Question & Answer: Condensed Consolidated Balance Sheets – USD ($) $ in Thousands…..

Condensed Consolidated Balance Sheets – USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Net operating loss carryforwards	$ 467,200
Current assets:
Cash and cash equivalents	192,114	$ 279,672	$319,929
Marketable securities	25,839	194,386	102,327
Accounts receivable, net	164,553	145,692	183,992
Inventory	167,192	188,232	153,026
Prepaid expenses and other current assets	38,115	25,261	63,769
Total current assets	587,813	833,243	823,043
Property and equipment, net	76,509	70,050	41,556
Intangible assets, net	33,530	31,027	2,937
Goodwill	146,459	57,095	14,095
Other long-term assets	78,329	111,561	36,060
Total assets	922,640	1,102,976	917,691
Current liabilities:
Accounts payable	205,028	89,989	126,240
Accrued liabilities	211,323	192,446	118,507
Deferred revenue	14,388	12,742	14,022
Total current liabilities	430,739	295,177	258,769
Long-term taxes payable	26,386	21,770	13,266
Other long-term liabilities	18,570	13,996	4,452
Total liabilities	475,695	330,943	276,487
Commitments, contingencies and guarantees
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000 shares authorized; none issued	0	0	0
Common stock and additional paid-in capital, $0.0001 par value, 500,000 Class A shares authorized,104,647 and 100,596 shares issued and outstanding, respectively; 150,000 Class B shares authorized, 36,712 and 36,005 shares issued and outstanding, respectively	757,226	663,311	533,000
Treasury stock, at cost, 1,545 and 1,545 shares, respectively	-35,613	-35,613	0
Retained earnings (accumulated deficit)	-274,668	144,335	108,204
Total stockholders’ equity	446,945	772,033	641,204
Total liabilities and stockholders’ equity	$ 922,640	$ 1,102,976	$ 917,691

Condensed Consolidated Statements of Operations – USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Revenue	$ 1,185,481	$ 1,619,971	$ 1,394,205
Cost of revenue	723,561	946,757	766,970
Gross profit	461,920	673,214	627,235
Operating expenses:
Research and development	358,902	241,694	151,852
Sales and marketing	368,620	268,939	194,377
General and administrative	107,367	107,833	93,971
Total operating expenses	834,889	618,466	440,200
Operating income (loss)	-372,969	54,748	187,035
Other expense, net	-2,205	-2,163	-6,060
Income (loss) before income taxes	-375,174	52,585	180,975
Income tax expense	43,829	16,454	52,887
Net income (loss)	-419,003	36,131	128,088
Less: net income allocable to participating securities	0	0	-16,512
Net income (loss) attributable to common stockholders—basic	-419,003	36,131	111,576
Add: net income allocable to dilutive participating securities	0	0	2,277
Net income (loss) attributable to common stockholders—diluted	$ (419,003)	$ 36,131	$ 113,853
Net income per share attributable to common stockholders – Basic (in dollars per share)	$ (3.01)	$ 0.27	$ 1.07
Net income per share attributable to common stockholders – Diluted (in dollars per share)	$ (3.01)	$ 0.25	$ 0.92
Weighted-average shares used to compute net income per share attributable to common stockholders – Basic (in shares)	139,425	134,595	104,453
Weighted-average shares used to compute net income per share attributable to common stockholders – Diluted (in shares)	139,425	146,486	123,630

