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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.26 | 5.17 | 5.49 | 24 | 12:33:32 |
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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 25,
2016 |
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December 26,
2015 |
||||
ASSETS
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|
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|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
138,380
|
|
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$
|
149,101
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Short-term investments
|
119,370
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|
125,561
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Short-term restricted cash
|
24,942
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|
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—
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Accounts receivable, net of allowance for doubtful accounts of $630 in 2016 and 2015
|
193,414
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186,243
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Inventory
|
202,280
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|
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174,699
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|
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Prepaid expenses and other current assets
|
29,210
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29,511
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Total current assets
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707,596
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665,115
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Property, plant and equipment, net
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120,095
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110,861
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Intangible assets
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142,108
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156,319
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Goodwill
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189,982
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191,560
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Long-term investments
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87,944
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76,507
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Cost-method investment
|
14,500
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14,500
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Long-term restricted cash
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5,355
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5,310
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Other non-current assets
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4,194
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|
|
4,009
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Total assets
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$
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1,271,774
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$
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1,224,181
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
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||||
Current liabilities:
|
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|
||||
Accounts payable
|
$
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83,875
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$
|
92,554
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Accrued expenses
|
36,466
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|
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33,736
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|
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Accrued compensation and related benefits
|
41,461
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49,887
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Accrued warranty
|
17,737
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17,889
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Deferred revenue
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47,277
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42,977
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Total current liabilities
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226,816
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237,043
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Long-term debt, net
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128,328
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123,327
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Accrued warranty, non-current
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23,252
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20,955
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Deferred revenue, non-current
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19,671
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13,881
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Deferred tax liability
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33,264
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35,731
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Other long-term liabilities
|
18,182
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16,183
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|
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Commitments and contingencies (Note 16)
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||||
Stockholders’ equity:
|
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||||
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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Common stock, $0.001 par value
Authorized shares – 500,000 as of June 25, 2016 and December 26, 2015
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||||
Issued and outstanding shares – 143,131 as of June 25, 2016 and 140,197 as of December 26, 2015
|
143
|
|
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140
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|
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Additional paid-in capital
|
1,325,238
|
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1,300,301
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|
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Accumulated other comprehensive income (loss)
|
(1,737
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)
|
|
1,123
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|
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Accumulated deficit
|
(515,915
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)
|
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(539,413
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)
|
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Total Infinera Corporation stockholders’ equity
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807,729
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762,151
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Noncontrolling interest
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14,532
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14,910
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Total stockholders' equity
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822,261
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777,061
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Total liabilities and stockholders’ equity
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$
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1,271,774
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$
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1,224,181
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Three Months Ended
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Six Months Ended
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||||||||||||
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June 25,
2016 |
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June 27,
2015 |
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June 25,
2016 |
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June 27,
2015 |
||||||||
Revenue:
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||||||||
Product
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$
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227,532
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$
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178,982
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$
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443,614
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$
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339,825
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Services
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31,290
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28,364
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60,026
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54,383
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|
||||
Total revenue
|
258,822
|
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207,346
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503,640
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394,208
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||||
Cost of revenue:
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||||||||
Cost of product
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122,438
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99,491
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240,500
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188,997
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|
||||
Cost of services
|
12,638
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|
|
11,059
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23,056
