726 )
Allowance for returns (880 ) (1,994 ) 1,114
Allowance for doubtful accounts (3,168 ) (3,889 ) 721
Accounts receivable, net $ 541,315
$ 681,206
$ (139,891 )

The decrease in Accounts receivable, net, when comparing June 30, 2017 to December 31, 2016 was primarily due to an increase in collections from prior period bookings. The activity in our Allowance for returns was comprised primarily of $4.2 million in credits issued for returns during the six months ended June 30, 2017, partially offset by $3.1 million of provisions for returns recorded during the six months ended June 30, 2017. The activity in our Allowance for doubtful accounts was comprised primarily of $2.4 million of uncollectible accounts written off, net of recoveries during the six months ended June 30, 2017, partially offset by $1.7 million in provisions for doubtful accounts. From time to time, we could maintain individually significant accounts receivable balances from our distributors or customers, which are comprised of large business enterprises, governments and small and medium-sized businesses. If the financial condition of our distributors or customers deteriorates, our operating results could be adversely affected.

Stock Repurchase Programs

Our Board of Directors authorized an ongoing stock repurchase program with a total repurchase authority granted to us of ~~$6.8 billion, of which $500.0 million was approved in January 2017.~~$8.5 billion. We may use the approved dollar authority to repurchase stock at any time until the approved amount is exhausted. The objective of ~~our~~the stock repurchase program is to improve stockholders’ returns. At June 30, ~~2017, $404.0~~2018, $514.1 million was available to repurchase common stock pursuant to the stock repurchase program. All shares repurchased are recorded as treasury stock. A portion of the funds used to repurchase stock over the course of the program was provided by net proceeds from the Convertible Notes and 2027 Notes offerings, as well as proceeds from employee stock ~~option exercises~~awards and the related tax benefit.

We are authorized to make ~~open market~~ purchases of our common stock using general corporate funds through open market purchases, or pursuant to a Rule 10b5-1 plan or in privately negotiated transactions.

In November 2017, we purchased $750.0 million shares of our common stock through our ASR agreement with the ASR Counterparty. We paid $750.0 million to the ASR Counterparty under the ASR agreement and received approximately 7.1 million shares of our common stock from the ASR Counterparty, which represented 80 percent of the value of the shares to be repurchased pursuant to the ASR Agreement. The total number of shares of common stock that we repurchased under the ASR Agreement was based on the average of the daily volume-weighted average prices of our common stock during the term of the ASR Agreement, less a discount. Final settlement of the ASR agreement was completed in January 2018 and we received delivery of an additional 1.4 million shares of our common stock.

In February 2018, we entered into an ASR transaction with Goldman Sachs & Co. LLC to pay an aggregate of $750.0 million in exchange for the delivery of approximately 6.5 million shares of our common stock based on current market prices. The purchase price per share under the ASR was based on the volume-weighted average price of our common stock during the term of the ASR, less a discount. The ASR was entered into pursuant to our existing share repurchase program. Final settlement of the ASR agreement was completed in April 2018 and we received delivery of an additional 1.6 million shares of our common stock.

During the three and six months ended June 30, 2018, we expended $15.0 million on open market purchases under the stock repurchase program, repurchasing 0.1 million shares of common stock at an average price of $106.83.

During the three months ended June 30, 2017, we had no open market purchases. During the six months ended June 30, 2017, we expended approximately $500.0 million on open market purchases under the stock repurchase program, repurchasing ~~6,399,499~~6.4 million shares of ~~outstanding~~ common stock at an average price of $78.13.

During the three months ended June 30, 2016, we had no open market purchases. During the six months ended June 30, 2016, we expended $28.7 million on open market purchases under the stock repurchase program, repurchasing 426,300 shares of outstanding common stock at an average price of $67.30.

