12 months ended End of year 2 41,939 50 Consolidated and Combined Statements of Cash Flows (USD $) 51 In thousands, unless otherwise specified 52 Cash flows from operating activities: 53 Net income 54 Adjustments to reconcile net income to 55 net cash provided by operating activities: 56 Depreciation and amortization 57 Loss on disposal of property and equipment 58 Gain on sale of business unit 59 Income on equity method investment 70 Gain on sale of cost method investment 71 Stock-based compensation 72 Deferred income taxes, net 73 Tax benefit of excess stock-based compensation 74 deductions 75 Non-cash director deferred compensation 76 Changes in operating assets and liabilities - 77 (use) source 13,606 211 (433) (1.376) (634) 15,995 3,557 (2,971) 82 78 Accounts receivable 79 Unbilled revenue 30 Inventory 31 Other assets 32 Accounts payable 33 Accrued expenses 84 Accrued compensation 35 Deferred revenue and customer advances 36 Long term liabilities 87 Net cash provided by operating activities 38 Cash flows from investing activities: 39 Additions of property and equipment 30 Change in other assets 21 Proceeds from sale of business unit 92 Proceeds from sale of cost method investment 23 Purchases of investments 34 Sales and maturities of investments 35 Net cash provided by (used in) investing 36 activities 25,484 198 (981) 3.187 6,502 4,222 5,748 2,996 (908) 116.424 (10,817) (2,093) 23,520 634 (16,554) 9,500 4,190 (1.300) 9.344 (97,021) 2.971 (86,006) 34,608 97 Cash flows from financing activities: 98 Income tax withholding payment associated 99 with restricted stock vesting 100 Proceeds from stock option exercises 101 Stock repurchases 102 Tax benefit of excess stock-based compensation 103 deductions 104 Net cash provided by (used in) financing 105 activities 106 Net increase (decrease) in cash and cash 107 equivalents 108 Cash and cash equivalents, at beginning 109 of period 110 Cash and cash equivalents, at end of period 111 Supplemental disclosure of cash flow information 112 Cash paid for income taxes 113 Non-cash investing and financing activities: 114 Transfer of inventory to property and equipment 115 Additions of property and equipment included 116 in accounts payable 117 Asset retirement obligation 118 179,915 214,523 14,061 5 1,550 115 B C End of year 2 End of year 1 A 1 Consolidated Balance Sheets (USD S) 2 In thousands, unless otherwise specified 3 ASSETS 4 Current assets. 5 Cash and cash equivalents 6 Short term investments 7 Accounts receivable, net of allowance 8 Unbilled revenue 9 Inventory 10 Other current assets 11 Total current assets 12 Property and equipment, net 13 Deferred tax assets 14 Goodwill 15 Intangible assets, net 16 Other assets 17 Total assets 18 LIABILITIES, REDEEMABLE CONVERTIBLE 179,915 33,124 104,679 452 61,678 9.501 389,349 26,850 31,721 48,751 15,664 9,408 521,743 61,655 15,954 15,752 3,265 96,626 7.706 19 PREFERRED STOCK AND 20 STOCKHOLDERS? EQUITY 21 Current liabilities: 22 Accounts payable 23 Accrued expenses 24 Accrued compensation 25 Deferred revenue and customer advances 26 Total current liabilities 27 Long term liabilities 28 Commitments and contingencies (Note 11): 29 Redeemable convertible preferred stock, 30 5,000,000 shares authorized and no shares 31 issued or outstanding 32 Common stock, $0.01 par value, 100,000,000 shares 33 authorized, and 27.237.870 and 29,091,806 shares 34 issued and outstanding at December 31. 35 2016 and January 2, 2016, respectively 36 Additional paid-in capital 37 Retained earnings 38 Accumulated other comprehensive loss 39 Total stockholders? equity 40 Total liabilities, redeemable convertible 41 291 232,345 185,011 (236) 417,411 521,743 12 Months Ended End of year 2 44 42 43 Consolidated and combined Statements of Operations (USD $) In thousands, except Per Share data, unless otherwise specified 45 Revenue 46 Cost of revenue(1) 47 Gross margin 48 Operating expenses 49 Research and development(1) 50 Selling and marketing(1) 51 General and administrative(1) 52 Total operating expenses 53 Operating income 54 Other income (expense), net 55 Income before income taxes 56 Income tax expense 57 Net income 58 