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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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68-0438710
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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1035 N. McDowell Blvd.
Petaluma, California
(Address of Principal Executive Offices) |
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94954
(Zip Code)
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Registrant's telephone number, including area code (707) 766-3000
Securities registered pursuant to Section 12(b) of the Act:
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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, $0.025 par value
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The New York Stock Exchange
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Securities registered pursuant to section 12(g) of the Act:
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None
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(Title of class)
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Large Accelerated Filer
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Accelerated Filer
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Non-accelerated filer
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(Do not check if a smaller reporting Company)
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Smaller Reporting Company
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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our ability to predict our revenue and reduce and control costs related to our products or service offerings, including larger scale turnkey network improvement projects that may span several quarters;
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our ability to increase our sales to larger communications service providers ("CSPs") globally;
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the capital spending patterns of CSPs, and any decrease or delay in capital spending by CSPs due to macro-economic conditions, regulatory uncertainties, or other reasons;
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the impact of government-sponsored programs on our customers;
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intense competition;
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our ability to develop new products or enhancements that support technological advances and meet changing CSP requirements;
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our ability to achieve market acceptance of our products and CSPs' willingness to deploy our new products;
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the concentration of our customer base;
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the length and unpredictability of our sales cycles and timing of orders;
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our focus on CSPs with limited revenue potential;
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our lack of long-term, committed-volume purchase contracts with our customers;
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our exposure to the credit risks of our customers;
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fluctuations in our gross margin;
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the interoperability of our products with CSP networks;
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our dependence on sole-, single- and limited-source suppliers;
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our ability to manage our relationships with our contract manufacturers and suppliers;
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our ability to forecast our manufacturing requirements and manage our inventory;
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our products' compliance with industry standards;
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our ability to expand our international operations;
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our ability to protect our intellectual property and the cost of doing so;
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the quality of our products, including any undetected hardware defects or bugs in our software;
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our ability to estimate future warranty obligations due to product failure rates;
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our ability to obtain necessary third-party technology licenses at reasonable costs;
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the regulatory and physical impacts of climate change and other natural events;
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the attraction and retention of qualified employees and key management personnel;
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our ability to build and sustain the proper information technology infrastructure; and
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our ability to maintain proper and effective internal controls.
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ITEM 1.
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Business
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A Complex Patchwork of Networks and Technologies
— In order to upgrade their access networks, CSPs have typically added networks for new residential or business services that they deliver, such as digital subscriber line ("DSL") or G.fast, data over cable service interface specification ("DOCSIS"), GPON or Gigabit Ethernet, on top of existing networks. This led to an overbuild of access technologies and an unnecessarily complex patchwork of physical connections between the central office or data center and the subscriber. In addition, CSPs have expanded the penetration of fiber into their access networks, thereby shortening the length of the subscriber connection through lower bandwidth media types (such as copper-based or coaxial cable-based networks). CSPs have also attempted to evolve their access networks to enable more efficient packet-based services by adding Ethernet protocol on top of existing asynchronous transfer mode ("ATM") and DSL protocols. In addition, CSPs have often deployed separate equipment to facilitate the delivery of synchronous optical networking ("SONET"), Gigabit Ethernet and 10 Gigabit Ethernet transport, which connects CSP central offices and data centers with their access networks, further increasing the complexity and the cost of their networks. This approach has left most CSPs with disparate architectures, features, functions and capabilities in different parts of their networks. This increasingly complex, patchwork approach to deploying access networks and delivering new services to their subscribers has created potential complications for CSPs within their access networks. These potential complications limit data transmission capability, increase the cost of operation and maintenance and can negatively impact the subscriber experience.
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Limited Capacity from Legacy Access Architectures
— Legacy access network architectures were designed to address earlier-generation communication demands of wireline telephone, cable television and cellular services. Such access networks have physical limitations in their ability to scale bandwidth, avoid latency issues and deliver the advanced broadband services subscribers demand today and are expected to increasingly demand in the future. In addition, CSPs understand the need to add fiber to their networks to provide the bandwidth required to scale advanced broadband services. However, it is costly and complex to integrate fiber-based technologies into legacy access networks.
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Inflexible Technologies Increase Network Switching Costs
— Legacy access networks were architected around a narrow set of technologies. For example, traditional voice calls use circuit switching technology to allocate a fixed amount of network capacity to each call, regardless of whether such capacity is fully utilized. The emergence of packet-based technologies, primarily IP and Ethernet, has significantly improved the ability to transmit data efficiently across networks as bandwidth is only consumed when signals are actually being transmitted. Most legacy access networks do not allow circuit- and packet-based technologies to co-exist or to evolve from one technology to another.
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Inefficient Service Roll-out Constrains Subscriber Offerings
— Legacy access networks were designed to support a narrow range of services, and as a result, they limit the ability of CSPs to provision the advanced broadband services increasingly demanded by their subscribers. Packet-based networks are more flexible and efficient than traditional circuit-switched networks. For example, to provision additional business services in a legacy access network, a CSP would typically deploy additional physical connections and equipment, while packet-based infrastructure allows a CSP to change or add services virtually without the presence of a service technician or the installation of new equipment. In order to deploy these services quickly and efficiently, CSPs must be able to utilize their existing infrastructure while upgrading the legacy access network to packet-based technologies.
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Highly Reliable Access Products are Difficult to Engineer and Manage
— Given the critical nature of access networks and their typical deployment in remote and distant locations, access infrastructure products must be highly reliable. Unlike most other communications equipment which is deployed in environmentally controlled data centers, central offices or similar facilities, a great deal of access equipment is deployed in outdoor environments and must be specifically engineered to operate in variable and often extremely harsh conditions, as well as fit into smaller spaces, such as on a street corner, near office buildings or on the side of a house or cellular tower. Since the access portion of the network is broadly distributed, it is expensive as well as difficult to manage and maintain. CSPs require access network equipment that can perform reliably in these uncontrolled environments and be deployed in a variety of form factors, thereby adding significant engineering and product development challenges as compared to most other forms of communications infrastructure equipment. In addition, some portion of the access market is supported by government initiatives and products sold into this segment require additional government certifications and approvals in order to qualify for deployment.