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20,303
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|
||||
Total cost of revenue
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135,076
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110,550
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263,556
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209,300
|
|
||||
Gross profit
|
123,746
|
|
|
96,796
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|
240,084
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|
184,908
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|
||||
Operating expenses:
|
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||||||||
Research and development
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59,541
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|
43,421
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113,686
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82,678
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|
||||
Sales and marketing
|
30,465
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21,535
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60,474
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42,577
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|
||||
General and administrative
|
17,658
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15,310
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|
34,971
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27,966
|
|
||||
Total operating expenses
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107,664
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80,266
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209,131
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153,221
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Income from operations
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16,082
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16,530
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30,953
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31,687
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|
||||
Other income (expense), net:
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||||||||
Interest income
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595
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|
551
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|
1,117
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|
965
|
|
||||
Interest expense
|
(3,176
|
)
|
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(2,947
|
)
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(6,331
|
)
|
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(5,837
|
)
|
||||
Other gain (loss), net
|
(714
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)
|
|
4,780
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|
|
(928
|
)
|
|
5,081
|
|
||||
Total other income (expense), net
|
(3,295
|
)
|
|
2,384
|
|
|
(6,142
|
)
|
|
209
|
|
||||
Income before income taxes
|
12,787
|
|
|
18,914
|
|
|
24,811
|
|
|
31,896
|
|
||||
Provision for income taxes
|
1,475
|
|
|
1,008
|
|
|
1,691
|
|
|
1,624
|
|
||||
Net income
|
11,312
|
|
|
17,906
|
|
|
23,120
|
|
|
30,272
|
|
||||
Less: Loss attributable to noncontrolling interest
|
(171
|
)
|
|
—
|
|
|
(378
|
)
|
|
—
|
|
||||
Net income attributable to Infinera Corporation
|
$
|
11,483
|
|
|
$
|
17,906
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|
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$
|
23,498
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$
|
30,272
|
|
Net income per common share attributable to Infinera Corporation:
|
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||||||||
Basic
|
$
|
0.08
|
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$
|
0.14
|
|
|
$
|
0.17
|
|
|
$
|
0.23
|
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Diluted
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
$
|
0.16
|
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|
$
|
0.22
|
|
Weighted average shares used in computing net income per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
142,396
|
|
|
130,349
|
|
|
141,600
|
|
|
129,094
|
|
||||
Diluted
|
145,891
|
|
|
140,642
|
|
|
146,385
|
|
|
138,973
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 25,
2016 |
|
June 27,
2015 |
|
June 25,
2016 |
|
June 27,
2015 |
||||||||
Net income
|
$
|
11,312
|
|
|
$
|
17,906
|
|
|
$
|
23,120
|
|
|
$
|
30,272
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain on available-for-sale investments
|
258
|
|
|
(78
|
)
|
|
639
|
|
|
189
|
|
||||
Foreign currency translation adjustment
|
(6,769
|
)
|
|
129
|
|
|
(3,499
|
)
|
|
(30
|
)
|
||||
Net change in accumulated other comprehensive income (loss)
|
(6,511
|
)
|
|
51
|
|
|
(2,860
|
)
|
|
159
|
|
||||
Less: Comprehensive loss attributable to noncontrolling interest
|
(171
|
)
|
|
—
|
|
|
(378
|
)
|
|
—
|
|
||||
Comprehensive income attributable to Infinera Corporation
|
$
|
4,972
|
|
|
$
|
17,957
|
|
|
$
|
20,638
|
|
|
$
|
30,431
|
|
|
Six Months Ended
|
||||||
|
June 25,
2016 |
|
June 27,
2015 |
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
23,120
|
|
|
$
|
30,272
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
29,891
|
|
|
12,850
|
|
||
Amortization of debt discount and issuance costs
|
5,001
|
|
|
4,524
|
|
||
Amortization of premium on investments
|
733
|
|
|
1,792
|
|
||
Stock-based compensation expense
|
18,980
|
|
|
15,417
|
|
||
Other loss (gain)
|
84
|
|
|
(4,780
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(7,404
|
)
|
|
45,140
|
|
||
Inventory
|
(31,304
|
)
|
|
(12,774
|
)
|
||
Prepaid expenses and other assets
|
(328
|
)
|
|
(1,080
|
)
|
||
Accounts payable
|
(7,339
|
)
|
|
(23,597
|
)
|
||
Accrued liabilities and other expenses
|
(5,528
|
)
|
|
1,491
|
|
||
Deferred revenue
|
10,129
|
|
|
4,216
|
|
||
Accrued warranty
|
2,165
|
|
|
1,399
|
|
||
Net cash provided by operating activities
|
38,200
|
|
|
74,870
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Purchase of available-for-sale investments
|
(97,051
|
)
|
|
(112,940
|
)
|
||
Proceeds from sales of available-for-sale investments
|
—
|
|
|
9,998
|
|
||
Proceeds from maturities of investments
|
91,714
|
|
|
143,483
|
|
||
Purchase of property and equipment
|
(23,278
|
)
|
|
(16,098
|
)
|
||
Change in restricted cash
|
(60
|
)
|
|
290
|
|
||
Net cash provided by (used in) investing activities
|
(28,675
|
)
|
|
24,733
|
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Security pledge to acquire noncontrolling interest
|
(24,942
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock
|
8,586
|
|
|
16,488
|
|
||
Minimum tax withholding paid on behalf of employees for net share settlement
|
(3,082
|
)
|
|
(4,561
|
)
|
||
Net cash provided by (used in) financing activities
|
(19,438
|
)
|
|
11,927
|
|
||
Effect of exchange rate changes on cash
|
(808
|
)
|
|
(7
|
)
|
||
Net change in cash and cash equivalents
|
(10,721
|
)
|
|
111,523
|
|
||
Cash and cash equivalents at beginning of period
|
149,101
|
|
|
86,495
|
|
||
Cash and cash equivalents at end of period
|
$
|
138,380
|
|
|
$
|
198,018
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid for income taxes, net of refunds
|
$
|
3,237
|
|
|
$
|
1,481
|
|
Cash paid for interest
|
$
|
1,410
|
|
|
$
|
1,313
|
|
Supplemental schedule of non-cash investing activities:
|
|
|
|
||||
Transfer of inventory to fixed assets
|
$
|
4,009
|
|
|
$
|
2,205
|
|
1.
|
Basis of Presentation and Significant Accounting Policies
|
2.
|
Recent Accounting Pronouncements
|
3.
|
Fair Value Measurements
|
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 25, 2016
|
|
As of December 26, 2015
|
||||||||||||||||||||||||||||
|
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
|
$
|
34,077
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,077
|
|
|
$
|
37,829
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37,829
|
|
Certificates of deposit
|
—
|
|
|
2,604
|
|
|
—
|
|
|
2,604
|
|
|
—
|
|
|
5,001
|
|
|
—
|
|
|
5,001
|
|
||||||||
Commercial paper
|
—
|
|
|
52,433
|
|
|
—
|
|
|
52,433
|
|
|
—
|
|
|
10,997
|
|
|
—
|
|
|
10,997
|
|
||||||||
Corporate bonds
|
—
|
|
|
108,257
|
|
|
—
|
|
|
108,257
|
|
|
—
|
|
|
163,400
|
|
|
—
|
|
|
163,400
|
|
||||||||
U.S. agency notes
|
—
|
|
|
10,775
|
|
|
—
|
|
|
10,775
|
|
|
—
|
|
|
10,717
|
|
|
—
|
|
|
10,717
|
|
||||||||
U.S. treasuries
|
56,332
|
|
|
—
|
|
|
—
|
|
|
56,332
|
|
|
24,851
|
|
|
—
|
|
|
—
|
|
|
24,851
|
|
||||||||
Foreign currency exchange forward contracts
|
—
|
|
|
346
|
|
|
—
|
|
|
346
|
|
|
—
|
|
|
490
|
|
|
—
|
|
|
490
|
|
||||||||
Total assets
|
$
|
90,409
|
|
|
$
|
174,415
|
|
|
$
|
—
|
|
|
$
|
264,824
|
|
|
$
|
62,680
|
|
|
$
|
190,605
|
|
|
$
|
—
|
|
|
$
|
253,285
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency exchange forward contracts
|
$
|
—
|
|
|
$
|
(277
|
)
|
|
$
|
—
|
|
|
$
|
(277
|
)
|
|
$
|
—
|
|
|
$
|
(44
|
)
|
|
$
|
—
|
|
|
$
|
(44
|
)
|
|
June 25, 2016
|
||||||||||||||
|
Adjusted Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Money market funds
|
$
|
34,077
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,077
|
|
Certificates of deposit
|
2,600
|
|
|
4
|
|
|
—
|
|
|
2,604
|
|
||||
Commercial paper
|
52,450
|
|
|
—
|
|
|
(17
|
)
|
|
52,433
|
|
||||
Corporate bonds
|
108,185
|
|
|
97
|
|
|
(25
|
)
|
|
108,257
|
|
||||
U.S. agency notes
|
10,784
|
|
|
—
|
|
|
(9
|
)
|
|
10,775
|
|
||||
U.S. treasuries
|
56,249
|
|
|
83
|
|
|
—
|
|
|
56,332
|
|
||||
Total available-for-sale investments
|
$
|
264,345
|
|
|
$
|
184
|
|
|
$
|
(51
|
)
|
|
$
|
264,478
|
|
|
December 26, 2015
|
||||||||||||||
|
Adjusted Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Money market funds
|
$
|
37,829
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37,829
|
|
Certificates of deposit
|
5,000
|
|
|
1
|
|
|
—
|
|
|
5,001
|
|
||||
Commercial paper
|
10,997
|
|
|
—
|
|
|
—
|
|
|
10,997
|
|
||||
Corporate bonds
|
163,797
|
|
|
—
|
|
|
(397
|
)
|
|
163,400
|
|
||||
U.S. agency notes
|
10,786
|
|
|
—
|
|
|
(69
|
)
|
|
10,717
|
|
||||
U.S. treasuries
|
24,894
|
|
|
—
|
|
|
(43
|
)
|
|
24,851
|
|
||||
Total available-for-sale investments
|
$
|
253,303
|
|
|
$
|
1
|
|
|
$
|
(509
|
)
|
|
$
|
252,795
|
|
4.