Shares for Tax Withholding

During the three and six months ended June 30, ~~2017,~~2018, we withheld ~~43,446~~30,502 shares and 537,776 shares, respectively, from equity awards that vested, totaling ~~$3.6~~$3.0 million and $49.9 million, respectively, to satisfy minimum tax withholding obligations that arose on the vesting of such equity awards. During the three and six months ended June 30, 2017, we withheld 43,446 shares and 734,600 shares, from stock units that vested, totaling $60.5 million, to satisfy minimum tax withholding obligations that arose on the vesting of stock units. During the three months ended June 30, 2016, we withheld 134,771 sharesrespectively, from equity awards that vested, totaling ~~$11.0~~$3.6 million and $60.5 million, respectively, to satisfy minimum tax withholding obligations that arose on the vesting of such equity awards. During the six months ended June 30, 2016, we withheld 563,609 shares from stock units that vested, totaling $43.9 million, to satisfy minimum tax withholding obligations that arose on the vesting of stock units. These shares are reflected as treasury stock in our condensed consolidated balance sheets and the related cash outlays do not reduce our total stock repurchase authority.

Off-Balance Sheet Arrangements

We do not have any special purpose entities or off-balance sheet financing arrangements.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes during the quarter ended June 30, ~~2017~~2018 with respect to the information appearing in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of June 30, ~~2017,~~2018, our management, with the participation of our principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our principal executive officer and our principal financial officer concluded that, as of June 30, ~~2017~~2018, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us 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 Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated by and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the ~~quarter~~three months ended June 30, ~~2017,~~2018, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

Due to the nature of our business, we are subject to patent infringement claims alleging infringement by various Citrix products and services. We believe that we have meritorious defenses to the allegations made in our pending cases and intend to vigorously defend these lawsuits; however, we are unable currently to determine the ultimate outcome of these or similar matters or the potential exposure to loss, if any. In addition, we are a defendant in various litigation matters generally arising out of the normal course of business. Although it is difficult to predict the ultimate outcomes of these cases, we believe that it is not reasonably possible that the ultimate outcomes will materially and adversely affect our business, financial position, results of operations or cash flows.


ITEM 1A.	RISK FACTORS

There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A, ~~“Risk Factors”~~"Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2017, which was filed with the Securities and Exchange Commission on February 16, ~~2017.~~2018.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

Our Board of Directors has authorized an ongoing stock repurchase program with a total repurchase authority granted to us of ~~$6.8 billion, of which $500.0 million was approved in January 2017.~~$8.5 billion. The objective of the stock repurchase program is to improve stockholders’ returns. As of June 30, ~~2017~~2018, ~~$404.0~~$514.1 million was available to repurchase common stock pursuant to the stock repurchase program. All shares repurchased are recorded as treasury stock. The following table shows the monthly activity related to our stock repurchase program for the quarter ended June 30, ~~2017~~2018:

Total Number
of Shares
(or Units)
Purchased
(1)

Average Price
Paid per Share
(or Unit)

Total Number of Shares
(or Units) Purchased as
Part of Publicly
Announced Plans or
Programs

Maximum Number (or Approximate Dollar Value)
of Shares (or Units) that
May Yet Be Purchased
Under the Plans or
Programs (In thousands) (2)
April 1, 2017 through April 30, 2017 18,560
$ 84.77
—
$ 404,006
May 1, 2017 through May 31, 2017 6,897
82.16
—
404,006
June 1, 2017 through June 30, 2017 17,989
80.98
—
404,006
Total 43,446
—
404,006



	Total Number of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit)			Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (In thousands) (3)
April 1, 2018 through April 30, 2018	1,658,125	$	91.33	⁽²⁾	1,642,603	$	529,049
May 1, 2018 through May 31, 2018	146,038	106.76			140,200	514,071
June 1, 2018 through June 30, 2018	9,142	105.73			—	514,071
Total	1,813,305				1,782,803	514,071

(1)

Represents ~~43,446~~approximately 1.6 million shares from the ASR agreement described below and 30,502 shares withheld from restricted stock units ~~and stock awards~~ that vested in the second quarter of ~~2017~~2018 to satisfy minimum tax withholding obligations that arose on the vesting of ~~such~~ restricted stock ~~units and stock awards. We had no open market purchases during the quarter ended June 30, 2017. For more information see Note 16 to our condensed consolidated financial statements.~~

units.