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Expensive to Deploy and Operate
— As a result of deploying multiple networks with discrete functions, legacy access networks require a wide variety of equipment to be installed, maintained and ultimately replaced, thereby placing a significant and recurring capital and operating expense burden on the CSP. Once installed, this equipment occupies valuable space inside a data center or central office, requires frequent labor-intensive maintenance and consumes meaningful amounts of power. Moreover, the lack of integration across protocols and fiber- and copper-based network architectures negatively impacts network performance. Inferior network performance diminishes the subscriber experience and increases network operating costs by increasing service calls, the number of required support staff and the frequency of equipment upgrades and replacements.
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Onerous Backoffice Systems Slow Deployment of New Technologies and Services
— Traditional methods for operationalizing new products and services often require significant testing and lengthy backoffice integration activities, often directly proportional to the size of the CSP. This often places CSPs at a competitive disadvantage when competing with emerging service providers that can leverage for streamlined or virtualized processes. Emerging frameworks like Software Defined Networking ("SDN") and Network Functions Virtualization ("NFV") can help CSPs overcome these operational challenges and bring new products and services to market faster.
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Single Intelligent Access Network for Basic and Advanced Services
— The Calix portfolio allows for a broad range of subscriber services to be provisioned and delivered over a single unified network. These systems can deliver basic voice and data, advanced broadband services, including high-speed Internet, IPTV, mobile broadband, high-definition video and online gaming, as well as integrated transport within our portfolio, all of which can be monitored and managed by Compass Cloud. In addition, our systems can be deployed in both small and large form factors across multiple deployment scenarios depending on subscriber proximity and service requirements. Introduced in 2014, the Open Link Cable software solution provides cable MSOs with the operational advantage of being able to provision GPON services via their traditional DOCSIS back office infrastructure. These are examples of our multiservice approach that allows CSPs to utilize their legacy access networks during the course of their equipment upgrade
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High Capacity and Operational Efficiency
— The Calix portfolio is designed to facilitate the evolution of CSP access networks to fiber- and Ethernet-based network architectures. Our portfolio includes systems and nodes that exceed the capacity of the products of our competitors. Our systems and nodes are designed and optimized for fiber- and copper-based network architectures. We also have a broad portfolio of fiber ONTs and GigaFamily products that serve as the on-premises gateways and service delivery platforms for new services to subscribers. Many of our ONTs auto-detect fiber access technologies, support both GPON and point-to-point Gigabit Ethernet, and can co-exist with next generation PON technologies to provide CSPs additional cost and management efficiencies.
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Highly Flexible Technology Solutions
— The Calix portfolio enables CSPs to utilize legacy access network infrastructure during their migration towards fiber- and Ethernet-based access networks. Our portfolio supports multiple protocols, different form factors and modular options optimized for a variety of installation locations and environments, and multiple services delivered over fiber- and copper-based network architectures.
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Seamless Transition to Advanced Services
— The Calix portfolio enables CSPs to better manage the evolution of their access networks by transitioning the delivery of basic voice and data services to advanced broadband services. Our C-Series system supports ongoing demand for basic voice and data services, and facilitates a seamless and controlled migration to IP-based services. For CSPs without legacy network constraints, our E-Series and B-Series systems allow CSPs to deploy advanced broadband services rapidly and cost effectively to their subscribers.
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Highly Reliable and Purpose-Built Solutions for Demands of Access
— The Calix portfolio is designed for high availability and purpose-built for the demands of access network deployments. Our carrier class products are environmentally hardened and field-tested to be capable of withstanding harsh environmental conditions, including temperatures between -40 and 65 degrees Celsius, extremely dry or wet conditions and physical abuse. Our access systems are built and tested to meet or exceed network equipment-building system standards, which are a set of safety, spatial and environmental design guidelines for telecommunications equipment. Our products are highly compatible and designed to be easily integrated into the existing operational and management infrastructure of CSP access networks. Our portfolio can be deployed in multiple form factors and power configurations to address a wide range of deployment scenarios influenced by space and power constraints.
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An Operating System and Software Platform Built to Meet the Emerging Demands of the Access Network
— Our AXOS platform is an architecture built to leverage the best of data center software design and network virtualization in the challenging environment and variability of the ever-changing access network. Completely hardware independent, AXOS allows for all software functions in the access network to be developed and run without dependence on the underlying hardware and associated silicon chipsets. This always-on architecture and consistent provisioning of services accelerates time-to-revenue, reduces service disruptions, and reduces operational complexity for service providers.
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Compelling Customer Value Proposition
— We believe the Calix portfolio and AXOS platform offer CSPs a compelling value proposition. Our portfolio provides CSPs the flexibility to upgrade their networks over time, reduce operational costs and maximize their return on capital expenditures. Our packet-based systems and nodes and AXOS platform enable CSPs to offer new services more quickly and generate new revenue opportunities. We believe the interoperability and compatibility of our portfolio reduces the complexity and cost of managing CSP networks.
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Continue Our Sole Focus on Access Systems and Cloud Software
— Our dedicated focus on access has been an important driver of our success with our customers. We believe our focus has allowed us to develop the highly innovative AXOS platform, our powerful operative system optimized for the access network, which allows us to develop access systems and solutions faster than our competitors. AXOS also allows our CSP customers to integrate, deploy, and upgrade our systems and solutions at an accelerated rate. This has proven to be a key differentiator for Calix. In contrast, virtually all of our large competitors in the access market devote some percentage of their resources to products outside of the access network, and in some cases, products not even designed for CSPs. We intend to continue to focus our efforts on the access market, which we believe will enable us to continue to deliver compelling, timely and innovative access solutions to CSPs.
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Continue to Enable our Customers to Transform Their Networks and Business Models
— We believe that residential and business subscribers are pressuring CSPs to expand their offerings through the delivery of superior subscriber experiences. In response, CSPs need to transform their networks and business models by rapidly provisioning new services while minimizing the capital and operational costs of their networks. We believe the Calix portfolio enables CSPs to introduce new revenue-generating services as demanded by their subscribers.
