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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Infinera Corporation | NASDAQ:INFN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.02 | -0.38% | 5.24 | 5.05 | 5.75 | 5.64 | 5.22 | 5.47 | 1,976,802 | 01:00:00 |
|
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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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77-0560433
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
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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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Item 1.
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Item 1A.
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Item 6.
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Item 1.
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Condensed Consolidated Financial Statements
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June 28,
2014 |
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December 28,
2013 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
83,307
|
|
|
$
|
124,330
|
|
Short-term investments
|
230,694
|
|
|
172,660
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $41 in 2014 and $43 in 2013
|
120,686
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|
|
100,643
|
|
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Inventory
|
130,853
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|
|
123,685
|
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Prepaid expenses and other current assets
|
20,167
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|
|
17,752
|
|
||
Total current assets
|
585,707
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|
539,070
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|
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Property, plant and equipment, net
|
76,886
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|
79,668
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Long-term investments
|
37,086
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64,419
|
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Cost-method investment
|
9,000
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9,000
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|
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Long-term restricted cash
|
4,404
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|
|
3,904
|
|
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Other non-current assets
|
5,571
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|
|
4,865
|
|
||
Total assets
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$
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718,654
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|
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$
|
700,926
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
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|
||||
Current liabilities:
|
|
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|
||||
Accounts payable
|
$
|
33,162
|
|
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$
|
39,843
|
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Accrued expenses
|
22,546
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|
|
22,431
|
|
||
Accrued compensation and related benefits
|
28,742
|
|
|
33,899
|
|
||
Accrued warranty
|
13,860
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|
|
12,374
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|
||
Deferred revenue
|
29,657
|
|
|
32,402
|
|
||
Total current liabilities
|
127,967
|
|
|
140,949
|
|
||
Long-term debt, net
|
112,932
|
|
|
109,164
|
|
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Accrued warranty, non-current
|
14,088
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|
|
10,534
|
|
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Deferred revenue, non-current
|
6,187
|
|
|
4,888
|
|
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Other long-term liabilities
|
18,173
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|
|
17,581
|
|
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Commitments and contingencies (Note 14)
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||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value
Authorized shares – 25,000 and no shares issued and outstanding
|
—
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|
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—
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|
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Common stock, $0.001 par value
Authorized shares – 500,000 as of June 28, 2014 and December 28, 2013 Issued and outstanding shares – 123,615 as of June 28, 2014 and 119,887 as of December 28, 2013
|
124
|
|
|
120
|
|
||
Additional paid-in capital
|
1,046,375
|
|
|
1,025,661
|
|
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Accumulated other comprehensive loss
|
(3,113
|
)
|
|
(3,486
|
)
|
||
Accumulated deficit
|
(604,079
|
)
|
|
(604,485
|
)
|
||
Total stockholders’ equity
|
439,307
|
|
|
417,810
|
|
||
Total liabilities and stockholders’ equity
|
$
|
718,654
|
|
|
$
|
700,926
|
|
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Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2014 |
|
June 29,
2013 |
|
June 28,
2014 |
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June 29,
2013 |
||||||||
Revenue:
|
|
|
|
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|
|
|
||||||||
Product
|
$
|
142,364
|
|
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$
|
120,647
|
|
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$
|
266,606
|
|
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$
|
228,990
|
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Services
|
23,035
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|
|
17,738
|
|
|
41,608
|
|
|
34,020
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|
||||
Total revenue
|
165,399
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|
|
138,385
