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Form 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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|
75-2275152
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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851 West Cypress Creek Road
Fort Lauderdale, Florida
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33309
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(Address of principal executive offices)
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(Zip Code)
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x
Large accelerated filer
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o
Accelerated filer
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o
Non-accelerated filer
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o
Smaller reporting company
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o
Emerging growth company
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Page
Number
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PART I:
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Item 1.
|
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Item 2.
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Item 3.
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Item 4.
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PART II:
|
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Item 1.
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||
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Item 1A.
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||
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Item 2.
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Item 6.
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June 30, 2017
|
|
December 31, 2016
|
||||
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(In thousands, except par value)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
844,771
|
|
|
$
|
836,095
|
|
Short-term investments, available-for-sale
|
511,092
|
|
|
726,923
|
|
||
Accounts receivable, net of allowances of $4,048 and $5,883 at June 30, 2017 and December 31, 2016, respectively
|
541,315
|
|
|
681,206
|
|
||
Inventories, net
|
13,229
|
|
|
12,522
|
|
||
Prepaid expenses and other current assets
|
176,080
|
|
|
124,842
|
|
||
Current assets of discontinued operations
|
—
|
|
|
179,689
|
|
||
Total current assets
|
2,086,487
|
|
|
2,561,277
|
|
||
Long-term investments, available-for-sale
|
1,045,384
|
|
|
980,142
|
|
||
Property and equipment, net
|
252,925
|
|
|
261,954
|
|
||
Goodwill
|
1,617,105
|
|
|
1,585,893
|
|
||
Other intangible assets, net
|
187,550
|
|
|
173,681
|
|
||
Deferred tax assets, net
|
177,375
|
|
|
233,900
|
|
||
Other assets
|
64,083
|
|
|
54,449
|
|
||
Long-term assets of discontinued operations
|
—
|
|
|
538,931
|
|
||
Total assets
|
$
|
5,430,909
|
|
|
$
|
6,390,227
|
|
Liabilities, Temporary Equity and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
65,265
|
|
|
$
|
72,724
|
|
Accrued expenses and other current liabilities
|
240,808
|
|
|
256,799
|
|
||
Income taxes payable
|
4,724
|
|
|
39,771
|
|
||
Current portion of deferred revenues
|
1,205,692
|
|
|
1,208,229
|
|
||
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
|
|
||
Long-term portion of deferred revenues
|
510,209
|
|
|
476,135
|
|
||
Convertible notes, long-term
|
1,367,092
|
|
|
—
|
|
||
Other liabilities
|
125,418
|
|
|
119,813
|
|
||
Long-term liabilities of discontinued operations
|
—
|
|
|
7,708
|
|
||
Commitments and contingencies
|
|
|
|
||||
Temporary equity from Convertible notes
|
—
|
|
|
79,495
|
|
||
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
|
|
||
Additional paid-in capital
|
4,922,187
|
|
|
4,761,588
|
|
||
Retained earnings
|
3,663,732
|
|
|
4,010,737
|
|
||
Accumulated other comprehensive loss
|
(8,779
|
)
|
|
(28,704
|
)
|
||
|
8,577,445
|
|
|
8,743,924
|
|
||
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
|
)
|
||
Total stockholders' equity
|
1,881,701
|
|
|
2,608,727
|
|
||
Total liabilities, temporary equity and stockholders' equity
|
$
|
5,430,909
|
|
|
$
|
6,390,227
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(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
|
|
||||
Total net revenues
|
693,227
|
|
|
673,987
|
|
|
1,355,904
|
|
|
1,332,760
|
|
||||
Cost of net revenues:
|
|
|
|
|
|
|
|
||||||||
Cost of product and license revenues
|
32,735
|
|
|
33,623
|
|
|
62,446
|
|
|
65,018
|
|
||||
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
|
|
||||
Total cost of net revenues
|
109,312
|
|
|
107,191
|
|
|
211,770
|
|
|
207,002
|
|
||||
Gross margin
