☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
77-0560433
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of exchange on which registered
|
Common stock, par value $0.001 per share
|
|
INFN
|
|
The Nasdaq Global Select Market
|
Large accelerated filer
|
☐
|
|
Accelerated Filer
|
☒
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
|
|
|
Page
|
|
|
|
Item 1.
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
Item 1.
|
Condensed Consolidated Financial Statements (Unaudited)
|
|
March 28,
2020 |
|
December 28,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
261,534
|
|
|
$
|
109,201
|
|
Short-term restricted cash
|
4,126
|
|
|
4,339
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $4,014 in 2020 and $4,005 in 2019
|
272,278
|
|
|
349,645
|
|
||
Inventory
|
319,696
|
|
|
340,429
|
|
||
Prepaid expenses and other current assets
|
159,845
|
|
|
139,217
|
|
||
Total current assets
|
1,017,479
|
|
|
942,831
|
|
||
Property, plant and equipment, net
|
148,815
|
|
|
150,793
|
|
||
Operating lease right-of-use assets
|
61,914
|
|
|
68,081
|
|
||
Intangible assets
|
155,356
|
|
|
170,346
|
|
||
Goodwill
|
239,412
|
|
|
249,848
|
|
||
Long-term restricted cash
|
17,808
|
|
|
19,257
|
|
||
Other non-current assets
|
26,347
|
|
|
27,182
|
|
||
Total assets
|
$
|
1,667,131
|
|
|
$
|
1,628,338
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
203,277
|
|
|
$
|
273,397
|
|
Accrued expenses and other current liabilities
|
186,668
|
|
|
193,168
|
|
||
Accrued compensation and related benefits
|
69,135
|
|
|
92,221
|
|
||
Short-term debt, net
|
31,680
|
|
|
31,673
|
|
||
Accrued warranty
|
18,988
|
|
|
21,107
|
|
||
Deferred revenue
|
95,693
|
|
|
103,753
|
|
||
Total current liabilities
|
605,441
|
|
|
715,319
|
|
||
Long-term debt, net
|
509,564
|
|
|
323,678
|
|
||
Long-term financing lease obligations
|
2,113
|
|
|
2,394
|
|
||
Accrued warranty, non-current
|
20,474
|
|
|
22,241
|
|
||
Deferred revenue, non-current
|
34,149
|
|
|
36,067
|
|
||
Deferred tax liability
|
7,505
|
|
|
8,700
|
|
||
Operating lease liabilities
|
60,420
|
|
|
64,210
|
|
||
Other long-term liabilities
|
65,746
|
|
|
69,194
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
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 as of March 28, 2020 and December 28, 2019 Issued and outstanding shares – 183,198 as of March 28, 2020 and 181,134 as of December 28, 2019 |
183
|
|
|
181
|
|
||
Additional paid-in capital
|
1,827,484
|
|
|
1,740,884
|
|
||
Accumulated other comprehensive loss
|
(46,139
|
)
|
|
(34,639
|
)
|
||
Accumulated deficit
|
(1,419,809
|
)
|
|
(1,319,891
|
)
|
||
Total stockholders' equity
|
361,719
|
|
|
386,535
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,667,131
|
|
|
$
|
1,628,338
|
|
|
Three Months Ended
|
||||||
|
March 28,
2020 |
|
March 30,
2019 |
||||
Revenue:
|
|
|
|
||||
Product
|
$
|
255,192
|
|
|
$
|
223,007
|
|
Services
|
75,081
|
|
|
69,700
|
|
||
Total revenue
|
330,273
|
|
|
292,707
|
|
||
Cost of revenue:
|
|
|
|
||||
Cost of product
|
201,792
|
|
|
157,817
|
|
||
Cost of services
|
40,695
|
|
|
36,676
|
|
||
Amortization of intangible assets
|
8,628
|
|
|
8,252
|
|
||
Acquisition and integration costs
|
1,035
|
|
|
2,064
|
|
||
Restructuring and related
|
1,157
|
|
|
21,466
|
|
||
Total cost of revenue
|
253,307
|
|
|
226,275
|
|
||
Gross profit
|
76,966
|
|
|
66,432
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
|
68,180
|
|
|
73,660
|
|
||
Sales and marketing
|
36,689
|
|
|
40,037
|
|
||
General and administrative
|
29,620
|
|
|
33,044
|
|
||
Amortization of intangible assets
|
4,555
|
|
|
7,057
|
|
||
Acquisition and integration costs
|
9,222
|
|
|
7,134
|
|
||
Restructuring and related
|
5,580
|
|
|
17,188
|
|
||
Total operating expenses
|
153,846
|
|
|
178,120
|
|
||
Loss from operations
|
(76,880
|
)
|
|
(111,688
|
)
|
||
Other income (expense), net:
|
|
|
|
||||
Interest income
|
24
|
|
|
766
|
|
||
Interest expense
|
(8,794
|
)
|
|
(7,563
|
)
|
||
Other gain (loss), net
|
(12,682
|
)
|
|
(2,923
|
)
|
||
Total other income (expense), net
|
(21,452
|
)
|
|
(9,720
|
)
|
||
Loss before income taxes
|
(98,332
|
)
|
|
(121,408
|
)
|
||
Provision for income taxes
|
936
|
|
|
193
|
|
||
Net loss
|
$
|
(99,268
|
)
|
|
$
|
(121,601
|
)
|
Net loss per common share:
|
|
|
|
||||
Basic
|
$
|
(0.55
|
)
|
|
$
|
(0.69
|
)
|
Diluted
|
$
|
(0.55
|
)
|
|
$
|
(0.69
|
)
|
Weighted average shares used in computing net loss per common share:
|
|
|
|
||||
Basic
|
182,024
|
|
|
176,406
|
|
||
Diluted
|
182,024
|
|
|
176,406
|
|
|
Three Months Ended
|
||||||
|
March 28,
2020 |
|
March 30,
2019 |
||||
Net loss
|
$
|
(99,268
|
)
|
|
$
|
(121,601
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Change in unrealized gain on available-for-sale investments
|
—
|
|
|
65
|
|
||
Foreign currency translation adjustment
|
(11,106
|
)
|
|
(5,557
|
)
|
||