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|
|
308,214
|
|
|
263,010
|
|
||||
Cost of revenue:
|
|
|
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|
|
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||||||||
Cost of product
|
85,906
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|
|
80,198
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|
|
164,344
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|
|
155,645
|
|
||||
Cost of services
|
9,240
|
|
|
6,533
|
|
|
15,211
|
|
|
13,009
|
|
||||
Total cost of revenue
|
95,146
|
|
|
86,731
|
|
|
179,555
|
|
|
168,654
|
|
||||
Gross profit
|
70,253
|
|
|
51,654
|
|
|
128,659
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|
|
94,356
|
|
||||
Operating expenses:
|
|
|
|
|
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|
|
||||||||
Research and development
|
31,738
|
|
|
31,681
|
|
|
61,084
|
|
|
61,407
|
|
||||
Sales and marketing
|
18,082
|
|
|
17,155
|
|
|
35,944
|
|
|
35,201
|
|
||||
General and administrative
|
12,381
|
|
|
11,426
|
|
|
24,635
|
|
|
21,298
|
|
||||
Total operating expenses
|
62,201
|
|
|
60,262
|
|
|
121,663
|
|
|
117,906
|
|
||||
Income (loss) from operations
|
8,052
|
|
|
(8,608
|
)
|
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6,996
|
|
|
(23,550
|
)
|
||||
Other income (expense), net:
|
|
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||||||||
Interest income
|
337
|
|
|
207
|
|
|
673
|
|
|
404
|
|
||||
Interest expense
|
(2,728
|
)
|
|
(849
|
)
|
|
(5,405
|
)
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|
(849
|
)
|
||||
Other gain (loss), net
|
(264
|
)
|
|
(158
|
)
|
|
(993
|
)
|
|
(361
|
)
|
||||
Total other income (expense), net
|
(2,655
|
)
|
|
(800
|
)
|
|
(5,725
|
)
|
|
(806
|
)
|
||||
Income (loss) before income taxes
|
5,397
|
|
|
(9,408
|
)
|
|
1,271
|
|
|
(24,356
|
)
|
||||
Provision for income taxes
|
617
|
|
|
601
|
|
|
865
|
|
|
932
|
|
||||
Net income (loss)
|
$
|
4,780
|
|
|
$
|
(10,009
|
)
|
|
$
|
406
|
|
|
$
|
(25,288
|
)
|
Net income (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.04
|
|
|
$
|
(0.09
|
)
|
|
$ 0.00
|
|
|
$
|
(0.22
|
)
|
|
Diluted
|
$
|
0.04
|
|
|
$
|
(0.09
|
)
|
|
$ 0.00
|
|
|
$
|
(0.22
|
)
|
|
Weighted average shares used in computing net income (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
123,128
|
|
|
116,911
|
|
|
122,240
|
|
|
115,609
|
|
||||
Diluted
|
126,758
|
|
|
116,911
|
|
|
126,112
|
|
|
115,609
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2014 |
|
June 29,
2013 |
|
June 28,
2014 |
|
June 29,
2013 |
||||||||
Net income (loss)
|
$
|
4,780
|
|
|
$
|
(10,009
|
)
|
|
$
|
406
|
|
|
$
|
(25,288
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Reclassification of realized gain on auction rate securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(166
|
)
|
||||
Unrealized gain (loss) on all other available-for-sale investments
|
13
|
|
|
(99
|
)
|
|
62
|
|
|
(108
|
)
|
||||
Foreign currency translation adjustment
|
87
|
|
|
(802
|
)
|
|
331
|
|
|
(918
|
)
|
||||
Tax related to available-for-sale investment
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
||||
Net change in accumulated other comprehensive income (loss)
|
100
|
|
|
(901
|
)
|
|
373
|
|
|
(1,192
|
)
|
||||
Comprehensive income (loss)
|
$
|
4,880
|
|
|
$
|
(10,910
|
)
|
|
$
|
779
|
|
|
$
|
(26,480
|
)
|
|
Six Months Ended
|
||||||
|
June 28,
2014 |
|
June 29,
2013 |
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
406
|
|
|
$
|
(25,288
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
12,813
|
|
|
12,621
|
|
||
Amortization of debt discount and issuance costs
|
4,092
|
|
|
630
|
|
||
Amortization of premium on investments
|
1,747
|
|
|
450
|
|
||
Stock-based compensation expense
|
13,476
|
|
|
16,159
|
|
||
Other gain
|
(22
|
)
|
|
(291
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(20,043
|
)
|
|
10,332
|
|
||
Inventory
|
(8,107
|
)
|
|
791
|
|
||
Prepaid expenses and other assets
|
(3,389
|
)
|
|
(2,238
|
)
|
||
Accounts payable
|
(6,428
|
)
|
|
(23,980
|
)
|
||
Accrued liabilities and other expenses
|
(3,318
|
)
|
|
(220
|
)
|
||
Deferred revenue
|
(1,448
|
)
|
|
4,440
|
|
||
Accrued warranty
|
5,040
|
|
|
3,219
|
|
||
Net cash used in operating activities
|
(5,181
|
)
|
|
(3,375
|
)
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Purchase of available-for-sale investments
|
(158,496
|
)
|
|
(130,828
|
)
|
||
Proceeds from sale of available-for-sale investments
|
9,824
|
|
|
2,850
|
|
||
Proceeds from maturities and calls of investments
|
116,290
|
|
|
62,647
|
|
||
Purchase of property and equipment
|
(9,985
|
)
|
|
(9,431
|
)
|
||
Change in restricted cash
|
(491
|
)
|
|
(6
|
)
|
||
Net cash used in investing activities
|
(42,858
|
)
|
|
(74,768
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from issuance of debt, net
|
—
|
|
|
144,469
|
|
||
Proceeds from issuance of common stock
|
8,401
|
|
|
12,496
|
|
||
Minimum tax withholding paid on behalf of employees for net share settlement
|
(1,619
|
)
|
|
(1,499
|
)
|
||
Net cash provided by financing activities
|
6,782
|
|
|
155,466
|
|
||
Effect of exchange rate changes on cash
|
234
|
|
|
(778
|
)
|
||
Net change in cash and cash equivalents
|
(41,023
|
)
|
|
76,545
|
|
||
Cash and cash equivalents at beginning of period
|
124,330
|
|
|
104,666
|
|
||
Cash and cash equivalents at end of period
|
$
|
83,307
|
|
|
$
|
181,211
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid for income taxes, net of refunds
|
$
|
482
|
|
|
$
|
1,148
|
|
Cash paid for interest
|
$
|
1,313
|
|
|
$
|
—
|
|
Supplemental schedule of non-cash financing activities:
|
|
|
|
||||
Transfer of inventory to fixed assets
|
$
|
978
|
|
|
$
|
4,684
|
|
1.
|
Basis of Presentation and Significant Accounting Policies
|
2.
|
Recent Accounting Pronouncements
|
3.
|
Fair Value Measurements and Other-Than-Temporary Impairments
|
Level 1
|
|
–
|
|
Quoted prices in active markets for identical assets or liabilities.
|
|
|
|
|
|
Level 2
|
|
–
|
|
Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
|
|
|
Level 3
|
|
–
|
|
Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.