(2)

In February 2018, we paid $750.0 million to the ASR Counterparty under the ASR agreement and received approximately 6.5 million shares of our common stock from the ASR Counterparty, which represented 80 percent of the value of the shares to be repurchased pursuant to the ASR Agreement. The total number of shares of common stock that we repurchased under the ASR Agreement was based on the average of the daily volume-weighted average prices of our common stock during the term of the ASR Agreement, less a discount. Final settlement of the ASR agreement was completed in April 2018 and we received delivery of an additional 1.6 million shares of our common stock. In total, 8.2 million shares were repurchased under this ASR at an average repurchase price of $92.01.


(3)	Shares withheld from restricted stock units ~~and stock awards~~ that vested to satisfy minimum tax withholding obligations that arose on the vesting of awards do not deplete the dollar amount available for purchases under the repurchase program.


ITEM 5.	OTHER INFORMATION

Not applicable.


ITEM 6.	EXHIBITS


(a)	List of exhibits



Exhibit No.		Description

~~2.1†~~31.1†		Amendment No. 2, dated as of May 4, 2017 and effective as of May 1, 2017, to Agreement and Plan of Merger, dated as of July 26, 2016, by and between Citrix Systems, Inc., GetGo, Inc., and LogMeIn, Inc.

10.1*		~~Citrix Systems, Inc. Amended and Restated 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 27, 2017)~~

~~31.1~~		Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer

~~31.2~~31.2†		Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer

32.1††		Section 1350 Certification of Principal Executive Officer and Principal Financial Officer

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document



*	~~Indicates a management contract or a compensatory plan, contract or arrangements.~~
†	Filed herewith.
††	Furnished herewith.

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 on this ~~4th~~3rd day of August, ~~2017.~~2018.




	CITRIX SYSTEMS, INC.

	By:	/s/ ~~MARK M. COYLE~~ANDREW DEL MATTO
		~~Mark M. Coyle~~Andrew Del Matto
		~~Interim~~Executive Vice President and Chief Financial Officer
		(Authorized Officer and Principal Financial Officer)

~~EXHIBIT INDEX~~



~~Exhibit No.~~		~~Description~~

~~2.1†~~		Amendment No. 2, dated as of May 4, 2017 and effective as of May 1, 2017, to Agreement and Plan of Merger, dated as of July 26, 2016, by and between Citrix Systems, Inc., GetGo, Inc., and LogMeIn, Inc.

10.1*		~~Citrix Systems, Inc. Amended and Restated 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 27, 2017)~~

~~31.1~~		~~Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer~~

~~31.2~~		~~Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer~~

~~32.1††~~		~~Section 1350 Certification of Principal Executive Officer and Principal Financial Officer~~

~~101.INS~~		~~XBRL Instance Document~~

~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~



*	~~Indicates a management contract or a compensatory plan, contract or arrangements.~~
†	~~Filed herewith.~~
††	~~Furnished herewith.~~



Delaware		75-2275152
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

851 West Cypress Creek Road Fort Lauderdale, Florida		33309
(Address of principal executive offices)		(Zip Code)



x Large accelerated filer		o Accelerated filer
o Non-accelerated filer		o Smaller reporting company
		o Emerging growth company




		Page Number
PART I:	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets: June 30, ~~2017~~2018 (Unaudited) and December 31, ~~2016 (Unaudited)~~2017 (Derived from audited financial statements)	3

	Condensed Consolidated Statements of Income: Three and Six Months ended June 30, ~~2017~~2018 and ~~2016~~2017 (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income: Three and Six Months ended June 30, ~~2017~~2018 and ~~2016~~2017 (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows: Six Months ended June 30, ~~2017~~2018 and ~~2016~~2017 (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3436

