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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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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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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value
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The NASDAQ Global Select Market
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Page
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Part I
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Part II
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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Part III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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Part IV
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Item 15.
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Exhibits, Financial Statement Schedules
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•
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growth of cloud services;
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•
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growth of bandwidth-intensive services like streaming high-definition video services;
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•
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increasing use of connected virtual and augmented reality devices;
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•
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proliferation of mobile services of Wi-Fi, 4G and future growth of 5G; and
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•
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rise of the Internet of Things, driving massive growth in the number of network-connected devices.
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•
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high-bandwidth solutions that scale optical transmission bandwidth to meet increasing demand while providing wide-ranging granularity for service efficiency;
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•
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efficient solutions with the right mix of integrated and disaggregated systems that optimize performance and increase reliability while reducing physical space, power consumption and heat dissipation
,
leading to lower operational expenses;
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•
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easy
-
to
-
use solutions that are highly programmable and open, which help reduce the time and complexity of deploying new transmission bandwidth;
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•
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improved integration between packet or Internet Protocol equipment such as routers and optical transport networking equipment; and
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•
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strong encryption at the transport layer processed at line-rate speeds.
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•
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Proliferating our broad base of purpose-built technologies and products to existing customers, as well as obtain new customers.
We have introduced multiple purpose-built products to allow us to address a broader portion of our existing customer networks but also to expand into adjacent markets.
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•
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Enhancing our existing product portfolio for the long-haul, subsea, DCI and metro markets.
We are enhancing existing products and building new products across long-haul, subsea, DCI and metro aggregation markets. We anticipate that these products will be released over the course of 2017 with a focus on advanced features and further integration to improve our cost structure.
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•
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Improving the cadence under which new products are brought to market.
Historically, we have brought new generations of our products based on our optical engine, which includes advanced PICs and DSPs, to market every four to five years. Current competitive market conditions include increased investments from our larger competitors that allows for faster cadences of new products. In addition, the emergence of certain component providers who build enhanced components have allowed other competitors to bring products to market much faster than they could have in the past. As a result, we have committed to bring new generations of our products to market approximately every two to three years.
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•
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Continuing our commitment to provide world-class product quality and support services to our customers.
We believe that providing the most reliable products and our customer experience capabilities are major differentiators.
Our global customer service and technical support team is committed to making our customers successful by providing the highest quality support services to deploy, operate and maintain their networks.
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•
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Maintaining and extending our technology lead.
We intend to continually invest in key technologies such as various forms of the PIC, our FlexCoherent processor, application-specific integrated circuits (“ASICs”), software and other important technologies. We plan to incorporate the functionality of additional discrete functions into our PICs and take advantage of the advanced features in our new DSPs. In addition, we intend to pursue the expansion of our packet switching and bandwidth management capabilities in order to enhance the performance, scalability and economic advantages of our products.
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•
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Continuing investment in vertically integrated manufacturing activities.
We believe that our vertical integration and manufacturing capabilities serve as competitive advantages from a technology, supply chain and financial perspective, and we plan to continue to invest in our next-generation PIC technologies. We will supplement that strategy through the use of certain merchant components in certain cases where it can provide us with a performance, cost or time-to-market advantage.
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•
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Investing in our network management system and SDN.
We believe that we lead the industry in ease of use, facilitated through our Infinera Management System and Xceed suite of software products. We continue to invest in our software products, including adding capabilities such as Infinera Instant Bandwidth. We are extending the management and control capabilities across our entire portfolio with a goal of achieving end-to-end service provisioning. Based on customers’ desire for more programmable networks, we have added open application programming interfaces (“APIs”) to our Infinera Intelligent Transport Network architecture so they can be used by our customers to build more agile networks and deliver competitive services.
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•
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Tier-1 carriers for domestic and international networks;
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•
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Tier-2 and Tier-3 carriers;
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•
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ICP and data center operators;
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•
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wholesale carriers;
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•
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submarine network operators;
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•
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multiple system operators/cable companies;
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•
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enterprise customers; and
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•
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research and education/government entities.
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Scalable.
The proliferation of data centers, rise of cloud computing, increasing consumption of video and growth in mobile access is fundamentally changing traffic characteristics in operator networks. Infinera Intelligent Transport Networks deliver multi-terabit coherent super-channels today. This technology allows a massive pool of bandwidth to be provisioned in a single operational motion. We expect to introduce products in the course of 2017 that will utilize our new Infinite Capacity Engine and deliver sliceable super-channels up to 2.4 Tb/s. Sliceable photonics provide wavelength granularity for wide-ranging control of the network.
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•
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Flexible.
Networks are growing in complexity with the proliferation of internet protocols, network layers and fiber interconnects. Complexity increases the time it takes to plan and deploy network services and increases the cost of maintenance, operation, power, space and cooling. By combining packet and Optical Transport Network (“OTN”) switching functions with WDM, integrated platforms offer a wide variety of services. Conversely, disaggregated platforms offer optimized functionality that prioritizes lowering overall network operating costs without compromising performance. Infinera Intelligent Transport Networks offer a mix of integrated and disaggregated platforms to reduce complexity in the network.
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Open.
Network operators are facing intensifying competition to meet customer demand for immediate bandwidth needs and better visibility into the network. Our Intelligent Transport Networks feature highly programmable platforms with SDN APIs enabling networks to be open; this helps simplify end to end multi-layer provisioning. Additionally, there is growing demand from certain customers for line systems that are open, which entails having the ability to use transponders from one vendor over a different vendor’s line system. We are addressing this dynamic, both by seeking opportunities to sell our transponders over other vendors’ line systems and also offering an Infinera platform that supports both fixed and flexible grid technology, thus allowing a seamless mix of multi-vendor transponders.
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•
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price and other commercial terms;
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•
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functionality;
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•
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form factor or density;
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•
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power consumption;
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•
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heat dissipation;
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•
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customer qualification testing;
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existing business and customer relationships;
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•
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the ability of products and services to meet customers’ immediate and future network requirements;
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•
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installation and operational simplicity;
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•
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service and support;
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•
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security and encryption requirements;
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•
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scalability and investment protection; and
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product lead times.
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•
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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;
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changes in customers’ budgets for optical transport network equipment purchases and changes or variability in their purchasing cycles;
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•
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fluctuations in our customer, product or geographic mix, including the impact of new customer deployments, which typically carry lower gross margins, and increased customer consolidation, which may affect our ability to grow revenue;
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•
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the timing of new product releases;
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•
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how quickly, or at all, the markets in which we operate adopt our solutions;
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•
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order cancellations or reductions or delays in delivery schedules by our customers;
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•
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our ability to control costs, including our operating expenses and the costs and availability of components we purchase for our products;
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•
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our ability to maintain volumes and yields on products manufactured in our internal manufacturing facilities;
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•
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any significant changes in the competitive dynamics of our market, including any new entrants, or customer or competitor consolidation;
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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;
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•
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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;
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•
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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
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•
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general economic conditions in domestic and international markets.
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•
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completion of product development, including the development and completion of our next-generation PICs and specialized ASICs, and the completion of associated module development, including modules developed by third parties;
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•
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the qualification and multiple sourcing of critical components;
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•
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validation of manufacturing methods and processes;
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•
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extensive quality assurance and reliability testing and staffing of testing infrastructure;
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•
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validation of software; and
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•
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establishment of systems integration and systems test validation requirements.
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•
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the mix in any period of the types of customers purchasing our products as well as the product mix;
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•
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significant new deployments to existing and new customers, often with a higher portion of lower margin common equipment as we deploy network footprint;
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•
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pricing and commercial terms designed to secure long-term customer relationships;
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•
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the volume of Infinera Instant Bandwidth-enabled solutions sold, and Infinera Instant Bandwidth licenses activated;
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•
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price discounts negotiated by our customers;
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•
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charges for excess or obsolete inventory;
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•
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changes in the price or availability of components for our products;
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•
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changes in our manufacturing costs, including fluctuations in yields and production volumes; and
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•
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changes in warranty related costs.
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•
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aggressively pricing their optical transport products and other portfolio products, including offering significant one-time discounts and guaranteed future price decreases;
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•
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offering optical products at a substantial discount or for free when bundled together with broader technology purchases, such as router or wireless equipment purchases;
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providing financing, marketing and advertising assistance to customers;
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•
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influencing customer requirements to emphasize different product capabilities, which better suit their products; and
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•
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offering to repurchase our equipment from existing customers.
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•
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price and other commercial terms;
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•
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functionality;
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•
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form factor or density;
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•
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power consumption;
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•
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heat dissipation;
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•
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customer qualification testing;
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•
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existing business and customer relationships;
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•
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the ability of products and services to meet customers’ immediate and future network requirements;
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•
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installation and operational simplicity;
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•
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service and support;
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•
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security and encryption requirements;
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•
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scalability and investment protection; and
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•
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product lead times.
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•
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reduced control over delivery schedules, particularly for international contract manufacturing sites;
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•
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reliance on the quality assurance procedures of third parties;
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•
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potential uncertainty regarding manufacturing yields and costs;
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•
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potential lack of adequate capacity during periods of high demand;
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•
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potential uncertainty related to the use of international contract manufacturing sites;
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•
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limited warranties on components;
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•
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potential misappropriation of our intellectual property; and
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•
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potential manufacturing disruptions (including disruptions caused by geopolitical events, military actions or natural disasters).
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•
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variations in our operating results;
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•
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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;
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•
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market conditions in our industry, the industries of our customers and the economy as a whole;
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•
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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;
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•
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recruitment or departure of key personnel;
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•
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mergers and acquisitions by us, by our competitors or by our customers; and
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•
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adoption or modification of regulations, policies, procedures or programs applicable to our business.
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•
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reduced demand for our products as a result of constraints on capital spending by our customers;
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•
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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;
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•
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risk of excess or obsolete inventories;
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•
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excess manufacturing capacity and higher associated overhead costs as a percentage of revenue; and
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•
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more limited ability to accurately forecast our business and future financial performance.
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•
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reduced orders from existing customers;
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•
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declining interest from potential customers;
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•
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delays in our ability to recognize revenue or in collecting accounts receivables;
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•
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costs associated with fixing software or hardware defects or replacing products;
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•
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high service and warranty expenses;
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•
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delays in shipments;
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•
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high inventory excess and obsolescence expense;
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•
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high levels of product returns;
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•
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diversion of our engineering personnel from our product development efforts; and
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•
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payment of liquidated damages, performance guarantees or similar penalties.
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•
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our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, litigation, general corporate or other purposes may be limited;
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•
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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
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•
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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.
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•
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greater difficulty in collecting accounts receivable and longer collection periods;
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•
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difficulties of managing and staffing international offices, and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;
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•
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political, social and economic instability, including wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions;
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•
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tariff and trade barriers and other regulatory requirements or contractual limitations on our ability to sell or develop our products in certain foreign markets;
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•
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less effective protection of intellectual property than is afforded to us in the United States or other developed countries;
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•
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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;
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•
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potentially adverse tax consequences; and
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•
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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.
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•
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changes in the valuation of our deferred tax assets and liabilities, and in deferred tax valuation allowances;
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•
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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;
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•
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changing tax laws, regulations, rates and interpretations in multiple jurisdictions in which we operate;
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•
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changes in accounting and tax treatment of equity-based compensation;
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•
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changes to the financial accounting rules for income taxes; and
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•
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the resolution of issues arising from tax audits.