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Continue to Engage Directly with Customers
— We operate a differentiated business model focused on aligning with our customers, predominantly through direct engagement, service, and support, complemented in most international markets by a high touch Fiber Forward Partner Program,
a selective program for Calix Channel Partners that focuses on matching the access innovation of Calix with the local market leadership of our channel partners to drive new market opportunities, rapid results, and an improved bottom line
. Our direct customer engagement model allows us to target our sales resources as well as align our
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Build on our Growing Customer Footprint
— As of
December 31, 2016
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over 23 million
ports of the Calix portfolio have been deployed at a growing number of CSPs worldwide. Our
over 1,300
customers include many of the world's largest communications providers. This footprint provides us with the opportunity to sell additional components of the Calix portfolio to existing customers. For example, the vast majority of our existing customers have purchased additional line cards and other products from us after their initial purchase. We have also demonstrated that our footprint, combined with the flexibility of our portfolio, gives us incumbency benefits to sell complementary or new offerings in the future.
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Expand Deliberately into New Market and Applications
— We believe that a disciplined approach to targeting markets and applications is critical to our long-term success. For example, we initially focused on rural Incumbent Local Exchange Carrier ("ILEC") customers and have achieved an industry leadership position as the majority of U.S. Independent Operating Companies ("IOCs") have deployed our access systems and software. We will continue our disciplined approach of targeting new markets and applications in which we believe our products will rapidly gain customer adoption. For example, we are targeting additional markets for our fiber access solutions, including the mobile backhaul market, the municipal, open access, and electrical cooperative markets, and cable MSO markets. We have also entered new geographic markets, including Africa, Asia, Australia, Europe, and Latin America. These deployments complement our significant deployments in Canada and the Caribbean.
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Pursue Strategic Relationships, Alliances and Acquisitions
— We intend to continue to pursue strategic technology and distribution relationships, alliances and acquisitions that align us with CSPs' strategic directions to increase revenue-generating services while reducing the cost to deploy and operate their access networks. We believe these relationships, alliances and acquisitions will allow us to grow our footprint and enhance our ability to sell our access systems and cloud software. We developed and invested in the Calix Compatible Program to assure interoperability across the ecosystems of the majority of vendors critical for implementing and delivering new advanced broadband services. This program has approximately 61 technology members to date and enables our customers to rapidly deploy proven solutions in their access networks. We work with Ericsson Inc. ("Ericsson") and others to provide advanced broadband solutions globally, including efforts to ensure successful interoperation between our products and Ericsson's MediaFirst and Mediaroom IPTV platforms. In addition, our acquisitions of Optical Solutions, Inc. ("OSI") in 2006, Occam Networks, Inc. ("Occam") in 2011, and the fiber access assets from Ericsson in November 2012 have provided us with leading copper and fiber access technologies that have been integrated into the Calix portfolio.
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Broad Product Offering
— We offer a comprehensive portfolio of access systems and cloud software that is deployed in the portion of the network that extends from the data center, central office, or similar facilities to a subscriber's premises. We sell our access systems and nodes in a variety of form factors, modular options and configurations that are important to CSPs. Our network-based products include our E-Series systems and nodes, which provide cost-effective, flexible service delivery of IP-based services, as well as our B-Series nodes, which provides multiservice over Ethernet via distributed nodes, and our C-Series system, which is our multiservice, multiprotocol access system. Our premises-based offerings consist of our P-Series ONTs and residential gateways as well as our GigaFamily of premises service delivery centers, hubs, and points which are deployed in combination with our E-Series, B-Series, and C-Series systems and nodes to enable our customers to connect to their subscribers across a diverse set of form factors, protocols and functionality requirements.
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Multiservice and Multiprotocol
— We develop our products and an extensive offering of service interfaces to ensure CSPs can connect to their subscribers to enable the delivery of basic voice and data or advanced broadband services over fiber- and copper-based network architectures regardless of protocol. Our C-Series system also enables CSPs to integrate IP and legacy protocols, as well as fiber- and copper-based connectivity, in a single chassis. In doing so, the C-Series system allows CSPs to evolve their access infrastructures over time. Our E-Series systems and nodes and B-Series nodes are multiservice but focus solely on Ethernet. Our E-Series systems and nodes are well suited for CSPs who are using Ethernet to transform their networks. Our B-Series nodes are focused on CSPs using Ethernet over copper and fiber and a distributed architecture to transform their networks. Our E-Series, B-Series, and C-Series systems and nodes are often, but are not required to be, deployed together so that the C-Series system can act as a protocol gateway for our E-Series and B-Series systems and nodes.
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Powerful Operating Systems
— Our access systems are interoperable and are designed to be easily deployed and managed together as a single, unified access network. The C7, E7 and most other E-Series nodes utilize a common Ethernet kernel, which we refer to as the Ethernet eXtensible Architecture ("EXA"), which was developed based on industry standard protocols and focused on the needs of the access network. Our AXOS platform, available on an expanding family of E-Series systems and nodes, has taken EXA to another level by allowing
all software functions in the access network to be developed and run without dependence on the underlying hardware and associated silicon chipsets.
Both environments allow Calix to develop, test and introduce new access systems and software rapidly, and enable our customers to deploy advanced broadband services at their desired pace.
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Unified Network Management
— Our CMS is server-based network management software capable of overseeing and managing multiple E-Series, B-Series, and C-Series networks. Activate is a cloud-based network management software optimized for AXOS systems. CMS and Activate perform all provisioning, maintenance and troubleshooting operations across disparate access technologies and networks through a common user interface. This enables CSPs to manage and unify the various elements of the Calix portfolio as a single, scalable platform. CMS and Activate are often integrated by our customers with their back-office systems for billing and provisioning.