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) Statement – USD ($) shares in Thousands, $ in Thousands	Total	Special Termination Benefits [Member]	Preferred Stock [Member]Redeemable Convertible Preferred Stock [Member]
Beginning Balance at Dec. 31, 2013	$ (5,366)		$ 77,198
Beginning Balance (shares) at Dec. 31, 2013			30,523
Increase (Decrease) in Stockholders’ Equity [Roll Forward]
Issuance of common stock upon public offerings, net of offering costs	286,247
Issuance of common stock upon public offerings, net of offering costs (shares)
Conversion of preferred stock to common stock upon initial public offering, net of issuance cost accretion	77,198		$ (77,198)
Conversion of preferred stock to common stock upon initial public offering, net of issuance cost accretion (shares)			-30,523
Common stock issued under employee benefit plans, net of shares withheld for tax	7,681
Common stock issued under employee benefit plans, net of shares withheld for tax (shares)
Retirement of common stock	-1,177
Retirement of common stock (shares)
Stock-based compensation expense	71,399
Excess tax benefit from stock-based compensation	77,134
Net income (loss)	128,088
Ending Balance at Dec. 31, 2014	641,204		$ 0
Ending Balance (shares) at Dec. 31, 2014			0
Increase (Decrease) in Stockholders’ Equity [Roll Forward]
Common stock issued under employee benefit plans, net of shares withheld for tax	36,413
Common stock issued under employee benefit plans, net of shares withheld for tax (shares)
Taxes paid related to net share settlements	-13,943
Retirement of common stock (shares)
Repurchase of outstanding common stock	-35,613
Repurchase of outstanding common stock (shares)
Stock-based compensation expense	80,583
Excess tax benefit from stock-based compensation	27,258
Net income (loss)	36,131
Ending Balance at Dec. 31, 2015	772,033		$ 0
Ending Balance (shares) at Dec. 31, 2015			0
Increase (Decrease) in Stockholders’ Equity [Roll Forward]
Common stock issued under employee benefit plans, net of shares withheld for tax	10,103
Common stock issued under employee benefit plans, net of shares withheld for tax (shares)
Taxes paid related to net share settlements	-6,889
Shares issued to third-party vendor for services (Note 11)	7,297
Shares issued to third-party vendor for services (Note 11) (shares)
Stock-based compensation expense	69,499	$ 15,566
Excess tax benefit from stock-based compensation	-1,661
Net income (loss)	-419,003
Ending Balance at Dec. 31, 2016	$ 446,945		$ 0
Ending Balance (shares) at Dec. 31, 2016			0

Condensed Consolidated Statements of Cash Flows – USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Statement of Cash Flows [Abstract]
Net income (loss)	$ (419,003)	$ 36,131	$ 128,088
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	41,640	28,981	17,945
Stock-based compensation	69,527	80,680	71,399
Excess tax benefit from stock-based compensation	-3,463	-29,348	-77,134
Deferred income taxes	38,568	-11,468	-16,920
Non-cash restructuring charges	17,601	0	0
Impairment of intangible assets	7,088	0	0
Other	7,574	5,427	1,865
Changes in operating assets and liabilities:
Accounts receivable, net	-18,816	38,313	-61,323
Inventory	21,040	-35,005	-41,033
Prepaid expenses and other assets	-14,618	-23,281	-30,317
Accounts payable and other liabilities	142,941	68,461	98,354
Deferred revenue	2,168	-1,280	5,998
Net cash provided by (used in) operating activities	-107,753	157,611	96,922
Investing activities:
Purchases of property and equipment, net	-43,627	-51,245	-27,210
Purchases of marketable securities	0	-220,055	-103,827
Maturities of marketable securities	119,918	94,680	1,083
Sale of marketable securities	47,348	30,048	0
Acquisitions, net of cash acquired	-104,353	-65,405	-3,950
Net cash provided by (used in) investing activities	19,286	-211,977	-133,904
Financing activities:
Proceeds from issuance of common stock, net	2,775	22,833	300,097
Excess tax benefit from stock-based compensation	3,463	29,348	77,134
Payment of deferred acquisition-related consideration	-950	0	-2,000
Payment of credit facility issuance costs	-3,333	0	0
Payment of deferred public offering costs	0	-903	-5,730
Repurchases of outstanding common stock	0	-35,613	0
Repayment of debt	0	0	-114,000
Net cash provided by financing activities	1,955	15,665	255,501
Effect of exchange rate changes on cash and cash equivalents	-1,046	-1,556	0
Net increase (decrease) in cash and cash equivalents	-87,558	-40,257	218,519
Cash and cash equivalents at beginning of period	279,672	319,929	101,410
Cash and cash equivalents at end of period	192,114	279,672	319,929
Supplementary cash flow disclosure:
Cash paid for interest	0	0	1,853
Cash paid (refunded) for income taxes, net	9,690	-1,093	37,283
Non-cash investing and financing activities:
Conversion of preferred stock to common stock, net	0	0	77,198
Purchases of property and equipment included in accounts payable and accrued liabilities	2,258	5,153	2,474
Reclass of deferred public offering costs to additional paid-in capital	$ 0	$ 0	$ 7,722