|
|
As of June 28, 2014
|
|
As of December 28, 2013
|
||||||||||||||||||||||||||||
|
Fair Value Measured Using
|
|
Fair Value Measured Using
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
$
|
16,741
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,741
|
|
|
$
|
51,749
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51,749
|
|
Certificates of deposit
|
—
|
|
|
3,560
|
|
|
—
|
|
|
3,560
|
|
|
—
|
|
|
3,840
|
|
|
—
|
|
|
3,840
|
|
||||||||
Commercial paper
|
—
|
|
|
82,673
|
|
|
—
|
|
|
82,673
|
|
|
—
|
|
|
85,860
|
|
|
—
|
|
|
85,860
|
|
||||||||
Corporate bonds
|
—
|
|
|
186,006
|
|
|
—
|
|
|
186,006
|
|
|
—
|
|
|
150,595
|
|
|
—
|
|
|
150,595
|
|
||||||||
U.S. treasuries
|
8,838
|
|
|
—
|
|
|
—
|
|
|
8,838
|
|
|
4,804
|
|
|
—
|
|
|
—
|
|
|
4,804
|
|
||||||||
Foreign currency exchange forward contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
||||||||
Total assets
|
$
|
25,579
|
|
|
$
|
272,239
|
|
|
$
|
—
|
|
|
$
|
297,818
|
|
|
$
|
56,553
|
|
|
$
|
240,324
|
|
|
$
|
—
|
|
|
$
|
296,877
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency exchange forward contracts
|
$
|
—
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
June 28, 2014
|
||||||||||||||
|
Adjusted Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
||||||||
Money market funds
|
$
|
16,741
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,741
|
|
Certificates of deposit
|
3,560
|
|
|
—
|
|
|
—
|
|
|
3,560
|
|
||||
Commercial paper
|
82,675
|
|
|
4
|
|
|
(6
|
)
|
|
82,673
|
|
||||
Corporate bonds
|
186,069
|
|
|
29
|
|
|
(92
|
)
|
|
186,006
|
|
||||
U.S. treasuries
|
8,835
|
|
|
5
|
|
|
(2
|
)
|
|
8,838
|
|
||||
Total available-for-sale investments
|
$
|
297,880
|
|
|
$
|
38
|
|
|
$
|
(100
|
)
|
|
$
|
297,818
|
|
|
December 28, 2013
|
||||||||||||||
|
Adjusted Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Money market funds
|
$
|
51,749
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51,749
|
|
Certificates of deposit
|
3,840
|
|
|
—
|
|
|
—
|
|
|
3,840
|
|
||||
Commercial paper
|
85,870
|
|
|
2
|
|
|
(12
|
)
|
|
85,860
|
|
||||
Corporate bonds
|
150,711
|
|
|
27
|
|
|
(143
|
)
|
|
150,595
|
|
||||
U.S. treasuries
|
4,802
|
|
|
2
|
|
|
—
|
|
|
4,804
|
|
||||
Total available-for-sale investments
|
$
|
296,972
|
|
|
$
|
31
|
|
|
$
|
(155
|
)
|
|
$
|
296,848
|
|
|
Amortized
Cost
|
|
Cumulative
OTTI in
Earnings
|
|
|
Unrealized
Gain
|
|
OTTI Loss in
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||||||
Balance at December 29, 2012
|
$
|
2,707
|
|
|
$
|
(394
|
)
|
|
|
$
|
784
|
|
|
$
|
(618
|
)
|
|
$
|
166
|
|
Call on investments
|
(87
|
)
|
|
13
|
|
|
|
(25
|
)
|
|
20
|
|
|
(5
|
)
|
|||||
Investments sold
|
(2,620
|
)
|
|
381
|
|
|
|
(759
|
)
|
|
598
|
|
|
(161
|
)
|
|||||
Balance at June 29, 2013
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
4.
|
Cost-method Investment
|
5.
|
Derivative Instruments
|
|
As of June 28, 2014
|
|
As of December 28, 2013
|
||||||||||||||||||||
|
Gross Notional
(1)
|
|
Prepaid Expenses and Other Assets
|
|
Other
Accrued
Liabilities
|
|
Gross Notional
(1)
|
|
Prepaid Expenses and Other Assets
|
|
Other
Accrued
Liabilities
|
||||||||||||
Foreign currency exchange forward contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Related to euro denominated receivables
|
$
|
12,458
|
|
|
—
|
|
|
$
|
(53
|
)
|
|
$
|
16,867
|
|
|
27
|
|
|
$
|
—
|
|
||
Related to British pound denominated receivables
|
1,266
|
|
|
—
|
|
|
(4
|
)
|
|
13,271
|
|
|
—
|
|
|
(26
|
)
|
||||||
Related to restricted cash
|
1,381
|
|
|
—
|
|
|
(6
|
)
|
|
1,391
|
|
|
2
|
|
|
—
|
|
||||||
|
$
|
15,105
|
|
|
$
|
—
|
|
|
$
|
(63
|
)
|
|
$
|
31,529
|
|
|
$
|
29
|
|
|
$
|
(26
|
)
|
(1)
|
Represents the face amounts of forward contracts that were outstanding as of the period noted.
|
6.
|
Balance Sheet Details
|
|
June 28, 2014
|
|
December 28, 2013
|
||||
Inventory:
|
|
|
|
||||
Raw materials
|
$
|
11,160
|
|
|
$
|
14,311
|
|
Work in process
|
40,641
|
|
|
49,172
|
|
||
Finished goods
(1)
|
79,052
|
|
|
60,202
|
|
||
Total inventory
|
$
|
130,853
|
|
|
$
|
123,685
|
|
Property, plant and equipment, net:
|
|
|
|
||||
Computer hardware
|
$
|
8,270
|
|
|
$
|
9,692
|
|
Computer software
(2)
|
17,578
|
|
|
16,988
|
|
||
Laboratory and manufacturing equipment
|
154,181
|
|
|
146,834
|
|
||
Furniture and fixtures
|
1,344
|
|
|
1,347
|
|
||
Leasehold improvements
|
36,687
|
|
|
35,913
|
|
||
Construction in progress
|
7,278
|
|
|
8,950
|
|
||
Subtotal
|
$
|
225,338
|
|
|
$
|
219,724
|
|
Less accumulated depreciation and amortization
|
(148,452
|
)
|
|
(140,056
|
)
|
||
Total property, plant and equipment, net
|
$
|
76,886
|
|
|
$
|
79,668
|
|
Accrued expenses:
|
|
|
|
||||
Loss contingency related to non-cancelable purchase commitments
|
$
|
5,019
|
|
|
$
|
5,120
|
|
Professional and other consulting fees
|
1,131
|
|
|
1,411
|
|
||
Taxes payable
|
2,990
|
|
|
2,372
|
|
||
Royalties
|
1,804
|
|
|
1,540
|
|
||
Accrued rebate and customer prepay liability
|
566
|
|
|
3,807
|
|
||
Accrued interest on convertible senior notes
|
219
|
|
|
219
|
|
||
Other accrued expenses
|
10,817
|
|
|
7,962
|
|
||
Total accrued expenses
|
$
|
22,546
|
|
|
$
|
22,431
|
|
(1)
|
Included in finished goods inventory at June 28, 2014 and December 28, 2013 were
$17.8 million
and
$9.2 million
, respectively, of inventory at customer locations for which product acceptance had not occurred.
|
(2)
|
Included in computer software at June 28, 2014 and December 28, 2013 were
$7.9 million
and
$7.9 million
, respectively, related to an enterprise resource planning ("ERP") system that the Company implemented during 2012. The unamortized ERP costs at June 28, 2014 and December 28, 2013 were
$5.7 million
and
$6.3 million
, respectively.