|
583,915
|
|
|
566,796
|
|
|
1,144,134
|
|
|
1,125,758
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
106,696
|
|
|
100,651
|
|
|
209,365
|
|
|
202,883
|
|
||||
Sales, marketing and services
|
268,300
|
|
|
245,921
|
|
|
515,065
|
|
|
479,848
|
|
||||
General and administrative
|
81,146
|
|
|
78,883
|
|
|
157,655
|
|
|
157,158
|
|
||||
Amortization of other intangible assets
|
3,692
|
|
|
3,822
|
|
|
7,338
|
|
|
7,542
|
|
||||
Restructuring
|
2,140
|
|
|
3,580
|
|
|
10,126
|
|
|
49,136
|
|
||||
Total operating expenses
|
461,974
|
|
|
432,857
|
|
|
899,549
|
|
|
896,567
|
|
||||
Income from operations
|
121,941
|
|
|
133,939
|
|
|
244,585
|
|
|
229,191
|
|
||||
Interest income
|
5,560
|
|
|
4,164
|
|
|
11,172
|
|
|
7,915
|
|
||||
Interest expense
|
(12,007
|
)
|
|
(11,196
|
)
|
|
(23,560
|
)
|
|
(22,351
|
)
|
||||
Other (expense) income, net
|
(1,141
|
)
|
|
(272
|
)
|
|
2,185
|
|
|
(1,275
|
)
|
||||
Income from continuing operations before income taxes
|
114,353
|
|
|
126,635
|
|
|
234,382
|
|
|
213,480
|
|
||||
Income tax expense
|
5,524
|
|
|
20,346
|
|
|
55,228
|
|
|
33,937
|
|
||||
Income from continuing operations
|
108,829
|
|
|
106,289
|
|
|
179,154
|
|
|
179,543
|
|
||||
Income (loss) from discontinued operations, net of income taxes
|
—
|
|
|
14,609
|
|
|
$
|
(42,704
|
)
|
|
$
|
24,818
|
|
||
Net income
|
$
|
108,829
|
|
|
$
|
120,898
|
|
|
$
|
136,450
|
|
|
$
|
204,361
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.72
|
|
|
$
|
0.69
|
|
|
$
|
1.18
|
|
|
$
|
1.16
|
|
Income (loss) from discontinued operations
|
—
|
|
|
0.09
|
|
|
(0.28
|
)
|
|
0.16
|
|
||||
Basic net earnings per share
|
$
|
0.72
|
|
|
$
|
0.78
|
|
|
$
|
0.90
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.70
|
|
|
$
|
0.68
|
|
|
$
|
1.14
|
|
|
$
|
1.15
|
|
Income (loss) from discontinued operations
|
—
|
|
|
0.09
|
|
|
(0.27
|
)
|
|
0.16
|
|
||||
Diluted net earnings per share:
|
$
|
0.70
|
|
|
$
|
0.77
|
|
|
$
|
0.87
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
151,212
|
|
|
154,998
|
|
|
152,247
|
|
|
154,485
|
|
||||
Diluted
|
156,036
|
|
|
156,666
|
|
|
157,239
|
|
|
156,258
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Net income
|
$
|
108,829
|
|
|
$
|
120,898
|
|
|
$
|
136,450
|
|
|
$
|
204,361
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Available for sale securities:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gains
|
350
|
|
|
1,793
|
|
|
1,440
|
|
|
5,892
|
|
||||
Less: reclassification adjustment for net gains included in net income
|
(85
|
)
|
|
(270
|
)
|
|
(460
|
)
|
|
(292
|
)
|
||||
Net change (net of tax effect)
|
265
|
|
|
1,523
|
|
|
980
|
|
|
5,600
|
|
||||
Loss on pension liability
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gains (losses)
|
1,884
|
|
|
(2,218
|
)
|
|
3,876
|
|
|
4
|
|
||||
Less: reclassification adjustment for net losses (gains) included in net income
|
6
|
|
|
(142
|
)
|
|
1,678
|
|
|
1,023
|
|
||||
Net change (net of tax effect)
|
1,890
|
|
|
(2,360
|
)
|
|
5,554
|
|
|
1,027
|
|
||||
Other comprehensive income (loss)
|
2,155
|
|
|
(837
|
)
|
|
6,525
|
|
|
6,627
|
|
||||
Comprehensive income
|
$
|
110,984
|
|
|
$
|
120,061
|
|
|
$
|
142,975
|
|
|
$
|
210,988
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
136,450
|
|
|
$
|
204,361
|
|
Loss (income) from discontinued operations
|
42,704
|
|
|
(24,818
|
)
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, amortization and other
|
97,403
|
|
|
112,465
|
|
||
Stock-based compensation expense
|
75,487
|
|
|
74,428
|
|
||
Excess tax benefit from stock-based compensation
|
—
|
|
|
(10,308
|
)
|
||
Deferred income tax expense (benefit)
|
56,584
|
|
|
(9,508
|
)
|
||
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies
|
(6,049
|
)
|
|
(2,242
|
)
|
||
Other non-cash items
|
7,812
|
|
|
2,801
|
|
||
Total adjustments to reconcile net income to net cash provided by operating activities
|
231,237
|
|
|
167,636
|
|
||
Changes in operating assets and liabilities, net of the effects of acquisitions:
|
|
|
|
||||
Accounts receivable
|
140,471
|
|
|
162,958
|
|
||
Inventories
|
(1,398
|
)
|
|
(1,463
|
)
|
||
Prepaid expenses and other current assets
|
(5,957
|
)
|
|
(13,672
|
)
|
||
Other assets
|
(9,597
|
)
|
|
2,597
|
|
||
Income taxes, net
|
(73,567
|
)
|
|
45,392
|
|
||
Accounts payable
|
(9,272
|
)
|
|
(24,532
|
)
|
||
Accrued expenses and other current liabilities
|
(20,536
|
)
|
|
13,368
|
|
||
Deferred revenues
|
26,084
|
|
|
(28,052
|
)
|
||
Other liabilities
|
(790
|
)
|
|
(2,525
|
)
|
||
Total changes in operating assets and liabilities, net of the effects of acquisitions
|
45,438
|
|
|
154,071
|
|
||