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4950

Item 4.	Controls and Procedures	4950

PART II:	OTHER INFORMATION

Item 1.	Legal Proceedings	5051

Item 1A.	Risk Factors	5051

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5152

Item 5.	Other Information	53

Item 6.	Exhibits	5254

Signature		5355


							June 30, 2018			December 31, 2017
	June 30, 2017			December 31, 2016			(Unaudited)			(Derived from audited financial statements)
	(In thousands, except par value)						(In thousands, except par value)
Assets
Current assets:
Cash and cash equivalents	$	844,771		$	836,095		$	1,021,708		$	1,115,130
Short-term investments, available-for-sale	511,092			726,923			487,367			632,516
Accounts receivable, net of allowances of $4,048 and $5,883 at June 30, 2017 and December 31, 2016, respectively	541,315			681,206
Accounts receivable, net of allowances of $3,737 and $4,645 at June 30, 2018 and December 31, 2017, respectively							528,386			712,535
Inventories, net	13,229			12,522			20,282			13,912
Prepaid expenses and other current assets	176,080			124,842			208,648			147,330
Current assets of discontinued operations	—			179,689
Total current assets	2,086,487			2,561,277			2,266,391			2,621,423
Long-term investments, available-for-sale	1,045,384			980,142			825,444			984,328
Property and equipment, net	252,925			261,954			246,025			252,932
Goodwill	1,617,105			1,585,893			1,662,438			1,614,494
Other intangible assets, net	187,550			173,681			141,989			141,952
Deferred tax assets, net	177,375			233,900			119,760			152,362
Other assets	64,083			54,449			104,015			52,685
Long-term assets of discontinued operations	—			538,931
Total assets	$	5,430,909		$	6,390,227		$	5,366,062		$	5,820,176
Liabilities, Temporary Equity and Stockholders' Equity
Current liabilities:
Accounts payable	$	65,265		$	72,724		$	86,533		$	66,893
Accrued expenses and other current liabilities	240,808			256,799			277,275			277,679
Income taxes payable	4,724			39,771			1,261			34,033
Current portion of convertible notes							1,406,157			—
Current portion of deferred revenues	1,205,692			1,208,229			1,243,032			1,308,474
Short-term debt	30,000			—
Convertible notes, short-term	—			1,348,156
Current liabilities of discontinued operations	—			172,670
Total current liabilities	1,546,489			3,098,349			3,014,258			1,687,079
Long-term portion of deferred revenues	510,209			476,135			480,942			555,769
Convertible notes, long-term	1,367,092			—
Long-term debt							741,277			2,127,474
Long-term income taxes payable							321,651			335,457
Other liabilities	125,418			119,813			143,677			121,936
Long-term liabilities of discontinued operations	—			7,708
Commitments and contingencies
Temporary equity from Convertible notes	—			79,495
Temporary equity from convertible notes							28,081			—
Stockholders' equity:
Preferred stock at $.01 par value: 5,000 shares authorized, none issued and outstanding	—			—			—			—
Common stock at $.001 par value: 1,000,000 shares authorized; 304,891 and 302,851 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	305			303
Common stock at $.001 par value: 1,000,000 shares authorized; 307,662 and 305,751 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively							308			306
Additional paid-in capital	4,922,187			4,761,588			5,116,339			4,883,670
Retained earnings	3,663,732			4,010,737			3,893,354			3,509,484
Accumulated other comprehensive loss	(8,779		)	(28,704		)	(18,718		)	(10,806		)
	8,577,445			8,743,924			8,991,283			8,382,654
Less - common stock in treasury, at cost (153,687 and 146,552 shares at June 30, 2017 and December 31, 2016, respectively)	(6,695,744		)	(6,135,197		)
Less - common stock in treasury, at cost (172,244 and 162,044 shares at June 30, 2018 and December 31, 2017, respectively)							(8,355,107		)	(7,390,193		)
Total stockholders' equity	1,881,701			2,608,727			636,176			992,461
Total liabilities, temporary equity and stockholders' equity	$	5,430,909		$	6,390,227		$	5,366,062		$	5,820,176