|
|
June 28, 2014
|
|
December 28, 2013
|
||||
Value added tax license
|
$
|
1,451
|
|
|
$
|
1,430
|
|
Customer proposal guarantee
|
1,876
|
|
|
1,446
|
|
||
Property leases
|
699
|
|
|
699
|
|
||
Total standby letters of credit
|
$
|
4,026
|
|
|
$
|
3,575
|
|
7.
|
Accumulated Comprehensive Loss
|
|
|
Unrealized Gain
on Other
Available-for-Sale
Securities
|
|
Foreign
Currency Translation
|
|
Accumulated
Tax Effect
|
|
Total
|
||||||||
Balance at December 28, 2013
|
|
$
|
(124
|
)
|
|
$
|
(2,602
|
)
|
|
$
|
(760
|
)
|
|
$
|
(3,486
|
)
|
Net current-period other comprehensive loss
|
|
62
|
|
|
331
|
|
|
(20
|
)
|
|
373
|
|
||||
Balance at June 28, 2014
|
|
$
|
(62
|
)
|
|
$
|
(2,271
|
)
|
|
$
|
(780
|
)
|
|
$
|
(3,113
|
)
|
8.
|
Basic and Diluted Net Income (Loss) Per Common Share
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
June 28, 2014
|
|
June 29, 2013
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
4,780
|
|
|
$
|
(10,009
|
)
|
|
$
|
406
|
|
|
$
|
(25,288
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
123,128
|
|
|
116,911
|
|
|
122,240
|
|
|
115,609
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Employee equity plans
|
3,630
|
|
|
—
|
|
|
3,872
|
|
|
—
|
|
||||
Diluted weighted average common shares outstanding
|
126,758
|
|
|
116,911
|
|
|
126,112
|
|
|
115,609
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.04
|
|
|
$
|
(0.09
|
)
|
|
$ 0.00
|
|
|
$
|
(0.22
|
)
|
|
Diluted
|
$
|
0.04
|
|
|
$
|
(0.09
|
)
|
|
$ 0.00
|
|
|
$
|
(0.22
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
June 28, 2014
|
|
June 29, 2013
|
||||
Stock options
|
766
|
|
|
7,396
|
|
|
914
|
|
|
7,396
|
|
Restricted stock units
|
338
|
|
|
6,362
|
|
|
569
|
|
|
6,362
|
|
Performance stock units
|
—
|
|
|
721
|
|
|
—
|
|
|
721
|
|
Employee stock purchase plan shares
|
697
|
|
|
601
|
|
|
708
|
|
|
601
|
|
Total
|
1,801
|
|
|
15,080
|
|
|
2,191
|
|
|
15,080
|
|
9.
|
Convertible Senior Notes
|
•
|
during any fiscal quarter commencing after the fiscal quarter ended on September 28, 2013 (and only during such fiscal quarter) if the last reported sale price of the common stock for at least
20
trading days (whether or not consecutive) during a period of
30
consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to
130%
of the conversion price on each applicable trading day;
|
•
|
during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per
$1,000
principal amount of Notes for each trading day of the measurement period was less than
98%
of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;
|
•
|
upon the occurrence of specified corporate events described under the Indenture, such as a consolidation, merger or binding share exchange; or
|
•
|
at any time on or after December 1, 2017 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.
|
|
Other Non-Current Assets
|
|
Long-Term Debt
|
|
Additional Paid-in Capital
|
||||||
Principal amount
|
$
|
—
|
|
|
$
|
150,000
|
|
|
$
|
—
|
|
Debt discount
|
—
|
|
|
(45,000
|
)
|
|
—
|
|
|||
Equity component
|
—
|
|
|
—
|
|
|
45,000
|
|
|||
Debt issuance cost
|
3,872
|
|
|
—
|
|
|
(1,659
|
)
|
|||
Initial transaction amounts
|
$
|
3,872
|
|
|
$
|
105,000
|
|
|
$
|
43,341
|
|
Amortization of debt issuance cost
|
(682
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of debt discount
|
—
|
|
|
7,932
|
|
|
—
|
|
|||
Net carrying amount at June 28, 2014
|
$
|
3,190
|
|
|
$
|
112,932
|
|
|
$
|
43,341
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
June 28, 2014
|
|
June 29, 2013
|
||||||||
Contractual interest expense
|
$
|
656
|
|
|
$
|
219
|
|
|
$
|
1,313
|
|
|
$
|
219
|
|
Amortization of debt issuance costs
|
164
|
|
|
50
|
|
|
324
|
|
|
50
|
|
||||
Amortization of debt discount
|
1,908
|
|
|
580
|
|
|
3,768
|
|
|
580
|
|
||||
Total interest expense
|
$
|
2,728
|
|
|
$
|
849
|
|
|
$
|
5,405
|
|
|
$
|
849
|
|
10.