Net cash provided by operating activities of continuing operations
|
455,829
|
|
|
501,250
|
|
||
Net cash (used in) provided by operating activities of discontinued operations
|
(56,070
|
)
|
|
67,077
|
|
||
Net cash provided by operating activities
|
399,759
|
|
|
568,327
|
|
||
Investing Activities
|
|
|
|
||||
Purchases of available-for-sale investments
|
(590,004
|
)
|
|
(907,498
|
)
|
||
Proceeds from sales of available-for-sale investments
|
562,098
|
|
|
446,932
|
|
||
Proceeds from maturities of available-for-sale investments
|
179,330
|
|
|
322,100
|
|
||
Purchases of property and equipment
|
(38,650
|
)
|
|
(48,687
|
)
|
||
Cash paid for acquisitions, net of cash acquired
|
(60,449
|
)
|
|
—
|
|
||
Cash paid for licensing agreements and technology
|
(5,155
|
)
|
|
(24,577
|
)
|
||
Other
|
987
|
|
|
544
|
|
||
Net cash provided by (used in) investing activities of continuing operations
|
48,157
|
|
|
(211,186
|
)
|
||
Net cash used in investing activities of discontinued operations
|
(3,891
|
)
|
|
(28,249
|
)
|
||
Net cash provided by (used in) investing activities
|
44,266
|
|
|
(239,435
|
)
|
||
Financing Activities
|
|
|
|
||||
Proceeds from issuance of common stock under stock-based compensation plans
|
1,490
|
|
|
30,559
|
|
||
Proceeds from credit facility
|
125,000
|
|
|
—
|
|
||
Repayment of credit facility
|
(95,000
|
)
|
|
—
|
|
||
Repayment of acquired debt
|
(4,000
|
)
|
|
—
|
|
||
Excess tax benefit from stock-based compensation
|
—
|
|
|
10,308
|
|
||
Stock repurchases, net
|
(500,000
|
)
|
|
(28,689
|
)
|
||
Cash paid for tax withholding on vested stock awards
|
(60,547
|
)
|
|
(43,842
|
)
|
||
Transfer of cash to GoTo Business resulting from the separation
|
(28,523
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(561,580
|
)
|
|
(31,664
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
5,370
|
|
|
486
|
|
||
Change in cash and cash equivalents
|
(112,185
|
)
|
|
297,714
|
|
||
Cash and cash equivalents at beginning of period, including cash of discontinued operations of $120,861 and $57,762, respectively
|
956,956
|
|
|
368,518
|
|
||
Cash and cash equivalents at end of period
|
844,771
|
|
|
666,232
|
|
||
Less cash of discontinued operations
|
—
|
|
|
(71,126
|
)
|
||
Cash and cash equivalents at end of period
|
$
|
844,771
|
|
|
$
|
595,106
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2016
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Net revenues
|
$
|
168,993
|
|
|
$
|
58,215
|
|
|
$
|
335,898
|
|
Cost of net revenues
|
37,131
|
|
|
15,456
|
|
|
76,412
|
|
|||
Gross margin
|
131,862
|
|
|
42,759
|
|
|
259,486
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
24,110
|
|
|
9,108
|
|
|
45,837
|
|
|||
Sales, marketing and services
|
52,528
|
|
|
20,881
|
|
|
111,349
|
|
|||
General and administrative
|
18,626
|
|
|
7,636
|
|
|
31,586
|
|
|||
Amortization of other intangible assets
|
3,464
|
|
|
1,176
|
|
|
7,138
|
|
|||
Restructuring
|
436
|
|
|
3,189
|
|
|
945
|
|
|||
Separation
|
13,550
|
|
|
40,573
|
|
|
27,781
|
|
|||
Total operating expenses
|
112,714
|
|
|
82,563
|
|
|
224,636
|
|
|||
Income (loss) from discontinued operations before income taxes
|
19,148
|
|
|
(39,804
|
)
|
|
34,850
|
|
|||
Income tax expense
|
4,539
|
|
|
2,900
|
|
|
10,032
|
|
|||
Income (loss) from discontinued operations, net of income tax
|
$
|
14,609
|
|
|
$
|
(42,704
|
)
|
|
$
|
24,818
|
|
|
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
|
$
|
11,333
|
|
Accrued expenses and other current liabilities
|
46,088
|
|
|
Current portion of deferred revenues
|
115,249
|
|
|
Total current liabilities of discontinued operations
|
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
|
$
|
180,378
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
108,829
|
|
|
$
|
106,289
|
|
|
$
|
179,154
|
|
|
$
|
179,543
|
|
Income (loss) from discontinued operations, net of income taxes
|
—
|
|
|
14,609
|
|
|
(42,704
|
)
|
|
24,818
|
|
||||
Net income
|
$
|
108,829
|
|
|
$
|
120,898
|
|
|
$
|
136,450
|
|
|
$
|
204,361
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic net earnings per share - weighted-average shares outstanding
|
151,212
|
|
|
154,998
|
|
|
152,247
|
|
|
154,485
|
|
||||
Effect of dilutive employee stock awards
|
2,180
|
|
|
1,668
|
|
|
2,815
|
|
|
1,773
|
|
||||
Effect of dilutive Convertible Notes
|
2,644
|
|
|
—
|
|
|
2,177
|
|
|
—
|
|
||||
Denominator for diluted net earnings per share - weighted-average shares outstanding
|
156,036
|
|
|
156,666
|
|
|
157,239
|
|
|
156,258
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.72
|
|
|
$
|
0.69
|
|
|
$
|
1.18
|
|
|
$
|
1.16
|
|
Income (loss) from discontinued operations
|
—
|
|
|
0.09
|
|
|