Actuarial gain (loss) on pension liabilities
|
(394
|
)
|
|
78
|
|
||
Net change in accumulated other comprehensive loss
|
(11,500
|
)
|
|
(5,414
|
)
|
||
Comprehensive loss
|
$
|
(110,768
|
)
|
|
$
|
(127,015
|
)
|
|
|
Three Months Ended March 28, 2020
|
|||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Accumulated
Deficit |
|
Total Stockholders' Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 28, 2019
|
|
181,134
|
|
|
$
|
181
|
|
|
$
|
1,740,884
|
|
|
$
|
(34,639
|
)
|
|
$
|
(1,319,891
|
)
|
|
$
|
386,535
|
|
ESPP shares issued
|
|
1,839
|
|
|
2
|
|
|
7,392
|
|
|
—
|
|
|
—
|
|
|
7,394
|
|
|||||
Restricted stock units released
|
|
225
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
11,411
|
|
|
—
|
|
|
—
|
|
|
11,411
|
|
|||||
Cumulative-effect adjustment from adoption of Topic 326
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(650
|
)
|
|
(650
|
)
|
|||||
Conversion option related to convertible senior notes, net of allocated costs
|
|
—
|
|
|
—
|
|
|
67,797
|
|
|
—
|
|
|
—
|
|
|
67,797
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,500
|
)
|
|
—
|
|
|
(11,500
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
(99,268
|
)
|
|
(99,268
|
)
|
|||||
Balance at March 28, 2020
|
|
183,198
|
|
|
$
|
183
|
|
|
$
|
1,827,484
|
|
|
$
|
(46,139
|
)
|
|
$
|
(1,419,809
|
)
|
|
$
|
361,719
|
|
|
|
Three Months Ended March 30, 2019
|
|||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Loss |
|
Accumulated
Deficit |
|
Total Stockholders' Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 29, 2018
|
|
175,452
|
|
|
$
|
175
|
|
|
$
|
1,685,916
|
|
|
$
|
(25,300
|
)
|
|
$
|
(956,970
|
)
|
|
$
|
703,821
|
|
ESPP shares issued
|
|
1,825
|
|
|
2
|
|
|
7,738
|
|
|
—
|
|
|
—
|
|
|
7,740
|
|
|||||
Restricted stock units released
|
|
138
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
9,056
|
|
|
—
|
|
|
—
|
|
|
9,056
|
|
|||||
Cumulative-effect adjustment from adoption of Topic 842
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,697
|
|
|
23,697
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,414
|
)
|
|
—
|
|
|
(5,414
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(121,601
|
)
|
|
(121,601
|
)
|
|||||
Balance at March 30, 2019
|
|
177,415
|
|
|
177
|
|
|
$
|
1,702,710
|
|
|
$
|
(30,714
|
)
|
|
$
|
(1,054,874
|
)
|
|
$
|
617,299
|
|
|
Three Months Ended
|
||||||
|
March 28,
2020 |
|
March 30,
2019 |
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net loss
|
$
|
(99,268
|
)
|
|
$
|
(121,601
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
25,445
|
|
|
30,939
|
|
||
Non-cash restructuring charges and related costs
|
1,760
|
|
|
16,851
|
|
||
Amortization of debt discount and issuance costs
|
5,731
|
|
|
4,614
|
|
||
Operating lease expense
|
5,204
|
|
|
14,966
|
|
||
Stock-based compensation expense
|
11,703
|
|
|
8,713
|
|
||
Other, net
|
1,153
|
|
|
1,775
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
70,238
|
|
|
49,754
|
|
||
Inventory
|
17,737
|
|
|
(24,937
|
)
|
||
Prepaid expenses and other assets
|
(18,744
|
)
|
|
(5,236
|
)
|
||
Accounts payable
|
(72,355
|
)
|
|
(23,439
|
)
|
||
Accrued liabilities and other expenses
|
(32,083
|
)
|
|
(15,486
|
)
|
||
Deferred revenue
|
(8,038
|
)
|
|
6,933
|
|
||
Net cash used in operating activities
|
(91,517
|
)
|
|
(56,154
|
)
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Proceeds from maturities of investments
|
—
|
|
|
10,542
|
|
||
Acquisition of business, net of cash acquired
|
—
|
|
|
(10,000
|
)
|
||
Purchase of property and equipment, net
|
(8,464
|
)
|
|
(6,590
|
)
|
||
Net cash used in investing activities
|
(8,464
|
)
|
|
(6,048
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from issuance of 2027 Notes
|
194,500
|
|
|
—
|
|
||
Proceeds from mortgage payable
|
—
|
|
|
8,584
|
|
||
Proceeds from revolving line of credit
|
55,000
|
|
|
—
|
|
||
Repayment of revolving line of credit
|
—
|
|
|
—
|
|
||
Payment of debt issuance cost
|
(1,775
|
)
|
|
|
|||
Repayment of mortgage payable
|
(99
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock
|
7,395
|
|
|
7,740
|
|
||
Net cash provided by financing activities
|
255,021
|
|
|
16,324
|
|
||
Effect of exchange rate changes on cash and restricted cash
|
(4,369
|
)
|
|
(1,213
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
150,671
|
|
|
(47,091
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
132,797
|
|
|
242,337
|
|
||
Cash, cash equivalents and restricted cash at end of period(1)
|
$
|
283,468
|
|
|
$
|
195,246
|
|
|
|
|
|
|
March 28,
2020 |
|
March 30,
2019 |
||||
|
|
|
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
261,534
|
|
|
$
|
167,259
|
|
Short-term restricted cash
|
4,126
|
|
|
4,671
|
|
||
Long-term restricted cash
|
17,808
|
|
|
23,316
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
283,468
|
|
|
$
|
195,246
|
|
1.
|
Basis of Presentation and Significant Accounting Policies
|
2.