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Standards-Based Switching Architecture
— Most of our E-Series systems and nodes currently utilize EXA, however, an expanding family of our E-Series systems and nodes leverage the AXOS platform, our Linux-based network operating system and software platform built for the specific needs of the access network. Completely hardware independent, AXOS allows for all software functions in the access network to be developed and run without dependence on the underlying hardware and associated silicon chipsets. With its always-on architecture and consistent provisioning services, AXOS accelerates time-to-revenue, eliminates service disruptions, and reduces operational complexity for service providers. All future E-Series systems will be based on this open, standards-based, SDN-aligned platform.
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Multiservice over Ethernet
— Our E-Series systems and nodes enable CSPs to offer high bandwidth, advanced broadband and low latency services across Ethernet over fiber- and copper-based network architectures.
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Deployment Flexibility
— Our E-Series systems and nodes are composed of a variety of distinct small form factor configurations as little as a single rack unit in height to a 13-rack unit large chassis. The E-Series systems and nodes are designed to deliver operational efficiencies without sacrificing deployment flexibility or service functionality. Our E-Series systems are optimally sized to deliver high bandwidth services from a data center, central office, remote terminal, remote node or MDU. For CSPs seeking additional flexibility and performance, the modular E7-2 and E9-2 and the high capacity E7-20 can be combined with other E7s or other B-Series, C-Series and E-Series systems and nodes and managed uniformly.
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High Capacity and Reliability
— Our E-Series systems and nodes have high data throughput capacity and are designed to meet the demanding bandwidth and low latency requirements of advanced broadband services for residential and business subscribers. Our E-Series systems and nodes support a range of transport options from multiple 100 Gigabit Ethernet uplinks in each E9-2 chassis down to redundant Gigabit Ethernet in the E5-48 node family. Our E9-2 was architected to be the industry's first fully distributed and non-blocking system. Our chassis-based E7-2 supports a redundant 100 gigabits per second backplane in each deployable module with line cards that further support a minimum of 100 gigabits per second switching capacity. The E7-20 supports the same 100 gigabits per second line card switching capacity per card, but houses each card in a 20-service line card slot chassis with a two terabits per second backplane. The E7 also supports transparent local area network services and are designed to be Metro Ethernet Forum compliant and to meet NEBS requirements.
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Broad Array of Advanced Services Support
— Our E-Series systems and nodes support a broad array of advanced services. Our E3-12C supports up to 12 VDSL2 combination voice and DSL services ports as well as DSL port bonding, and offers multiple Gigabit Ethernet network uplinks. Our E3-48, E3-48C, E5-48, and E5-48C support up to 48 VDSL2 service ports as well as DSL port bonding and vectoring, and offer multiple 10 Gigabit Ethernet and 2.5 or single Gigabit Ethernet uplinks. Our E7s, E5-300s, and E5-520 support a mix of GPON, multiple Gigabit Ethernet and 10 Gigabit Ethernet ports, and well as select Metro Ethernet Forum (MEF) advanced business services. Our E9-2 supports both NG-PON2 and XGS-PON while the E3-2 supports NG-PON2, XGS-PON, and GPON. E7 line card options include a mix of GPON, point-to-point Gigabit Ethernet, 10 Gigabit Ethernet services, and in the case of the E7-2, 48 ports of VDSL2 combo and vectoring services on a line card, which translates into an industry-leading 96 VDSL2 combo ports in a 1 rack unit form factor, as well as traffic management and queuing, performance monitoring and virtual local area network stacking to support quality of service.
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Multiservice over Ethernet
— Our B-Series nodes enable CSPs to offer high bandwidth, advanced broadband and low latency services across Ethernet over fiber- and copper-based network architectures.
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Deployment Flexibility
— Our B-Series nodes are composed of three distinct form factor chassis between 1 and 12 rack units in height. The B-Series nodes are designed to deliver operational efficiencies without sacrificing deployment flexibility or service functionality. Our B-Series node options are optimally sized to deliver high bandwidth services from a data center, central office, remote terminal, remote node or MDU. For CSPs seeking additional flexibility and performance, the B6s can be combined with C-Series and E-Series systems and nodes, all of which are managed by our CMS.
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High Capacity and Reliability
— Our B-Series nodes have high data throughput capacity and are designed to meet the demanding bandwidth and low latency requirements of advanced broadband services for residential and business subscribers. Our B-Series nodes support a range of transport options from multiple 10 Gigabit Ethernet uplinks in each chassis down to redundant Gigabit Ethernet ports. The distributed intelligence of the B6s supports 10 gigabits per second in each deployed line card. The B6s also support T1 circuit emulation and are designed to be Metro Ethernet Forum (MEF 9 and MEF 14) compliant and to meet Network Equipment-Building System ("NEBS") requirements.
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Broad Array of Advanced Services Support
— Our B-Series nodes support a broad array of advanced services, including up to 48 VDSL2 and 48 ADSL2+ overlay or combination voice and DSL services ports as well as DSL port bonding on each line card, and offer multiple Gigabit Ethernet network uplinks. Our B6s also support a mix of GPON, point-to-point gigabit Ethernet and multiple Gigabit Ethernet and 10 Gigabit Ethernet ports. Line card options include a mix of GPON, point-to-point gigabit Ethernet, and 10 Gigabit Ethernet services, as well as traffic management and queuing, performance monitoring, and virtual local area network stacking to support quality of service.
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Protocol Independent
— Our C-Series system enables the integration of multiple protocols through a system architecture where line cards perform specific protocol processing.
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High Capacity
— Our C-Series system can enable up to 200 gigabits per second total throughput capacity. It can provide service delivery speeds of up to 10 gigabits per second in network transport rings or directly to subscribers, which is significantly greater than the bandwidth that CSPs are typically providing to their subscribers. This enables CSPs to scale their advanced broadband service offerings over time without the need to change their equipment.
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Flexible Switching Architecture
— Our C-Series system supports a highly scalable switching architecture with characteristics similar to high performance routers. All services are converted to packets on line cards allowing our system to natively switch circuits, cells and packets. As a result, both legacy and advanced packet-based services can be supported simultaneously or uniformly, allowing the C-Series to be deployed as a pure Ethernet delivery system, a traditional service delivery system or a hybrid services system.