(1) Sales, or total revenues ÷ (Cash + Cash equivalents + Short-term investments, or Short

(2) Sales, or total revenues ÷ Accounts receivable

(3) Sales, or total revenues ÷ Inventories

(4) Sales, or total revenues ÷ Total current assets

(5) Sales, or total revenues ÷ Working capital

(6) Sales, or total revenues ÷ Net PPE

(1) Gross profit ÷ sales, or total revenues

(2) Operating income^@ ÷ sales, or total revenues

(3) Income from continuing operations before taxes^ ÷ sales, or total revenues

Expert Answer

The required ratios are shown below.	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
(1) Sales, or total revenues ÷ (Cash + Cash equivalents + Short-term investments)	5.44	3.42	3.30
(2) Sales, or total revenues ÷ Accounts receivable	7.20	11.12	7.58
(3) Sales, or total revenues ÷ Inventories	7.09	8.61	9.11
(4) Sales, or total revenues ÷ Total current assets	2.02	1.94	1.69
(5) Sales, or total revenues ÷ Working capital	7.55	3.01	2.47
(6) Sales, or total revenues ÷ Net PPE	15.49	23.13	33.55


(1) Gross profit ÷ sales, or total revenues	38.96%	41.56%	44.99%
(2) Operating income ÷ sales, or total revenues	-31.46%	3.38%	13.42%
(3) Income from continuing operations before taxes ÷ sales, or total revenues	-31.65%	3.25%	12.98%

Notes:
(a).Short term investments are the marketable securities.
(b) Working capital = Total current assets – Total current liabilities
(c) Net PPE = Property and equipment , net

The abstracts of the Balance sheet & Income statement are given below.

Balance sheet

Condensed Consolidated Balance Sheets – USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	192114	279672	319929
Marketable securities	25839	194386	102327
Accounts receivable, net	164553	145692	183992
Inventory	167192	188232	153026
Prepaid expenses and other current assets	38115	25261	63769
Total current assets	587813	833243	823043
Property and equipment, net	76509	70050	41556
Intangible assets, net	33530	31027	2937
Goodwill	146459	57095	14095
Other long-term assets	78329	111561	36060
Total assets	922640	1102976	917691
Current liabilities:
Accounts payable	205028	89989	126240
Accrued liabilities	211323	192446	118507
Deferred revenue	14388	12742	14022
Total current liabilities	430739	295177	258769

Income Statement

Condensed Consolidated Statements of Operations – USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Revenue	1185481.00	1619971.00	1394205.00
Cost of revenue	723561.00	946757.00	766970.00
Gross profit	461920.00	673214.00	627235.00
Operating expenses:
Research and development	358902.00	241694.00	151852.00
Sales and marketing	368620.00	268939.00	194377.00
General and administrative	107367.00	107833.00	93971.00
Total operating expenses	834889.00	618466.00	440200.00
Operating income (loss)	-372969.00	54748.00	187035.00
Other expense, net	-2205.00	-2163.00	-6060.00
Income (loss) before income taxes	-375174.00	52585.00	180975.00

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