(0.28
|
)
|
|
0.16
|
|
||||
Basic net earnings per share
|
$
|
0.72
|
|
|
$
|
0.78
|
|
|
$
|
0.90
|
|
|
$
|
1.32
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.70
|
|
|
$
|
0.68
|
|
|
$
|
1.14
|
|
|
$
|
1.15
|
|
Income (loss) from discontinued operations
|
—
|
|
|
0.09
|
|
|
(0.27
|
)
|
|
0.16
|
|
||||
Diluted net earnings per share:
|
$
|
0.70
|
|
|
$
|
0.77
|
|
|
$
|
0.87
|
|
|
$
|
1.31
|
|
Anti-dilutive weighted-average shares from stock awards
|
274
|
|
|
296
|
|
|
977
|
|
|
574
|
|
|
Unidesk
|
||||
|
Purchase Price Allocation
|
|
Asset Life
|
||
Current assets
|
$
|
5,321
|
|
|
|
Property and equipment
|
131
|
|
|
|
|
Intangible assets
|
39,470
|
|
|
4 years
|
|
Goodwill
|
31,212
|
|
|
Indefinite
|
|
Other assets
|
90
|
|
|
|
|
Assets acquired
|
76,224
|
|
|
|
|
Other current liabilities assumed
|
2,290
|
|
|
|
|
Current portion of deferred revenues
|
3,042
|
|
|
|
|
Long term portion of deferred revenues
|
2,412
|
|
|
|
|
Long-term liabilities assumed
|
4,086
|
|
|
|
|
Deferred taxes
|
1,247
|
|
|
|
|
Net assets acquired
|
$
|
63,147
|
|
|
|
|
Unidesk
|
|
Asset Life
|
||
Developed technology
|
$
|
35,230
|
|
|
4 years
|
Customer contracts
|
4,240
|
|
|
4 years
|
|
Total
|
$
|
39,470
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
Description of the
Securities
|
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
|
|
Corporate securities
|
805,137
|
|
|
509
|
|
|
(1,164
|
)
|
|
804,482
|
|
|
842,887
|
|
|
193
|
|
|
(2,114
|
)
|
|
840,966
|
|
||||||||
Municipal securities
|
3,965
|
|
|
12
|
|
|
—
|
|
|
3,977
|
|
|
9,989
|
|
|
3
|
|
|
(4
|
)
|
|
9,988
|
|
||||||||
Government securities
|
269,920
|
|
|
73
|
|
|
(743
|
)
|
|
269,250
|
|
|
445,083
|
|
|
135
|
|
|
(600
|
)
|
|
444,618
|
|
||||||||
Total
|
$
|
1,558,457
|
|
|
$
|
1,219
|
|
|
$
|
(3,200
|
)
|
|
$
|
1,556,476
|
|
|
$
|
1,709,922
|
|
|
$
|
1,030
|
|
|
$
|
(3,887
|
)
|
|
$
|
1,707,065
|
|
•
|
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.
|
|
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)
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
753,839
|
|
|
$
|
753,839
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market funds
|
89,406
|
|
|
89,406
|
|
|
—
|
|
|
—
|
|
||||
Corporate securities
|
1,526
|
|
|
—
|
|
|
1,526
|
|
|
—
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Agency securities
|
478,767
|
|
|
—
|
|
|
478,767
|
|
|
—
|
|
||||
Corporate securities
|
804,482
|
|
|
—
|
|
|
804,088
|
|
|
394
|
|
||||
Municipal securities
|
3,977
|
|
|
—
|
|
|
3,977
|
|
|
—
|
|
||||
Government securities
|
269,250
|
|
|
—
|
|
|
269,250
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
3,264
|
|
|
—
|
|
|
3,264
|
|
|
—
|
|
||||
Total assets
|
$
|
2,404,511
|
|
|
$
|
843,245
|
|
|
$
|
1,560,872
|
|
|
$
|
394
|
|
Accrued expenses and other current liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
989
|
|
|
—
|
|
|
989
|
|
|
—
|
|
||||
Total liabilities
|
$
|
989
|
|
|
$
|
—
|
|
|
$
|
989
|
|
|
$
|
—
|
|
|
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)
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
528,637
|
|
|
$
|
528,637
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market funds
|
224,765
|
|
|
224,765
|
|
|
—
|
|
|
—
|
|
||||
Corporate securities
|
82,693
|
|
|
—
|
|
|
82,693
|
|
|
—
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Agency securities
|
411,493
|
|
|
—
|
|
|
411,493
|
|
|
—
|
|
||||
Corporate securities
|
840,966
|
|
|
—
|
|
|
839,968
|
|
|
998
|
|
||||
Municipal securities
|
9,988
|
|
|
—
|
|
|
9,988
|
|
|
—
|
|
||||
Government securities
|
444,618
|
|
|
—
|
|
|
444,618
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
2,506
|
|
|
—
|
|
|
2,506
|
|
|
—
|
|
||||
Total assets
|
$
|
2,545,666
|
|
|
$
|
753,402
|
|
|
$
|
1,791,266
|
|
|
$
|
998
|
|
Accrued expenses and other current liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
4,435
|
|
|
—
|
|
|
4,435
|
|
|
—
|
|
||||
Total liabilities
|
$
|
4,435
|
|
|
$
|
—
|
|
|
$
|
4,435
|
|
|
$
|
—
|
|
|
Fair Value
|
|
Carrying Value
|
||||
Convertible Senior Notes
|
$
|
1,738,506
|
|
|
$
|
1,367,092
|
|
|
Six Months Ended
|
||||
|
June 30, 2017
|
|
June 30, 2016
|
||
Expected volatility factor
|
0.29
|
|
|
0.41
|
|
Risk free interest rate
|
0.60
|
%
|
|
0.35
|
%
|
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
Expected life (in years)
|
0.5
|
|
|
0.5
|
|
•
|
The number of shares of common stock subject to each outstanding stock option was increased and the corresponding exercise price was decreased to maintain the intrinsic value of each outstanding stock option immediately before and after the Spin-off. There was no incremental expense related to this adjustment.