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
	(In thousands, except per share information)												(In thousands, except per share information)
Revenues:
Product and licenses	$	211,009		$	219,507		$	402,606		$	421,540
Software as a service	41,513			32,764			80,243			63,879
License updates and maintenance	409,028			386,864			811,783			779,882
Professional services	31,677			34,852			61,272			67,459
Subscription													$	110,796		$	74,596		$	213,954		$	143,686
Product and license													192,058			190,376			352,755			361,275
Support and services													439,511			428,255			872,848			850,943
Total net revenues	693,227			673,987			1,355,904			1,332,760			742,365			693,227			1,439,557			1,355,904
Cost of net revenues:
Cost of subscription, support and services													67,523			64,167			130,908			123,826
Cost of product and license revenues	32,735			33,623			62,446			65,018			29,707			32,735			63,579			62,446
Cost of services and maintenance revenues	64,167			59,178			123,826			113,537
Amortization of product related intangible assets	12,410			14,390			25,498			28,447			11,519			12,410			22,548			25,498
Total cost of net revenues	109,312			107,191			211,770			207,002			108,749			109,312			217,035			211,770
Gross margin	583,915			566,796			1,144,134			1,125,758			633,616			583,915			1,222,522			1,144,134
Operating expenses:
Research and development	106,696			100,651			209,365			202,883			112,943			106,696			211,493			209,365
Sales, marketing and services	268,300			245,921			515,065			479,848			286,730			268,300			537,943			515,065
General and administrative	81,146			78,883			157,655			157,158			77,340			81,146			141,067			157,655
Amortization of other intangible assets	3,692			3,822			7,338			7,542			4,019			3,692			7,685			7,338
Restructuring	2,140			3,580			10,126			49,136			7,437			2,140			13,624			10,126
Total operating expenses	461,974			432,857			899,549			896,567			488,469			461,974			911,812			899,549
Income from operations	121,941			133,939			244,585			229,191			145,147			121,941			310,710			244,585
Interest income	5,560			4,164			11,172			7,915			9,402			5,560			18,133			11,172
Interest expense	(12,007		)	(11,196		)	(23,560		)	(22,351		)	(20,542		)	(12,007		)	(40,878		)	(23,560		)
Other (expense) income, net	(1,141		)	(272		)	2,185			(1,275		)	(2,537		)	(1,141		)	(5,549		)	2,185
Income from continuing operations before income taxes	114,353			126,635			234,382			213,480			131,470			114,353			282,416			234,382
Income tax expense	5,524			20,346			55,228			33,937			24,637			5,524			31,324			55,228
Income from continuing operations	108,829			106,289			179,154			179,543			106,833			108,829			251,092			179,154
Income (loss) from discontinued operations, net of income taxes	—			14,609			$	(42,704	)	$	24,818
(Loss) from discontinued operations, net of income taxes													—			—			—			(42,704		)
Net income	$	108,829		$	120,898		$	136,450		$	204,361		$	106,833		$	108,829		$	251,092		$	136,450
Basic earnings (loss) per share:
Income from continuing operations	$	0.72		$	0.69		$	1.18		$	1.16		$	0.79		$	0.72		$	1.82		$	1.18
Income (loss) from discontinued operations	—			0.09			(0.28		)	0.16
(Loss) from discontinued operations													—			—			—			(0.28		)
Basic net earnings per share	$	0.72		$	0.78		$	0.90		$	1.32		$	0.79		$	0.72		$	1.82		$	0.90

Diluted earnings (loss) per share:
Income from continuing operations	$	0.70		$	0.68		$	1.14		$	1.15		$	0.73		$	0.70		$	1.72		$	1.14
Income (loss) from discontinued operations	—			0.09			(0.27		)	0.16
(Loss) from discontinued operations													—			—			—			(0.27		)
Diluted net earnings per share:	$	0.70		$	0.77		$	0.87		$	1.31		$	0.73		$	0.70		$	1.72		$	0.87

Weighted average shares outstanding:
Basic	151,212			154,998			152,247			154,485			135,993			151,212			137,614			152,247
Diluted	156,036			156,666			157,239			156,258			145,447			156,036			145,709			157,239