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•
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issue stock that would dilute our current stockholders’ percentage ownership;
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•
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incur debt and assume other liabilities;
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•
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use a substantial portion of our cash resources; or
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•
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incur amortization expenses related to other intangible assets and/or incur large and immediate write-offs.
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•
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problems integrating the acquired operations, technologies or products with our own;
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•
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diversion of management’s attention from our core business;
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•
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adverse impact on overall company operating results;
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•
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adverse effects on existing business relationships with suppliers and customers;
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•
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risks associated with entering new markets; and
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•
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loss of key employees.
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•
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authorize the issuance of “blank check” convertible preferred stock that could be issued by our board of directors to thwart a takeover attempt;
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•
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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;
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•
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require that directors only be removed from office for cause and only upon a supermajority stockholder vote;
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•
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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;
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•
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prevent stockholders from calling special meetings; and
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•
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prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders.
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Location
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Function
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Square Footage
|
|
Sunnyvale, CA
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Corporate headquarters and manufacturing
|
321,000
|
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Allentown, PA
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Manufacturing and research and development
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60,000
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Annapolis Junction, MD
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Research and development, service and support
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12,000
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Carrollton, TX
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Sales, service and support
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5,000
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Kanata, Canada
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Research and development
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13,000
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Stockholm, Sweden
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Research and development, sales, service and support
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78,000
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London, United Kingdom
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Sales, service and support
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6,000
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Bangalore, India
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Software development
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122,000
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Beijing, China
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Research and development
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22,000
|
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Hong Kong, China
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Sales, service and support
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2,000
|
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Tokyo, Japan
|
Sales and support
|
2,000
|
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
High
|
|
Low
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||||
Fourth Quarter 2016
|
$
|
9.62
|
|
|
$
|
7.23
|
|
Third Quarter 2016
|
$
|
13.24
|
|
|
$
|
8.20
|
|
Second Quarter 2016
|
$
|
16.25
|
|
|
$
|
10.95
|
|
First Quarter 2016
|
$
|
19.16
|
|
|
$
|
13.02
|
|
Fourth Quarter 2015
|
$
|
22.85
|
|
|
$
|
16.98
|
|
Third Quarter 2015
|
$
|
25.24
|
|
|
$
|
18.35
|
|
Second Quarter 2015
|
$
|
22.95
|
|
|
$
|
17.58
|
|
First Quarter 2015
|
$
|
19.70
|
|
|
$
|
13.00
|
|
|
Years Ended
|
||||||||||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
|
December 28,
2013 |
|
December 29,
2012 |
||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Revenue
|
$
|
870,135
|
|
|
$
|
886,714
|
|
|
$
|
668,079
|
|
|
$
|
544,122
|
|
|
$
|
438,437
|
|
Gross profit
|
$
|
393,718
|
|
|
$
|
403,477
|
|
|
$
|
288,304
|
|
|
$
|
218,639
|
|
|
$
|
157,569
|
|
Net income (loss)
|
$
|
(24,430
|
)
|
|
$
|
50,950
|
|
|
$
|
13,659
|
|
|
$
|
(32,119
|
)
|
|
$
|
(85,330
|
)
|
Net income (loss) attributable to Infinera Corporation
|
$
|
(23,927
|
)
|
|
$
|
51,413
|
|
|
$
|
13,659
|
|
|
$
|
(32,119
|
)
|
|
$
|
(85,330
|
)
|
Net income (loss) per common share attributable to Infinera Corporation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.17
|
)
|
|
$
|
0.39
|
|
|
$
|
0.11
|
|
|
$
|
(0.27
|
)
|
|
$
|
(0.77
|
)
|
Diluted
|
$
|
(0.17
|
)
|
|
$
|
0.36
|
|
|
$
|
0.11
|
|
|
$
|
(0.27
|
)
|
|
$
|
(0.77
|
)
|
Weighted average number of shares used in computing basic and diluted net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
142,989
|
|
|
133,259
|
|
|
123,672
|
|
|
117,425
|
|
|
110,739
|
|
|||||
Diluted
|
142,989
|
|
|
143,171
|
|
|
128,565
|
|
|
117,425
|
|
|
110,739
|
|
|||||
Total cash and cash equivalents, investments and restricted cash
|
$
|
360,056
|
|
|
$
|
356,479
|
|
|
$
|
390,816
|
|
|
$
|
365,313
|
|
|
$
|
187,554
|
|
Cost-method investments
|
$
|
7,000
|
|
|
$
|
14,500
|
|
|
$
|
14,500
|
|
|
$
|
9,000
|
|
|
$
|
9,000
|
|
Intangible assets, net
|
$
|
108,475
|
|
|
$
|
156,319
|
|
|
$
|
361
|
|
|
$
|
416
|
|
|
$
|
470
|
|
Goodwill
|
$
|
176,760
|
|
|
$
|
191,560
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets
|
$
|
1,198,583
|
|
|
$
|
1,226,294
|
|
|
$
|
818,016
|
|
|
$
|
700,926
|
|
|
$
|
528,170
|
|
Long-term debt, net
|
$
|
133,586
|
|
|
$
|
125,440
|
|
|
$
|
116,894
|
|
|
$
|
109,164
|
|
|
$
|
—
|
|
Common stock and additional paid-in capital
|
$
|
1,354,227
|
|
|
$
|
1,300,441
|
|
|
$
|
1,077,351
|
|
|
$
|
1,025,781
|
|
|
$
|
930,730
|
|
Infinera stockholders' equity
|
$
|
762,328
|
|
|
$
|
762,151
|
|
|
$
|
481,907
|
|
|
$
|
417,810
|
|
|
$
|
356,136
|
|
Noncontrolling interest
|
$
|
—
|
|
|
$
|
14,910
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total stockholders’ equity
|
$
|
762,328
|
|
|
$
|
777,061
|
|
|
$
|
481,907
|
|
|
$
|
417,810
|
|
|
$
|
356,136
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Years Ended
|
|
|
|
|
|||||||||||||||
|
December 31,
2016
|
|
% of total
revenue
|
|
December 26,
2015 |
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
751,167
|
|
|
86
|
%
|
|
$
|
769,230
|
|
|
87
|
%
|
|
$
|
(18,063
|
)
|
|
(2
|
)%
|
Services
|
118,968
|
|
|
14
|
%
|
|
117,484
|
|
|
13
|
%
|
|
1,484
|
|
|
1
|
%
|
|||
Total revenue
|
$
|
870,135
|
|
|
100
|
%
|
|
$
|
886,714
|
|
|
100
|
%
|
|
$
|
(16,579
|
)
|
|
(2
|
)%
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
433,266
|
|
|
50
|
%
|
|
$
|
436,916
|
|
|
49
|
%
|
|
$
|
(3,650
|
)
|
|
(1
|
)%
|
Services
|
43,151
|
|
|
5
|
%
|
|
46,321
|
|
|
5
|
%
|
|
(3,170
|
)
|
|
(7
|
)%
|
|||
Total cost of revenue
|
$
|
476,417
|
|
|
55
|
%
|
|
$
|
483,237
|
|
|
54
|
%
|
|
$
|
(6,820
|
)
|
|
(1
|
)%
|
Gross profit
|
$
|
393,718
|
|
|
45.2
|
%
|
|
$
|
403,477
|
|
|
45.5
|
%
|
|
$
|
(9,759
|
)
|
|
(2
|
)%
|
|
Years Ended
|
|
|
|
|
|||||||||||||||
|
December 26,
2015 |
|
% of total
revenue
|
|
December 27,
2014 |
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
769,230
|
|
|
87
|
%
|
|
$
|
572,276
|
|
|
86
|
%
|
|
$
|
196,954
|
|
|
34
|
%
|
Services
|
117,484
|
|
|
13
|
%
|
|
95,803
|
|
|
14
|
%
|
|
21,681
|
|
|
23
|
%
|
|||
Total revenue
|
$
|
886,714
|
|
|
100
|
%
|
|
$
|
668,079
|
|
|
100
|
%
|
|
$
|
218,635
|
|
|
33
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
436,916
|
|
|
49
|
%
|
|
$
|
340,856
|
|
|
51
|
%
|
|
$
|
96,060
|
|
|
28
|
%
|
Services
|
46,321
|
|
|
5
|
%
|
|
38,919
|
|
|
6
|
%
|
|
7,402
|
|
|
19
|
%
|
|||
Total cost of revenue
|
$
|
483,237
|
|
|
54
|
%
|
|
$
|
379,775
|
|
|
57
|
%
|
|
$
|
103,462
|
|
|
27
|
%
|
Gross profit
|
$
|
403,477
|
|
|
45.5
|
%
|
|
$
|
288,304
|
|
|
43.2
|
%
|
|
$
|
115,173
|
|
|
40
|
%
|
|
Years Ended
|
|
|
|
|
|||||||||||||||
|
December 31,
2016
|
|
% of total revenue
|
|
December 26,
2015 |
|
% of total revenue
|
|
Change
|
|
% Change
|
|||||||||
Total revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Domestic
|
$
|
541,889
|
|
|
62
|
%
|
|
$
|
602,433
|
|
|
68
|
%
|
|
$
|
(60,544
|
)
|
|
(10
|
)%
|
International
|
328,246
|
|
|
38
|
%
|
|
284,281
|
|
|
32
|
%
|
|
43,965
|
|
|
15