|
Cost-method Investment
|
5.
|
Derivative Instruments
|
|
As of June 25, 2016
|
|
As of December 26, 2015
|
||||||||||||||||||||
|
Gross Notional
(1)
|
|
Prepaid Expense and Other Assets
|
|
Other Accrued Liabilities
|
|
Gross Notional
(1)
|
|
Prepaid Expense and Other Assets
|
|
Other Accrued Liabilities
|
||||||||||||
Foreign currency exchange forward contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Related to euro denominated receivables
|
$
|
35,923
|
|
|
$
|
312
|
|
|
$
|
(277
|
)
|
|
$
|
46,753
|
|
|
$
|
319
|
|
|
$
|
(44
|
)
|
Related to British pound denominated receivables
|
$
|
6,660
|
|
|
34
|
|
|
—
|
|
|
$
|
6,686
|
|
|
171
|
|
|
—
|
|
||||
Related to restricted cash
|
$
|
256
|
|
|
—
|
|
|
—
|
|
|
$
|
252
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
$
|
346
|
|
|
$
|
(277
|
)
|
|
|
|
|
$
|
490
|
|
|
$
|
(44
|
)
|
|
|
(1)
|
Represents the face amounts of forward contracts that were outstanding as of the period noted.
|
Cash
|
$
|
181,133
|
|
Common stock (7,873,055 shares)
|
169,507
|
|
|
Total
|
$
|
350,640
|
|
|
Amounts Recognized as of Acquisition Date
|
|
Measurement Period Adjustments
|
|
Total
|
||||||
Cash
|
$
|
36,688
|
|
|
$
|
—
|
|
|
$
|
36,688
|
|
Accounts receivable
|
16,183
|
|
|
—
|
|
|
16,183
|
|
|||
Inventory
|
19,886
|
|
|
—
|
|
|
19,886
|
|
|||
Other assets
|
8,320
|
|
|
—
|
|
|
8,320
|
|
|||
Intangible assets, net
|
161,845
|
|
|
—
|
|
|
161,845
|
|
|||
Goodwill
|
187,220
|
|
|
669
|
|
|
187,889
|
|
|||
Current liabilities
|
(24,320
|
)
|
|
(800
|
)
|
|
(25,120
|
)
|
|||
Deferred tax liabilities
|
(39,221
|
)
|
|
131
|
|
|
(39,090
|
)
|
|||
Long-term liabilities
|
(589
|
)
|
|
—
|
|
|
(589
|
)
|
|||
Noncontrolling interest
|
(15,372
|
)
|
|
—
|
|
|
(15,372
|
)
|
|||
Total net assets
|
$
|
350,640
|
|
|
$
|
—
|
|
|
$
|
350,640
|
|
|
Fair Value
|
|
Estimated Useful Life (Years)
|
||
Trade name
|
$
|
234
|
|
|
0.5
|
Customer relationships
|
49,033
|
|
|
8
|
|
Developed technology
|
92,450
|
|
|
5
|
|
In-process technology
|
20,128
|
|
|
N/A
|
|
Total
|
$
|
161,845
|
|
|
|
|
June 25, 2016
|
|
December 26, 2015
|
||||
Beginning noncontrolling interest
|
$
|
14,910
|
|
|
$
|
—
|
|
Noncontrolling interest investment
|
—
|
|
|
15,373
|
|
||
Loss attributable to noncontrolling interest
|
(378
|
)
|
|
(463
|
)
|
||
Ending noncontrolling interest
|
$
|
14,532
|
|
|
$
|
14,910
|
|
7.