|
Stockholders’ Equity
|
|
Number of
Options
|
|
Weighted-Average
Exercise
Price
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 28, 2013
|
6,367
|
|
|
$
|
7.26
|
|
|
$
|
17,452
|
|
Options granted
|
25
|
|
|
$
|
9.02
|
|
|
|
||
Options exercised
|
(456
|
)
|
|
$
|
5.87
|
|
|
$
|
1,379
|
|
Options canceled
|
(40
|
)
|
|
$
|
11.58
|
|
|
|
|
|
Outstanding at June 28, 2014
|
5,896
|
|
|
$
|
7.34
|
|
|
$
|
14,355
|
|
Vested and expected to vest as of June 28, 2014
|
5,893
|
|
|
|
|
$
|
14,347
|
|
||
Exercisable at June 28, 2014
|
5,770
|
|
|
$
|
7.34
|
|
|
$
|
14,102
|
|
|
Number of
Restricted
Stock Units
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 28, 2013
|
6,583
|
|
|
$
|
7.72
|
|
|
$
|
64,443
|
|
RSUs granted
|
2,293
|
|
|
$
|
8.29
|
|
|
|
|
|
RSUs released
|
(2,441
|
)
|
|
$
|
7.66
|
|
|
$
|
20,824
|
|
RSUs canceled
|
(313
|
)
|
|
$
|
7.24
|
|
|
|
|
|
Outstanding at June 28, 2014
|
6,122
|
|
|
$
|
7.98
|
|
|
$
|
58,464
|
|
Expected to vest at June 28, 2014
|
5,880
|
|
|
|
|
|
$
|
56,151
|
|
|
Number of
Performance
Stock Units
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 28, 2013
|
721
|
|
|
$
|
7.04
|
|
|
$
|
7,054
|
|
PSUs granted
|
446
|
|
|
$
|
7.04
|
|
|
|
||
PSUs released
|
(255
|
)
|
|
$
|
6.36
|
|
|
$
|
2,097
|
|
PSUs canceled
|
(73
|
)
|
|
$
|
7.19
|
|
|
|
||
Outstanding at June 28, 2014
|
839
|
|
|
$
|
7.21
|
|
|
$
|
8,009
|
|
Expected to vest at June 28, 2014
|
625
|
|
|
|
|
$
|
5,969
|
|
|
Unrecognized
Compensation
Expense, Net
|
|
Weighted-
Average Period
(in years)
|
|
Stock options
|
422
|
|
|
1.6
|
RSUs
|
35,613
|
|
|
2.4
|
PSUs
|
2,782
|
|
|
1.6
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
Employee and Director Stock Options
|
June 28, 2014
|
|
June 29, 2013
|
|
June 28, 2014
|
|
June 29, 2013
|
Volatility
|
N/A
|
|
N/A
|
|
52%
|
|
N/A
|
Risk-free interest rate
|
N/A
|
|
N/A
|
|
1.3%
|
|
N/A
|
Expected life
|
N/A
|
|
N/A
|
|
4.3 years
|
|
N/A
|
Estimated fair value
|
N/A
|
|
N/A
|
|
$3.85
|
|
N/A
|
Total stock-based compensation expense
|
$127
|
|
$722
|
|
$515
|
|
$1,525
|
N/A
|
Not applicable because the Company did not grant any options to employees for the periods presented.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
Employee Stock Purchase Plan
|
June 28, 2014
|
|
June 29, 2013
|
|
June 28, 2014
|
|
June 29, 2013
|
Volatility
|
49%
|
|
46%
|
|
49% - 51%
|
|
46%
|
Risk-free interest rate
|
0.02%
|
|
0.14%
|
|
0.02% - 0.11%
|
|
0.10%
|
Expected life
|
0.25 years
|
|
0.5 years
|
|
0.25 - 0.5 years
|
|
0.5 years
|
Estimated fair value
|
$2.05
|
|
$1.87
|
|
$2.05 - $2.57
|
|
$1.87
|
Total stock-based compensation expense
|
$843
|
|
$566
|
|
$1,634
|
|
$1,274
|
|
Year Ended
|
|
December 28, 2013
|
Infinera Volatility
|
55%
|
NASDAQ Telecom Composite Index Volatility
|
23%
|
Risk-free interest rate
|
0.42%
|
Correlation with NASDAQ Telecom Composite Index
|
0.56
|
Estimated fair value
|
$6.27 - $7.06
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 28, 2014
|
||
Infinera Volatility
|
50%
|
|
49% - 50%
|
IGN Index Volatility
|
25%
|
|
25%
|
Risk-free interest rate
|
0.71%
|
|
0.66% - 0.71%
|
Correlation with IGN Index
|
0.60
|
|
0.60
|
Estimated fair value
|
$6.59 - $7.53
|
|
$6.59 - $7.60
|
|
June 28, 2014
|
|
December 28, 2013
|
||||
Stock-based compensation effects in inventory
|
$
|
3,228
|
|
|
$
|
3,189
|
|
Stock-based compensation effects in deferred inventory cost
|
$
|
13
|
|
|
$
|
15
|
|
Stock-based compensation effects in fixed assets
|
$
|
132
|
|
|
$
|
145
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
June 28, 2014
|
|
June 29, 2013
|
||||||||
Stock-based compensation effects included in net income (loss) before income taxes
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
477
|
|
|
$
|
474
|
|
|
$
|
929
|
|
|
$
|
960
|
|
Research and development
|
2,080
|
|
|
2,622
|
|
|
4,218
|
|
|
5,741
|
|
||||
Sales and marketing
|
1,815
|
|
|
1,807
|
|
|
3,535
|
|
|
3,806
|
|
||||
General and administration
|
1,549
|
|
|
1,591
|
|
|
3,079
|
|
|
2,360
|
|
||||
|
5,921
|
|
|
6,494
|
|
|
11,761
|
|
|
12,867
|
|
||||
Cost of revenue – amortization from balance sheet
(1)
|
883
|
|
|
1,690
|
|
|
1,715
|
|
|
3,292
|
|
||||
Total stock-based compensation expense
|
$
|
6,804
|
|
|
$
|
8,184
|
|
|
$
|
13,476
|
|
|
$
|
16,159
|
|
(1)
|
Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period.
|
11.
|
Income Taxes
|
12.
|
Segment Information
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
June 28, 2014
|
|
June 29, 2013
|
||||||||
Americas:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
136,342
|
|
|
$
|
88,251
|
|
|
$
|
247,033
|
|
|
$
|
167,324
|
|
Other Americas
|
4,760
|
|
|
3,802
|
|
|
8,296
|
|
|
4,519
|
|
||||
|
141,102
|
|
|
92,053
|
|
|
255,329
|
|
|
171,843
|
|
||||
Europe, Middle East and Africa
|
19,234
|
|
|
31,954
|
|
|
44,847
|
|
|
70,760
|
|
||||
Asia Pacific and Japan
|
5,063
|
|
|
14,378
|
|
|
8,038
|
|
|
20,407
|
|
||||
Total revenue
|
$
|
165,399
|
|
|
$
|
138,385
|
|
|
$
|
308,214
|
|
|
$
|
263,010
|
|
|
June 28,
2014
|
|
December 28,
2013
|
||||
United States
|
$
|
74,157
|
|
|
$
|
76,850
|
|
Other Americas
|
283
|
|
|
319
|
|
||
Europe, Middle East and Africa
|
1,022
|
|
|
1,451
|
|
||
Asia Pacific and Japan
|
1,424
|
|
|
1,048
|
|
||
Total property, plant and equipment, net
|
$
|
76,886
|
|
|
$
|
79,668
|
|
13.