|
%
|
|||
|
$
|
870,135
|
|
|
100
|
%
|
|
$
|
886,714
|
|
|
100
|
%
|
|
$
|
(16,579
|
)
|
|
(2
|
)%
|
Total revenue by sales channel
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Direct
|
$
|
809,681
|
|
|
93
|
%
|
|
$
|
825,952
|
|
|
93
|
%
|
|
$
|
(16,271
|
)
|
|
(2
|
)%
|
Indirect
|
60,454
|
|
|
7
|
%
|
|
60,762
|
|
|
7
|
%
|
|
(308
|
)
|
|
(1
|
)%
|
|||
|
$
|
870,135
|
|
|
100
|
%
|
|
$
|
886,714
|
|
|
100
|
%
|
|
$
|
(16,579
|
)
|
|
(2
|
)%
|
|
Years Ended
|
|
|
|
|
|||||||||||||||
|
December 26,
2015 |
|
% of total revenue
|
|
December 27,
2014 |
|
% of total revenue
|
|
Change
|
|
% Change
|
|||||||||
Total revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Domestic
|
$
|
602,433
|
|
|
68
|
%
|
|
$
|
476,172
|
|
|
71
|
%
|
|
$
|
126,261
|
|
|
27
|
%
|
International
|
284,281
|
|
|
32
|
%
|
|
191,907
|
|
|
29
|
%
|
|
92,374
|
|
|
48
|
%
|
|||
|
$
|
886,714
|
|
|
100
|
%
|
|
$
|
668,079
|
|
|
100
|
%
|
|
$
|
218,635
|
|
|
33
|
%
|
Total revenue by sales channel
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Direct
|
$
|
825,952
|
|
|
93
|
%
|
|
$
|
633,619
|
|
|
95
|
%
|
|
$
|
192,333
|
|
|
30
|
%
|
Indirect
|
60,762
|
|
|
7
|
%
|
|
34,460
|
|
|
5
|
%
|
|
26,302
|
|
|
76
|
%
|
|||
|
$
|
886,714
|
|
|
100
|
%
|
|
$
|
668,079
|
|
|
100
|
%
|
|
$
|
218,635
|
|
|
33
|
%
|
|
Years Ended
|
|
|
|
|
|||||||||||||||
|
December 31,
2016
|
|
% of total
revenue
|
|
December 26,
2015 |
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Research and development
|
$
|
232,291
|
|
|
27
|
%
|
|
$
|
180,703
|
|
|
20
|
%
|
|
$
|
51,588
|
|
|
29
|
%
|
Sales and marketing
|
118,858
|
|
|
14
|
%
|
|
101,398
|
|
|
11
|
%
|
|
17,460
|
|
|
17
|
%
|
|||
General and administrative
|
68,343
|
|
|
8
|
%
|
|
61,640
|
|
|
7
|
%
|
|
6,703
|
|
|
11
|
%
|
|||
Total operating expenses
|
$
|
419,492
|
|
|
49
|
%
|
|
$
|
343,741
|
|
|
38
|
%
|
|
$
|
75,751
|
|
|
22
|
%
|
|
Years Ended
|
|
|
|
|
|||||||||||||||
|
December 26,
2015 |
|
% of total
revenue
|
|
December 27,
2014 |
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Research and development
|
$
|
180,703
|
|
|
20
|
%
|
|
$
|
133,484
|
|
|
20
|
%
|
|
$
|
47,219
|
|
|
35
|
%
|
Sales and marketing
|
101,398
|
|
|
11
|
%
|
|
79,026
|
|
|
12
|
%
|
|
22,372
|
|
|
28
|
%
|
|||
General and administrative
|
61,640
|
|
|
7
|
%
|
|
48,452
|
|
|
7
|
%
|
|
13,188
|
|
|
27
|
%
|
|||
Total operating expenses
|
$
|
343,741
|
|
|
38
|
%
|
|
$
|
260,962
|
|
|
39
|
%
|
|
$
|
82,779
|
|
|
32
|
%
|
|
Years Ended
|
||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
Research and development
|
$
|
13,732
|
|
|
$
|
11,055
|
|
|
$
|
8,927
|
|
Sales and marketing
|
11,043
|
|
|
8,081
|
|
|
7,477
|
|
|||
General and administration
|
9,295
|
|
|
7,354
|
|
|
6,383
|
|
|||
Total
|
$
|
34,070
|
|
|
$
|
26,490
|
|
|
$
|
22,787
|
|
|
Years Ended
|
||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
|
(In thousands)
|
||||||||||
Interest income
|
$
|
2,478
|
|
|
$
|
1,837
|
|
|
$
|
1,456
|
|
Interest expense
|
(12,887
|
)
|
|
(11,941
|
)
|
|
(11,021
|
)
|
|||
Other gain (loss), net
|
7,002
|
|
|
2,399
|
|
|
(1,365
|
)
|
|||
Total other income (expense), net
|
$
|
(3,407
|
)
|
|
$
|
(7,705
|
)
|
|
$
|
(10,930
|
)
|
|
Years Ended
|
||||||||||
|
December 31, 2016
|
|
December 26, 2015
|
|
December 27, 2014
|
||||||
|
(In thousands)
|
||||||||||
Net cash flow provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
38,377
|
|
|
$
|
133,176
|
|
|
$
|
35,963
|
|
Investing activities
|
$
|
(12,115
|
)
|
|
$
|
(91,475
|
)
|
|
$
|
(96,059
|
)
|
Financing activities
|
$
|
(8,866
|
)
|
|
$
|
20,983
|
|
|
$
|
22,861
|
|
|
Years Ended
|
||||||
|
December 31, 2016
|
|
December 26, 2015
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
162,641
|
|
|
$
|
149,101
|
|
Short-term and long-term investments
|
182,476
|
|
|
202,068
|
|
||
Restricted cash
|
14,939
|
|
|
5,310
|
|
||
|
$
|
360,056
|
|
|
$
|
356,479
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1 - 3
years
|
|
3 - 5
years
|
|
More than
5 years
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Purchase obligations
(1)
|
$
|
111,932
|
|
|
$
|
111,932
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
(2)
|
55,589
|
|
|
12,073
|
|
|
22,460
|
|
|
12,713
|
|
|
8,343
|
|
|||||
Convertible senior notes, including interest
|
153,938
|
|
|
2,625
|
|
|
151,313
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
(3)
|
$
|
321,459
|
|
|
$
|
126,630
|
|
|
$
|
173,773
|
|
|
$
|
12,713
|
|
|
$
|
8,343
|
|
|
|
(1)
|
We have service agreements with our major production suppliers under which we are committed to purchase certain parts.
|
(2)
|
We lease facilities under non-cancelable operating lease agreements. These leases have varying terms that range from one to 12 years, and contain leasehold improvement incentives, rent holidays and escalation clauses. In addition, some of these leases have renewal options for up to five years. We also have contractual commitments to remove leasehold improvements and return certain properties to a specified condition when the leases terminate. At the inception of a lease with such conditions, we record an asset retirement obligation liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. An assumption of lease renewal where a renewal option exists is used only when the renewal has been determined to be reasonably assured. The estimated useful life of leasehold improvements is one to 12 years.
|
(3)
|
Tax liabilities of $2.8 million related to uncertain tax positions are not included in the table because we cannot reliably estimate the timing and amount of future payments, if any.
|
•
|
The expected term represents the weighted-average period that the stock options are expected to be outstanding prior to being exercised. The expected term is estimated based on our historical data on employee exercise patterns and post vesting termination behavior to estimate expected exercises over the contractual term of grants.
|
•
|
Expected volatility of our stock has been historically based on the weighted-average implied and historical volatility of Infinera and its peer group. The peer group is comprised of similar companies in the same industrial sector. As we gained more historical volatility data, the weighting of our own data in the expected volatility calculation associated with options gradually increased to 100% by 2013.
|
•
|
intangible assets including valuation methodology, estimations of future cash flows and discount rates, as well as the estimated useful life of the intangible assets;
|
•
|
the acquired company’s brand, as well as assumptions about the period of time the acquired brand will continue to be used; and
|
•
|
deferred tax assets and liabilities, uncertain tax positions and tax-related valuation allowances, which are initially estimated as of the acquisition date.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
Page
|
Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
Consolidated Statements of Stockholders’ Equity
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
|
December 31, 2016
|
|
December 26, 2015
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
162,641
|
|
|
$
|
149,101
|
|
Short-term investments
|
141,697
|
|
|
125,561
|
|
||
Short-term restricted cash
|
8,490
|
|
|
—
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $772 in 2016 and $630 in 2015
|
150,370
|
|
|
186,243
|
|
||
Inventory
|
232,955
|
|
|
174,699
|
|
||
Prepaid expenses and other current assets
|
34,270
|
|
|
29,511
|
|
||
Total current assets
|
730,423
|
|
|
665,115
|
|
||
Property, plant and equipment, net
|
124,800
|
|
|
110,861
|
|
||
Intangible assets
|
108,475
|
|
|
156,319
|
|
||
Goodwill
|
176,760
|
|
|
191,560
|
|
||
Long-term investments
|
40,779
|
|
|
76,507
|
|
||
Cost-method investments
|
7,000
|
|
|
14,500
|
|
||
Long-term restricted cash
|
6,449
|
|
|
5,310
|
|
||
Other non-current assets
|
3,897
|
|
|
4,009
|
|
||
Total assets
|
$
|
1,198,583
|
|
|
$
|
1,224,181
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
62,486
|
|
|
$
|
92,554
|
|
Accrued expenses
|
31,580
|
|
|
33,736
|
|
||
Accrued compensation and related benefits
|
46,637
|
|
|
49,887
|
|
||
Accrued warranty
|
16,930
|
|
|
17,889
|
|
||
Deferred revenue
|
58,900
|
|
|
42,977
|
|
||
Total current liabilities
|
216,533
|
|
|
237,043
|
|
||
Long-term debt, net
|
133,586
|
|
|
123,327
|
|
||
Accrued warranty, non-current
|
23,412
|
|
|
20,955
|
|
||
Deferred revenue, non-current
|
19,362
|
|
|
13,881
|
|
||
Deferred tax liability, non-current
|
25,327
|
|
|
35,731
|
|
||
Other long-term liabilities
|
18,035
|
|
|
16,183
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value
Authorized shares—25,000 and no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value
Authorized shares—500,000 in 2016 and 2015
Issued and outstanding shares—145,021 in 2016 and 140,197 in 2015
|
145
|
|
|
140
|
|
||
Additional paid-in capital
|
1,354,082
|
|
|
1,300,301
|
|
||
Accumulated other comprehensive income (loss)
|
(28,324
|
)
|
|
1,123
|
|
||
Accumulated deficit
|
(563,575
|
)
|
|
(539,413
|
)
|
||
Total Infinera Corporation stockholders’ equity
|
762,328
|
|
|
762,151
|
|
||
Noncontrolling interest
|
—
|
|
|
14,910
|
|
||
Total stockholders' equity
|
762,328
|
|
|
777,061
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,198,583
|
|
|
$
|
1,224,181
|
|
|
Years Ended
|
||||||||||
|
December 31, 2016
|
|
December 26, 2015
|
|
December 27, 2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Product
|
$
|
751,167
|
|
|
$
|
769,230
|
|
|
$
|
572,276
|
|
Services
|
118,968
|
|
|
117,484
|
|
|
95,803
|
|
|||
Total revenue
|
870,135
|
|
|
886,714
|
|
|
668,079
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Cost of product
|
433,266
|
|
|
436,916
|
|
|
340,856
|
|
|||
Cost of services
|
43,151
|
|
|
46,321
|
|
|
38,919
|
|
|||
Total cost of revenue
|
476,417
|
|
|
483,237
|
|
|
379,775
|
|
|||
Gross profit
|
393,718
|
|
|
403,477
|
|
|
288,304
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
232,291
|
|
|
180,703
|
|
|
133,484
|
|
|||
Sales and marketing
|
118,858
|
|
|
101,398
|
|
|
79,026
|
|
|||
General and administrative
|
68,343
|
|
|
61,640
|
|
|
48,452
|
|
|||
Total operating expenses
|
419,492
|
|
|
343,741
|
|
|
260,962
|
|
|||
Income (loss) from operations
|
(25,774
|
)
|
|