|
Recent Accounting Pronouncements
|
Remainder of 2020
|
|
$
|
18,987
|
|
2021
|
|
18,691
|
|
|
2022
|
|
15,245
|
|
|
2023
|
|
12,054
|
|
|
2024
|
|
10,066
|
|
|
Thereafter
|
|
35,855
|
|
|
Total lease payments
|
|
110,898
|
|
|
Less: interest(1)
|
|
32,423
|
|
|
Present value of lease liabilities
|
|
$
|
78,475
|
|
Weighted average remaining lease term
|
|
7.01 years
|
|
|
Weighted average discount rate
|
|
9.09
|
%
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
6,425
|
|
Operating cash flow from operating leases
|
|
$
|
6,425
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
|
$
|
1,818
|
|
|
|
|
||
Remainder of 2020
|
|
$
|
1,557
|
|
2021
|
|
1,199
|
|
|
2022
|
|
930
|
|
|
2023
|
|
402
|
|
|
Thereafter
|
|
—
|
|
|
Total lease payments
|
|
4,088
|
|
|
Less: interest
|
|
281
|
|
|
Present value of lease liabilities
|
|
$
|
3,807
|
|
Weighted average remaining lease term
|
|
2.78 years
|
|
|
Weighted average discount rate
|
|
7.00
|
%
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
—
|
|
Operating cash flow from operating leases
|
|
$
|
—
|
|
Leased assets obtained in exchange for new finance lease liabilities
|
|
$
|
—
|
|
|
Three Months Ended
|
||||||
|
March 28,
2020 |
|
March 30,
2019 |
||||
United States
|
$
|
170,526
|
|
|
$
|
132,522
|
|
Other Americas
|
19,688
|
|
|
15,132
|
|
||
Europe, Middle East and Africa
|
88,578
|
|
|
98,992
|
|
||
Asia Pacific
|
51,481
|
|
|
46,061
|
|
||
Total revenue
|
$
|
330,273
|
|
|
$
|
292,707
|
|
|
March 28,
2020 |
|
December 28, 2019
|
||||
Accounts receivable, net
|
$
|
272,278
|
|
|
$
|
349,645
|
|
Contract assets
|
$
|
34,806
|
|
|
$
|
22,814
|
|
Deferred revenue
|
$
|
129,842
|
|
|
$
|
139,820
|
|
|
Remainder of 2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Revenue expected to be recognized in the future as of March 28, 2020
|
$
|
453,406
|
|
|
$
|
37,172
|
|
|
$
|
11,538
|
|
|
$
|
6,056
|
|
|
$
|
1,802
|
|
|
$
|
449
|
|
|
$
|
510,423
|
|
|
As of March 28, 2020
|
|
As of December 28, 2019
|
||||||||||||||||||||
|
Fair Value Measured Using
|
|
Fair Value Measured Using
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency exchange forward contracts
|
$
|
—
|
|
|
$
|
(52
|
)
|
|
$
|
(52
|
)
|
|
$
|
—
|
|
|
$
|
(159
|
)
|
|
$
|
(159
|
)
|
|
As of March 28, 2020
|
|
As of December 28, 2019
|
||||||||||||
|
Gross Notional(1)
|
|
Other Accrued Liabilities
|
|
Gross
Notional(1) |
|
Other
Accrued Liabilities |
||||||||
Foreign currency exchange forward contracts
|
|
|
|
|
|
|
|
||||||||
Related to euro denominated receivables
|
$
|
8,928
|
|
|
$
|
(52
|
)
|
|
$
|
27,566
|
|
|
$
|
(159
|
)
|
|
$
|
8,928
|
|
|
$
|
(52
|
)
|
|
$
|
27,566
|
|
|
$
|
(159
|
)
|
(1)
|
Represents the face amounts of forward contracts that were outstanding as of the end of the period noted.
|
Balance as of December 28, 2019
|
$
|
249,848
|
|
Foreign currency translation adjustments
|
(10,436
|
)
|
|
Balance as of March 28, 2020
|
$
|
239,412
|
|
|
March 28, 2020
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Remaining Useful Life (In Years)
|
||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|||
Trade names
|
$
|
1,000
|
|
|
$
|
(1,000
|
)
|
|
$
|
—
|
|
|
NMF*
|
Customer relationships and backlog
|
153,216
|
|
|
(71,159
|
)
|
|
82,057
|
|
|
5.6
|
|||
Developed technology
|
174,068
|
|
|
(100,769
|
)
|
|
73,299
|
|
|
3.5
|
|||
Total intangible assets with finite lives
|
$
|
328,284
|
|
|
$
|
(172,928
|
)
|
|
$
|
155,356
|
|
|
|
|
December 28, 2019
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Remaining Useful Life (In Years)
|
||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
||||||
Trade names
|
$
|
1,000
|
|
|
$
|
(1,000
|
)
|
|
$
|
—
|
|
|
NMF*
|
Customer relationships and backlog
|
155,942
|
|
|
(68,119
|
)
|
|
87,823
|
|
|
5.8
|
|||
Developed technology
|
179,593
|
|
|
(97,070
|
)
|
|
82,523
|
|
|
3.5
|
|||
Total intangible assets with finite lives
|
$
|
336,535
|
|
|
$
|
(166,189
|
)
|
|
$
|
170,346
|
|
|
|
|
|
|
Fiscal Years
|
||||||||||||||||||||||||
|
Total
|
|
Remainder of 2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025 and Thereafter
|
||||||||||||||
Total future amortization expense
|
$
|
155,356
|
|
|
$
|
33,596
|
|
|
$
|
34,904
|
|
|
$
|
32,417
|
|
|
$
|
26,662
|
|
|
$
|
11,983
|
|
|
$
|
15,794
|
|
|
March 28,
2020 |
|
December 28,
2019 |
||||
Inventory
|
|
|
|
||||
Raw materials
|
$
|
49,992
|
|
|
$
|
47,474
|
|
Work in process
|
52,012
|
|
|
48,842
|
|
||
Finished goods
|
217,692
|
|
|
244,113
|
|
||
Total inventory
|
$
|
319,696
|
|
|
$
|
340,429
|
|
Property, plant and equipment, net
|
|
|
|
||||
Computer hardware
|
$
|
33,179
|
|
|
$
|
36,086
|
|
Computer software(1)
|
45,124
|
|
|
45,428
|
|
||
Laboratory and manufacturing equipment(2)
|
314,701
|
|
|
313,081
|
|
||
Land and building
|
12,349
|
|
|
12,349
|
|
||
Furniture and fixtures
|
3,218
|
|
|
2,845
|
|
||
Leasehold and building improvements(3)
|
52,568
|
|
|
52,263
|
|
||
Construction in progress
|
37,148
|
|
|
27,946
|
|
||
Subtotal
|
498,287
|
|
|
489,998
|
|
||
Less accumulated depreciation and amortization(4)
|
(349,472
|
)
|
|
(339,205
|
)
|
||
Total property, plant and equipment, net
|
$
|
148,815
|
|
|
$
|
150,793
|
|
Accrued expenses and other current liabilities
|
|
|
|
||||
Loss contingency related to non-cancelable purchase commitments
|
$
|
25,860
|
|
|
$
|
24,812
|
|
Professional and other consulting fees
|
14,218
|
|
|
12,296
|
|
||
Taxes payable
|
76,589
|
|
|
65,815
|
|
||
Accrued rebate and customer prepay liability
|
711
|
|
|
4,390
|
|
||
Short-term operating lease liability
|
18,054
|
|
|
18,106
|
|
||
Short-term financing lease obligation
|
1,693
|
|
|
1,380
|
|
||
Restructuring accrual
|
24,262
|
|
|
26,076
|
|
||
Other accrued expenses and other current liabilities
|
25,281
|
|
|
40,293
|
|
||
Total accrued expenses
|
$
|
186,668
|
|
|
$
|
193,168
|
|
(1)
|
Included in computer software at March 28, 2020 and December 28, 2019 were $23.5 million and $23.3 million, respectively, related to enterprise resource planning (“ERP”) systems that the Company implemented. The unamortized ERP costs at March 28, 2020 and December 28, 2019 were $10.8 million and $11.3 million, respectively.