|
Goodwill and Intangible Assets
|
Balance as of December 26, 2015
|
$
|
191,560
|
|
Foreign currency translation adjustments
|
(1,578
|
)
|
|
Accumulated impairment loss
|
—
|
|
|
Balance as of June 25, 2016
|
$
|
189,982
|
|
|
June 25, 2016
|
|||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Remaining Useful Life (In Years)
|
|||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
||||
Trade names
|
$
|
237
|
|
|
$
|
(237
|
)
|
|
$
|
—
|
|
|
—
|
|
Customer relationships
|
49,579
|
|
|
(5,278
|
)
|
|
44,301
|
|
|
7.2
|
|
|||
Developed technology
|
98,471
|
|
|
(16,302
|
)
|
|
82,169
|
|
|
4.2
|
|
|||
Other intangible assets
|
819
|
|
|
(540
|
)
|
|
279
|
|
|
5.1
|
|
|||
Total intangible assets with finite lives
|
$
|
149,106
|
|
|
$
|
(22,357
|
)
|
|
$
|
126,749
|
|
|
5.3
|
|
In-process technology
|
15,359
|
|
|
—
|
|
|
15,359
|
|
|
|
||||
Total intangible assets
|
$
|
164,465
|
|
|
$
|
(22,357
|
)
|
|
$
|
142,108
|
|
|
|
|
December 26, 2015
|
|||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Remaining Useful Life (In Years)
|
|||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|||||||
Trade names
|
$
|
239
|
|
|
$
|
(168
|
)
|
|
$
|
71
|
|
|
0.2
|
|
Customer relationships
|
49,991
|
|
|
(2,197
|
)
|
|
47,794
|
|
|
7.7
|
|
|||
Developed technology
|
94,256
|
|
|
(6,629
|
)
|
|
87,627
|
|
|
4.6
|
|
|||
Other intangible assets
|
819
|
|
|
(513
|
)
|
|
306
|
|
|
5.6
|
|
|||
Total intangible assets with finite lives
|
$
|
145,305
|
|
|
$
|
(9,507
|
)
|
|
$
|
135,798
|
|
|
5.7
|
|
In-process technology
|
20,521
|
|
|
—
|
|
|
20,521
|
|
|
|
||||
Total intangible assets
|
$
|
165,826
|
|
|
$
|
(9,507
|
)
|
|
$
|
156,319
|
|
|
|
|
|
|
Fiscal Years
|
||||||||||||||||||||||||
|
Total
|
|
Remainder of 2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021 and Thereafter
|
||||||||||||||
Total future amortization expense
|
$
|
126,749
|
|
|
$
|
12,903
|
|
|
$
|
25,806
|
|
|
$
|
25,806
|
|
|
$
|
25,677
|
|
|
$
|
19,093
|
|
|
$
|
17,464
|
|
8.
|
Balance Sheet Details
|
|
June 25, 2016
|
|
December 26, 2015
|
||||
Inventory:
|
|
|
|
||||
Raw materials
|
$
|
39,062
|
|
|
$
|
27,879
|
|
Work in process
|
60,988
|
|
|
52,599
|
|
||
Finished goods
|
102,230
|
|
|
94,221
|
|
||
Total inventory
|
$
|
202,280
|
|
|
$
|
174,699
|
|
Property, plant and equipment, net:
|
|
|
|
||||
Computer hardware
|
$
|
12,388
|
|
|
$
|
11,097
|
|
Computer software
(1)
|
25,170
|
|
|
22,548
|
|
||
Laboratory and manufacturing equipment
|
207,901
|
|
|
189,168
|
|
||
Furniture and fixtures
|
2,012
|
|
|
1,897
|
|
||
Leasehold improvements
|
41,924
|
|
|
38,946
|
|
||
Construction in progress
|
29,930
|
|
|
31,060
|
|
||
Subtotal
|
$
|
319,325
|
|
|
$
|
294,716
|
|
Less accumulated depreciation and amortization
|
(199,230
|
)
|
|
(183,855
|
)
|
||
Total property, plant and equipment, net
|
$
|
120,095
|
|
|
$
|
110,861
|
|
Accrued expenses:
|
|
|
|
||||
Loss contingency related to non-cancelable purchase commitments
|
$
|
5,822
|
|
|
$
|
6,821
|
|
Professional and other consulting fees
|
4,246
|
|
|
5,363
|
|
||
Taxes payable
|
6,186
|
|
|
3,295
|
|
||
Royalties
|
5,045
|
|
|
4,290
|
|
||
Other accrued expenses
|
15,167
|
|
|
13,967
|
|
||
Total accrued expenses
|
$
|
36,466
|
|
|
$
|
33,736
|
|
|
|
(1)
|
Included in computer software at
June 25, 2016
and December 26, 2015 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 25, 2016
and December 26, 2015 were
$3.5 million
and
$4.0 million
, respectively.
|
9.
|
Accumulated Other Comprehensive Income
|
|
|
Unrealized Gain (Loss)
on Other
Available-for-Sale
Securities
|
|
Foreign
Currency Translation
|
|
Accumulated
Tax Effect
|
|
Total
|
||||||||
Balance at December 26, 2015
|
|
$
|
(506
|
)
|
|
$
|
2,389
|
|
|
$
|
(760
|
)
|
|
$
|
1,123
|
|
Net current-period other comprehensive income
|
|
639
|
|
|
(3,499
|
)
|
|
—
|
|
|
(2,860
|
)
|
||||
Balance at June 25, 2016
|
|
$
|
133
|
|
|
$
|
(1,110
|
)
|
|
$
|
(760
|
)
|
|
$
|
(1,737
|
)
|
10.
|
Basic and Diluted Net Income Per Common Share
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
June 25, 2016
|
|
June 27, 2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Infinera Corporation
|
$
|
11,483
|
|
|
$
|
17,906
|
|
|
$
|
23,498
|
|
|
$
|
30,272
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
142,396
|
|
|
130,349
|
|
|
141,600
|
|
|
129,094
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Employee equity plans
|
2,775
|
|
|
5,766
|
|
|
3,299
|
|
|
6,168
|
|
||||
Assumed conversion of convertible senior notes from conversion spread
|
720
|
|
|
4,527
|
|
|
1,486
|
|
|
3,711
|
|
||||
Diluted weighted average common shares outstanding
|
145,891
|
|
|
140,642
|
|
|
146,385
|
|
|
138,973
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per common share attributable to Infinera Corporation
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.08
|
|
|
$
|
0.14
|
|
|
$
|
0.17
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
June 25, 2016
|
|
June 27, 2015
|
||||
Stock options
|
13
|
|
|
10
|
|
|
11
|
|
|
10
|
|
RSUs
|
2,663
|
|
|
73
|
|
|
1,721
|
|
|
789
|
|
PSUs
|
846
|
|
|
129
|
|
|
594
|
|
|
210
|
|
ESPP shares
|
—
|
|
|
—
|
|
|
291
|
|
|
207
|
|
Total
|
3,522
|
|
|
212
|
|
|
2,617
|
|
|
1,216
|
|
11.
|
Convertible Senior Notes
|
•
|
during any fiscal quarter commencing after the fiscal quarter ended on March 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.