59,736
|
|
|
27,342
|
|
|||
Other income (expense), net:
|
|
|
|
|
|
||||||
Interest income
|
2,478
|
|
|
1,837
|
|
|
1,456
|
|
|||
Interest expense
|
(12,887
|
)
|
|
(11,941
|
)
|
|
(11,021
|
)
|
|||
Other gain (loss), net
|
7,002
|
|
|
2,399
|
|
|
(1,365
|
)
|
|||
Total other income (expense), net
|
(3,407
|
)
|
|
(7,705
|
)
|
|
(10,930
|
)
|
|||
Income (loss) before income taxes
|
(29,181
|
)
|
|
52,031
|
|
|
16,412
|
|
|||
Provision for (benefit from) income taxes
|
(4,751
|
)
|
|
1,081
|
|
|
2,753
|
|
|||
Net income (loss)
|
(24,430
|
)
|
|
50,950
|
|
|
13,659
|
|
|||
Less: Loss attributable to noncontrolling interest
|
(503
|
)
|
|
(463
|
)
|
|
—
|
|
|||
Net income (loss) attributable to Infinera Corporation
|
$
|
(23,927
|
)
|
|
$
|
51,413
|
|
|
$
|
13,659
|
|
Net income (loss) per common share attributable to Infinera Corporation:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.17
|
)
|
|
$
|
0.39
|
|
|
$
|
0.11
|
|
Diluted
|
$
|
(0.17
|
)
|
|
$
|
0.36
|
|
|
$
|
0.11
|
|
Weighted average shares used in computing net income (loss) per common share:
|
|
|
|
|
|
||||||
Basic
|
142,989
|
|
|
133,259
|
|
|
123,672
|
|
|||
Diluted
|
142,989
|
|
|
143,171
|
|
|
128,565
|
|
|
Years Ended
|
||||||||||
|
December 31, 2016
|
|
December 26, 2015
|
|
December 27, 2014
|
||||||
Net income (loss)
|
$
|
(24,430
|
)
|
|
$
|
50,950
|
|
|
$
|
13,659
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized gain (loss) on available-for-sale investments
|
297
|
|
|
(62
|
)
|
|
(320
|
)
|
|||
Foreign currency translation adjustment
|
(29,625
|
)
|
|
5,803
|
|
|
(812
|
)
|
|||
Tax effect on items related to available-for-sale investments
|
(119
|
)
|
|
—
|
|
|
—
|
|
|||
Net change in accumulated other comprehensive income (loss)
|
(29,447
|
)
|
|
5,741
|
|
|
(1,132
|
)
|
|||
Less: Comprehensive loss attributable to noncontrolling interest
|
(503
|
)
|
|
(463
|
)
|
|
—
|
|
|||
Comprehensive income (loss) attributable to Infinera Corporation
|
$
|
(53,374
|
)
|
|
$
|
57,154
|
|
|
$
|
12,527
|
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Total Stockholders' Equity
|
|
Noncontrolling Interest
|
|
Total
|
|||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||||||||||||
Balance at December 28, 2013
|
|
119,887
|
|
|
$
|
120
|
|
|
1,025,661
|
|
|
$
|
(3,486
|
)
|
|
$
|
(604,485
|
)
|
|
$
|
417,810
|
|
|
$
|
—
|
|
|
$
|
417,810
|
|
|
Stock options exercised
|
|
2,001
|
|
|
2
|
|
|
13,981
|
|
|
—
|
|
|
—
|
|
|
13,983
|
|
|
—
|
|
|
13,983
|
|
|||||||
ESPP shares issued
|
|
1,438
|
|
|
1
|
|
|
10,727
|
|
|
—
|
|
|
|
|
|
10,728
|
|
|
—
|
|
|
10,728
|
|
|||||||
Shares withheld for tax obligations
|
|
(217
|
)
|
|
—
|
|
|
(1,846
|
)
|
|
—
|
|
|
—
|
|
|
(1,846
|
)
|
|
—
|
|
|
(1,846
|
)
|
|||||||
Restricted stock units released
|
|
3,051
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
28,705
|
|
|
—
|
|
|
—
|
|
|
28,705
|
|
|
—
|
|
|
28,705
|
|
|||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,132
|
)
|
|
—
|
|
|
(1,132
|
)
|
|
—
|
|
|
(1,132
|
)
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,659
|
|
|
13,659
|
|
|
—
|
|
|
13,659
|
|
|||||||
Balance at December 27, 2014
|
|
126,160
|
|
|
$
|
126
|
|
|
$
|
1,077,225
|
|
|
$
|
(4,618
|
)
|
|
$
|
(590,826
|
)
|
|
$
|
481,907
|
|
|
$
|
—
|
|
|
$
|
481,907
|
|
Stock options exercised
|
|
1,787
|
|
|
2
|
|
|
13,092
|
|
|
—
|
|
|
—
|
|
|
13,094
|
|
|
—
|
|
|
13,094
|
|
|||||||
ESPP shares issued
|
|
1,229
|
|
|
1
|
|
|
12,252
|
|
|
—
|
|
|
—
|
|
|
12,253
|
|
|
—
|
|
|
12,253
|
|
|||||||
Shares withheld for tax obligations
|
|
(300
|
)
|
|
—
|
|
|
(5,227
|
)
|
|
—
|
|
|
—
|
|
|
(5,227
|
)
|
|
—
|
|
|
(5,227
|
)
|
|||||||
Restricted stock units released
|
|
3,448
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issuance of common stock related to acquisition
|
|
7,873
|
|
|
8
|
|
|
169,499
|
|
|
—
|
|
|
—
|
|
|
169,507
|
|
|
—
|
|
|
169,507
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
32,621
|
|
|
—
|
|
|
—
|
|
|
32,621
|
|
|
—
|
|
|
32,621
|
|
|||||||
Noncontrolling interest investment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,373
|
|
|
15,373
|
|
|||||||
Tax benefit from share-based award activity
|
|
—
|
|
|
—
|
|
|
842
|
|
|
—
|
|
|
—
|
|
|
842
|
|
|
—
|
|
|
842
|
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,741
|
|
|
—
|
|
|
5,741
|
|
|
—
|
|
|
5,741
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,413
|
|
|
51,413
|
|
|
(463
|
)
|
|
50,950
|
|
|||||||
Balance at December 26, 2015
|
|
140,197
|
|
|
$
|
140
|
|
|
$
|
1,300,301
|
|
|
$
|
1,123
|
|
|
$
|
(539,413
|
)
|
|
$
|
762,151
|
|
|
$
|
14,910
|
|
|
$
|
777,061
|
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Total Stockholders' Equity
|
|
Noncontrolling Interest
|
|
Total
|
|||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||||||||||||
Balance at December 26, 2015
|
|
140,197
|
|
|
$
|
140
|
|
|
$
|
1,300,301
|
|
|
$
|
1,123
|
|
|
$
|
(539,413
|
)
|
|
$
|
762,151
|
|
|
$
|
14,910
|
|
|
$
|
777,061
|
|
Stock options exercised
|
|
825
|
|
|
1
|
|
|
4,094
|
|
|
—
|
|
|
—
|
|
|
4,095
|
|
|
—
|
|
|
4,095
|
|
|||||||
ESPP shares issued
|
|
1,369
|
|
|
1
|
|
|
13,607
|
|
|
—
|
|
|
—
|
|
|
13,608
|
|
|
—
|
|
|
13,608
|
|
|||||||
Shares withheld for tax obligations
|
|
(287
|
)
|
|
—
|
|
|
(3,657
|
)
|
|
—
|
|
|
—
|
|
|
(3,657
|
)
|
|
—
|
|
|
(3,657
|
)
|
|||||||
Restricted stock units released
|
|
2,917
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
42,552
|
|
|
—
|
|
|
—
|
|
|
42,552
|
|
|
—
|
|
|
42,552
|
|
|||||||
Noncontrolling interest investment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,407
|
)
|
|
(14,407
|
)
|
|||||||
Squeeze-out Proceedings
|
|
—
|
|
|
—
|
|
|
(2,812
|
)
|
|
—
|
|
|
—
|
|
|
(2,812
|
)
|
|
—
|
|
|
(2,812
|
)
|
|||||||
Cumulative-effect adjustment from adoption of ASU 2016-09
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(235
|
)
|
|
(235
|
)
|
|
—
|
|
|
(235
|
)
|
|||||||
Tax benefit from share-based award activity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,447
|
)
|
|
—
|
|
|
(29,447
|
)
|
|
—
|
|
|
(29,447
|
)
|
|||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,927
|
)
|
|
(23,927
|
)
|
|
(503
|
)
|
|
(24,430
|
)
|
|||||||
Balance at December 31, 2016
|
|
145,021
|
|
|
$
|
145
|
|
|
$
|
1,354,082
|
|
|
$
|
(28,324
|
)
|
|
$
|
(563,575
|
)
|
|
$
|
762,328
|
|
|
$
|
—
|
|
|
$
|
762,328
|
|
|
Years Ended
|
||||||||||
|
December 31, 2016
|
|
December 26, 2015
|
|
December 27, 2014
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(24,430
|
)
|
|
$
|
50,950
|
|
|
$
|
13,659
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
61,489
|
|
|
35,777
|
|
|
25,917
|
|
|||
Amortization of debt discount and issuance costs
|
10,260
|
|
|
9,281
|
|
|
8,395
|
|
|||
Amortization of premium on investments
|
1,069
|
|
|
2,917
|
|
|
3,772
|
|
|||
Impairment on acquired in-process research and development
|
11,295
|
|
|
—
|
|
|
—
|
|
|||
Realized gain on sale of cost-method investments
|
(8,983
|
)
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation expense
|
40,533
|
|
|
32,580
|
|
|
28,394
|
|
|||
Other (gain) loss
|
672
|
|
|
(442
|
)
|
|
(12
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
33,895
|
|
|
(15,971
|
)
|
|
(53,948
|
)
|
|||
Inventory
|
(64,095
|
)
|
|
(17,116
|
)
|
|
(25,486
|
)
|
|||
Prepaid expenses and other assets
|
(5,501
|
)
|
|
(3,248
|
)
|
|
(8,324
|
)
|
|||
Accounts payable
|
(28,254
|
)
|
|
19,223
|
|
|
18,810
|
|
|||
Accrued liabilities and other expenses
|
(11,012
|
)
|
|
8,448
|
|
|
15,998
|
|
|||
Deferred revenue
|
21,439
|
|
|
10,777
|
|
|
8,788
|
|
|||
Net cash provided by operating activities
|
38,377
|
|
|
133,176
|
|
|
35,963
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Purchase of available-for-sale investments
|
(124,077
|
)
|
|
(186,737
|
)
|
|
(302,398
|
)
|
|||
Proceeds from sales of available-for-sale investments
|
—
|
|
|
67,303
|
|
|
28,481
|
|
|||
Proceeds from maturities and calls of investments
|
142,898
|
|
|
213,234
|
|
|
208,051
|
|
|||
Purchase of cost-method investments
|
(7,000
|
)
|
|
—
|
|
|
(5,500
|
)
|
|||
Proceeds from sale of cost-method investments
|
23,483
|
|
|
—
|
|
|
—
|
|
|||
Purchase of property and equipment
|
(43,335
|
)
|
|
(42,018
|
)
|
|
(23,122
|
)
|
|||
Acquisition of business, net of cash acquired
|
—
|
|
|
(144,445
|
)
|
|
—
|
|
|||
Realized gain from forward contract for business acquisition
|
—
|
|
|
1,053
|
|
|
—
|
|
|||
Change in restricted cash
|
(4,084
|
)
|
|
135
|
|
|
(1,571
|
)
|
|||
Net cash used in investing activities
|
(12,115
|
)
|
|
(91,475
|
)
|
|
(96,059
|
)
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Security pledge related to Squeeze-out Proceedings
|
(6,086
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of noncontrolling interest
|
(16,771
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of common stock
|
17,648
|
|
|
25,351
|
|
|
24,707
|
|
|||
Minimum tax withholding paid on behalf of employees for net share settlement
|
(3,657
|
)
|
|
(5,227
|
)
|
|
(1,846
|
)
|
|||
Excess tax benefit from stock option transactions
|
—
|
|
|
859
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
(8,866
|
)
|
|
20,983
|
|
|
22,861
|
|
|||
Effect of exchange rate changes on cash
|
(3,856
|
)
|
|
(78
|
)
|
|
(600
|
)
|
|||
Net change in cash and cash equivalents
|
13,540
|
|
|
62,606
|
|
|
(37,835
|
)
|
|||
Cash and cash equivalents at beginning of period
|
149,101
|
|
|
86,495
|
|
|
124,330
|
|
|||
Cash and cash equivalents at end of period
|
$
|
162,641
|
|
|
$
|
149,101
|
|
|
$
|
86,495
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for income taxes, net of refunds
|
$
|
6,625
|
|
|
$
|
4,570
|
|
|
$
|
1,697
|
|
Cash paid for interest
|
$
|
2,776
|
|
|
$
|
2,647
|
|
|
$
|
2,625
|
|
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Transfer of inventory to fixed assets
|
$
|
5,597
|
|
|
$
|
9,314
|
|
|
$
|
2,569
|
|
Common stock issued in connection with acquisition
|
$
|
—
|
|
|
$
|
169,507
|
|
|
$
|
—
|
|
•
|
The expected term represents the weighted-average period that the stock options are expected to be outstanding prior to being exercised. The expected term is estimated based on the Company’s historical data on employee exercise patterns and post vesting termination behavior to estimate expected exercises over the contractual term of grants.