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Density
— In typical applications, a single 14-inch high C-Series system shelf can terminate 480 copper-based subscriber connections, or up to 5,120 fiber-to-the premises, or FTTP, subscribers using GPON. This functionality allows up to 2,400 subscribers of advanced broadband services over copper-based networks or over 25,000 subscribers over fiber-based networks to be served out of a single seven-foot rack in the central office.
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Reduced Risk of Technological Obsolescence
— As new services and technologies are introduced to the network, our flexible C-Series architecture allows CSPs to add or swap line cards to introduce new functionality into the access system. Services such as IPTV and voice over Internet protocol require new features like Internet Group Management Protocol channel change processing and protocol gateway support, which can easily be added without substantial changes to existing equipment. As a result, equipment purchased by CSPs can have longer useful lives, which can reduce CSPs' capital expenditures.
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Extensive Line Card Offering
— Currently our C-Series system offers 47 line cards that enable a diverse set of trunk and subscriber interfaces, ranging from basic voice service and specialized circuits to advanced broadband services such as packet-based Fast and gigabit Ethernet, SONET (up to optical carrier-48, or OC-48), VDSL2 and ADSL2+ across multiple copper pairs and GPON. In addition, our C-Series system supports multiple combinations of service interface cards in any slot at any time. We believe this flexibility provides CSPs the ability to evolve networks toward higher-capacity, packet-based service offerings in a minimally disruptive and cost-effective manner.
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price;
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functionality;
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existing business and customer relationships;
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the ability of products and services, including turnkey professional services capabilities, to meet customers' immediate and future network requirements;
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product quality;
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installation capability;
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service and support;
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scalability; and
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manufacturing capability.
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ITEM 1A.
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Risk Factors
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our ability to predict our revenue and reduce and control product costs;
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our ability to increase our sales to larger CSPs globally;
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the capital spending patterns of CSPs and any decrease or delay in capital spending by CSPs due to macro-economic conditions, regulatory uncertainties, or other reasons;
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the impact of government-sponsored programs on our customers;
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intense competition;
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our ability to develop new products or enhancements that support technological advances and meet changing CSP requirements;
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our ability to achieve market acceptance of our products and CSPs' willingness to deploy our new products;
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the concentration of our customer base;
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the length and unpredictability of our sales cycles and timing of orders;
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our focus on CSPs with limited revenue potential;
|
•
|
our lack of long-term, committed-volume purchase contracts with our customers;
|
•
|
our exposure to the credit risks of our customers;
|
•
|
fluctuations in our gross margins;
|
•
|
the interoperability of our products with CSP networks;
|
•
|
our dependence on sole-, single- and limited-source suppliers;
|
•
|
our ability to manage our relationships with our contract manufacturers and suppliers;
|
•
|
our ability to forecast our manufacturing requirements and manage our inventory;
|
•
|
our products' compliance with industry standards;
|
•
|
our ability to expand our international operations;
|
•
|
our ability to protect our intellectual property and the cost of doing so;
|
•
|
the quality of our products, including any undetected hardware defects or bugs in our software;
|
•
|
our ability to estimate future warranty obligations due to product failure rates;
|
•
|
our ability to obtain necessary third-party technology licenses at reasonable costs;
|
•
|
the regulatory and physical impacts of climate change and other natural events;
|
•
|
the attraction and retention of qualified employees and key management personnel;
|
•
|
our ability to build and sustain the proper information technology infrastructure; and
|
•
|
our ability to maintain proper and effective internal controls.
|
•
|
the successful development of new products;
|
•
|
our ability to anticipate CSP and market requirements and changes in technology and industry standards;
|
•
|
our ability to differentiate our products from our competitors' offerings based on performance, cost-effectiveness or other factors;
|
•
|
our ongoing ability to successfully integrate acquired product lines and customer bases into our business;
|
•
|
our ability to gain customer acceptance of our products; and
|
•
|
our ability to market and sell our products.
|
•
|
changes in customer, geographic or product mix, including the mix of configurations within each product group;
|
•
|
increased price competition, including the impact of customer discounts and rebates;
|
•
|
our ability to reduce and control product costs;
|
•
|
changes in component pricing;
|
•
|
changes in contract manufacturer rates;
|
•
|
charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand;
|
•
|
introduction of new products;
|
•
|
an increase in revenue mix toward services, which typically have lower margins;
|
•
|
changes in shipment volume;
|
•
|
changes in or increased reliance on distribution channels;
|
•
|
increased expansion efforts into new or emerging markets;
|
•
|
increased warranty costs;
|
•
|
excess and obsolete inventory and inventory holding charges;
|
•
|
expediting costs incurred to meet customer delivery requirements; and
|
•
|
potential costs associated with contractual liquidated damages obligations.
|
•
|
differing regulatory requirements, including tax laws, trade laws, data privacy laws, labor regulations, tariffs, export quotas, custom duties or other trade restrictions;
|
•
|
liability or damage to our reputation resulting from corruption or unethical business practices;
|
•
|
fluctuation in currency exchange rates;
|
•
|
longer collection periods and difficulties in collecting accounts receivable;
|
•
|
greater difficulty supporting and localizing our products;
|
•
|
different or unique competitive pressures as a result of, among other things, the presence of local equipment suppliers;
|
•
|
challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, and compensation, benefits and compliance programs;
|
•
|
limited or unfavorable intellectual property protection;
|
•
|
risk of change in international political or economic conditions, terrorist attacks or acts of war; and
|
•
|
restrictions on the repatriation of earnings.
|
•
|
manage organizational change;
|
•
|
manage a larger organization;
|
•
|
accelerate and/or refocus research and development activities;
|
•
|
expand our manufacturing, supply chain and distribution capacity;
|
•
|
increase our sales and marketing efforts;
|
•
|
broaden our customer-support and services capabilities;
|
•
|
maintain or increase operational efficiencies;
|
•
|
scale support operations in a cost-effective manner;
|
•
|
implement appropriate operational and financial systems; and
|
•
|
maintain effective financial disclosure controls and procedures.