|
Guarantees
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
June 28, 2014
|
|
June 29, 2013
|
||||||||
Beginning balance
|
$
|
26,385
|
|
|
$
|
16,672
|
|
|
$
|
22,908
|
|
|
$
|
16,482
|
|
Charges to operations
|
6,800
|
|
|
6,178
|
|
|
12,360
|
|
|
10,346
|
|
||||
Utilization
|
(2,370
|
)
|
|
(2,055
|
)
|
|
(5,612
|
)
|
|
(4,138
|
)
|
||||
Change in estimate
(1)
|
(2,867
|
)
|
|
(1,094
|
)
|
|
(1,708
|
)
|
|
(2,989
|
)
|
||||
Balance at the end of the period
|
$
|
27,948
|
|
|
$
|
19,701
|
|
|
$
|
27,948
|
|
|
$
|
19,701
|
|
(1)
|
The Company records hardware warranty liabilities based on the latest quality and cost information available as of that date. The changes in estimate shown here are due to changes in overall actual failure rates and the resulting impact of these changes on the Company’s estimate of expected future returns, as well as changes in the estimated cost and the mix of new versus used units related to replacement of failed units.
|
14.
|
Litigation and Contingencies
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
142,364
|
|
|
86
|
%
|
|
$
|
120,647
|
|
|
87
|
%
|
|
$
|
21,717
|
|
|
18
|
%
|
Services
|
23,035
|
|
|
14
|
%
|
|
17,738
|
|
|
13
|
%
|
|
5,297
|
|
|
30
|
%
|
|||
Total revenue
|
$
|
165,399
|
|
|
100
|
%
|
|
$
|
138,385
|
|
|
100
|
%
|
|
$
|
27,014
|
|
|
20
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
85,906
|
|
|
52
|
%
|
|
$
|
80,198
|
|
|
58
|
%
|
|
$
|
5,708
|
|
|
7
|
%
|
Services
|
9,240
|
|
|
6
|
%
|
|
6,533
|
|
|
5
|
%
|
|
2,707
|
|
|
41
|
%
|
|||
Total cost of revenue
|
$
|
95,146
|
|
|
58
|
%
|
|
$
|
86,731
|
|
|
63
|
%
|
|
$
|
8,415
|
|
|
10
|
%
|
Gross profit
|
$
|
70,253
|
|
|
42
|
%
|
|
$
|
51,654
|
|
|
37
|
%
|
|
$
|
18,599
|
|
|
36
|
%
|
|
Six Months Ended
|
|
|
|
|
|||||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
266,606
|
|
|
87
|
%
|
|
$
|
228,990
|
|
|
87
|
%
|
|
$
|
37,616
|
|
|
16
|
%
|
Services
|
41,608
|
|
|
13
|
%
|
|
34,020
|
|
|
13
|
%
|
|
7,588
|
|
|
22
|
%
|
|||
Total revenue
|
$
|
308,214
|
|
|
100
|
%
|
|
$
|
263,010
|
|
|
100
|
%
|
|
$
|
45,204
|
|
|
17
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
164,344
|
|
|
53
|
%
|
|
$
|
155,645
|
|
|
59
|
%
|
|
$
|
8,699
|
|
|
6
|
%
|
Services
|
15,211
|
|
|
5
|
%
|
|
13,009
|
|
|
5
|
%
|
|
2,202
|
|
|
17
|
%
|
|||
Total cost of revenue
|
$
|
179,555
|
|
|
58
|
%
|
|
$
|
168,654
|
|
|
64
|
%
|
|
$
|
10,901
|
|
|
6
|
%
|
Gross profit
|
$
|
128,659
|
|
|
42
|
%
|
|
$
|
94,356
|
|
|
36
|
%
|
|
$
|
34,303
|
|
|
36
|
%
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total revenue
|
|
Amount
|
|
% of total revenue
|
|
Change
|
|
% Change
|
|||||||||
Total revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Domestic
|
$
|
136,342
|
|
|
82
|
%
|
|
$
|
88,251
|
|
|
64
|
%
|
|
$
|
48,091
|
|
|
54
|
%
|
International
|
29,057
|
|
|
18
|
%
|
|
50,134
|
|
|
36
|
%
|
|
(21,077
|
)
|
|
(42
|
)%
|
|||
|
$
|
165,399
|
|
|
100
|
%
|
|
$
|
138,385
|
|
|
100
|
%
|
|
$
|
27,014
|
|
|
20
|
%
|
Total revenue by sales channel
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Direct
|
$
|
160,310
|
|
|
97
|
%
|
|
$
|
122,234
|
|
|
88
|
%
|
|
$
|
38,076
|
|
|
31
|
%
|
Indirect
|
5,089
|
|
|
3
|
%
|
|
16,151
|
|
|
12
|
%
|
|
(11,062
|
)
|
|
(68
|
)%
|
|||
|
$
|
165,399
|
|
|
100
|
%
|
|
$
|
138,385
|
|
|
100
|
%
|
|
$
|
27,014
|
|
|
20
|
%
|
|
Six Months Ended
|
|
|
|
|
|||||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total revenue
|
|
Amount
|
|
% of total revenue
|
|
Change
|
|
% Change
|
|||||||||
Total revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Domestic
|
$
|
247,033
|
|
|
80
|
%
|
|
$
|
167,324
|
|
|
64
|
%
|
|
$
|
79,709
|
|
|
48
|
%
|
International
|
61,181
|
|
|
20
|
%
|
|
95,686
|
|
|
36
|
%
|
|
(34,505
|
)
|
|
(36
|
)%
|
|||
|
$
|
308,214
|
|
|
100
|
%
|
|
$
|
263,010
|
|
|
100
|
%
|
|
$
|
45,204
|
|
|
17
|
%
|
Total revenue by sales channel
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Direct
|
$
|
300,784
|
|
|
98
|
%
|
|
$
|
243,082
|
|
|
92
|
%
|
|
$
|
57,702
|
|
|
24
|
%
|
Indirect
|
7,430
|
|
|
2
|
%
|
|
19,928
|
|
|
8
|
%
|
|
(12,498
|
)
|
|
(63
|
)%
|
|||
|
$
|
308,214
|
|
|
100
|
%
|
|
$
|
263,010
|
|
|
100
|
%
|
|
$
|
45,204
|
|
|
17
|
%
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
31,738
|
|
|
19
|
%
|
|
$
|
31,681
|
|
|
23
|
%
|
|
$
|
57
|
|
|
0.2
|
%
|
Sales and marketing
|
18,082
|
|
|
11
|
%
|
|
17,155
|
|
|
13
|
%
|
|
927
|
|
|
5
|
%
|
|||
General and administrative
|
12,381
|
|
|
7
|
%
|
|
11,426
|
|
|
8
|
%
|
|
955
|
|
|
8
|
%
|
|||
Total operating expenses
|
$
|
62,201
|
|
|
37
|
%
|
|
$
|
60,262
|
|
|
44
|
%
|
|
$
|
1,939
|
|
|
3
|
%
|
|
Six Months Ended
|
|
|
|
|
|||||||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
61,084
|
|
|
20
|
%
|
|
$
|
61,407
|
|
|
23
|
%
|
|
$
|
(323
|
)
|
|
(1)
|
%
|
Sales and marketing
|
35,944
|
|
|
12
|
%
|
|
35,201
|
|
|
14
|
%
|
|
743
|
|
|
2
|
%
|
|||
General and administrative
|
24,635
|
|
|
8
|
%
|
|
21,298
|
|
|
8
|
%
|
|
3,337
|
|
|
16
|
%
|
|||