|
•
|
Expected volatility of the Company’s stock has been historically based on the weighted-average implied and historical volatility of Infinera and its peer group. The peer group is comprised of similar companies in the same industrial sector. As the Company gained more historical volatility data, the weighting of its own data in the expected volatility calculation associated with options gradually increased to 100% by 2013.
|
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.
|
|
Estimated Useful Lives
|
Laboratory and manufacturing equipment
|
1.5 to 10 years
|
Furniture and fixtures
|
3 to 5 years
|
Computer hardware and software
|
1.5 to 7 years
|
Leasehold improvements
|
1 to 12 years
|
•
|
Intangible assets, including valuation methodology, estimations of future cash flows and discount rates, as well as the estimated useful life of the intangible assets;
|
•
|
the acquired company’s brand, as well as assumptions about the period of time the acquired brand will continue to be used;
|
•
|
deferred tax assets and liabilities, uncertain tax positions and tax-related valuation allowances, which are initially estimated as of the acquisition date;
|
|
As of December 31, 2016
|
|
As of December 26, 2015
|
||||||||||||||||||||
|
Fair Value Measured Using
|
|
Fair Value Measured Using
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
41,773
|
|
|
$
|
—
|
|
|
$
|
41,773
|
|
|
$
|
37,829
|
|
|
$
|
—
|
|
|
$
|
37,829
|
|
Certificates of deposit
|
—
|
|
|
1,881
|
|
|
1,881
|
|
|
—
|
|
|
5,001
|
|
|
5,001
|
|
||||||
Commercial paper
|
—
|
|
|
39,310
|
|
|
39,310
|
|
|
—
|
|
|
10,997
|
|
|
10,997
|
|
||||||
Corporate bonds
|
—
|
|
|
88,324
|
|
|
88,324
|
|
|
—
|
|
|
163,400
|
|
|
163,400
|
|
||||||
U.S. agency notes
|
—
|
|
|
11,759
|
|
|
11,759
|
|
|
—
|
|
|
10,717
|
|
|
10,717
|
|
||||||
U.S. treasuries
|
52,092
|
|
|
—
|
|
|
52,092
|
|
|
24,853
|
|
|
—
|
|
|
24,853
|
|
||||||
Foreign currency exchange forward contracts
|
$
|
—
|
|
|
$
|
187
|
|
|
$
|
187
|
|
|
$
|
—
|
|
|
$
|
490
|
|
|
$
|
490
|
|
Total assets
|
$
|
93,865
|
|
|
$
|
141,461
|
|
|
$
|
235,326
|
|
|
$
|
62,682
|
|
|
$
|
190,605
|
|
|
$
|
253,287
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency exchange forward contracts
|
$
|
—
|
|
|
$
|
(71
|
)
|
|
$
|
(71
|
)
|
|
$
|
—
|
|
|
$
|
(44
|
)
|
|
$
|
(44
|
)
|
|
December 31, 2016
|
||||||||||||||
|
Adjusted
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash
|
$
|
109,978
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
109,978
|
|
Money market funds
|
41,773
|
|
|
—
|
|
|
—
|
|
|
41,773
|
|
||||
Commercial paper
|
8,892
|
|
|
—
|
|
|
(1
|
)
|
|
8,891
|
|
||||
U.S. agency notes
|
1,999
|
|
|
—
|
|
|
—
|
|
|
1,999
|
|
||||
Total cash and cash equivalents
|
$
|
162,642
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
162,641
|
|
Certificates of deposit
|
1,881
|
|
|
—
|
|
|
—
|
|
|
1,881
|
|
||||
Commercial paper
|
30,425
|
|
|
—
|
|
|
(6
|
)
|
|
30,419
|
|
||||
Corporate bonds
|
63,097
|
|
|
1
|
|
|
(59
|
)
|
|
63,039
|
|
||||
U.S. agency notes
|
7,285
|
|
|
—
|
|
|
(8
|
)
|
|
7,277
|
|
||||
U.S. treasuries
|
39,093
|
|
|
9
|
|
|
(21
|
)
|
|
39,081
|
|
||||
Total short-term investments
|
$
|
141,781
|
|
|
$
|
10
|
|
|
$
|
(94
|
)
|
|
$
|
141,697
|
|
Corporate bonds
|
25,374
|
|
|
—
|
|
|
(89
|
)
|
|
25,285
|
|
||||
U.S. agency notes
|
2,499
|
|
|
—
|
|
|
(16
|
)
|
|
2,483
|
|
||||
U.S. treasuries
|
13,032
|
|
|
2
|
|
|
(23
|
)
|
|
13,011
|
|
||||
Total long-term investments
|
$
|
40,905
|
|
|
$
|
2
|
|
|
$
|
(128
|
)
|
|
$
|
40,779
|
|
Total cash, cash equivalents and investments
|
$
|
345,328
|
|
|
$
|
12
|
|
|
$
|
(223
|
)
|
|
$
|
345,117
|
|
|
December 26, 2015
|
||||||||||||||
|
Adjusted
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash
|
$
|
98,372
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
98,372
|
|
Money market funds
|
37,829
|
|
|
—
|
|
|
—
|
|
|
37,829
|
|
||||
Commercial paper
|
6,000
|
|
|
—
|
|
|
—
|
|
|
6,000
|
|
||||
U.S. treasuries
|
6,900
|
|
|
—
|
|
|
—
|
|
|
6,900
|
|
||||
Total cash and cash equivalents
|
$
|
149,101
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
149,101
|
|
Certificates of deposit
|
3,120
|
|
|
—
|
|
|
—
|
|
|
3,120
|
|
||||
Commercial paper
|
4,997
|
|
|
—
|
|
|
—
|
|
|
4,997
|
|
||||
Corporate bonds
|
111,608
|
|
|
—
|
|
|
(148
|
)
|
|
111,460
|
|
||||
U.S. agency notes
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
U.S. treasuries
|
5,986
|
|
|
—
|
|
|
(4
|
)
|
|
5,982
|
|
||||
Total short-term investments
|
$
|
125,713
|
|
|
$
|
—
|
|
|
$
|
(152
|
)
|
|
$
|
125,561
|
|
Certificates of deposit
|
1,880
|
|
|
1
|
|
|
—
|
|
|
1,881
|
|
||||
Corporate bonds
|
52,189
|
|
|
—
|
|
|
(249
|
)
|
|
51,940
|
|
||||
U.S. agency notes
|
10,784
|
|
|
—
|
|
|
(69
|
)
|
|
10,715
|
|
||||
U.S. treasuries
|
12,010
|
|
|
—
|
|
|
(39
|
)
|
|
11,971
|
|
||||
Total long-term investments
|
$
|
76,863
|
|
|
$
|
1
|
|
|
$
|
(357
|
)
|
|
$
|
76,507
|
|
Total cash, cash equivalents and investments
|
$
|
351,677
|
|
|
$
|
1
|
|
|
$
|
(509
|
)
|
|
$
|
351,169
|
|
4.
|
Cost-method Investments
|
|
As of December 31, 2016
|
|
As of December 26, 2015
|
||||||||||||||||||||
|
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
|
$
|
23,887
|
|
|
$
|
137
|
|
|
$
|
(71
|
)
|
|
$
|
46,753
|
|
|
$
|
319
|
|
|
$
|
(44
|
)
|
Related to British pound denominated receivables
|
$
|
6,353
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
6,686
|
|
|
$
|
171
|
|
|
$
|
—
|
|
Related to euro denominated restricted cash
|
$
|
242
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
252
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
|
|
$
|
187
|
|
|
$
|
(71
|
)
|
|
|
|
$
|
490
|
|
|
$
|
(44
|
)
|
|
|
(1)
|
Represents the face amounts of forward contracts that were outstanding as of the period noted.
|
|
December 31, 2016
|
|
December 26, 2015
|
||||
Beginning noncontrolling interest
|
$
|
14,910
|
|
|
$
|
—
|
|
Noncontrolling interest investment
|
—
|
|
|
15,373
|
|
||
Acquisition of noncontrolling interest
|
(14,407
|
)
|
|
—
|
|
||
Loss attributable to noncontrolling interest
|
(503
|
)
|
|
(463
|
)
|
||
Ending noncontrolling interest
|
$
|
—
|
|
|
$
|
14,910
|
|
7.
|
Goodwill and Intangible Assets
|
Balance as of December 26, 2015
|
$
|
191,560
|
|
Foreign currency translation adjustments
|
(14,800
|
)
|
|
Accumulated impairment loss
|
—
|
|
|
Balance as of December 31, 2016
|
$
|
176,760
|
|
|
December 31, 2016
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Remaining Useful Life (In Years)
|
||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
||||||
Trade names
|
$
|
220
|
|
|
$
|
(220
|
)
|
|
$
|
—
|
|
|
0.0
|
Customer relationships
|
46,125
|
|
|
(7,793
|
)
|
|
38,332
|
|
|
6.6
|
|||
Developed technology
|
94,320
|
|
|
(24,715
|
)
|
|
69,605
|
|
|
3.7
|
|||
Other intangible assets
|
819
|
|
|
(567
|
)
|
|
252
|
|
|
4.6
|
|||
Total intangible assets with finite lives
|
$
|
141,484
|
|
|
$
|
(33,295
|
)
|
|
$
|
108,189
|
|
|
4.7
|
Acquired in-process technology
|
286
|
|
|
—
|
|
|
286
|
|
|
|
|||
Total intangible assets
|
$
|
141,770
|
|
|
$
|
(33,295
|
)
|
|
$
|
108,475
|
|
|
|
|
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
|
Acquired in-process technology
|
20,521
|
|
|
—
|
|
|
20,521
|
|
|
|
|||
Total intangible assets
|
$
|
165,826
|
|
|
$
|
(9,507
|
)
|
|
$
|
156,319
|
|
|
|
|
|
|
Fiscal Years
|
||||||||||||||||||||
|
Total
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021 and Thereafter
|
||||||||||||
Total future amortization expense
|
$
|
108,189
|
|
|
$
|
24,924
|
|
|
$
|
24,924
|
|
|
$
|
24,364
|
|
|
$
|
17,779
|
|
|
$
|
16,198
|
|
|
December 31,
2016
|
|
December 26,
2015 |
||||
Inventory:
|
|
|
|
||||
Raw materials
|
$
|
33,158
|
|
|
$
|
27,879
|
|
Work in process
|
74,533
|
|
|
52,599
|
|
||
Finished goods
|
125,264
|
|
|
94,221
|
|
||
Total
|
$
|
232,955
|
|
|
$
|
174,699
|
|
Property, plant and equipment, net:
|
|
|
|
||||
Computer hardware
|
$
|
12,775
|
|
|
$
|
11,097
|
|
Computer software
(1)
|
26,779
|
|
|
22,548
|
|
||
Laboratory and manufacturing equipment
|
222,311
|
|
|
189,168
|
|
||
Furniture and fixtures
|
2,075
|
|
|
1,897
|
|
||
Leasehold improvements
|
42,267
|
|
|
38,946
|
|
||
Construction in progress
|
33,633
|
|
|
31,060
|
|
||
Subtotal
|
$
|
339,840
|
|
|
$
|
294,716
|
|
Less accumulated depreciation and amortization
(2)
|
(215,040
|
)
|
|
(183,855
|
)
|
||
Total
|
$
|
124,800
|
|
|
$
|
110,861
|
|
Accrued expenses:
|
|
|
|
||||
Loss contingency related to non-cancelable purchase commitments
|
$
|
5,555
|
|
|
$
|
6,821
|
|
Professional and other consulting fees
|
4,955
|
|
|
5,363
|
|
||
Taxes payable
|
2,384
|
|
|
3,295
|
|
||
Royalties
|
5,375
|
|
|
4,290
|
|
||
Other accrued expenses
|
13,311
|
|
|
13,967
|
|
||
Total
|
$
|
31,580
|
|
|
$
|
33,736
|
|
|
|
(1)
|
Included in computer software at December 31, 2016 and December 26, 2015 were
$9.1 million
and
$7.9 million
, respectively, related to enterprise resource planning (“ERP”) systems that the Company implemented. The unamortized ERP costs at December 31, 2016 and December 26, 2015 were
$4.0 million
and
$4.0 million
, respectively.