|
(2)
|
Included in laboratory and manufacturing equipment at March 28, 2020 was $2 million related to an equipment finance lease entered by the Company for a term of three years with an option to purchase at the end of the three-year term. The finance lease was recorded at $2 million using a discount rate of 8.2% and was included in property, plant and equipment, net.
|
(3)
|
Included in leasehold improvements at March 28, 2020 was equipment finance lease entered by the Company for a term of five-years with an option to purchase at the end of five year term. The finance lease was recorded at $2.3 million using a discount rate of 5% and was included in property, plant and equipment, net.
|
(4)
|
Depreciation expense was $12.3 million, which includes depreciation of capitalized ERP cost of $0.7 million for the three months ended March 28, 2020.
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
||||||
|
Cost of
Revenue
|
|
Operating Expenses
|
||||
Severance and related expenses
|
$
|
1,102
|
|
|
$
|
2,630
|
|
Lease related impairment charges
|
44
|
|
|
2,945
|
|
||
Asset impairment
|
12
|
|
|
5
|
|
||
Total
|
$
|
1,158
|
|
|
$
|
5,580
|
|
|
Three Months Ended
|
||||||
|
March 30, 2019
|
||||||
|
Cost of
Revenue
|
|
Operating Expenses
|
||||
Severance and related expenses
|
$
|
20,698
|
|
|
$
|
5,850
|
|
Accelerated amortization of lease assets due to cease use
|
—
|
|
|
11,338
|
|
||
Asset impairment
|
768
|
|
|
—
|
|
||
Total
|
$
|
21,466
|
|
|
$
|
17,188
|
|
|
December 28, 2019
|
|
Charges
|
|
Cash
|
|
Non-cash Settlements and Other
|
|
March 28, 2020
|
||||||||||
Severance and related expenses
|
$
|
28,565
|
|
|
$
|
3,732
|
|
|
$
|
(6,083
|
)
|
|
$
|
(181
|
)
|
|
$
|
26,033
|
|
Lease related impairment charges
|
—
|
|
|
2,989
|
|
|
(1,407
|
)
|
|
(1,582
|
)
|
|
—
|
|
|||||
Asset impairment
|
—
|
|
|
17
|
|
|
(28
|
)
|
|
11
|
|
|
—
|
|
|||||
Others
|
838
|
|
|
—
|
|
|
(126
|
)
|
|
(8
|
)
|
|
704
|
|
|||||
Total
|
$
|
29,403
|
|
|
$
|
6,738
|
|
|
$
|
(7,644
|
)
|
|
$
|
(1,760
|
)
|
|
$
|
26,737
|
|
|
|
Foreign Currency Translation
|
|
Accumulated Tax Effect
|
|
Actuarial Gain (Loss) on Pension
|
|
Total
|
||||||||
Balance at December 28, 2019
|
|
$
|
(28,308
|
)
|
|
$
|
(964
|
)
|
|
$
|
(5,367
|
)
|
|
$
|
(34,639
|
)
|
Other comprehensive loss before reclassifications
|
|
(11,106
|
)
|
|
—
|
|
|
(807
|
)
|
|
(11,913
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
413
|
|
|
413
|
|
||||
Net current-period other comprehensive loss
|
|
(11,106
|
)
|
|
—
|
|
|
(394
|
)
|
|
(11,500
|
)
|
||||
Balance at March 28, 2020
|
|
$
|
(39,414
|
)
|
|
$
|
(964
|
)
|
|
$
|
(5,761
|
)
|
|
$
|
(46,139
|
)
|
|
Three Months Ended
|
||||||
|
March 28,
2020 |
|
March 30,
2019 |
||||
Net loss
|
$
|
(99,268
|
)
|
|
$
|
(121,601
|
)
|
Weighted average common shares outstanding - basic and diluted
|
182,024
|
|
|
176,406
|
|
||
Net loss per common share - basic and diluted
|
$
|
(0.55
|
)
|
|
$
|
(0.69
|
)
|
|
Three Months Ended
|
||||
|
March 28,
2020 |
|
March 30,
2019 |
||
Stock options outstanding
|
605
|
|
|
970
|
|
Restricted stock units
|
17,214
|
|
|
12,473
|
|
Performance stock units
|
4,057
|
|
|
2,599
|
|
Employee stock purchase plan shares
|
525
|
|
|
1,325
|
|
Total
|
22,401
|
|
|
17,367
|
|
•
|
during any fiscal quarter commencing after the fiscal quarter ended on June 27, 2020 (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 2027 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;
|
•
|
if the Company calls any or all of the 2027 Notes for redemption, such 2027 Notes called for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date;
|
•
|
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, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2027 Notes at any time, regardless of the foregoing circumstances.
|
|
March 28,
2020 |
||
Principal
|
$
|
200,000
|
|
Unamortized discount (1)
|
(69,694
|
)
|
|
Unamortized issuance cost (1)
|
(4,300
|
)
|
|
Net carrying amount
|
$
|
126,006
|
|
(1)
|
Unamortized debt conversion discount and issuance costs will be amortized over the remaining life of the 2027 Notes, which is approximately 83 months.
|
|
Three Months Ended
|
||
|
March 28, 2020
|
||
Contractual interest expense
|
$
|
274
|
|
Amortization of debt issuance costs
|
27
|
|
|
Amortization of debt discount
|
440
|
|
|
Total interest expense
|
$
|
741
|
|
•
|
during any fiscal quarter commencing after the fiscal quarter ended on December 29, 2018 (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
|
•
|
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 2024 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;
|
•
|
if the Company calls the 2024 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date;
|
•
|
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 June 1, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2024 Notes at any time, regardless of the foregoing circumstances.
|
|
March 28,
2020 |
|
December 28, 2019
|
||||
Principal
|
$
|
402,500
|
|
|
$
|
402,500
|
|
Unamortized discount (1)
|
(104,972
|
)
|
|
(109,652
|
)
|
||
Unamortized issuance cost (1)
|
(6,852
|
)
|
|
(7,158
|
)
|
||
Net carrying amount
|
$
|
290,676
|
|
|
$
|
285,690
|
|
(1)
|
Unamortized debt conversion discount and issuance costs will be amortized over the remaining life of the 2024 Notes, which is approximately 54 months.