Total operating expenses
|
$
|
121,663
|
|
|
40
|
%
|
|
$
|
117,906
|
|
|
45
|
%
|
|
$
|
3,757
|
|
|
3
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||
|
June 28,
2014 |
|
June 29,
2013 |
|
Change
|
|
% Change
|
|
June 28,
2014 |
|
June 29,
2013 |
|
Change
|
|
% Change
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Interest income
|
$
|
337
|
|
|
$
|
207
|
|
|
$
|
130
|
|
|
63
|
%
|
|
$
|
673
|
|
|
$
|
404
|
|
|
$
|
269
|
|
|
67
|
%
|
Interest expense
|
(2,728
|
)
|
|
(849
|
)
|
|
(1,879
|
)
|
|
221
|
%
|
|
(5,405
|
)
|
|
(849
|
)
|
|
(4,556
|
)
|
|
537
|
%
|
||||||
Other gain (loss), net
|
(264
|
)
|
|
(158
|
)
|
|
(106
|
)
|
|
67
|
%
|
|
(993
|
)
|
|
(361
|
)
|
|
(632
|
)
|
|
175
|
%
|
||||||
Total other income (expense), net
|
$
|
(2,655
|
)
|
|
$
|
(800
|
)
|
|
$
|
(1,855
|
)
|
|
232
|
%
|
|
$
|
(5,725
|
)
|
|
$
|
(806
|
)
|
|
$
|
(4,919
|
)
|
|
610
|
%
|
|
Six Months Ended
|
||||||
|
June 28,
2014
|
|
June 29,
2013
|
||||
|
(In thousands)
|
||||||
Net cash flow provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(5,181
|
)
|
|
$
|
(3,375
|
)
|
Investing activities
|
$
|
(42,858
|
)
|
|
$
|
(74,768
|
)
|
Financing activities
|
$
|
6,782
|
|
|
$
|
155,466
|
|
|
June 28,
2014
|
|
December 28,
2013
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
83,307
|
|
|
$
|
124,330
|
|
Short-term and long-term investments
|
267,780
|
|
|
237,079
|
|
||
Long-term restricted cash
|
4,404
|
|
|
3,904
|
|
||
|
$
|
355,491
|
|
|
$
|
365,313
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
fluctuations in demand, sales cycles and prices for products and services, including discounts given in response to competitive pricing pressures;
|
•
|
fluctuations in our product mix, including the mix of higher and lower margin products and significant mix changes resulting from new customer deployments;
|
•
|
changes in customers’ budgets for optical transport network equipment purchases and changes in their purchasing cycles;
|
•
|
order cancellations or reductions or delays in delivery schedules by our customers;
|
•
|
the payment terms offered to our customers;
|
•
|
our ability to control costs, including our operating expenses and the costs of components we purchase for our products;
|
•
|
readiness of customer sites for installation of our products;
|
•
|
the timing of product releases or upgrades by us or by our competitors. In particular, if we fail to achieve targeted release dates for our future products, or convert lab trials and field evaluations by potential customers into purchase orders, our revenue and operating results may be negatively impacted;
|
•
|
any significant changes in the competitive dynamics of our market, including any new entrants, technological advances or substantial discounting of products;
|
•
|
availability of third-party suppliers to provide contract engineering and installation services for us;
|
•
|
the timing of recognizing revenue in any given quarter, including the impact of revenue recognition standards and any future changes in U.S. GAAP or new interpretations of existing accounting rules;
|
•
|
the impact of a significant natural disaster, such as an earthquake, severe weather, or tsunami or other flooding, as well as interruptions or shortages in the supply of utilities such as water and electricity, in a key location such as our Northern California facilities, which is located near major earthquake fault lines; and
|
•
|
general economic conditions in domestic and international markets.
|
•
|
the mix in any period of the customers purchasing our products and the product mix, including the relative mix of higher and lower margin products and services;
|
•
|
significant new customer deployments, often with a higher portion of lower margin common equipment;
|
•
|
price discounts negotiated by our customers;
|
•
|
introduction of new products with initial sales at relatively small volumes and higher product costs;
|
•
|
sales volume from each customer during the period;
|
•
|
the amount of equipment we sell in any given quarter;
|
•
|
increased price competition;
|
•
|
charges for excess or obsolete inventory;
|
•
|
changes in the price or availability of components for our products;
|
•
|
changes in our manufacturing costs, including fluctuations in yields and production volumes; and
|
•
|
increased warranty or repair costs.
|
•
|
aggressively pricing their optical transport products and other portfolio products, including offering significant one-time discounts and guaranteed future price decreases;
|
•
|
providing financing, marketing and advertising assistance to customers;
|
•
|
announcing competing products prior to market availability combined with extensive marketing efforts;
|
•
|
influencing customer requirements to emphasize different product capabilities, such as greater minimum bandwidth requirements or higher transport speeds;
|
•
|
offering to repurchase our equipment from existing customers; and
|
•
|
asserting intellectual property rights.