|
(2)
|
Depreciation expense was
$35.5 million
,
$26.8 million
and
$25.9 million
(which includes depreciation of capitalized ERP costs of
$1.2 million
,
$1.2 million
and
$1.1 million
, respectively) for 2016, 2015 and 2014, respectively.
|
|
Unrealized Gain (Loss) on Available-for-Sale Securities
|
|
Foreign Currency Translation
|
|
Accumulated Tax Effect
|
|
Total
|
||||||||
Balance at December 28, 2013
|
$
|
(124
|
)
|
|
$
|
(2,602
|
)
|
|
$
|
(760
|
)
|
|
$
|
(3,486
|
)
|
Other comprehensive loss before reclassifications
|
(320
|
)
|
|
(812
|
)
|
|
—
|
|
|
(1,132
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net current-period other comprehensive loss
|
(320
|
)
|
|
(812
|
)
|
|
—
|
|
|
(1,132
|
)
|
||||
Balance at December 27, 2014
|
$
|
(444
|
)
|
|
$
|
(3,414
|
)
|
|
$
|
(760
|
)
|
|
$
|
(4,618
|
)
|
Other comprehensive income before reclassifications
|
(62
|
)
|
|
5,803
|
|
|
—
|
|
|
5,741
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net current-period other comprehensive income
|
(62
|
)
|
|
5,803
|
|
|
—
|
|
|
5,741
|
|
||||
Balance at December 26, 2015
|
$
|
(506
|
)
|
|
$
|
2,389
|
|
|
$
|
(760
|
)
|
|
$
|
1,123
|
|
Other comprehensive loss before reclassifications
|
297
|
|
|
(29,625
|
)
|
|
(119
|
)
|
|
(29,447
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net current-period other comprehensive loss
|
297
|
|
|
(29,625
|
)
|
|
(119
|
)
|
|
(29,447
|
)
|
||||
Balance at December 31, 2016
|
$
|
(209
|
)
|
|
$
|
(27,236
|
)
|
|
$
|
(879
|
)
|
|
$
|
(28,324
|
)
|
|
Years Ended
|
||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss) attributable to Infinera Corporation
|
$
|
(23,927
|
)
|
|
$
|
51,413
|
|
|
$
|
13,659
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average common shares outstanding
|
142,989
|
|
|
133,259
|
|
|
123,672
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Employee equity plans
|
—
|
|
|
5,686
|
|
|
4,778
|
|
|||
Assumed conversion of convertible senior notes from conversion spread
|
—
|
|
|
4,226
|
|
|
115
|
|
|||
Dilutive weighted average common shares outstanding
|
142,989
|
|
|
143,171
|
|
|
128,565
|
|
|||
|
|
|
|
|
|
||||||
Net income (loss) per common share attributable to Infinera Corporation
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.17
|
)
|
|
$
|
0.39
|
|
|
$
|
0.11
|
|
Diluted
|
$
|
(0.17
|
)
|
|
$
|
0.36
|
|
|
$
|
0.11
|
|
|
As of
|
|||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
|||
Stock options outstanding
|
2,042
|
|
|
8
|
|
|
362
|
|
Restricted stock units
|
5,302
|
|
|
415
|
|
|
331
|
|
Performance stock units
|
896
|
|
|
73
|
|
|
124
|
|
Employee stock purchase plan shares
|
1,010
|
|
|
225
|
|
|
741
|
|
Total
|
9,250
|
|
|
721
|
|
|
1,558
|
|
11.
|
Convertible Senior Notes
|
•
|
during any fiscal quarter commencing after the fiscal quarter ending 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.
|
|
December 31, 2016
|
|
December 26, 2015
|
||||
Principal
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Unamortized discount
(1)
|
(15,114
|
)
|
|
(24,560
|
)
|
||
Unamortized issuance cost
(1)
|
(1,300
|
)
|
|
(2,113
|
)
|
||
Net carrying amount
|
$
|
133,586
|
|
|
$
|
123,327
|
|
|
|
(1)
|
Unamortized debt conversion discount and issuance costs will be amortized over the remaining life of the Notes, which is approximately
17 months
.
|
|
Years Ended
|
||||||||||
|
December 31, 2016
|
|
December 26, 2015
|
|
December 27, 2014
|
||||||
Contractual interest expense
|
$
|
2,625
|
|
|
$
|
2,625
|
|
|
$
|
2,626
|
|
Amortization of debt issuance costs
|
813
|
|
|
735
|
|
|
665
|
|
|||
Amortization of debt discount
|
9,447
|
|
|
8,546
|
|
|
7,730
|
|
|||
Total interest expense
|
$
|
12,885
|
|
|
$
|
11,906
|
|
|
$
|
11,021
|
|
12.
|
Commitments and Contingencies
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Operating lease payments
|
$
|
12,073
|
|
|
$
|
11,723
|
|
|
$
|
10,737
|
|
|
$
|
9,445
|
|
|
$
|
3,268
|
|
|
$
|
8,343
|
|
|
$
|
55,589
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Purchase obligations
|
$
|
111,932
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
111,932
|
|
|
December 31,
2016
|
|
December 26,
2015 |
||||
Beginning balance
|
$
|
38,844
|
|
|
$
|
27,040
|
|
Charges to operations
|
25,135
|
|
|
31,258
|
|
||
Utilization
|
(16,884
|
)
|
|
(15,114
|
)
|
||
Change in estimate
(1)
|
(6,753
|
)
|
|
(4,340
|
)
|
||
Balance at the end of the period
|
$
|
40,342
|
|
|
$
|
38,844
|
|
|
|
(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. Over time, the Company's failure rates and repair costs have generally declined leading to favorable changes in warranty reserves.
|
14.
|
Stockholders’ Equity
|
|
December 31, 2016
|
|
Outstanding stock options and awards
|
7,853
|
|
Reserved for future option and award grants
|
7,096
|
|
Reserved for future ESPP
|
4,664
|
|
Total common stock reserved for stock options and awards
|
19,613
|
|
|
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
|
(2,001
|
)
|
|
$
|
6.99
|
|
|
$
|
8,182
|
|
Options canceled
|
(93
|
)
|
|
$
|
12.38
|
|
|
|
||
Outstanding at December 27, 2014
|
4,298
|
|
|
$
|
7.29
|
|
|
$
|
32,833
|
|
Options granted
|
—
|
|
|
$
|
—
|
|
|
|
||
Options exercised
|
(1,787
|
)
|
|
$
|
7.33
|
|
|
$
|
21,566
|
|
Options canceled
|
—
|
|
|
$
|
—
|
|
|
|
||
Outstanding at December 26, 2015
|
2,511
|
|
|
$
|
7.26
|
|
|
$
|
28,288
|
|
Options granted
|
—
|
|
|
$
|
—
|
|
|
|
||
Options exercised
|
(825
|
)
|
|
$
|
4.97
|
|
|
$
|
4,433
|
|
Options canceled
|
(31
|
)
|
|
$
|
12.46
|
|
|
|
||
Outstanding at December 31, 2016
|
1,655
|
|
|
$
|
8.30
|
|
|
$
|
965
|
|
Exercisable at December 31, 2016
|
1,649
|
|
|
$
|
8.30
|
|
|
$
|
965
|
|
|
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
|
2,705
|
|
|
$
|
8.80
|
|
|
|
||
RSUs released
|
(2,797
|
)
|
|
$
|
7.84
|
|
|
$
|
24,858
|
|
RSUs canceled
|
(449
|
)
|
|
$
|
7.85
|
|
|
|
||
Outstanding at December 27, 2014
|
6,042
|
|
|
$
|
8.14
|
|
|
$
|
90,085
|
|
RSUs granted
|
2,202
|
|
|
$
|
18.48
|
|
|
|
||
RSUs released
|
(3,035
|
)
|
|
$
|
7.88
|
|
|
$
|
53,892
|
|
RSUs canceled
|
(277
|
)
|
|
$
|
10.95
|
|
|
|
||
Outstanding at December 26, 2015
|
4,932
|
|
|
$
|
12.76
|
|
|
$
|
91,285
|
|
RSUs granted
|
2,992
|
|
|
$
|
13.94
|
|
|
|
|
|
RSUs released
|
(2,303
|
)
|
|
$
|
11.06
|
|
|
$
|
26,407
|
|
RSUs canceled
|
(328
|
)
|
|
$
|
13.9
|
|
|
|
||
Outstanding at December 31, 2016
|
5,293
|
|
|
$
|
14.1
|
|
|
$
|
44,939
|
|
|
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
|
508
|
|
|
$
|
8.34
|
|
|
|
||
PSUs released
|
(255
|
)
|
|
$
|
6.36
|
|
|
$
|
2,097
|
|
PSUs canceled
|
(98
|
)
|
|
$
|
7.18
|
|
|
|
||
Outstanding at December 27, 2014
|
876
|
|
|
$
|
7.49
|
|
|
$
|
13,067
|
|
PSUs granted
|
332
|
|
|
$
|
18.23
|
|
|
|
||
PSU performance earned
(1)
|
129
|
|
|
$
|
7.32
|
|
|
|
||
PSUs released
|
(413
|
)
|
|
$
|
7.00
|
|
|
$
|
7,231
|
|
PSUs canceled
|
(193
|
)
|
|
$
|
8.03
|
|
|
|
||
Outstanding at December 26, 2015
|
731
|
|
|
$
|
12.35
|
|
|
$
|
13,540
|
|
PSUs granted
|
647
|
|
|
$
|
15.28
|
|
|
|
|
|
PSU performance earned
(1)
|
234
|
|
|
$
|
12.28
|
|
|
|
||
PSUs released
|
(614
|
)
|
|
$
|
11.34
|
|
|
$
|
8,077
|
|
PSUs canceled
|
(94
|
)
|
|
$
|
15.18
|
|
|
|
||
Outstanding at December 31, 2016
|
904
|
|
|
$
|
14.13
|
|
|
$
|
7,672
|
|
Expected to vest as of December 31, 2016
|
81
|
|
|
|
|
$
|
691
|
|
|
|
(1)
|
Represents the additional PSUs awarded resulting from the achievement of performance goals above the performance targets established at grant.