|
|
Three Months Ended
|
||
|
March 28, 2020
|
||
Contractual interest expense
|
$
|
2,138
|
|
Amortization of debt issuance costs
|
306
|
|
|
Amortization of debt discount
|
4,680
|
|
|
Total interest expense
|
$
|
7,124
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||
|
Total
|
|
Remainder of 2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(In thousands)
|
|
|
|
|
||||||||||||||||||||||
Operating leases(1)(2)
|
110,898
|
|
|
18,987
|
|
|
18,691
|
|
|
15,245
|
|
|
12,054
|
|
|
10,066
|
|
|
35,855
|
|
|||||||
Financing lease obligations(3)
|
4,088
|
|
|
1,557
|
|
|
1,199
|
|
|
930
|
|
|
402
|
|
|
—
|
|
|
—
|
|
|||||||
2027 - Convertible senior notes, including interest(4)
|
234,889
|
|
|
2,389
|
|
|
5,000
|
|
|
5,000
|
|
|
5,000
|
|
|
5,000
|
|
|
212,500
|
|
|||||||
2024 - Convertible senior notes, including interest(4)
|
440,989
|
|
|
4,277
|
|
|
8,553
|
|
|
8,553
|
|
|
8,553
|
|
|
411,053
|
|
|
—
|
|
|||||||
Asset backed loan(4)
|
86,289
|
|
|
1,289
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85,000
|
|
|
—
|
|
|||||||
Financing assistance agreement, including interest(4)
|
32,278
|
|
|
32,278
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Mortgage Payable, including interest(4)
|
9,879
|
|
|
631
|
|
|
841
|
|
|
841
|
|
|
842
|
|
|
6,724
|
|
|
—
|
|
|||||||
Total contractual obligations
|
$
|
919,310
|
|
|
$
|
61,408
|
|
|
$
|
34,284
|
|
|
$
|
30,569
|
|
|
$
|
26,851
|
|
|
$
|
517,843
|
|
|
$
|
248,355
|
|
|
Number of Stock
Options
|
|
Weighted Average
Exercise
Price
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 28, 2019
|
730
|
|
|
$
|
8.41
|
|
|
$
|
—
|
|
Options granted
|
—
|
|
|
$
|
—
|
|
|
|
||
Options exercised
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Options canceled
|
(125
|
)
|
|
$
|
8.81
|
|
|
|
|
|
Outstanding at March 28, 2020
|
605
|
|
|
$
|
8.33
|
|
|
$
|
—
|
|
Exercisable at March 28, 2020
|
605
|
|
|
$
|
8.33
|
|
|
|
|
|
Number of
Restricted
Stock Units
|
|
Weighted
Average
Grant Date
Fair Value
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 28, 2019
|
11,600
|
|
|
$
|
6.20
|
|
|
$
|
90,254
|
|
RSUs granted
|
5,978
|
|
|
$
|
5.90
|
|
|
|
|
|
RSUs released
|
(165
|
)
|
|
$
|
7.45
|
|
|
$
|
848
|
|
RSUs canceled
|
(200
|
)
|
|
$
|
6.87
|
|
|
|
|
|
Outstanding at March 28, 2020
|
17,213
|
|
|
$
|
6.08
|
|
|
$
|
88,478
|
|
|
Number of
Performance
Stock Units
|
|
Weighted
Average
Grant Date
Fair Value
Per Share
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 28, 2019
|
2,505
|
|
|
$
|
6.48
|
|
|
$
|
19,485
|
|
PSUs granted
|
1,628
|
|
|
$
|
5.89
|
|
|
|
||
PSUs released
|
(60
|
)
|
|
$
|
4.98
|
|
|
$
|
308
|
|
PSUs canceled
|
(16
|
)
|
|
$
|
5.19
|
|
|
|
||
Outstanding at March 28, 2020
|
4,057
|
|
|
$
|
5.77
|
|
|
$
|
20,853
|
|
Expected to vest at March 28, 2020
|
3,946
|
|
|
|
|
$
|
20,282
|
|
|
Unrecognized
Compensation
Expense, Net
|
|
Weighted
Average Period
(in Years)
|
||
RSUs
|
$
|
76,045
|
|
|
2.40
|
PSUs
|
$
|
15,416
|
|
|
2.69
|
|
Three Months Ended
|
||
|
March 28, 2020
|
|
March 30, 2019
|
Volatility
|
42%
|
|
72%
|
Risk-free interest rate
|
1.56%
|
|
2.48%
|
Expected life
|
0.5 years
|
|
0.5 years
|
Estimated fair value
|
$2.17
|
|
$1.77
|
Total stock-based compensation expense
|
$1,513
|
|
$1,316
|
|
|
2018
|
|
2017
|
Index volatility
|
|
33%
|
|
33% - 34%
|
Infinera volatility
|
|
58% - 59%
|
|
55% - 56%
|
Risk-free interest rate
|
|
2.37% - 2.40%
|
|
1.41% - 1.63%
|
Correlation with index/index component
|
|
0.04 - 0.48
|
|
0.10 - 0.49
|
Estimated fair value
|
|
$14.99 - $19.46
|
|
$15.23 - $17.35
|
|
|
2019
|
Index volatility
|
|
N/A
|
Infinera volatility
|
|
64% - 68%
|
Risk-free interest rate
|
|
2.17% - 2.48%
|
Correlation with index/index component
|
|
N/A
|
Estimated fair value
|
|
$2.08 - $2.89
|
|
|
|
|
|
|||||||||||
|
|
Total Number of Performance Stock Units
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|||||
Outstanding at December 28, 2019
|
|
2,505
|
|
|
199
|
|
|
270
|
|
|
2,036
|
|
|
—
|
|
PSUs granted
|
|
1,628
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,628
|
|
PSUs released
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|
(60
|
)
|
|
—
|
|
PSUs canceled
|
|
(16
|
)
|
|
(1
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
Outstanding at March 28, 2020
|
|
4,057
|
|
|
198
|
|
|
270
|
|
|
1,961
|
|
|
1,628
|
|
|
March 28,
2020 |
|
December 28,
2019 |
||||
Stock-based compensation effects in inventory
|
$
|
4,506
|
|
|
$
|
4,798
|
|
|
Three Months Ended
|
||||||
|
March 28,
2020 |
|
March 30,
2019 |
||||
Stock-based compensation effects included in net loss before income taxes
|
|
|
|
||||
Cost of revenue
|
$
|
624
|
|
|
$
|
538
|
|
Research and development
|
3,774
|
|
|
3,603
|
|
||
Sales and marketing
|
2,644
|
|
|
1,547
|
|
||
General and administration
|
3,183
|
|
|
2,235
|
|
||
|
10,225
|
|
|
7,923
|
|
||
Cost of revenue – amortization from balance sheet (1)
|
1,478
|
|
|
790
|
|
||
Total stock-based compensation expense
|
$
|
11,703
|
|
|
$
|
8,713
|
|
(1)
|
Stock-based compensation expense deferred to inventory in prior periods and recognized in the current period.