|
•
|
cost associated with fixing software or hardware defects;
|
•
|
high service and warranty expenses;
|
•
|
high inventory obsolescence expense;
|
•
|
delays in collecting accounts receivable;
|
•
|
payment of liquidated damages for performance failures; and
|
•
|
declining sales to existing customers.
|
•
|
expenses and distractions, including diversion of management time related to litigation;
|
•
|
expenses and distractions related to potential claims resulting from any possible future acquisitions, whether or not they are completed;
|
•
|
retaining and integrating employees from acquired businesses;
|
•
|
issuance of dilutive equity securities or incurrence of debt;
|
•
|
integrating various accounting, management, information, human resource and other systems to permit effective management;
|
•
|
incurring possible write-offs, impairment charges, contingent liabilities, amortization expense of intangible assets or impairment of goodwill and intangible assets with finite useful lives;
|
•
|
difficulties integrating and supporting acquired products or technologies;
|
•
|
unexpected capital expenditure requirements;
|
•
|
insufficient revenues to offset increased expenses associated with the acquisition; and
|
•
|
opportunity costs associated with committing capital to such acquisitions.
|
•
|
difficulty hiring and retaining appropriate engineering resources due to intense competition for such resources and resulting wage inflation;
|
•
|
the knowledge transfer related to our technology and exposure to misappropriation of intellectual property or confidential information, including information that is proprietary to us, our customers and third parties;
|
•
|
heightened exposure to changes in the economic, security and political conditions of China;
|
•
|
fluctuation in currency exchange rates and tax risks associated with international operations;
|
•
|
development efforts that do not meet our requirements because of language, cultural or other differences associated with international operations, resulting in errors or delays; and
|
•
|
uncertainty with regards to actions the Trump administration may take with respect to international trade agreements and U.S. tax provisions related to international commerce that could adversely affect our international operations.
|
•
|
quarterly variations in our results of operations or those of our competitors;
|
•
|
failure to meet any guidance that we have previously provided regarding our anticipated results;
|
•
|
changes in earnings estimates or recommendations by securities analysts;
|
•
|
failure to meet securities analysts' estimates;
|
•
|
announcements by us or our competitors of new products, significant contracts, commercial relationships, acquisitions or capital commitments;
|
•
|
developments with respect to intellectual property rights;
|
•
|
our ability to develop and market new and enhanced products on a timely basis;
|
•
|
our commencement of, or involvement in, litigation and developments relating to such litigation;
|
•
|
changes in governmental regulations; and
|
•
|
a slowdown in the communications industry or the general economy.
|
•
|
a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;
|
•
|
no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
|
•
|
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
|
•
|
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
|
•
|
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
|
•
|
advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of us.
|
ITEM 1B.
|
Unresolved Staff Comments
|
ITEM 2.
|
Properties
|
ITEM 3.
|
Legal Proceedings
|
ITEM 4.
|
Mine Safety Disclosures
|
ITEM 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
High
|
|
Low
|
||||
Fiscal Year 2016
|
|
|
|
|
||||
First Quarter
|
|
$
|
7.87
|
|
|
$
|
5.64
|
|
Second Quarter
|
|
7.76
|
|
|
6.24
|
|
||
Third Quarter
|
|
8.20
|
|
|
6.30
|
|
||
Fourth Quarter
|
|
8.10
|
|
|
6.15
|
|
||
|
|
|
|
|
||||
|
|
High
|
|
Low
|
||||
Fiscal Year 2015
|
|
|
|
|
||||
First Quarter
|
|
$
|
10.63
|
|
|
$
|
8.09
|
|
Second Quarter
|
|
8.96
|
|
|
7.25
|
|
||
Third Quarter
|
|
8.79
|
|
|
6.75
|
|
||
Fourth Quarter
|
|
9.07
|
|
|
6.30
|
|
ITEM 6.
|
Selected Financial Data
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
(1)
|
||||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
$
|
458,787
|
|
|
$
|
407,463
|
|
|
$
|
401,227
|
|
|
$
|
382,618
|
|
|
$
|
330,218
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Products and services
(2)
|
|
253,465
|
|
|
208,681
|
|
|
215,085
|
|
|
203,191
|
|
|
185,103
|
|
|||||
Amortization of intangible assets
|
|
4,104
|
|
|
8,353
|
|
|
8,353
|
|
|
8,353
|
|
|
7,539
|
|
|||||
Total cost of revenue
|
|
257,569
|
|
|
217,034
|
|
|
223,438
|
|
|
211,544
|
|
|
192,642
|
|
|||||
Gross profit
|
|
201,218
|
|
|
190,429
|
|
|
177,789
|
|
|
171,074
|
|
|
137,576
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
(2)
|
|
106,869
|
|
|
89,714
|
|
|
80,311
|
|
|
79,299
|
|
|
66,748
|
|
|||||
Sales and marketing
(2)
|
|
83,675
|
|
|
78,563
|
|
|
76,283
|
|
|
68,075
|
|
|
62,129
|
|
|||||
General and administrative
(2)
|
|
41,592
|
|
|
38,454
|
|
|
31,371
|
|
|
31,945
|
|
|
26,114
|
|
|||||
Amortization of intangible assets
|
|
1,701
|
|
|
10,208
|
|
|
10,208
|
|
|
10,208
|
|
|
10,208
|
|
|||||
Acquisition-related expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,401
|
|
|||||
Litigation settlement gain
|
|
(4,500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
|
229,337
|
|
|
216,939
|
|
|
198,173
|
|
|
189,527
|
|
|
166,600
|
|
|||||
Loss from operations
|
|
(28,119
|
)
|
|
(26,510
|
)
|
|
(20,384
|
)
|
|
(18,453
|
)
|
|
(29,024
|
)
|
|||||
Interest and other income (expense), net
(3)
|
|
1,064
|
|
|
712
|
|
|
151
|
|
|
1,174
|
|
|
856
|
|
|||||
Loss before provision for (benefit from) income taxes
|
|
(27,055
|
)
|
|
(25,798
|
)
|
|
(20,233
|
)
|
|
(17,279
|
)
|
|
(28,168
|
)
|
|||||
Provision for (benefit from) income taxes
|
|
347
|
|
|
535
|
|
|
581
|
|
|
(14
|
)
|
|
158
|
|
|||||
Net loss
|
|
$
|
(27,402
|
)
|
|
$
|
(26,333
|
)
|
|
$
|
(20,814
|
)
|
|
$
|
(17,265
|
)
|
|
$
|
(28,326
|
)
|
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
|
$
|
(0.56
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.59
|
)
|
Weighted-average number of shares used to compute net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
|
48,730
|
|
|
51,489
|
|
|
50,808
|
|
|
49,419
|
|
|
48,180
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
(1)
|
||||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and marketable securities
|
|
$
|
78,107
|
|
|
$
|
73,590
|
|
|
$
|
111,679
|
|
|
$
|
82,747
|
|
|
$
|
46,995
|
|
Working capital
|
|
97,926
|
|
|
115,561
|
|
|
131,693
|
|
|
114,366
|
|
|
84,255
|
|
|||||
Total assets
|
|
355,475
|
|
|
323,886
|
|
|
370,221
|
|
|
383,599
|
|
|
377,897
|
|
|||||
Common stock and additional paid-in capital
|
|
837,931
|
|
|
820,080
|
|
|
803,101
|
|
|
783,509
|
|
|
761,454
|
|
|||||
Total stockholders' equity
|
|
212,964
|
|
|
235,785
|
|
|
272,591
|
|
|
273,923
|
|
|
269,075
|
|
ITEM 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Persuasive evidence of an arrangement exists. We generally rely upon sales agreements and customer purchase orders as evidence of an arrangement.