|
|
June 25, 2016
|
|
December 26, 2015
|
||||
Principal
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Unamortized discount
(1)
|
(19,955
|
)
|
|
(24,560
|
)
|
||
Unamortized issuance cost
(1)
|
(1,717
|
)
|
|
(2,113
|
)
|
||
Net carrying amount
|
$
|
128,328
|
|
|
$
|
123,327
|
|
|
|
(1)
|
Unamortized debt conversion discount and issuance costs will be amortized over the remaining life of the Notes, which is approximately
two
years.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
June 25, 2016
|
|
June 27, 2015
|
||||||||
Contractual interest expense
|
$
|
656
|
|
|
$
|
656
|
|
|
$
|
1,313
|
|
|
$
|
1,313
|
|
Amortization of debt issuance costs
|
201
|
|
|
182
|
|
|
396
|
|
|
358
|
|
||||
Amortization of debt discount
|
2,331
|
|
|
2,109
|
|
|
4,605
|
|
|
4,166
|
|
||||
Total interest expense
|
$
|
3,188
|
|
|
$
|
2,947
|
|
|
$
|
6,314
|
|
|
$
|
5,837
|
|
12.
|
Stockholders’ Equity
|
|
Number of Stock
Options
|
|
Weighted-Average
Exercise
Price
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 26, 2015
|
2,511
|
|
|
$
|
7.26
|
|
|
$
|
28,288
|
|
Stock options granted
|
—
|
|
|
$
|
—
|
|
|
|
||
Stock options exercised
|
(259
|
)
|
|
$
|
4.24
|
|
|
$
|
2,334
|
|
Stock options canceled
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Outstanding at June 25, 2016
|
2,252
|
|
|
$
|
7.60
|
|
|
$
|
7,853
|
|
Vested and expected to vest as of June 25, 2016
|
2,252
|
|
|
|
|
$
|
7,852
|
|
||
Exercisable at June 25, 2016
|
2,243
|
|
|
$
|
7.60
|
|
|
$
|
7,834
|
|
|
Number of
Restricted
Stock Units
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 26, 2015
|
4,932
|
|
|
$
|
12.76
|
|
|
$
|
91,285
|
|
RSUs granted
|
2,418
|
|
|
$
|
15.08
|
|
|
|
|
|
RSUs released
|
(1,838
|
)
|
|
$
|
10.50
|
|
|
$
|
22,584
|
|
RSUs canceled
|
(186
|
)
|
|
$
|
13.06
|
|
|
|
|
|
Outstanding at June 25, 2016
|
5,326
|
|
|
$
|
14.59
|
|
|
$
|
58,371
|
|
Expected to vest at June 25, 2016
|
4,995
|
|
|
|
|
|
$
|
54,748
|
|
|
Number of
Performance
Stock Units
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 26, 2015
|
731
|
|
|
$
|
12.35
|
|
|
$
|
13,540
|
|
PSUs granted
|
647
|
|
|
$
|
15.28
|
|
|
|
||
PSUs performance earned
(1)
|
154
|
|
|
$
|
9.43
|
|
|
|
||
PSUs released
|
(462
|
)
|
|
$
|
9.43
|
|
|
$
|
6,650
|
|
PSUs canceled
|
(71
|
)
|
|
$
|
15.65
|
|
|
|
||
Outstanding at June 25, 2016
|
999
|
|
|
$
|
14.23
|
|
|
$
|
10,946
|
|
Expected to vest at June 25, 2016
|
962
|
|
|
|
|
$
|
10,543
|
|
|
|
(1)
|
Represents the additional PSUs awarded resulting from the achievement of performance goals above the performance targets established at grant since the original grants were at 100% of target amounts.
|
|
Unrecognized
Compensation
Expense, Net
|
|
Weighted-
Average Period
(in years)
|
||
Stock options
|
$
|
35
|
|
|
1.6
|
RSUs
|
$
|
58,826
|
|
|
2.7
|
PSUs
|
$
|
8,676
|
|
|
1.7
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
Employee Stock Purchase Plan
|
June 25, 2016
|
|
June 27, 2015
|
|
June 25, 2016
|
|
June 27, 2015
|
Volatility
|
56%
|
|
53%
|
|
56%
|
|
53%
|
Risk-free interest rate
|
0.52%
|
|
0.13%
|
|
0.52%
|
|
0.13%
|
Expected life
|
0.5 years
|
|
0.5 years
|
|
0.5 years
|
|
0.5 years
|
Estimated fair value
|
$4.53
|
|
$5.15
|
|
4.53
|
|
$5.15
|
Total stock-based compensation expense
|
$1,247
|
|
$1,077
|
|
$2,489
|
|
$2,128
|
|
|
2016
|
|
2015
|
|
2014
|
Index
|
|
SPGIIPTR
|
|
SPGIIPTR
|
|
SPGIIPTR
|
Index volatility
|
|
18%
|
|
18% - 19%
|
|
25%
|
Infinera volatility
|
|
55%
|
|
48%
|
|
49% - 50%
|
Risk-free interest rate
|
|
0.95% - 1.07%
|
|
0.97% - 1.10%
|
|
0.66% - 0.71%
|
Correlation with index
|
|
0.58 - 0.59
|
|
0.52
|
|
0.60
|
Estimated fair value
|
|
$10.31 - $16.62
|
|
$18.08 - $19.29
|
|
$6.59 - $7.60
|
|
|
Total Number of Performance Stock Units
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|||||
Outstanding at December 26, 2015
|
|
731
|
|
|
147
|
|
|
260
|
|
|
324
|
|
|
—
|
|
PSUs granted
|
|
647
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
647
|
|
PSUs performance earned
(1)
|
|
154
|
|
|
70
|
|
|
53
|
|
|
31
|
|
|
—
|
|
PSUs released
|
|
(462
|
)
|
|
(211
|
)
|
|
(158
|
)
|
|
(93
|
)
|
|
—
|
|
PSUs canceled
|
|
(71
|
)
|
|
(6
|
)
|
|
(8
|
)
|
|
(57
|
)
|
|
—
|
|
Outstanding at June 25, 2016
|
|
999
|
|
|
—
|
|
|
147
|
|
|
205
|
|
|
647
|
|
|
|
(1)
|
Represents the additional PSUs awarded resulting from the achievement of performance goals above the performance targets established at grant since the original grants were at 100% of target amounts.