|
•
|
completion of product development, including the completion of any associated PIC development, such as our next-generation PICs, and the completion of associated module development, including modules developed by third parties;
|
•
|
the qualification and multiple sourcing of critical components;
|
•
|
validation of manufacturing methods and processes;
|
•
|
extensive quality assurance and reliability testing and staffing of testing infrastructure;
|
•
|
validation of software; and
|
•
|
establishment of systems integration and systems test validation requirements.
|
•
|
overall capital expenditures by many of our customers or potential customers may be flat or reduced;
|
•
|
we will continue to have only limited ability to forecast the volume and product mix of our sales;
|
•
|
managing expenditures and inventory will be difficult in light of the uncertainties surrounding our business; and
|
•
|
increased competition will enable customers to insist on more favorable terms and conditions for sales, including product discounts, extended payment terms or financing assistance, as a condition of procuring their business.
|
•
|
reduced control over delivery schedules, particularly for international contract manufacturing sites;
|
•
|
reliance on the quality assurance procedures of third parties;
|
•
|
potential uncertainty regarding manufacturing yields and costs;
|
•
|
potential lack of adequate capacity during periods of high demand;
|
•
|
potential uncertainty related to the use of international contract manufacturing sites;
|
•
|
limited warranties on components supplied to us;
|
•
|
potential misappropriation of our intellectual property; and
|
•
|
potential manufacturing disruptions (including disruptions caused by geopolitical events, military actions or natural disasters).
|
•
|
reduced demand for our products as a result of constraints on capital spending by our customers, particularly service providers;
|
•
|
increased price competition for our products, not only from our competitors, but also as a result of our customer’s or potential customer’s utilization of inventoried or underutilized products, which could put additional downward pressure on our near term gross profits;
|
•
|
risk of excess or obsolete inventories;
|
•
|
excess manufacturing capacity and higher associated overhead costs as a percentage of revenue; and
|
•
|
more limited ability to accurately forecast our business and future financial performance.
|
•
|
delays in our ability to recognize revenue;
|
•
|
costs associated with fixing software or hardware defects or replacing products;
|
•
|
high service and warranty expenses;
|
•
|
delays in shipments;
|
•
|
high inventory excess and obsolescence expense;
|
•
|
high levels of product returns;
|
•
|
diversion of our engineering personnel from our product development efforts;
|
•
|
delays in collecting accounts receivable;
|
•
|
payment of liquidated damages, performance guarantees or similar penalties;
|
•
|
reduced orders from existing customers; and
|
•
|
declining interest from potential customers.
|
•
|
our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, litigation, general corporate or other purposes may be limited;
|
•
|
a substantial portion of our future cash balance may be dedicated to the payment of the principal of our indebtedness as we have the intention to pay the principal amount of the Notes in cash upon conversion if specified conditions are met or when due, such that we would not have those funds available for use in our business; and
|
•
|
if upon any conversion of the Notes we are required to satisfy our conversion obligation with shares of our common stock or if a make-whole fundamental change occurs, our existing stockholders’ interest in us would be diluted.
|
•
|
greater difficulty in collecting accounts receivable and longer collection periods;
|
•
|
difficulties of managing and staffing international offices, and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;
|
•
|
political, social and economic instability, including wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions;
|
•
|
tariff and trade barriers and other regulatory requirements or contractual limitations on our ability to sell or develop our products in certain foreign markets;
|
•
|
less effective protection of intellectual property than is afforded to us in the United States or other developed countries;
|
•
|
local laws and practices that favor local companies, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations;
|
•
|
certification requirements;
|
•
|
greater difficulty documenting and testing our internal controls;
|
•
|
potentially adverse tax consequences;
|
•
|
effects of changes in currency exchange rates that could negatively affect our financial results and cash flows; and
|
•
|
service provider and government spending patterns.
|
•
|
issue stock that would dilute our current stockholders’ percentage ownership;
|
•
|
incur debt and assume other liabilities; or
|
•
|
incur amortization expenses related to goodwill and other intangible assets and/or incur large and immediate write-offs.
|
•
|
problems integrating the acquired operations, technologies or products with our own;
|
•
|
diversion of management’s attention from our core business;
|
•
|
assumption of unknown liabilities;
|
•
|
adverse effects on existing business relationships with suppliers and customers;
|
•
|
increased accounting compliance risk;
|
•
|
risks associated with entering new markets; and
|
•
|
potential loss of key employees.
|
•
|
variations in our operating results;
|
•
|
announcements of technological innovations, new services or service enhancements, strategic alliances or agreements by us or by our competitors;
|
•
|
the gain or loss of customers;
|
•
|
recruitment or departure of key personnel;
|
•
|
changes in the estimates of our future operating results or external guidance on those results or changes in recommendations by any securities analysts that elect to follow our common stock;
|
•
|
market conditions in our industry, the industries of our customers and the economy as a whole; and
|
•
|
adoption or modification of regulations, policies, procedures or programs applicable to our business.
|
•
|
authorize the issuance of “blank check” convertible preferred stock that could be issued by our board of directors to thwart a takeover attempt;
|
•
|
establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;
|
•
|
require that directors only be removed from office for cause and only upon a supermajority stockholder vote;
|
•
|
provide that vacancies on the board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;
|
•
|
prevent stockholders from calling special meetings; and
|
•
|
prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders.
|
Item 6.
|
Exhibits
|
Exhibit No.
|
|
Description
|
|
|
|
10.1*
|
|
Infinera Corporation 2007 Employee Stock Purchase Plan, incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K as filed on May 20, 2014.
|
10.2*
|
|
Form of 2007 Employee Stock Purchase Plan Subscription Agreement, incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K as filed on May 20, 2014.
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
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
|
Infinera Corporation
|
||
|
|
|
By:
|
|
/
s
/ BRAD FELLER
|
|
|
Brad Feller
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
|
|
|
|
Date:
|
|
August 1, 2014
|
1 Year Infinera Chart |
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