|
•
|
The number of shares of common stock underlying each outstanding non-vested stock unit and performance unit was increased to preserve the intrinsic value of such award immediately prior to the Spin-off.
|
•
|
The opening prices of the performance units granted in 2015 and 2016 were adjusted to reflect the value of the shares of LogMeIn stock distributed to the Company's shareholders as a result of the Spin-off. These adjustments resulted in
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Income Statement Classifications
|
June 30, 2017
|
|
June 30, 2016
|
|
June 30, 2017
|
|
June 30, 2016
|
||||||||
Cost of services and maintenance revenues
|
$
|
815
|
|
|
$
|
542
|
|
|
$
|
1,407
|
|
|
$
|
1,036
|
|
Research and development
|
11,660
|
|
|
9,689
|
|
|
21,326
|
|
|
17,444
|
|
||||
Sales, marketing and services
|
14,728
|
|
|
12,560
|
|
|
26,325
|
|
|
23,504
|
|
||||
General and administrative
|
13,476
|
|
|
15,576
|
|
|
26,429
|
|
|
32,444
|
|
||||
Total
|
$
|
40,679
|
|
|
$
|
38,367
|
|
|
$
|
75,487
|
|
|
$
|
74,428
|
|
|
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
|
|
|
|
(1)
|
Amount relates to preliminary purchase price allocation of goodwill associated with the 2017 Business Combination. See Note 5 for more information regarding the Company's acquisitions.
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Product related intangible assets
|
$
|
690,060
|
|
|
$
|
546,244
|
|
|
$
|
647,594
|
|
|
$
|
520,746
|
|
Other
|
227,932
|
|
|
184,198
|
|
|
223,692
|
|
|
176,859
|
|
||||
Total
|
$
|
917,992
|
|
|
$
|
730,442
|
|
|
$
|
871,286
|
|
|
$
|
697,605
|
|
Year ending December 31,
|
Amount
|
|
|
2017 (remaining six months)
|
$
|
31,886
|
|
2018
|
59,636
|
|
|
2019
|
39,010
|
|
|
2020
|
24,851
|
|
|
2021
|
8,890
|
|
|
Thereafter
|
23,277
|
|
|
Total
|
$
|
187,550
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
Workspace Services revenues
(1)
|
$
|
420,908
|
|
|
$
|
410,426
|
|
|
$
|
820,412
|
|
|
$
|
809,940
|
|
Networking revenues
(2)
|
196,876
|
|
|
194,898
|
|
|
390,296
|
|
|
390,368
|
|
||||
Data revenues
(3)
|
43,614
|
|
|
33,748
|
|
|
83,649
|
|
|
64,882
|
|
||||
Professional services
(4)
|
31,829
|
|
|
34,915
|
|
|
61,547
|
|
|
67,570
|
|
||||
Total net revenues
|
$
|
693,227
|
|
|
$
|
673,987
|
|
|
$
|
1,355,904
|
|
|
$
|
1,332,760
|
|
|
|
(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.
|
(2)
|
Networking revenues primarily include NetScaler ADC and NetScaler SD-WAN, and related license updates and maintenance and support.
|
(3)
|
Data revenues primarily include ShareFile, Podio and Citrix Cloud.