|
|
Unrecognized
Compensation
Expense, Net
|
|
Weighted-
Average Period
(in years)
|
||
Stock options
|
$
|
24
|
|
|
1.0
|
RSUs
|
$
|
53,340
|
|
|
2.4
|
PSUs
|
$
|
5,346
|
|
|
1.5
|
|
|
Options Outstanding
|
|
Vested and Exercisable
Options
|
||||||||||||
Exercise Price
|
|
Number of
Shares
|
|
Weighted-
Average
Remaining
Contractual Life
|
|
Weighted-
Average
Exercise
Price
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
|
||||||
|
|
(In thousands)
|
|
(In years)
|
|
|
|
(In thousands)
|
|
|
||||||
$6.30 - $ 7.25
|
|
293
|
|
|
2.74
|
|
$
|
6.86
|
|
|
293
|
|
|
$
|
6.86
|
|
$7.45 - $ 7.61
|
|
400
|
|
|
1.74
|
|
$
|
7.54
|
|
|
400
|
|
|
$
|
7.54
|
|
$7.68 - $ 8.19
|
|
250
|
|
|
3.63
|
|
$
|
8.06
|
|
|
250
|
|
|
$
|
8.06
|
|
$ 8.58
|
|
509
|
|
|
4.11
|
|
$
|
8.58
|
|
|
509
|
|
|
$
|
8.58
|
|
$9.02 - $ 22.36
|
|
203
|
|
|
2.20
|
|
$
|
11.46
|
|
|
197
|
|
|
$
|
11.54
|
|
|
|
1,655
|
|
|
2.99
|
|
$
|
8.30
|
|
|
1,649
|
|
|
$
|
8.30
|
|
|
Year Ended
|
Employee and Director Stock Options
|
December 27,
2014 |
Volatility
|
52%
|
Risk-free interest rate
|
1.3%
|
Expected life
|
4.3 years
|
Estimated fair value
|
3.85
|
|
Years Ended
|
||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
Volatility
|
56% - 67%
|
|
39% - 53%
|
|
46% - 51%
|
Risk-free interest rate
|
0.51% - 0.52%
|
|
0.13% - 0.26%
|
|
0.02% - 0.11%
|
Expected life
|
0.5 years
|
|
0.5 years
|
|
0.3 - 0.5 years
|
Estimated fair value
|
$3.16 - $4.53
|
|
$5.15 - $6.43
|
|
$2.05 - $2.57
|
|
Years Ended
|
||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
Stock-based compensation expense
|
$
|
6,094
|
|
|
$
|
4,472
|
|
|
$
|
3,760
|
|
Employee contributions
|
$
|
13,609
|
|
|
$
|
12,253
|
|
|
$
|
10,728
|
|
Shares purchased
|
1,369
|
|
|
1,229
|
|
|
1,438
|
|
|
|
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
|
|
|
|
|
Grant Year
|
|||||||||||
|
|
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)
|
|
234
|
|
|
70
|
|
|
53
|
|
|
111
|
|
|
—
|
|
PSUs released
|
|
(614
|
)
|
|
(210
|
)
|
|
(179
|
)
|
|
(225
|
)
|
|
—
|
|
PSUs canceled
|
|
(94
|
)
|
|
(7
|
)
|
|
(11
|
)
|
|
(62
|
)
|
|
(14
|
)
|
Outstanding at December 31, 2016
|
|
904
|
|
|
—
|
|
|
123
|
|
|
148
|
|
|
633
|
|
|
|
(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.
|
|
Years Ended
|
||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
Stock-based compensation effects in inventory
|
$
|
4,911
|
|
|
$
|
3,129
|
|
|
$
|
3,088
|
|
Stock-based compensation effects in fixed assets
|
$
|
67
|
|
|
$
|
93
|
|
|
$
|
119
|
|
Stock-based compensation effects in net income (loss) before income taxes
|
|
|
|
|
|
||||||
Cost of revenue
|
$
|
2,966
|
|
|
$
|
2,405
|
|
|
$
|
1,921
|
|
Research and development
|
13,732
|
|
|
11,055
|
|
|
8,927
|
|
|||
Sales and marketing
|
11,043
|
|
|
8,081
|
|
|
7,477
|
|
|||
General and administrative
|
9,295
|
|
|
7,354
|
|
|
6,383
|
|
|||
|
37,036
|
|
|
28,895
|
|
|
24,708
|
|
|||
Cost of revenue—amortization from balance sheet
(1)
|
3,497
|
|
|
3,685
|
|
|
3,686
|
|
|||
Total stock-based compensation expense
|
$
|
40,533
|
|
|
$
|
32,580
|
|
|
$
|
28,394
|
|
|
|
(1)
|
Represents stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period.
|
15.
|
Income Taxes
|
|
Years Ended
|
||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
861
|
|
|
1,239
|
|
|
446
|
|
|||
Foreign
|
2,288
|
|
|
3,482
|
|
|
2,423
|
|
|||
Total current
|
$
|
3,181
|
|
|
$
|
4,721
|
|
|
$
|
2,869
|
|
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
(7,932
|
)
|
|
(3,640
|
)
|
|
(116
|
)
|
|||
Total deferred
|
$
|
(7,932
|
)
|
|
$
|
(3,640
|
)
|
|
$
|
(116
|
)
|
Total provision (benefit)
|
$
|
(4,751
|
)
|
|
$
|
1,081
|
|
|
$
|
2,753
|
|
|
Years Ended
|
|||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
|||
Expected tax (benefit) at federal statutory rate
|
(35.0
|
)%
|
|
35.0
|
%
|
|
35.0
|
%
|
State taxes, net of federal benefit
|
2.2
|
%
|
|
1.5
|
%
|
|
1.8
|
%
|
Research credits
|
(8.9
|
)%
|
|
(5.0
|
)%
|
|
(11.4
|
)%
|
Stock-based compensation
|
22.3
|
%
|
|
9.6
|
%
|
|
14.7
|
%
|
Change in valuation allowance
|
(5.9
|
)%
|
|
(43.0
|
)%
|
|
(25.3
|
)%
|
Foreign rate differential
|
9.4
|
%
|
|
4.0
|
%
|
|
2.0
|
%
|
Other
|
(0.4
|
)%
|
|
—
|
%
|
|
—
|
%
|
Effective tax rate
|
(16.3
|
)%
|
|
2.1
|
%
|
|
16.8
|
%
|
|
Years Ended
|
||||||
|
December 31,
2016
|
|
December 26,
2015 |
||||
Deferred tax assets:
|
|
|
|
||||
Net operating losses
|
$
|
77,670
|
|
|
$
|
67,973
|
|
Research credits
|
47,405
|
|
|
42,093
|
|
||
Nondeductible accruals
|
42,507
|
|
|
38,978
|
|
||
Inventory valuation
|
30,449
|
|
|
21,550
|
|
||
Property, plant and equipment
|
1,692
|
|
|
989
|
|
||
Intangible assets
|
119
|
|
|
796
|
|
||
Stock-based compensation
|
9,412
|
|
|
9,299
|
|
||
Total deferred tax assets
|
$
|
209,254
|
|
|
$
|
181,678
|
|
Valuation allowance
|
(200,476
|
)
|
|
(169,240
|
)
|
||
Net deferred tax assets
|
$
|
8,778
|
|
|
$
|
12,438
|
|
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
(239
|
)
|
|
(232
|
)
|
||
Accruals, reserves and prepaid expenses
|
(4,008
|
)
|
|
(3,874
|
)
|
||
Acquired intangible assets
|
(24,088
|
)
|
|
(34,894
|
)
|
||
Convertible senior notes
|
(5,653
|
)
|
|
(9,070
|
)
|
||
Total deferred tax liabilities
|
$
|
(33,988
|
)
|
|
$
|
(48,070
|
)
|
Net deferred tax liabilities
|
$
|
(25,210
|
)
|
|
$
|
(35,632
|
)
|
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
Beginning balance
|
$
|
19,130
|
|
|
$
|
16,978
|
|
|
$
|
15,148
|
|
Tax position related to current year
|
|
|
|
|
|
||||||
Additions
|
2,548
|
|
|
2,891
|
|
|
1,990
|
|
|||
Tax positions related to prior years
|
|
|
|
|
|
||||||
Additions
|
1,292
|
|
|
—
|
|
|
140
|
|
|||
Reductions
|
—
|
|
|
(497
|
)
|
|
(76
|
)
|
|||
Lapses of statute of limitations
|
(688
|
)
|
|
(242
|
)
|
|
(224
|
)
|
|||
Ending balance
|
$
|
22,282
|
|
|
$
|
19,130
|
|
|
$
|
16,978
|
|
16.
|
Segment Information
|
|
Years Ended
|
||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
Americas:
|
|
|
|
|
|
||||||
United States
|
$
|
541,889
|
|
|
$
|
602,433
|
|
|
$
|
476,172
|
|
Other Americas
|
40,036
|
|
|
65,075
|
|
|
34,379
|
|
|||
|
$
|
581,925
|
|
|
$
|
667,508
|
|
|
$
|
510,551
|
|
Europe, Middle East and Africa
|
243,783
|
|
|
174,380
|
|
|
132,271
|
|
|||
Asia Pacific and Japan
|
44,427
|
|
|
44,826
|
|
|
25,257
|
|
|||
Total revenue
|
$
|
870,135
|
|
|
$
|
886,714
|
|
|
$
|
668,079
|
|
|
December 31,
2016
|
|
December 26,
2015 |
||||
United States
|
$
|
117,715
|
|
|
$
|
102,702
|
|
Other Americas
|
218
|
|
|
173
|
|
||
|
117,933
|
|
|
102,875
|
|
||
Europe, Middle East and Africa
|
3,822
|
|
|
5,417
|
|
||
Asia Pacific and Japan
|
3,045
|
|
|
2,569
|
|
||
Total property, plant and equipment, net
|
$
|
124,800
|
|
|
$
|
110,861
|
|
17.
|
Employee Benefit Plan
|
18.