12 months ended End of year 2 41,939 50 Consolidated and Combined Statements of Cash Flows (USD $) 51 In thousands, unless otherwise specified 52 Cash flows from operating activities: 53 Net income 54 Adjustments to reconcile net income to 55 net cash provided by operating activities: 56 Depreciation and amortization 57 Loss on disposal of property and equipment 58 Gain on sale of business unit 59 Income on equity method investment 70 Gain on sale of cost method investment 71 Stock-based compensation 72 Deferred income taxes, net 73 Tax benefit of excess stock-based compensation 74 deductions 75 Non-cash director deferred compensation 76 Changes in operating assets and liabilities - 77 (use) source 13,606 211 (433) (1.376) (634) 15,995 3,557 (2,971) 82 78 Accounts receivable 79 Unbilled revenue 30 Inventory 31 Other assets 32 Accounts payable 33 Accrued expenses 84 Accrued compensation 35 Deferred revenue and customer advances 36 Long term liabilities 87 Net cash provided by operating activities 38 Cash flows from investing activities: 39 Additions of property and equipment 30 Change in other assets 21 Proceeds from sale of business unit 92 Proceeds from sale of cost method investment 23 Purchases of investments 34 Sales and maturities of investments 35 Net cash provided by (used in) investing 36 activities 25,484 198 (981) 3.187 6,502 4,222 5,748 2,996 (908) 116.424 (10,817) (2,093) 23,520 634 (16,554) 9,500 4,190 (1.300) 9.344 (97,021) 2.971 (86,006) 34,608 97 Cash flows from financing activities: 98 Income tax withholding payment associated 99 with restricted stock vesting 100 Proceeds from stock option exercises 101 Stock repurchases 102 Tax benefit of excess stock-based compensation 103 deductions 104 Net cash provided by (used in) financing 105 activities 106 Net increase (decrease) in cash and cash 107 equivalents 108 Cash and cash equivalents, at beginning 109 of period 110 Cash and cash equivalents, at end of period 111 Supplemental disclosure of cash flow information 112 Cash paid for income taxes 113 Non-cash investing and financing activities: 114 Transfer of inventory to property and equipment 115 Additions of property and equipment included 116 in accounts payable 117 Asset retirement obligation 118 179,915 214,523 14,061 5 1,550 115 B C End of year 2 End of year 1 A 1 Consolidated Balance Sheets (USD S) 2 In thousands, unless otherwise specified 3 ASSETS 4 Current assets. 5 Cash and cash equivalents 6 Short term investments 7 Accounts receivable, net of allowance 8 Unbilled revenue 9 Inventory 10 Other current assets 11 Total current assets 12 Property and equipment, net 13 Deferred tax assets 14 Goodwill 15 Intangible assets, net 16 Other assets 17 Total assets 18 LIABILITIES, REDEEMABLE CONVERTIBLE 179,915 33,124 104,679 452 61,678 9.501 389,349 26,850 31,721 48,751 15,664 9,408 521,743 61,655 15,954 15,752 3,265 96,626 7.706 19 PREFERRED STOCK AND 20 STOCKHOLDERS? EQUITY 21 Current liabilities: 22 Accounts payable 23 Accrued expenses 24 Accrued compensation 25 Deferred revenue and customer advances 26 Total current liabilities 27 Long term liabilities 28 Commitments and contingencies (Note 11): 29 Redeemable convertible preferred stock, 30 5,000,000 shares authorized and no shares 31 issued or outstanding 32 Common stock, $0.01 par value, 100,000,000 shares 33 authorized, and 27.237.870 and 29,091,806 shares 34 issued and outstanding at December 31. 35 2016 and January 2, 2016, respectively 36 Additional paid-in capital 37 Retained earnings 38 Accumulated other comprehensive loss 39 Total stockholders? equity 40 Total liabilities, redeemable convertible 41 291 232,345 185,011 (236) 417,411 521,743 12 Months Ended End of year 2 44 42 43 Consolidated and combined Statements of Operations (USD $) In thousands, except Per Share data, unless otherwise specified 45 Revenue 46 Cost of revenue(1) 47 Gross margin 48 Operating expenses 49 Research and development(1) 50 Selling and marketing(1) 51 General and administrative(1) 52 Total operating expenses 53 Operating income 54 Other income (expense), net 55 Income before income taxes 56 Income tax expense 57 Net income 58