|
(4)
|
Professional services revenues are primarily comprised of revenues from consulting services and product training and certification services.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
403,072
|
|
|
$
|
402,684
|
|
|
$
|
794,418
|
|
|
$
|
791,370
|
|
EMEA
|
217,313
|
|
|
205,064
|
|
|
419,165
|
|
|
411,995
|
|
||||
Asia-Pacific
|
72,842
|
|
|
66,239
|
|
|
142,321
|
|
|
129,395
|
|
||||
Total net revenues
|
$
|
693,227
|
|
|
$
|
673,987
|
|
|
$
|
1,355,904
|
|
|
$
|
1,332,760
|
|
|
|
|||||
|
June 30, 2017
|
December 31, 2016
|
||||
Liability component
|
|
|
||||
Principal
|
$
|
1,437,483
|
|
$
|
1,437,500
|
|
Less: note discount and issuance costs
|
(70,391
|
)
|
(89,344
|
)
|
||
Net carrying amount
|
$
|
1,367,092
|
|
$
|
1,348,156
|
|
|
|
|
||||
Equity component
|
|
|
|
|||
Temporary equity
|
$
|
—
|
|
$
|
79,495
|
|
Additional paid-in capital
|
162,869
|
|
83,374
|
|
||
Total equity (including temporary equity)
|
$
|
162,869
|
|
$
|
162,869
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Contractual interest expense
|
$
|
1,797
|
|
|
$
|
1,797
|
|
|
$
|
3,594
|
|
|
$
|
3,594
|
|
Amortization of debt issuance costs
|
1,039
|
|
|
1,015
|
|
|
2,071
|
|
|
2,024
|
|
||||
Amortization of debt discount
|
8,472
|
|
|
8,222
|
|
|
16,882
|
|
|
16,383
|
|
||||
|
$
|
11,308
|
|
|
$
|
11,034
|
|
|
$
|
22,547
|
|
|
$
|
22,001
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||
|
(In thousands)
|
||||||||||||||
|
June 30, 2017
|
|
December 31, 2016
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||
Derivatives Designated as
Hedging Instruments
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
Foreign currency forward contracts
|
Prepaid
expenses
and other
current
assets
|
|
$2,791
|
|
Prepaid
expenses
and other
current
assets
|
|
$460
|
|
Accrued
expenses
and other
current
liabilities
|
|
$209
|
|
Accrued
expenses
and other
current
liabilities
|
|
$3,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||
|
(In thousands)
|
||||||||||||||
|
June 30, 2017
|
|
December 31, 2016
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||
Derivatives Not Designated as
Hedging Instruments
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
Foreign currency forward contracts
|
Prepaid
expenses
and other
current
assets
|
|
$473
|
|
Prepaid
expenses
and other
current
assets
|
|
$2,046
|
|
Accrued
expenses
and other
current
liabilities
|
|
$780
|
|
Accrued
expenses
and other
current
liabilities
|
|
$619
|
|
For the Three Months Ended June 30, 2017
|
||||||||||||||||
|
(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)
|
||||||||||||
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
||||||||
Foreign currency forward contracts
|
$
|
1,890
|
|
|
$
|
(2,360
|
)
|
|
Operating expenses
|
|
$
|
(6
|
)
|
|
$
|
142
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
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 Three Months Ended June 30, 2017
|
||||||||
|
(In thousands)
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
Location of Loss Recognized in Income on
Derivative
|
|
Amount of Loss Recognized in Income on Derivative
|
||||||
|
|
|
2017
|
|
2016
|
||||
Foreign currency forward contracts
|
Other (expense) income, net
|
|
$
|
(2,064
|
)
|
|
$
|
(1,992
|
)
|
|
|
|
|
|
|
||||
|
For the Six Months Ended June 30, 2017
|
||||||||
|
(In thousands)
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
Location of Loss Recognized in Income on
Derivative
|
|
Amount of Loss Recognized in Income on Derivative
|
||||||
|
|
|
2017
|
|
2016
|
||||
Foreign currency forward contracts
|
Other (expense) income, net
|
|
$
|
(5,150
|
)
|
|
$
|
(3,965
|
)
|
Foreign Currency
|
Currency
Denomination
|
Australian Dollar
|
AUD 5,600
|
Brazilian Real
|
BRL 11,200
|
Pounds Sterling
|
GBP 7,400
|
Canadian Dollar
|
CAD 2,350
|
Chinese Yuan Renminbi
|
CNY 60,687
|
Danish Krone
|
DKK 8,264
|
Euro
|
EUR 4,678
|
Hong Kong Dollar
|
HKD 26,000
|
Indian Rupee
|
INR 205,765
|
Japanese Yen
|
JPY 1,587,000
|
Singapore Dollar
|
SGD 10,400
|
Swiss Franc
|
CHF 16,550
|
|
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
|
)
|
|
|
For the Three Months Ended June 30, 2017
|
||||
|
|
(In thousands)
|
||||
Details about accumulated other comprehensive loss components
|
|
Amount reclassified from accumulated other comprehensive loss, net of tax
|
|
Affected line item in the Condensed Consolidated Statements of Income
|
||
Unrealized net gains on available-for-sale securities
|
|
$
|
(85
|
)
|
|
Other (expense) income, net
|
Unrealized net losses on cash flow hedges
|
|
6
|
|
|
Operating expenses *
|
|
|
|
$
|
(79
|
)
|
|
|
|
|
|
|
|
||
|
|
|
|
|
||
|
|
For the Six Months Ended June 30, 2017
|
||||
|
|
(In thousands)
|
||||
Details about accumulated other comprehensive loss components
|
|
Amount reclassified from accumulated other comprehensive loss, net of tax
|
|
Affected line item in the Condensed Consolidated Statements of Income
|
||
Unrealized net gains on available-for-sale securities
|
|
$
|
(460
|
)
|
|
Other (expense) income, net
|
Unrealized net losses on cash flow hedges
|
|
1,678
|
|
|
Operating expenses *
|
|
|
|
$
|
1,218
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Employee severance and related costs
|
$
|
2,107
|
|
|
$
|
2,541
|
|
|
$
|
8,553
|
|
|
$
|
38,409
|
|
Consolidation of leased facilities
|
211
|
|
|
1,216
|
|
|
1,751
|
|
|
10,904
|
|
||||
Reversal of previous charges
|
(178
|
)
|
|
(177
|
)
|
|
(178
|
)
|
|
(177
|
)
|
||||
Total Restructuring charges
|
$
|
2,140
|
|
|
$
|
3,580
|
|
|
$
|
10,126
|
|
|
$
|
49,136
|
|
|
Total
|
||
Balance at January 1, 2017
|
$
|
38,059
|
|
Restructuring charges
|
10,126
|
|
|
Payments
|
(9,373
|
)
|
|
Balance at June 30, 2017
|
$
|
38,812
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Product and licenses revenue decreased
3.9%
to
$211.0 million
;
|
•
|
Software as a service revenue increased
26.7%
to $
41.5 million
;
|
•
|
License updates and maintenance revenue increased
5.7%
to $
409.0 million
;
|
•
|
Professional services revenue decreased
9.1%
to $
31.7 million
;
|
•
|
Gross margin as a percentage of revenue remained consistent at
84.2%
;
|
•
|
Operating income from continuing operations decreased
9.0%
to $
121.9 million
; and
|
•
|
Diluted net income per share from continuing operations increased
2.9%
to
$0.70
.