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



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



	Three Months Ended June 30, 2018
	As Reported		Balances without adoption of ASC 606		Effect of Change Higher/(Lower)
	(in thousands, except per share amounts)
Total net revenues	$	742,365	$	741,920	$	445
Total cost of net revenues	108,749		107,807		942
Gross profit	633,616		634,113		(497		)
Total operating expenses	488,469		499,047		(10,578		)
Income from operations	145,147		135,066		10,081
Net income	$	106,833	$	99,295	$	7,538

Basic earnings per share	$	0.79	$	0.73	$	0.06
Diluted earnings per share	$	0.73	$	0.68	$	0.05



	Six Months Ended June 30, 2018
	As Reported		Balances without adoption of ASC 606		Effect of Change Higher/(Lower)
	(in thousands, except per share amounts)
Total net revenues	$	1,439,557	$	1,449,244	$	(9,687	)
Total cost of net revenues	217,035		215,933		1,102
Gross profit	1,222,522		1,233,311		(10,789		)
Total operating expenses	911,812		925,731		(13,919		)
Income from operations	310,710		307,580		3,130
Net income	$	251,092	$	250,197	$	895

Basic earnings per share	$	1.82	$	1.82	$	—
Diluted earnings per share	$	1.72	$	1.72	$	—



Three Months Ended June 30, 2017
As Previously Reported			Amount Reclassified			As Reported Herein
Revenues:						Revenues:
Software as a service	$	41,513	$	33,083		Subscription	$	74,596
Product and licenses ⁽¹⁾	211,009		(20,633		)	Product and license	190,376
License updates and maintenance ⁽²⁾	409,028		19,227			Support and services ⁽³⁾	428,255
Professional services	31,677		(31,677		)
Total net revenues	$	693,227	$	—		Total net revenues	$	693,227



Six Months Ended June 30, 2017
As Previously Reported			Amount Reclassified			As Reported Herein
Revenues:						Revenues:
Software as a service	$	80,243	$	63,443		Subscription	$	143,686
Product and licenses ⁽¹⁾	402,606		(41,331		)	Product and license	361,275
License updates and maintenance ⁽²⁾	811,783		39,160			Support and services ⁽³⁾	850,943
Professional services	61,272		(61,272		)
Total net revenues	$	1,355,904	$	—		Total net revenues	$	1,355,904


(1)	Product and licenses as previously reported included revenue from CSPs and on-premise subscriptions that are now included in Subscription. Current period presentation only includes revenues from perpetual offerings and hardware.


(2)	License updates and maintenance as previously reported included revenue from CSPs and on-premise license updates and maintenance that are now included in Subscription.


(3)	Support and services includes revenues from license updates and maintenance from perpetual offerings as well as professional services.



Performance Obligation	When Performance Obligation is Typically Satisfied
Subscription
Cloud hosted offerings	Over the contract term, beginning on the date that service is made available to the customer (over time)
CSP	As the usage occurs (over time)
On-premise subscription software licenses	When software activation keys have been made available for download (point in time)
Product and license
Software Licenses	When software activation keys have been made available for download (point in time)
Hardware	When control of the product passes to the customer; typically upon shipment (point in time)
Support and services
License updates and maintenance	Ratably over the course of the service term (over time)
Professional services	As the services are provided (over time)



	Form 10-Q



	<1-3 years		3-5 years		5 years or more		Total
Subscriptions	$	275,424	$	26,255	$	530	$	302,209
Support and services	1,577,126		57,889		3,439		1,638,454
Total net revenues	$	1,852,550	$	84,144	$	3,969	$	1,940,663


	Unidesk		Asset Life	Cedexis		Asset Life
Customer relationships				$	2,000	1 year
Developed technology	$	35,230	4 years	23,100		6 years
Customer contracts	4,240		4 years
In process research and development				700		Indefinite
Tradenames				1,400		1 year
Total	$	39,470		$	27,200