|
•
|
Delivery has occurred. We use the shipping terms of the arrangement or evidence of customer acceptance to verify delivery or performance.
|
•
|
Sales price is fixed or determinable. We assess whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment. Payment terms to customers can range from net 30 to net 120 days.
|
•
|
Collectability is reasonably assured. We assess collectability based primarily on creditworthiness of customers and their payment histories.
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Revenue
|
$
|
458,787
|
|
|
$
|
407,463
|
|
|
$
|
401,227
|
|
|
$
|
51,324
|
|
|
13
|
%
|
|
$
|
6,236
|
|
|
2
|
%
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Products and services
|
$
|
253,465
|
|
|
$
|
208,681
|
|
|
$
|
215,085
|
|
|
$
|
44,784
|
|
|
21
|
%
|
|
$
|
(6,404
|
)
|
|
(3
|
)%
|
Amortization of intangible assets
|
4,104
|
|
|
8,353
|
|
|
8,353
|
|
|
(4,249
|
)
|
|
(51
|
)%
|
|
—
|
|
|
—
|
%
|
|||||
Total cost of revenue
|
$
|
257,569
|
|
|
$
|
217,034
|
|
|
$
|
223,438
|
|
|
$
|
40,535
|
|
|
19
|
%
|
|
$
|
(6,404
|
)
|
|
(3
|
)%
|
Gross profit
|
$
|
201,218
|
|
|
$
|
190,429
|
|
|
$
|
177,789
|
|
|
$
|
10,789
|
|
|
6
|
%
|
|
$
|
12,640
|
|
|
7
|
%
|
Gross margin
|
44
|
%
|
|
47
|
%
|
|
44
|
%
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Research and development
|
$
|
106,869
|
|
|
$
|
89,714
|
|
|
$
|
80,311
|
|
|
$
|
17,155
|
|
|
19
|
%
|
|
$
|
9,403
|
|
|
12
|
%
|
Percent of total revenue
|
23
|
%
|
|
22
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Sales and marketing
|
$
|
83,675
|
|
|
$
|
78,563
|
|
|
$
|
76,283
|
|
|
$
|
5,112
|
|
|
7
|
%
|
|
$
|
2,280
|
|
|
3
|
%
|
Percent of total revenue
|
18
|
%
|
|
19
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
General and administrative
|
$
|
41,592
|
|
|
$
|
38,454
|
|
|
$
|
31,371
|
|
|
$
|
3,138
|
|
|
8
|
%
|
|
$
|
7,083
|
|
|
23
|
%
|
Percent of total revenue
|
9
|
%
|
|
9
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Amortization of intangible assets
|
$
|
1,701
|
|
|
$
|
10,208
|
|
|
$
|
10,208
|
|
|
$
|
(8,507
|
)
|
|
(83
|
)%
|
|
$
|
—
|
|
|
—
|
%
|
Percent of total revenue
|
—
|
%
|
|
3
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Litigation settlement gain
|
$
|
(4,500
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,500
|
)
|
|
100
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Percent of total revenue
|
(1
|
)%
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Interest and other income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income
|
$
|
737
|
|
|
$
|
1,285
|
|
|
$
|
729
|
|
|
$
|
(548
|
)
|
|
(43
|
)%
|
|
$
|
556
|
|
|
76
|
%
|
Interest expense
|
(585
|
)
|
|
(1,144
|
)
|
|
(806
|
)
|
|
559
|
|
|
(49
|
)%
|
|
(338
|
)
|
|
42
|
%
|
|||||
Other income (expense), net
|
912
|
|
|
571
|
|
|
228
|
|
|
341
|
|
|
60
|
%
|
|
343
|
|
|
150
|
%
|
|||||
Total interest and other income (expense), net
|
$
|
1,064
|
|
|
$
|
712
|
|
|
$
|
151
|
|
|
$
|
352
|
|
|
49
|
%
|
|
$
|
561
|
|
|
372
|
%
|
|
Years Ended December 31,
|
|
2016 vs 2015 Change
|
|
2015 vs 2014 Change
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Provision for income taxes
|
$
|
347
|
|
|
$
|
535
|
|
|
$
|
581
|
|
|
$
|
(188
|
)
|
|
(35
|
)%
|
|
$
|
(46
|
)
|
|
(8
|
)%
|
Effective tax rate
|
(1.3
|
)%
|
|
(2.1
|
)%
|
|
(2.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by (used in) operating activities
|
|
$
|
24,419
|
|
|
$
|
(5,341
|
)
|
|
$
|
38,075
|
|
Net cash provided by (used in) investing activities
|
|
12,083
|
|
|
4,665
|
|
|
(75,444
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
(9,243
|
)
|
|
(24,141
|
)
|
|
3,575
|
|
ITEM 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
ITEM 8.