|
|
June 25, 2016
|
|
December 26, 2015
|
||||
Stock-based compensation effects in inventory
|
$
|
3,579
|
|
|
$
|
3,129
|
|
Stock-based compensation effects in deferred inventory cost
|
$
|
13
|
|
|
$
|
13
|
|
Stock-based compensation effects in property, plant and equipment, net
|
$
|
80
|
|
|
$
|
93
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
June 25, 2016
|
|
June 27, 2015
|
||||||||
Stock-based compensation effects included in net income before income taxes
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
746
|
|
|
$
|
613
|
|
|
$
|
1,419
|
|
|
$
|
1,095
|
|
Research and development
|
3,904
|
|
|
2,817
|
|
|
6,225
|
|
|
5,395
|
|
||||
Sales and marketing
|
2,945
|
|
|
2,070
|
|
|
5,180
|
|
|
3,791
|
|
||||
General and administration
|
2,486
|
|
|
1,829
|
|
|
4,385
|
|
|
3,495
|
|
||||
|
$
|
10,081
|
|
|
$
|
7,329
|
|
|
$
|
17,209
|
|
|
$
|
13,776
|
|
Cost of revenue – amortization from balance sheet
(1)
|
912
|
|
|
880
|
|
|
1,771
|
|
|
1,641
|
|
||||
Total stock-based compensation expense
|
$
|
10,993
|
|
|
$
|
8,209
|
|
|
$
|
18,980
|
|
|
$
|
15,417
|
|
|
|
(1)
|
Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period.
|
13.
|
Income Taxes
|
14.
|
Segment Information
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
June 25, 2016
|
|
June 27, 2015
|
||||||||
Americas:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
166,710
|
|
|
$
|
154,762
|
|
|
$
|
341,225
|
|
|
$
|
281,765
|
|
Other Americas
|
11,267
|
|
|
11,984
|
|
|
14,526
|
|
|
19,070
|
|
||||
|
177,977
|
|
|
166,746
|
|
|
355,751
|
|
|
300,835
|
|
||||
Europe, Middle East and Africa
|
64,570
|
|
|
26,629
|
|
|
124,446
|
|
|
72,508
|
|
||||
Asia Pacific and Japan
|
16,275
|
|
|
13,971
|
|
|
23,443
|
|
|
20,865
|
|
||||
Total revenue
|
$
|
258,822
|
|
|
$
|
207,346
|
|
|
$
|
503,640
|
|
|
$
|
394,208
|
|
|
June 25, 2016
|
|
December 26, 2015
|
||||
United States
|
$
|
112,289
|
|
|
$
|
102,702
|
|
Other Americas
|
278
|
|
|
173
|
|
||
|
112,567
|
|
|
102,875
|
|
||
Europe, Middle East and Africa
|
5,001
|
|
|
5,417
|
|
||
Asia Pacific and Japan
|
2,527
|
|
|
2,569
|
|
||
Total property, plant and equipment, net
|
$
|
120,095
|
|
|
$
|
110,861
|
|
15.
|
Guarantees
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
June 25, 2016
|
|
June 27, 2015
|
||||||||
Beginning balance
|
$
|
39,999
|
|
|
$
|
25,539
|
|
|
$
|
38,844
|
|
|
$
|
27,040
|
|
Charges to operations
|
7,308
|
|
|
6,019
|
|
|
14,062
|
|
|
11,367
|
|
||||
Utilization
|
(3,702
|
)
|
|
(3,003
|
)
|
|
(8,689
|
)
|
|
(4,821
|
)
|
||||
Change in estimate
(1)
|
(2,616
|
)
|
|
(116
|
)
|
|
(3,228
|
)
|
|
(5,147
|
)
|
||||
Balance at the end of the period
|
$
|
40,989
|
|
|
$
|
28,439
|
|
|
$
|
40,989
|
|
|
$
|
28,439
|
|
|
|
(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, the mix of new versus used units related to replacement of failed units, and changes in the estimated cost of repair. As the Company's products mature over time, failure rates and repair costs generally decline leading to favorable changes in warranty reserves.
|
16.