|
|
March 28,
2020 |
|
December 28, 2019
|
||||
United States
|
$
|
118,694
|
|
|
$
|
118,656
|
|
Other Americas
|
2,520
|
|
|
2,798
|
|
||
Europe, Middle East and Africa
|
21,395
|
|
|
21,536
|
|
||
Asia Pacific and Japan
|
6,206
|
|
|
7,803
|
|
||
Total property, plant and equipment, net
|
$
|
148,815
|
|
|
$
|
150,793
|
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
Beginning balance
|
$
|
43,348
|
|
|
$
|
41,021
|
|
Charges to operations
|
6,312
|
|
|
5,420
|
|
||
Utilization
|
(8,335
|
)
|
|
(5,803
|
)
|
||
Change in estimate(1)
|
(1,863
|
)
|
|
(887
|
)
|
||
Balance at the end of the period
|
$
|
39,462
|
|
|
$
|
39,751
|
|
(1)
|
The Company records product warranty liabilities based on the latest quality and cost information available as of the date the revenue is recorded. 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 including product recalls. As the Company's products mature over time, failure rates and repair costs associated with such products generally decline leading to favorable changes in warranty reserves.
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
Service cost
|
$
|
352
|
|
|
$
|
356
|
|
Interest cost
|
365
|
|
|
371
|
|
||
Expected return on plan assets
|
(669
|
)
|
|
(604
|
)
|
||
Amortization of actuarial loss
|
413
|
|
|
418
|
|
||
Total net periodic benefit cost
|
$
|
461
|
|
|
$
|
541
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
March 28, 2020
|
|
March 30, 2019
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
255,192
|
|
|
77
|
%
|
|
$
|
223,007
|
|
|
76
|
%
|
|
$
|
32,185
|
|
|
14
|
%
|
Services
|
75,081
|
|
|
23
|
%
|
|
69,700
|
|
|
24
|
%
|
|
5,381
|
|
|
8
|
%
|
|||
Total revenue
|
$
|
330,273
|
|
|
100
|
%
|
|
$
|
292,707
|
|
|
100
|
%
|
|
$
|
37,566
|
|
|
13
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
201,792
|
|
|
61
|
%
|
|
$
|
157,817
|
|
|
54
|
%
|
|
$
|
43,975
|
|
|
28
|
%
|
Services
|
40,695
|
|
|
12
|
%
|
|
36,676
|
|
|
12
|
%
|
|
4,019
|
|
|
11
|
%
|
|||
Amortization of intangible assets
|
8,628
|
|
|
3
|
%
|
|
8,252
|
|
|
3
|
%
|
|
376
|
|
|
5
|
%
|
|||
Acquisition and integration costs
|
1,035
|
|
|
—
|
%
|
|
2,064
|
|
|
1
|
%
|
|
(1,029
|
)
|
|
(50
|
)%
|
|||
Restructuring and related
|
1,157
|
|
|
—
|
%
|
|
21,466
|
|
|
7
|
%
|
|
(20,309
|
)
|
|
(95
|
)%
|
|||
Total cost of revenue
|
$
|
253,307
|
|
|
76
|
%
|
|
$
|
226,275
|
|
|
77
|
%
|
|
$
|
27,032
|
|
|
12
|
%
|
Gross profit
|
$
|
76,966
|
|
|
23.3
|
%
|
|
$
|
66,432
|
|
|
22.7
|
%
|
|
$
|
10,534
|
|
|
16
|
%
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
March 28, 2020
|
|
March 30, 2019
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total revenue
|
|
Amount
|
|
% of total revenue
|
|
Change
|
|
% Change
|
|||||||||
Total revenue by geography:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Domestic
|
$
|
170,526
|
|
|
52
|
%
|
|
$
|
132,522
|
|
|
45
|
%
|
|
$
|
38,004
|
|
|
29
|
%
|
International
|
159,747
|
|
|
48
|
%
|
|
160,185
|
|
|
55
|
%
|
|
(438
|
)
|
|
—
|
%
|
|||
|
$
|
330,273
|
|
|
100
|
%
|
|
$
|
292,707
|
|
|
100
|
%
|
|
$
|
37,566
|
|
|
13
|
%
|
Total revenue by sales channel:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Direct
|
$
|
244,351
|
|
|
74
|
%
|
|
$
|
248,196
|
|
|
85
|
%
|
|
$
|
(3,845
|
)
|
|
(2
|
)%
|
Indirect
|
85,922
|
|
|
26
|
%
|
|
44,511
|
|
|
15
|
%
|
|
41,411
|
|
|
93
|
%
|
|||
|
$
|
330,273
|
|
|
100
|
%
|
|
$
|
292,707
|
|
|
100
|
%
|
|
$
|
37,566
|
|
|
13
|
%
|
|
Three Months Ended
|
|
|
|
|
|||||||||||||||
|
March 28, 2020
|
|
March 30, 2019
|
|
|
|
|
|||||||||||||
|
Amount
|
|
% of total
revenue
|
|
Amount
|
|
% of total
revenue
|
|
Change
|
|
% Change
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
68,180
|
|
|
21
|
%
|
|
$
|
73,660
|
|
|
25
|
%
|
|
$
|
(5,480
|
)
|
|
(7
|
)%
|
Sales and marketing
|
36,689
|
|
|
11
|
%
|
|
40,037
|
|
|
14
|
%
|
|
(3,348
|
)
|
|
(8)
|
%
|
|||
General and administrative
|
29,620
|
|
|
9
|
%
|
|
33,044
|
|
|
12
|
%
|
|
(3,424
|
)
|
|
(10)
|
%
|
|||
Amortization of intangible assets
|
4,555
|
|
|
1
|
%
|
|
7,057
|
|
|
2
|
%
|
|
(2,502
|
)
|
|
(35)
|
%
|
|||
Acquisition and integration costs
|
9,222
|
|
|
3
|
%
|
|
7,134
|
|
|
2
|
%
|
|
2,088
|
|
|
29
|
%
|
|||
Restructuring and related
|
5,580
|
|
|
2
|
%
|
|
17,188
|
|
|
6
|
%
|
|
(11,608
|
)
|
|
(68
|
)%
|
|||
Total operating expenses
|
$
|
153,846
|
|
|
47
|
%
|
|
$
|
178,120
|
|
|
61
|
%
|
|
$
|
(24,274
|
)
|
|
(14)
|
%
|
|
Three Months Ended
|
|||||||||||||
|
March 28,
2020 |
|
March 30,
2019 |
|
Change
|
|
% Change
|
|||||||
|
|
|
|
|
|
|
|
|||||||
|
(In thousands)
|
|||||||||||||
Interest income
|
$
|
24
|
|
|
$
|
766
|
|
|
$
|
(742
|
)
|
|
(97
|
)%
|
Interest expense
|
(8,794
|
)
|
|
(7,563
|
)
|
|
(1,231
|
)
|
|
16
|
%
|
|||
Other gain (loss), net
|
(12,682
|
)
|
|
(2,923
|
)
|
|
(9,759
|
)
|
|
334
|
%
|
|||
Total other expense, net
|
$
|
(21,452
|
)
|
|
$
|
(9,720
|
)
|
|
$
|
(11,732
|
)
|
|
121
|
%
|
|
Three Months Ended
|
||||||
|
March 28, 2020
|
|
March 30, 2019
|
||||
|
|
|
|
||||
|
(In thousands)
|
||||||
Net cash flow provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(91,517
|
)
|
|
$
|
(56,154
|
)
|
Investing activities
|
$
|
(8,464
|
)
|
|
$
|
(6,048
|
)
|
Financing activities
|
$
|
255,021
|
|
|
$
|
16,324
|
|
|
March 28, 2020
|
|
December 28, 2019
|
||||
|
|
|
|
||||
|
(In thousands)
|
||||||
Cash
|
$
|
261,534
|
|
|
$
|
109,201
|
|
Restricted cash
|
21,934
|
|
|
23,596
|
|
||
|
$
|
283,468
|
|
|
$
|
132,797
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
fluctuations in demand, sales cycles and prices for products and services, including discounts given in response to competitive pricing pressures, as well as the timing of purchases by our key customers;