	June 30, 2017									December 31, 2016									June 30, 2018									December 31, 2017
Description of the Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Agency securities	$	479,435	$	625	$	(1,293	)	$	478,767	$	411,963	$	699	$	(1,169	)	$	411,493	$	371,079	$	431	$	(3,494	)	$	368,016	$	441,315	$	509	$	(2,760	)	$	439,064
Corporate securities	805,137		509		(1,164		)	804,482		842,887		193		(2,114		)	840,966		667,265		188		(5,283		)	662,170		810,444		268		(3,020		)	807,692
Municipal securities	3,965		12		—			3,977		9,989		3		(4		)	9,988		2,500		8		—			2,508		3,965		2		(2		)	3,965
Government securities	269,920		73		(743		)	269,250		445,083		135		(600		)	444,618		281,495		9		(1,387		)	280,117		367,595		44		(1,516		)	366,123
Total	$	1,558,457	$	1,219	$	(3,200	)	$	1,556,476	$	1,709,922	$	1,030	$	(3,887	)	$	1,707,065	$	1,322,339	$	636	$	(10,164	)	$	1,312,811	$	1,623,319	$	823	$	(7,298	)	$	1,616,844


	Unidesk			Cedexis
	Purchase Price Allocation		Asset Life	Purchase Price Allocation		Asset Life
Current assets	$	5,321		$	8,961
Property and equipment	131
Intangible assets	39,470		4 years	27,200		1-6 years
Goodwill	31,212		Indefinite	47,944		Indefinite
Other assets	90			69
Assets acquired	76,224			84,174
Other current liabilities assumed	2,290			5,711
Current portion of deferred revenues	3,042
Long term portion of deferred revenues	2,412
Long-term liabilities assumed	4,086
Assumed debt				5,674
Deferred taxes	1,247			768
Net assets acquired	$	63,147		$	72,021



	Fair Value		Carrying Value
Convertible Senior Notes	$	1,738,506	$	1,367,092



	Fair Value		Carrying Value
2027 Notes	$	727,778	$	741,277
Convertible Notes	$	2,059,942	$	1,406,157



	March 2017 Grant		March 2016 Grant		January 2016 Grant
Expected volatility factor	0.27-0.32		0.29 - 0.39		0.29 - 0.37
Risk free interest rate	1.48	%	0.91	%	1.10	%
Expected dividend yield	0	%	0	%	0	%



	Balance at January 1, 2017		Additions			Other		Balance at June 30, 2017
Goodwill	$	1,585,893	$	31,212	(1)	$	—	$	1,617,105



	Balance at January 1, 2018		Additions			Other		Balance at June 30, 2018
Goodwill	$	1,614,494	$	47,944	(1)	$	—	$	1,662,438


(1)	Amount relates to preliminary purchase price allocation of goodwill associated with the ~~2017~~2018 Business Combination. See Note 5 for more information regarding the Company's acquisitions.


Year ending December 31,	Amount		Amount
2017 (remaining six months)	$	31,886
2018	59,636
2018 (remaining six months)			$	31,022
2019	39,010		39,719
2020	24,851		27,220
2021	8,890		13,232
2022			11,381
Thereafter	23,277		19,415
Total	$	187,550	$	141,989


(1)	Workspace Services revenues are primarily comprised of sales from the Company’s application virtualization products, which include XenDesktop and XenApp, ~~and~~ the Company's enterprise mobility management products, which include XenMobile and related license updates, ~~and~~ maintenance and ~~support.~~subscription offerings.


(2)	Networking revenues primarily include NetScaler ADC and NetScaler SD-WAN and related license updates, ~~and~~ maintenance and ~~support.~~subscription offerings.


(3)	~~Data~~Content Collaboration revenues primarily include ShareFile, Podio and ~~Citrix Cloud.~~related subscriptions.


(4)	Professional services revenues are primarily comprised of revenues from consulting services and product training and certification services.


(5)	Prior period amounts have not been adjusted under the modified retrospective method. See Note 2 for further information regarding the Company’s adoption of the revenue recognition standard.


