Question #1 - 1a. What is the matching principle (do not give me the definition in the book, but instead in your own words using terminology from the book and YOU MUST use an example from the Blue Apron financial statements) 1b. What are the financial implications if a company does not follow the matching principle. Total 200 words minimum for all three together. December 31, 2019 43,531 248 25,106 8.864 77,749 181,806 6,510 266,065 PART I FINANCIAL INFORMATION Item 1. Financial Statements BLUE APRON HOLDINGS, INC. Consolidated Balance Sheets (In thousands, except share and per-share data) (Unaudited) March 31, 2020 ASSETS CURRENT ASSETS Cash and cash equivalents 29,505 Accounts receivable, net 209 Inventories, net 24,712 Prepaid expenses and other current assets 13,644 Total current assets 68,070 Property and equipment, net 138,314 Other noncurrent assets 4,868 TOTAL ASSETS 211,252 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable 26,539 Accrued expenses and other current liabilities 25,743 Deferred revenue 7,814 Total current liabilities 60,096 Long-term debt 53,646 Facility financing obligation 35,976 Other noncurrent liabilities 10,873 TOTAL LIABILITIES 160,591 Commitments and contingencies (Note 9) STOCKHOLDERS' EQUITY (DEFICIT): Class A common stock, par value of $0.0001 per share - 1,500,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 9,727,283 and 7,799,093 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively Class B common stock, par value of 0.0001 per share - 175,000,000 shares authorized as of March 31, 2020 and December 31, 2019: 3,654,248 and 5,464,196 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively Class C common stock, par value of $0.0001 per share 500,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 0 shares issued and outstanding as of March 31, 2020 and December 31, 2019 Additional paid-in capital 602,783 Accumulated deficit (552,124) TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 50,661 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 211,252 The accompanying notes are an integral part of these Consolidated Financial Statements. 23,972 30,366 6,120 60,458 53,464 71,689 12.455 198,066 599,976 (531,979) 67.999 266,065 BLUE APRON HOLDINGS, INC. Consolidated Statements of Operations (In thousands, except share and per-share data) (Unaudited) Three Months Ended March 31, 2020 101,857 2019 141,890 Net revenue Operating expenses: Cost of goods sold, excluding depreciation and amortization Marketing Product, technology, general and administrative Depreciation and amortization Other operating expense Total operating expenses Income (loss) from operations Interest income (expense), net Income (loss) before income taxes Benefit (provision) for income taxes Net income (loss) 60,638 15,032 34,217 6,753 3,198 119,838 (17,981) (2,155) (20,136) (9) (20,145) 82,704 14,234 39,148 8,604 230 144,920 (3,030) (2,232) (5,262) (13) (5,275) (0.41) (0.41) S Net income (loss) per share attributable to Class A, Class B, and Class C common stockholders* Basic $ (1.51) $ Diluted (1.51) $ Weighted average shares used to compute net income (loss) per share attributable to Class A, Class B, and Class C common stockholders*: Basic 13,305,805 Diluted 13,305,805 Reflects the 1-for-15 reverse stock split that became effective on June 14, 2019. The accompanying notes are an integral part of these Consolidated Financial Statements. 12,979,900 12,979,900 BLUE APRON HOLDINGS, INC. Consolidated Statements of Cash Flows (In thousands) (Unaudited) 2.533 Three Months Ended March 31, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) (20,145) $ (5,275) Adjustments to reconcile net income (loss) to net cash from (used in) operating activities Depreciation and amortization of property and equipment 6,753 8,604 Loss (gain) on disposal of property and equipment 110 Loss (gain) on build-to-suit accounting derecognition (4.936) Loss on impairment 7.448 Changes in reserves and allowances (425) (671) Share-based compensation 2,240 2,835 Non-cash interest expense 182 125 Changes in operating assets and liabilities: Accounts receivable 39 153 Inventories 767 1,216 Prepaid expenses and other current assets (2.992) 3,341 Accounts payable 279 Accrued expenses and other current liabilities (5,964) (1,319) Deferred revenue 1,694 (1.727) Other noncurrent assets and liabilities 202 (2.533) Net cash from (used in) operating activities (12,604) 5.138 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (1.611) (1.734) Proceeds from sale of property and equipment Net cash from (used in) investing activities (1.532) (1.667) CASH FLOWS FROM FINANCING ACTIVITIES: Payments of debt issuance costs (7) Proceeds from exercise of stock options 486 102 Principal payments on capital lease obligations (77) (66) Net cash from (used in) financing activities 409 29 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (13,747) 3,500 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH -- Beginning of period 46 443 97,307 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH -- End of period 32,696 100,807 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for income taxes, net of refunds s Cash paid for interest 2,088 SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION: 2.174 Acquisition (disposal) of property and equipment financed under capital lease obligations 22 S Non-cash additions to property and equipment $ 81 s 138 Purchases of property and equipment in Accounts payable and Accrued expenses and other current liabilities 354 S 250 The accompanying notes are an integral part of these Consolidated Financial Statements. 59