|
•
|
changes in customers’ budgets for optical transport network purchases and changes or variability in their purchasing cycles;
|
•
|
fluctuations in our customer, product or geographic mix, including the impact of new customer deployments, which typically carry lower gross margins, and customer consolidation, which may affect our ability to grow revenue;
|
•
|
the timing and acceptance of our new product releases and our competitors' new product releases;
|
•
|
how quickly, or whether at all, the markets in which we operate adopt our solutions;
|
•
|
our ability to increase volumes and yields on products manufactured in our internal manufacturing facilities;
|
•
|
delays in operations we may continue to experience during the course of utilizing our new enterprise resource planning (“ERP”) system, which we implemented in August 2019, including unintended disruptions in our ability to deliver and bill for customer shipments, project our inventory requirements, and manage our supply chain, including our hardware servicing operations;
|
•
|
our ability to successfully restructure our operations within our anticipated time frame and realize our anticipated savings;
|
•
|
the quality and timing of delivery of key components from suppliers, including any delays in the supply of components that may result from the effects of the COVID-19 pandemic;
|
•
|
order cancellations, reductions or delays in delivery schedules by our customers;
|
•
|
any delay in collecting or failure to collect accounts receivable;
|
•
|
our ability to control costs, including our operating expenses and the costs and availability of components we purchase for our products;
|
•
|
any significant changes in the competitive dynamics of the markets we serve, including any new entrants, new technologies, or customer or competitor consolidation;
|
•
|
readiness of customer sites for installation of our products as well as the availability of third-party service partners to provide contract engineering and installation services for us;
|
•
|
the timing of revenue recognition and revenue deferrals;
|
•
|
any future changes in U.S. GAAP or new interpretations of existing accounting rules;
|
•
|
the impact of a significant natural disaster, such as an earthquake, severe weather, or tsunami or other flooding, as well as interruptions or shortages in the supply of utilities such as water and electricity, in a key location such as our Northern California facilities, which is located near major earthquake fault lines and in a designated flood zone; and
|
•
|
general economic and political conditions in domestic and international markets, including those related to the upcoming presidential election in the United States.
|
•
|
completion of product development, including the development and completion of our next-generation optical engines, and the completion of associated module development;
|
•
|
the qualification and multiple sourcing of critical components;
|
•
|
validation of manufacturing methods and processes;
|
•
|
extensive quality assurance and reliability testing and staffing of testing infrastructure;
|
•
|
validation of software; and
|
•
|
establishment of systems integration and systems test validation requirements.
|
•
|
the mix of the types of customers purchasing our products as well as the product mix;
|
•
|
the initial products released powered by our next-generation technologies generate lower margin initially, as per unit production costs for initial units tend to be higher and experience more variability in production yields;
|
•
|
the pace at which we deploy solutions powered by our next generation technologies, which could lead to higher excess or obsolete inventory;
|
•
|
the mix of products sold to customers that benefit from vertical integration as compared to products that include a higher percentage of third-party components;
|
•
|
significant new deployments to existing and new customers, often with a higher portion of lower margin common equipment as we deploy network footprint;
|
•
|
aggressive pricing tactics by our competitors;
|
•
|
changes in the price or availability of components for our products, including as a result of COVID-19 pandemic-related supply shortages and due to new or increased tariffs on the prices of raw materials used in such components;
|
•
|
increased costs of shipping, logistics and freight related to the COVID-19 pandemic;
|
•
|
changes in our manufacturing costs, including fluctuations in yields and production volumes;
|
•
|
pricing and commercial terms designed to secure long-term customer relationships, as well as commercial deals to transition certain customers to our new products;
|
•
|
consolidation amongst our suppliers, which may increase prices of components for our products;
|
•
|
the volume of Instant Bandwidth-enabled solutions sold, and capacity licenses activated;
|
•
|
price discounts negotiated by our customers;
|
•
|
charges for excess or obsolete inventory; and
|
•
|
changes in warranty related costs.
|
•
|
aggressively pricing their optical transport products and other portfolio products, including offering significant one-time discounts and guaranteed future price decreases;
|
•
|
offering optical products at a substantial discount or for free when bundled together with broader technology purchases, such as router or wireless equipment purchases;
|
•
|
providing financing, marketing and advertising assistance to customers; and
|
•
|
influencing customer requirements to emphasize different product capabilities, which better suit their products.