|
|
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
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product and licenses
|
$
|
211,009
|
|
|
$
|
219,507
|
|
|
$
|
402,606
|
|
|
$
|
421,540
|
|
|
(3.9
|
)%
|
|
(4.5
|
)%
|
Software as a service
|
41,513
|
|
|
32,764
|
|
|
80,243
|
|
|
63,879
|
|
|
26.7
|
|
|
25.6
|
|
||||
License updates and maintenance
|
409,028
|
|
|
386,864
|
|
|
811,783
|
|
|
779,882
|
|
|
5.7
|
|
|
4.1
|
|
||||
Professional services
|
31,677
|
|
|
34,852
|
|
|
61,272
|
|
|
67,459
|
|
|
(9.1
|
)
|
|
(9.2
|
)
|
||||
Total net revenues
|
693,227
|
|
|
673,987
|
|
|
1,355,904
|
|
|
1,332,760
|
|
|
2.9
|
|
|
1.7
|
|
||||
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of product and license revenues
|
32,735
|
|
|
33,623
|
|
|
62,446
|
|
|
65,018
|
|
|
(2.6
|
)
|
|
(4.0
|
)
|
||||
Cost of services and maintenance revenues
|
64,167
|
|
|
59,178
|
|
|
123,826
|
|
|
113,537
|
|
|
8.4
|
|
|
9.1
|
|
||||
Amortization of product related intangible assets
|
12,410
|
|
|
14,390
|
|
|
25,498
|
|
|
28,447
|
|
|
(13.8
|
)
|
|
(10.4
|
)
|
||||
Total cost of net revenues
|
109,312
|
|
|
107,191
|
|
|
211,770
|
|
|
207,002
|
|
|
2.0
|
|
|
2.3
|
|
||||
Gross margin
|
583,915
|
|
|
566,796
|
|
|
1,144,134
|
|
|
1,125,758
|
|
|
3.0
|
|
|
1.6
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
106,696
|
|
|
100,651
|
|
|
209,365
|
|
|
202,883
|
|
|
6.0
|
|
|
3.2
|
|
||||
Sales, marketing and services
|
268,300
|
|
|
245,921
|
|
|
515,065
|
|
|
479,848
|
|
|
9.1
|
|
|
7.3
|
|
||||
General and administrative
|
81,146
|
|
|
78,883
|
|
|
157,655
|
|
|
157,158
|
|
|
2.9
|
|
|
0.3
|
|
||||
Amortization of other intangible assets
|
3,692
|
|
|
3,822
|
|
|
7,338
|
|
|
7,542
|
|
|
(3.4
|
)
|
|
(2.7
|
)
|
||||
Restructuring
|
2,140
|
|
|
3,580
|
|
|
10,126
|
|
|
49,136
|
|
|
(40.2
|
)
|
|
(79.4
|
)
|
||||
Total operating expenses
|
461,974
|
|
|
432,857
|
|
|
899,549
|
|
|
896,567
|
|
|
6.7
|
|
|
0.3
|
|
||||
Income from operations
|
121,941
|
|
|
133,939
|
|
|
244,585
|
|
|
229,191
|
|
|
(9.0
|
)
|
|
6.7
|
|
||||
Interest income
|
5,560
|
|
|
4,164
|
|
|
11,172
|
|
|
7,915
|
|
|
33.5
|
|
|
41.1
|
|
||||
Interest expense
|
(12,007
|
)
|
|
(11,196
|
)
|
|
(23,560
|
)
|
|
(22,351
|
)
|
|
7.2
|
|
|
5.4
|
|
||||
Other (expense) income, net
|
(1,141
|
)
|
|
(272
|
)
|
|
2,185
|
|
|
(1,275
|
)
|
|
319.5
|
|
|
(271.4
|
)
|
||||
Income from continuing operations before income taxes
|
114,353
|
|
|
126,635
|
|
|
234,382
|
|
|
213,480
|
|
|
(9.7
|
)
|
|
9.8
|
|
||||
Income tax expense
|
5,524
|
|
|
20,346
|
|
|
55,228
|
|
|
33,937
|
|
|
(72.8
|
)
|
|
62.7
|
|
||||
Income from continuing operations
|
108,829
|
|
|
106,289
|
|
|
179,154
|
|
|
179,543
|
|
|
2.4
|
|
|
(0.2
|
)
|
||||
Income (loss) from discontinued operations, net of income taxes
|
—
|
|
|
14,609
|
|
|
(42,704
|
)
|
|
24,818
|
|
|
(100.0
|
)
|
|
(272.1
|
)
|
||||
Net income
|
$
|
108,829
|
|
|
$
|
120,898
|
|
|
$
|
136,450
|
|
|
$
|
204,361
|
|
|
(10.0
|
)
|
|
(33.2
|
)
|
•
|
Workspace Services is primarily comprised of our Application Virtualization products which include XenDesktop and XenApp, our Enterprise Mobility Management products which include XenMobile products and Workspace Suite;
|
•
|
Networking primarily includes NetScaler ADC and NetScaler SD-WAN; and
|
•
|
Our CSP program provides subscription-based services in which the CSP partners host software services to their end users. The fees from the CSP program are recognized based on usage and as the CSP services are provided to their end users.