|
Financial Information by Quarter (Unaudited)
|
|
For the Three Months Ended (Unaudited)
|
||||||||||||||||||||||||||||||
|
|
|
2016
|
|
|
|
2015
|
||||||||||||||||||||||||
|
Dec. 31
|
|
Sep. 24
|
|
Jun. 25
|
|
Mar. 26
|
|
Dec. 26
|
|
Sep. 26
|
|
Jun. 27
|
|
Mar. 28
|
||||||||||||||||
|
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
$
|
151,365
|
|
|
$
|
156,188
|
|
|
$
|
227,532
|
|
|
$
|
216,082
|
|
|
$
|
227,040
|
|
|
$
|
202,365
|
|
|
$
|
178,982
|
|
|
$
|
160,843
|
|
Services
|
29,678
|
|
|
29,264
|
|
|
31,290
|
|
|
28,736
|
|
|
32,994
|
|
|
30,107
|
|
|
28,364
|
|
|
26,019
|
|
||||||||
Total revenue
|
181,043
|
|
|
185,452
|
|
|
258,822
|
|
|
244,818
|
|
|
260,034
|
|
|
232,472
|
|
|
207,346
|
|
|
186,862
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of product
|
101,702
|
|
|
91,064
|
|
|
122,438
|
|
|
118,062
|
|
|
130,765
|
|
|
117,154
|
|
|
99,491
|
|
|
89,506
|
|
||||||||
Cost of services
|
10,309
|
|
|
9,786
|
|
|
12,638
|
|
|
10,418
|
|
|
13,505
|
|
|
12,513
|
|
|
11,059
|
|
|
9,244
|
|
||||||||
Total cost of revenue
|
112,011
|
|
|
100,850
|
|
|
135,076
|
|
|
128,480
|
|
|
144,270
|
|
|
129,667
|
|
|
110,550
|
|
|
98,750
|
|
||||||||
Gross profit
|
69,032
|
|
|
84,602
|
|
|
123,746
|
|
|
116,338
|
|
|
115,764
|
|
|
102,805
|
|
|
96,796
|
|
|
88,112
|
|
||||||||
Operating expenses
|
114,900
|
|
|
95,461
|
|
|
107,664
|
|
|
101,467
|
|
|
101,975
|
|
|
88,545
|
|
|
80,266
|
|
|
72,955
|
|
||||||||
Income (loss) from operations
|
(45,868
|
)
|
|
(10,859
|
)
|
|
16,082
|
|
|
14,871
|
|
|
13,789
|
|
|
14,260
|
|
|
16,530
|
|
|
15,157
|
|
||||||||
Other income (expense), net
|
5,589
|
|
|
(2,854
|
)
|
|
(3,295
|
)
|
|
(2,847
|
)
|
|
(2,013
|
)
|
|
(5,901
|
)
|
|
2,384
|
|
|
(2,175
|
)
|
||||||||
Income (loss) before income taxes
|
(40,279
|
)
|
|
(13,713
|
)
|
|
12,787
|
|
|
12,024
|
|
|
11,776
|
|
|
8,359
|
|
|
18,914
|
|
|
12,982
|
|
||||||||
Provision for (benefit from) income taxes
|
(4,026
|
)
|
|
(2,416
|
)
|
|
1,475
|
|
|
216
|
|
|
(392
|
)
|
|
(151
|
)
|
|
1,008
|
|
|
616
|
|
||||||||
Net income (loss)
|
$
|
(36,253
|
)
|
|
$
|
(11,297
|
)
|
|
$
|
11,312
|
|
|
$
|
11,808
|
|
|
$
|
12,168
|
|
|
$
|
8,510
|
|
|
$
|
17,906
|
|
|
$
|
12,366
|
|
Less: Net loss attributable to noncontrolling interest
|
—
|
|
|
(125
|
)
|
|
(171
|
)
|
|
(207
|
)
|
|
(463
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net income (loss) attributable to Infinera Corporation
|
$
|
(36,253
|
)
|
|
$
|
(11,172
|
)
|
|
$
|
11,483
|
|
|
$
|
12,015
|
|
|
$
|
12,631
|
|
|
$
|
8,510
|
|
|
$
|
17,906
|
|
|
$
|
12,366
|
|
Net income (loss) per common share attributable to Infinera Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.25
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.06
|
|
|
$
|
0.14
|
|
|
$
|
0.10
|
|
Diluted
|
$
|
(0.25
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
|
$
|
0.09
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
Years Ended
|
||||||||||
|
December 31,
2016
|
|
December 26,
2015 |
|
December 27,
2014 |
||||||
|
(In thousands)
|
||||||||||
Deferred tax asset, valuation allowance
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
169,240
|
|
|
$
|
199,698
|
|
|
$
|
202,747
|
|
Additions
|
31,913
|
|
|
15,266
|
|
|
17,276
|
|
|||
Reductions
|
(677
|
)
|
|
(45,724
|
)
|
|
(20,325
|
)
|
|||
Ending balance
|
$
|
200,476
|
|
|
$
|
169,240
|
|
|
$
|
199,698
|
|
Allowance for doubtful accounts
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
630
|
|
|
$
|
38
|
|
|
$
|
43
|
|
Additions
|
772
|
|
|
657
|
|
|
18
|
|
|||
Reductions
|
(630
|
)
|
|
(65
|
)
|
|
(23
|
)
|
|||
Ending balance
|
$
|
772
|
|
|
$
|
630
|
|
|
$
|
38
|
|
Exhibit No.
|
|
Description
|
3.1
|
|
Amended and Restated Certificate of Incorporation, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K (No. 001-33486), filed with the SEC on June 12, 2007.
|
3.2
|
|
Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K (No. 001-33486), filed with the SEC on February 29, 2016.
|
4.1
|
|
Form of Common Stock Certificate, incorporated herein by reference to Exhibit 4.1 of the Registrant’s Form S-1/A (No. 333-140876), filed with the SEC on April 27, 2007.
|
4.2
|
|
Indenture dated May 30, 2013, between the Registrant and U.S. Bank National Association, as trustee, incorporated herein by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (No. 001-33486), filed with the SEC on May 30, 2013.
|
10.1*
|
|
Form of Indemnification Agreement between Registrant and each of its directors and executive officers, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form S-1 (No. 333-140876), filed with the SEC on February 26, 2007.
|
10.2*
|
|
2000 Stock Plan, as amended, and forms of stock option agreements thereunder, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Form S-1 (No. 333-140876), filed with the SEC on February 26, 2007.
|
10.3*
|
|
2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Annual Report on Form 10-K (No. 001-33486), filed with the SEC on February 18, 2015.
|
10.4*
|
|
Infinera Corporation 2007 Employee Stock Purchase Plan.
|
10.5*
|
|
Form of 2007 Employee Stock Purchase Plan Subscription Agreement, incorporated herein by reference to Exhibit 10.2 of the Registrant's Current Report on Form 8-K (no. 001-33486), filed with the SEC on May 20, 2014.
|
10.6*
|
|
Bonus Plan, incorporated by reference herein to Exhibit 10.1 of the Registrant’s Current Report on 8-K (No. 001-33486), filed with the SEC on February 14, 2011.
|
10.7*
|
|
Form of Section 16 Officer Restricted Stock Unit Agreement under the 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.7 of the Registrant’s Annual Report on Form 10-K (No. 001-33486), filed with the SEC on February 18, 2015.
|
10.8*
|
|
Form of Section 16 Officer Performance Share Agreement under the 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.8 of the Registrant’s Annual Report on Form 10-K (No. 001-33486), filed with the SEC on February 18, 2015.
|
10.9*
|
|
Form of Director Restricted Stock Unit Agreement under the 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.9 of the Registrant’s Annual Report on Form 10-K (No. 001-33486), filed with the SEC on February 18, 2015.
|
10.10*
|
|
Form of Stock Option Agreement under the 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q (No. 001-33486), filed with the SEC on May 5, 2010.
|
10.11*
|
|
Form of CEO Amended and Restated Change of Control Severance Agreement, incorporated herein by reference to Exhibit 10.10 of the Registrant’s Annual Report on Form 10-K (No. 001-33486), filed with the SEC on March 5, 2013.
|
10.12*
|
|
Form of Section 16 Officer Amended and Restated Change of Control Severance Agreement, incorporated herein by reference to Exhibit 10.11 of the Registrant’s Annual Report on Form 10-K (No. 001-33486), filed with the SEC on March 5, 2013.
|
10.13*
|
|
Executive Clawback Policy, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K (No. 001-33486), filed with the SEC on January 17, 2013.
|
10.14
|
|
Purchase Agreement dated May 23, 2013, between the Registrant and Morgan Stanley and Co. LLC and Goldman, Sachs & Co., as representatives of the initial purchasers, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (No. 001-33486), filed with the SEC on May 24, 2013.
|
10.15*
|
|
Executive Severance Policy, incorporated herein by reference to Exhibit 10.19 of the Registrant’s Annual Report on Form 10-K (No. 001-33486), filed with the SEC on February 18, 2015.
|
10.16*
|
|
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. 001-33486), filed with the SEC on May 17, 2016.
|
Exhibit No.
|
|
Description
|
10.17*
|
|
Form of Notice of Grant of Restricted Stock Units under the 2016 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K (No. 001-33486), filed with the SEC on May 17, 2016.
|
10.18*
|
|
Form of Notice of Grant of Restricted Stock Units for Directors under the 2016 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K (No. 001-33486), filed with the SEC on May 17, 2016.
|
10.19*
|
|
Form of Notice of Grant of Performance Shares under the 2016 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K (No. 001-33486), filed with the SEC on May 17, 2016.
|
21.1
|
|
Subsidiaries.
|
23.1
|
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
|
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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2**
|
|
Certification of 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
|
|
|
*
|
Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.
|
**
|
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
|
|
Infinera Corporation
|
||
|
|
|
|
|
By:
|
|
/s/ BRAD D. FELLER
|
|
|
|
Brad D. Feller
Chief Financial Officer
Principal Financial and Accounting Officer
|
Name and Signature
|
Title
|
Date
|
|
|
|
/s/ THOMAS J. FALLON
|
Chief Executive Officer and Director and Principal Executive Officer
|
February 23, 2017
|
Thomas J. Fallon
|
||
|
|
|
/s/ BRAD D. FELLER
|
Chief Financial Officer, Principal Financial and
Accounting Officer |
February 23, 2017
|
Brad D. Feller
|
||
|
|
|
/s/ DAVID F. WELCH, PH.D.
|
Co-founder, President and Director
|
February 23, 2017
|
David F. Welch, Ph.D.
|
||
|
|
|
/s/ KAMBIZ Y. HOOSHMAND
|
Chairman of the Board
|
February 23, 2017
|
Kambiz Y. Hooshmand
|
||
|
|
|
/s/ JOHN P. DAANE
|
Director
|
February 23, 2017
|
John P. Daane
|
||
|
|
|
/s/ MARCEL GANI
|
Director
|
February 23, 2017
|
Marcel Gani
|
||
|
|
|
/s/ PAUL J. MILBURY
|
Director
|
February 23, 2017
|
Paul J. Milbury
|
||
|
|
|
/s/ RAJAL M. PATEL
|
Director
|
February 23, 2017
|
Rajal M. Patel
|
|
|
|
|
|
/s/ MARK A. WEGLEITNER
|
Director
|
February 23, 2017
|
Mark A. Wegleitner
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
By:
|
/
s
/ T
HOMAS
J. F
ALLON
|
|
|
Thomas J. Fallon
Chief Executive Officer
(Principal Executive Officer)
|
|
By:
|
/s/ BRAD D. FELLER
|
|
|
Brad D. Feller
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
(a)
|
the Annual Report on Form 10-K of Infinera Corporation for the year ended December 31, 2016 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(b)
|
the information contained in the Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Infinera Corporation.
|
/s/ THOMAS J. FALLON
|
|
Thomas J. Fallon
Chief Executive Officer
(Principal Executive Officer)
|
|
(a)
|
that the Annual Report on Form 10-K of Infinera Corporation for the year ended December 31, 2016 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(b)
|
the information contained in the Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Infinera Corporation.
|
/s/ BRAD D. FELLER
|
|
Brad D. Feller
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|