|
•
|
reduced orders from existing customers;
|
•
|
declining interest from potential customers;
|
•
|
delays in our ability to recognize revenue or in collecting accounts receivables;
|
•
|
costs associated with fixing hardware or software defects or replacing products;
|
•
|
high service and warranty expenses;
|
•
|
delays in shipments;
|
•
|
high inventory excess and obsolescence expense;
|
•
|
high levels of product returns;
|
•
|
diversion of our engineering personnel from our product development efforts; and
|
•
|
payment of liquidated damages, performance guarantees or similar penalties.
|
•
|
price and other commercial terms;
|
•
|
functionality;
|
•
|
existing business and customer relationships;
|
•
|
the ability of products and services to meet customers’ immediate and future network requirements;
|
•
|
power consumption;
|
•
|
heat dissipation;
|
•
|
form factor or density;
|
•
|
installation and operational simplicity;
|
•
|
quality and reliability;
|
•
|
service and support;
|
•
|
security and encryption requirements;
|
•
|
scalability and investment protection; and
|
•
|
product lead times.
|
•
|
delays in recognizing revenue;
|
•
|
liability for injuries to persons, damage to property or other claims relating to the actions or omissions of our service partners;
|
•
|
our services revenue and gross margin may be adversely affected; and
|
•
|
our relationships with customers could suffer.
|
•
|
reduced control over delivery schedules, particularly for international contract manufacturing sites;
|
•
|
reliance on the quality assurance procedures of third parties;
|
•
|
potential uncertainty regarding manufacturing yields and costs;
|
•
|
potential lack of adequate capacity during periods of high demand;
|
•
|
limited warranties on components;
|
•
|
potential misappropriation of our intellectual property; and
|
•
|
potential manufacturing disruptions (including disruptions caused by geopolitical events, military actions, work stoppages, natural disasters or international health emergencies such as the COVID-19 pandemic).
|
•
|
variations in our operating results;
|
•
|
announcements of technological innovations, new services or service enhancements, strategic alliances or agreements by us or by our competitors;
|
•
|
the gain or loss of customers;
|
•
|
recruitment or departure of key personnel;
|
•
|
changes in the estimates of our future operating results or external guidance on those results or changes in recommendations or business expectations by any securities analysts that elect to follow our common stock;
|
•
|
mergers and acquisitions by us, by our competitors or by our customers;
|
•
|
market conditions in our industry, the industries of our customers and the economy as a whole, including global trade tariffs; and
|
•
|
adoption or modification of regulations, policies, procedures or programs applicable to our business.
|
•
|
reduced demand for our products as a result of constraints on capital spending by our customers;
|
•
|
increased price competition for our products, not only from our competitors, but also as a result of our customer’s or potential customer’s utilization of inventoried or underutilized products, which could put additional downward pressure on our near-term gross profits;
|
•
|
risk of excess or obsolete inventories;
|
•
|
our customers facing financial difficulties, including bankruptcy;
|
•
|
excess manufacturing capacity and higher associated overhead costs as a percentage of revenue; and
|
•
|
more limited ability to accurately forecast our business and future financial performance.
|
•
|
greater difficulty in collecting accounts receivable and longer collection periods;
|
•
|
difficulties of managing and staffing international offices, and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;
|
•
|
political, social and economic instability, including wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions;
|
•
|
tariff and trade barriers and other regulatory requirements or contractual limitations on our ability to sell or develop our products in certain foreign markets;
|
•
|
less effective protection of intellectual property than is afforded to us in the United States or other developed countries;
|
•
|
local laws and practices that favor local companies, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations;
|
•
|
potentially adverse tax consequences; and
|
•
|
effects of changes in currency exchange rates, particularly relative increases in the exchange rate of the U.S. dollar versus other currencies that could negatively affect our financial results and cash flows.
|
•
|
changes in the valuation of our deferred tax assets and liabilities, and in deferred tax valuation allowances;
|
•
|
changes in the relative proportions of revenue and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;
|
•
|
changing tax laws, regulations, rates and interpretations in multiple jurisdictions in which we operate;
|
•
|
changes to the financial accounting rules for income taxes;
|
•
|
the tax effects of acquisitions, including the effects of integrating intellectual property; and
|
•
|
the resolution of issues arising from tax audits.
|
•
|
problems integrating the acquired operations, technologies or products with our own;
|
•
|
diversion of management’s attention from our core business;
|
•
|
adverse effects on existing business relationships with suppliers and customers;
|
•
|
risks associated with entering new markets; and
|
•
|
loss of key employees.
|
•
|
authorize the issuance of “blank check” convertible preferred stock that could be issued by our board of directors to thwart a takeover attempt;
|
•
|
establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;
|
•
|
require that directors only be removed from office for cause;
|
•
|
provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;
|
•
|
prevent stockholders from calling special meetings; and
|
•
|
prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders.
|
•
|
our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, litigation, general corporate or other purposes may be limited; and
|
•
|
a substantial portion of our future cash balance may be dedicated to the payment of the principal of our indebtedness as we have stated the intention to pay the principal amount of each series Notes in cash upon conversion or when otherwise due, such that we would not have those funds available for use in our business.
|
Item 6.
|
Exhibits
|
Exhibit No.
|
|
Description
|
|
Indenture, dated March 9, 2020, by and between Infinera Corporation and U.S. Bank National Association, 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 March 9, 2020
|
|
|
|
|
|
Form of 2.50% Convertible Senior Note due 2027 (included in Exhibit 4.1 incorporated by reference hereto)
|
|
|
|
|
10.1*
|
|
Offer Letter between Infinera Corporation and Nicholas Walden dated January 3, 2020, incorporated herein by reference to Exhibit 10.27 of the Registrant’s Annual Report on Form 10-K (No. 001-33486), filed with the SEC on March 4, 2020
|
|
|
|
|
Second Amendment to Credit Agreement, dated as of March 4, 2020, among Infinera Corporation, the lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, 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 March 4, 2020
|
|
|
|
|
|
Purchase Agreement, dated March 4, 2020, by and between Infinera Corporation and Goldman Sachs & Co. LLC, 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 March 9, 2020
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
32.1**
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
*
|
Management contract or compensatory plan, contract or arrangement.
|
**
|
The certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
|
Infinera Corporation
|
||
|
|
|
By:
|
|
/s/ NANCY ERBA
|
|
|
Nancy Erba
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
|
|
|
|
Date:
|
|
May 15, 2020
|
By:
|
/s/ THOMAS J. FALLON
|
|
Thomas J. Fallon
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
By:
|
/s/ NANCY ERBA
|
|
Nancy Erba
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
Date:
|
May 15, 2020
|
|
/s/ THOMAS J. FALLON
|
|
|
|
Thomas J. Fallon
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
Date:
|
May 15, 2020
|
|
/s/ NANCY ERBA
|
|
|
|
Nancy Erba
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|