|
Litigation and Contingencies
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
227,532
|
|
|
88
|
%
|
|
$
|
178,982
|
|
|
86
|
%
|
|
$
|
48,550
|
|
|
27
|
%
|
Services
|
31,290
|
|
|
12
|
%
|
|
28,364
|
|
|
14
|
%
|
|
2,926
|
|
|
10
|
%
|
|||
Total revenue
|
$
|
258,822
|
|
|
100
|
%
|
|
$
|
207,346
|
|
|
100
|
%
|
|
$
|
51,476
|
|
|
25
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
122,438
|
|
|
47
|
%
|
|
$
|
99,491
|
|
|
48
|
%
|
|
$
|
22,947
|
|
|
23
|
%
|
Services
|
12,638
|
|
|
5
|
%
|
|
11,059
|
|
|
5
|
%
|
|
1,579
|
|
|
14
|
%
|
|||
Total cost of revenue
|
$
|
135,076
|
|
|
52
|
%
|
|
$
|
110,550
|
|
|
53
|
%
|
|
$
|
24,526
|
|
|
22
|
%
|
Gross profit
|
$
|
123,746
|
|
|
47.8
|
%
|
|
$
|
96,796
|
|
|
46.7
|
%
|
|
$
|
26,950
|
|
|
28
|
%
|
|
Six Months Ended
|
|
|
|
|
|||||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
443,614
|
|
|
88
|
%
|
|
$
|
339,825
|
|
|
86
|
%
|
|
$
|
103,789
|
|
|
31
|
%
|
Services
|
60,026
|
|
|
12
|
%
|
|
54,383
|
|
|
14
|
%
|
|
5,643
|
|
|
10
|
%
|
|||
Total revenue
|
$
|
503,640
|
|
|
100
|
%
|
|
$
|
394,208
|
|
|
100
|
%
|
|
$
|
109,432
|
|
|
28
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
240,500
|
|
|
48
|
%
|
|
$
|
188,997
|
|
|
48
|
%
|
|
$
|
51,503
|
|
|
27
|
%
|
Services
|
23,056
|
|
|
4
|
%
|
|
20,303
|
|
|
5
|
%
|
|
2,753
|
|
|
14
|
%
|
|||
Total cost of revenue
|
$
|
263,556
|
|
|
52
|
%
|
|
$
|
209,300
|
|
|
53
|
%
|
|
$
|
54,256
|
|
|
26
|
%
|
Gross profit
|
$
|
240,084
|
|
|
47.7
|
%
|
|
$
|
184,908
|
|
|
46.9
|
%
|
|
$
|
55,176
|
|
|
30
|
%
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total revenue
|
|
Amount
|
|
% of total revenue
|
|
Change
|
|
% Change
|
|||||||||
Total revenue by geography:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Domestic
|
$
|
166,710
|
|
|
64
|
%
|
|
$
|
154,762
|
|
|
75
|
%
|
|
$
|
11,948
|
|
|
8
|
%
|
International
|
92,112
|
|
|
36
|
%
|
|
52,584
|
|
|
25
|
%
|
|
39,528
|
|
|
75
|
%
|
|||
|
$
|
258,822
|
|
|
100
|
%
|
|
$
|
207,346
|
|
|
100
|
%
|
|
$
|
51,476
|
|
|
25
|
%
|
Total revenue by sales channel:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Direct
|
$
|
247,459
|
|
|
96
|
%
|
|
$
|
196,385
|
|
|
95
|
%
|
|
$
|
51,074
|
|
|
26
|
%
|
Indirect
|
11,363
|
|
|
4
|
%
|
|
10,961
|
|
|
5
|
%
|
|
402
|
|
|
4
|
%
|
|||
|
$
|
258,822
|
|
|
100
|
%
|
|
$
|
207,346
|
|
|
100
|
%
|
|
$
|
51,476
|
|
|
25
|
%
|
|
Six Months Ended
|
|
|
|
|
|||||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total revenue
|
|
Amount
|
|
% of total revenue
|
|
Change
|
|
% Change
|
|||||||||
Total revenue by geography:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Domestic
|
$
|
341,225
|
|
|
68
|
%
|
|
$
|
281,766
|
|
|
71
|
%
|
|
$
|
59,459
|
|
|
21
|
%
|
International
|
162,415
|
|
|
32
|
%
|
|
112,442
|
|
|
29
|
%
|
|
49,973
|
|
|
44
|
%
|
|||
|
$
|
503,640
|
|
|
100
|
%
|
|
$
|
394,208
|
|
|
100
|
%
|
|
$
|
109,432
|
|
|
28
|
%
|
Total revenue by sales channel:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Direct
|
$
|
482,410
|
|
|
96
|
%
|
|
$
|
374,378
|
|
|
95
|
%
|
|
$
|
108,032
|
|
|
29
|
%
|
Indirect
|
21,230
|
|
|
4
|
%
|
|
19,830
|
|
|
5
|
%
|
|
1,400
|
|
|
7
|
%
|
|||
|
$
|
503,640
|
|
|
100
|
%
|
|
$
|
394,208
|
|
|
100
|
%
|
|
$
|
109,432
|
|
|
28
|
%
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
59,541
|
|
|
23
|
%
|
|
$
|
43,421
|
|
|
21
|
%
|
|
$
|
16,120
|
|
|
37
|
%
|
Sales and marketing
|
30,465
|
|
|
12
|
%
|
|
21,535
|
|
|
10
|
%
|
|
8,930
|
|
|
41
|
%
|
|||
General and administrative
|
17,658
|
|
|
7
|
%
|
|
15,310
|
|
|
7
|
%
|
|
2,348
|
|
|
15
|
%
|
|||
Total operating expenses
|
$
|
107,664
|
|
|
42
|
%
|
|
$
|
80,266
|
|
|
38
|
%
|
|
$
|
27,398
|
|
|
34
|
%
|
|
Six Months Ended
|
|
|
|
|
|||||||||||||||
|
June 25, 2016
|
|
June 27, 2015
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
113,686
|
|
|
23
|
%
|
|
$
|
82,678
|
|
|
21
|
%
|
|
$
|
31,008
|
|
|
38
|
%
|
Sales and marketing
|
60,474
|
|
|
12
|
%
|
|
42,577
|
|
|
11
|
%
|
|
17,897
|
|
|
42
|
%
|
|||
General and administrative
|
34,971
|
|
|
7
|
%
|
|
27,966
|
|
|
7
|
%
|
|
7,005
|
|
|
25
|
%
|
|||
Total operating expenses
|
$
|
209,131
|
|
|
42
|
%
|
|
$
|
153,221
|
|
|
39
|
%
|
|
$
|
55,910
|
|
|
36
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||
|
June 25,
2016 |
|
June 27,
2015 |
|
Change
|
|
% Change
|
|
June 25,
2016 |
|
June 27,
2015 |
|
Change
|
|
% Change
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Interest income
|
$
|
595
|
|
|
$
|
551
|
|
|
$
|
44
|
|
|
8
|
%
|
|
$
|
1,117
|
|
|
$
|
965
|
|
|
$
|
152
|
|
|
16
|
%
|
Interest expense
|
(3,176
|
)
|
|
(2,947
|
)
|
|
(229
|
)
|
|
8
|
%
|
|
(6,331
|
)
|
|
(5,837
|
)
|
|
(494
|
)
|
|
8
|
%
|
||||||
Other gain (loss), net
|
(714
|
)
|
|
4,780
|
|
|
(5,494
|
)
|
|
(115
|
)%
|
|
(928
|
)
|
|
5,081
|
|
|
(6,009
|
)
|
|
(118
|
)%
|
||||||
Total other income (expense), net
|
$
|
(3,295
|
)
|
|
$
|
2,384
|
|
|
$
|
(5,679
|
)
|
|
(238
|
)%
|
|
$
|
(6,142
|
)
|
|
$
|
209
|
|
|
$
|
(6,351
|
)
|
|
(3,039
|
)%
|
|
Six Months Ended
|
||||||
|
June 25, 2016
|
|
June 27, 2015
|
||||
|
(In thousands)
|
||||||
Net cash flow provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
38,200
|
|
|
$
|
74,870
|
|
Investing activities
|
$
|
(28,675
|
)
|
|
$
|
24,733
|
|
Financing activities
|
$
|
(19,438
|
)
|
|
$
|
11,927
|
|
|
June 25, 2016
|
|
December 26, 2015
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
138,380
|
|
|
$
|
149,101
|
|
Short and long-term investments
|
207,314
|
|
|
202,068
|
|
||
Short and long-term restricted cash
|
30,297
|
|
|
5,310
|
|
||
|
$
|
375,991
|
|
|
$
|
356,479
|
|
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, as well as the timing of purchases by our key customers;
|
•
|
changes in customers’ budgets for optical transport network equipment purchases and changes or variability in their purchasing cycles;
|
•
|
fluctuations in our customer, product or geographic mix, including the impact of new customer deployments, which typically carry lower gross margins;
|
•
|