|
•
|
Customer Success Services, which gives customers a choice of tiered support offerings that combine the elements of product version upgrades, guidance, enablement, support and proactive monitoring to help our customers and our partners fully realize their business goals. Fees associated with this offering are recognized ratably over the term of the contract;
|
•
|
Maintenance for our Networking products, which include technical support and hardware and software maintenance, and which are recognized ratably over the contract term; and
|
•
|
Subscription Advantage program, which has been retired and reached end of sale and end of renewal for existing customers. Fees associated with these offerings are being recognized ratably over the remaining term of existing contracts, which was typically 12 to 24 months.
|
•
|
Fees from consulting services related to implementation of our products, which are recognized as the services are provided; and
|
•
|
Fees from product training and certification, which are recognized as the services are provided.
|
|
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
|
||||||||||||
|
|
||||||||||||||||||||||
Product and licenses
|
$
|
211,009
|
|
|
$
|
219,507
|
|
|
$
|
402,606
|
|
|
$
|
421,540
|
|
|
$
|
(8,498
|
)
|
|
$
|
(18,934
|
)
|
Software as a service
|
41,513
|
|
|
32,764
|
|
|
80,243
|
|
|
63,879
|
|
|
8,749
|
|
|
16,364
|
|
||||||
License updates and maintenance
|
409,028
|
|
|
386,864
|
|
|
811,783
|
|
|
779,882
|
|
|
22,164
|
|
|
31,901
|
|
||||||
Professional services
|
31,677
|
|
|
34,852
|
|
|
61,272
|
|
|
67,459
|
|
|
(3,175
|
)
|
|
(6,187
|
)
|
||||||
Total net revenues
|
$
|
693,227
|
|
|
$
|
673,987
|
|
|
$
|
1,355,904
|
|
|
$
|
1,332,760
|
|
|
$
|
19,240
|
|
|
$
|
23,144
|
|
|
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)
|
||||||||||||||||||||||
Cost of product and license revenues
|
$
|
32,735
|
|
|
$
|
33,623
|
|
|
$
|
62,446
|
|
|
$
|
65,018
|
|
|
$
|
(888
|
)
|
|
$
|
(2,572
|
)
|
Cost of services and maintenance revenues
|
64,167
|
|
|
59,178
|
|
|
123,826
|
|
|
113,537
|
|
|
4,989
|
|
|
10,289
|
|
||||||
Amortization of product related intangible assets
|
12,410
|
|
|
14,390
|
|
|
25,498
|
|
|
28,447
|
|
|
(1,980
|
)
|
|
(2,949
|
)
|
||||||
Total cost of net revenues
|
$
|
109,312
|
|
|
$
|
107,191
|
|
|
$
|
211,770
|
|
|
$
|
207,002
|
|
|
$
|
2,121
|
|
|
$
|
4,768
|
|
|
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, 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, 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, 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
|
|
|
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
|
)
|
•
|
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.
|
|
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
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
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
|
|
|
|
|
|
|
(1)
|
Represents
43,446
shares withheld from restricted stock units and stock awards that vested in the
second
quarter of
2017
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.
|
(2)
|
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 6.
|
EXHIBITS
|
(a)
|
List of exhibits
|
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.
|
|
|
|
|
CITRIX SYSTEMS, INC.
|
|
|
|
|
|
By:
|
/s/ MARK M. COYLE
|
|
|
Mark M. Coyle
|
|
|
Interim Chief Financial Officer
|
|
|
(Authorized Officer and Principal Financial Officer)
|
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.
|
By:
|
/s/ Antonio Gomes
|
By:
|
/s/ Michael J. Donahue
|
By:
|
/s/ Michael J. Donahue
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Citrix Systems, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
By:
|
/s/ DAVID J. HENSHALL
|
|
|
David J. Henshall
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Citrix Systems, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
By:
|
/s/ MARK M. COYLE
|
|
|
Mark M. Coyle
|
|
|
Interim Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
By:
|
/s/ DAVID J. HENSHALL
|
|
|
David J. Henshall
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ MARK M. COYLE
|
|
|
Mark M. Coyle
|
|
|
Interim Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|
|