(1)	As noted above, prior period amounts have not been adjusted under the modified retrospective method. See Note 2 for further information regarding the Company’s adoption of the revenue recognition standard.


	For the Three Months Ended June 30, 2017												For the Three Months Ended June 30,
	(In thousands)												(In thousands)
Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Effective Portion)					Location of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss (Effective Portion)						Amount of (Loss) Gain Recognized in Other Comprehensive Income (Effective Portion)					Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss (Effective Portion)
	2017		2016				2017			2016			2018			2017			2018		2017
Foreign currency forward contracts	$	1,890	$	(2,360	)	Operating expenses	$	(6	)	$	142		$	(4,419	)	$	1,890	Operating expenses	$	997	$	(6	)

	For the Six Months Ended June 30, 2017
	(In thousands)
Derivatives in Cash Flow Hedging Relationships	Amount of Gain Recognized in Other Comprehensive Income (Effective Portion)					Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss (Effective Portion)
	2017		2016				2017			2016
Foreign currency forward contracts	$	5,554	$	1,027		Operating expenses	$	(1,678	)	$	(1,023	)



	For the Six Months Ended June 30,
	(In thousands)
Derivatives in Cash Flow Hedging Relationships	Amount of (Loss) Gain Recognized in Other Comprehensive Income (Effective Portion)					Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss (Effective Portion)
	2018			2017			2018		2017
Foreign currency forward contracts	$	(4,946	)	$	5,554	Operating expenses	$	2,216	$	(1,678	)



	For the Six Months Ended June 30,
	(In thousands)
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative
		2018		2017
Foreign currency forward contracts	Other (expense) income, net	$	3,602	$	(5,150	)



Foreign Currency	Currency Denomination
Australian Dollar	AUD ~~5,600~~14,500
Brazilian Real	BRL ~~11,200~~10,300
Pounds Sterling	GBP ~~7,400~~3,800
Canadian Dollar	CAD ~~2,350~~5,050
Chinese Yuan Renminbi	CNY ~~60,687~~89,600
Danish Krone	DKK ~~8,264~~32,567
Euro	EUR ~~4,678~~7,064
Hong Kong Dollar	HKD ~~26,000~~20,800
Indian Rupee	INR ~~205,765~~23,000
Japanese Yen	JPY ~~1,587,000~~2,021,000
Korean Won	KRW 1,742,000
New Zealand Dollar	NZD 500
Singapore Dollar	SGD ~~10,400~~13,800
Swiss Franc	CHF ~~16,550~~20,250



	Foreign currency			Unrealized (loss) gain on available-for-sale securities			Unrealized (loss) gain on derivative instruments			Other comprehensive loss on pension liability			Total
	(In thousands)
Balance at December 31, 2016	$	(16,346	)	$	(3,108	)	$	(3,130	)	$	(6,120	)	$	(28,704	)
Other comprehensive income before reclassifications	—			1,440			3,876			—			5,316
Amounts reclassified from accumulated other comprehensive loss	—			(460		)	1,678			(9		)	1,209
Net current period other comprehensive income	—			980			5,554			(9		)	6,525
Distribution of the GoTo Business	$	13,400		$	—		$	—		$	—		$	13,400
Balance at June 30, 2017	$	(2,946	)	$	(2,128	)	$	2,424		$	(6,129	)	$	(8,779	)



	Foreign currency			Unrealized loss on available-for-sale securities			Unrealized gain (loss) on derivative instruments			Other comprehensive loss on pension liability			Total
	(In thousands)
Balance at December 31, 2017	$	(2,946	)	$	(6,666	)	$	2,158		$	(3,352	)	$	(10,806	)
Other comprehensive loss before reclassifications	—			(4,210		)	(2,730		)	—			(6,940		)
Amounts reclassified from accumulated other comprehensive loss	—			1,244			(2,216		)	—			(972		)
Net current period other comprehensive loss	—			(2,966		)	(4,946		)	—			(7,912		)
Balance at June 30, 2018	$	(2,946	)	$	(9,632	)	$	(2,788	)	$	(3,352	)	$	(18,718	)