the process of integrating the Transmode business with our business and the associated potential disruptions to our business;
|
•
|
the timing of product releases or upgrades by us;
|
•
|
how quickly, or at all, the markets in which we operate adopt our solutions;
|
•
|
order cancellations or reductions or delays in delivery schedules by our customers;
|
•
|
our ability to control costs, including our operating expenses and the costs of components we purchase for our products;
|
•
|
our ability to maintain volumes and yields on products manufactured in our internal manufacturing facilities;
|
•
|
any significant changes in the competitive dynamics of our market, including any new entrants, or customer or competitor consolidation;
|
•
|
readiness of customer sites for installation of our products as well as the 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 in a designated flood zone; and
|
•
|
general economic conditions in domestic and international markets.
|
•
|
the mix in any period of the types of customers purchasing our products as well as the product mix;
|
•
|
significant new customer deployments, often with a higher portion of lower margin common equipment as we deploy network footprint;
|
•
|
pricing and commercial terms designed to secure long-term customer relationships;
|
•
|
the volume of Infinera Instant Bandwidth-enabled solutions sold, and Instant Bandwidth licenses activated;
|
•
|
price discounts negotiated by our customers;
|
•
|
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;
|
•
|
offering optical products at a substantial discount or free when bundled together with the customers' router or wireless equipment purchases;
|
•
|
providing financing, marketing and advertising assistance to customers;
|
•
|
influencing customer requirements to emphasize different product capabilities, which better suit their products;
|
•
|
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.
|
•
|
price and other commercial terms;
|
•
|
functionality;
|
•
|
power consumption;
|
•
|
form factor or density;
|
•
|
installation and operation simplicity;
|
•
|
heat dissipation;
|
•
|
customer qualification testing;
|
•
|
existing business and customer relationships;
|
•
|
the ability of products and services to meet customers’ immediate and future network requirements;
|
•
|
service and support;
|
•
|
scalability and investment protection; and
|
•
|
product lead times.
|
•
|
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;
|
•
|
potential misappropriation of our intellectual property; and
|
•
|
potential manufacturing disruptions (including disruptions caused by geopolitical events, military actions or natural disasters).
|
•
|
variations in our operating results;
|
•
|
announcements of technological innovations, new services or service enhancements, the gain or loss of customers, strategic alliances or agreements by us or by our competitors;
|
•
|
market conditions in our industry, the industries of our customers and the economy as a whole;
|
•
|
changes in the estimates of our future operating results or external guidance on those results or changes in recommendations or business expectations by any securities analysts that elect to follow our common stock;
|
•
|
recruitment or departure of key personnel;
|
•
|
mergers and acquisitions by us or by our competitors; and
|
•
|
adoption or modification of regulations, policies, procedures or programs applicable to our business.
|
•
|
reduced demand for our products as a result of constraints on capital spending by our customers;
|
•
|
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.
|
•
|
reduced orders from existing customers;
|
•
|
declining interest from potential customers;
|
•
|
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; and
|
•
|
payment of liquidated damages, performance guarantees or similar penalties.
|
•
|
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;
|
•
|
potentially adverse tax consequences; and
|
•
|
effects of changes in currency exchange rates, particularly relative increases in the exchange rate of the U.S. dollar versus other currencies that could negatively affect our financial results and cash flows.
|
•
|
changes in the valuation of our deferred tax assets and liabilities, and in deferred tax valuation allowances;
|
•
|
changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;
|
•
|
changing tax laws, regulations, rates, and interpretations in multiple jurisdictions in which we operate;
|
•
|
changes in accounting and tax treatment of equity-based compensation;
|
•
|
changes to the financial accounting rules for income taxes; and
|
•
|
the resolution of issues arising from tax audits.
|
•
|
issue stock that would dilute our current stockholders’ percentage ownership;
|
•
|
incur debt and assume other liabilities;
|
•
|
use a substantial portion of our cash resources; or
|
•
|
incur amortization expenses related to 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;
|
•
|
adverse impact on overall company operating results;
|
•
|
adverse effects on existing business relationships with suppliers and customers;
|
•
|
risks associated with entering new markets; and
|
•
|
loss of key employees.
|
•
|
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 2016 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (No. 001-33286) filed with the SEC on May 17, 2016.
|
|
|
|
10.2
|
|
Form of Notice of Grant of Restricted Stock Units, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K (No. 001-33286) filed with the SEC on May 17, 2016.
|
|
|
|
10.3
|
|
Form of Notice of Grant of Restricted Stock Units for Directors, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K (No. 001-33286), filed with the SEC on May 17, 2016.
|
|
|
|
10.4
|
|
Form of Notice of Grant of Performance Shares, incorporated herein by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K (No. 001-33286) filed with the SEC on May 17, 2016.
|
|
|
|
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 2, 2016
|
1 Year Infinera Chart |
1 Month Infinera Chart |
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