|
Financial Statements and Supplementary Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
50,359
|
|
|
$
|
23,626
|
|
Marketable securities
|
|
27,748
|
|
|
49,964
|
|
||
Accounts receivable, net
|
|
51,336
|
|
|
47,155
|
|
||
Inventory
|
|
44,545
|
|
|
47,667
|
|
||
Deferred cost of revenue
|
|
34,763
|
|
|
4,918
|
|
||
Prepaid expenses and other current assets
|
|
10,571
|
|
|
9,470
|
|
||
Total current assets
|
|
219,322
|
|
|
182,800
|
|
||
Property and equipment, net
|
|
17,984
|
|
|
17,149
|
|
||
Goodwill
|
|
116,175
|
|
|
116,175
|
|
||
Intangible assets, net
|
|
813
|
|
|
6,618
|
|
||
Other assets
|
|
1,181
|
|
|
1,144
|
|
||
Total assets
|
|
$
|
355,475
|
|
|
$
|
323,886
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
23,827
|
|
|
$
|
19,603
|
|
Accrued liabilities
|
|
69,715
|
|
|
35,512
|
|
||
Deferred revenue
|
|
27,854
|
|
|
12,124
|
|
||
Total current liabilities
|
|
121,396
|
|
|
67,239
|
|
||
Long-term portion of deferred revenue
|
|
20,237
|
|
|
19,569
|
|
||
Other long-term liabilities
|
|
878
|
|
|
1,293
|
|
||
Total liabilities
|
|
142,511
|
|
|
88,101
|
|
||
Commitments and contingencies (See Note 6)
|
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
||||
Preferred stock, $0.025 par value; 5,000,000 shares authorized; no shares issued and outstanding as of December 31, 2016 and December 31, 2015
|
|
—
|
|
|
—
|
|
||
Common stock, $0.025 par value; 100,000,000 shares authorized; 54,722,135 shares issued and 49,392,318 shares outstanding as of December 31, 2016, and 53,049,781 shares issued and 49,509,251 shares outstanding as of December 31, 2015
|
|
1,368
|
|
|
1,326
|
|
||
Additional paid-in capital
|
|
836,563
|
|
|
818,754
|
|
||
Accumulated other comprehensive loss
|
|
(656
|
)
|
|
(195
|
)
|
||
Accumulated deficit
|
|
(584,325
|
)
|
|
(556,923
|
)
|
||
Treasury stock, 5,329,817 shares as of December 31, 2016 and 3,540,530 shares as of December 31, 2015
|
|
(39,986
|
)
|
|
(27,177
|
)
|
||
Total stockholders' equity
|
|
212,964
|
|
|
235,785
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
355,475
|
|
|
$
|
323,886
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
|
$
|
458,787
|
|
|
$
|
407,463
|
|
|
$
|
401,227
|
|
Cost of revenue:
|
|
|
|
|
|
|
||||||
Products and services
(1)
|
|
253,465
|
|
|
208,681
|
|
|
215,085
|
|
|||
Amortization of intangible assets
|
|
4,104
|
|
|
8,353
|
|
|
8,353
|
|
|||
Total cost of revenue
|
|
257,569
|
|
|
217,034
|
|
|
223,438
|
|
|||
Gross profit
|
|
201,218
|
|
|
190,429
|
|
|
177,789
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Research and development
(1)
|
|
106,869
|
|
|
89,714
|
|
|
80,311
|
|
|||
Sales and marketing
(1)
|
|
83,675
|
|
|
78,563
|
|
|
76,283
|
|
|||
General and administrative
(1)
|
|
41,592
|
|
|
38,454
|
|
|
31,371
|
|
|||
Amortization of intangible assets
|
|
1,701
|
|
|
10,208
|
|
|
10,208
|
|
|||
Litigation settlement gain
|
|
(4,500
|
)
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
|
229,337
|
|
|
216,939
|
|
|
198,173
|
|
|||
Loss from operations
|
|
(28,119
|
)
|
|
(26,510
|
)
|
|
(20,384
|
)
|
|||
Interest and other income (expense), net:
|
|
|
|
|
|
|
||||||
Interest income
|
|
737
|
|
|
1,285
|
|
|
729
|
|
|||
Interest expense
|
|
(585
|
)
|
|
(1,144
|
)
|
|
(806
|
)
|
|||
Other income (expense), net
|
|
912
|
|
|
571
|
|
|
228
|
|
|||
Total interest and other income (expense), net
|
|
1,064
|
|
|
712
|
|
|
151
|
|
|||
Loss before provision for income taxes
|
|
(27,055
|
)
|
|
(25,798
|
)
|
|
(20,233
|
)
|
|||
Provision for income taxes
|
|
347
|
|
|
535
|
|
|
581
|
|
|||
Net loss
|
|
$
|
(27,402
|
)
|
|
$
|
(26,333
|
)
|
|
$
|
(20,814
|
)
|
Net loss per common share:
|
|
|
|
|
|
|
||||||
Basic and diluted
|
|
$
|
(0.56
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.41
|
)
|
Weighted-average number of shares used to compute net loss per common share:
|
|
|
|
|
|
|
||||||
Basic and diluted
|
|
48,730
|
|
|
51,489
|
|
|
50,808
|
|
|||
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(27,402
|
)
|
|
$
|
(26,333
|
)
|
|
$
|
(20,814
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
Unrealized gains (losses) on available-for-sale
|
|
|
|
|
|
|
||||||
marketable securities, net
|
|
$
|
88
|
|
|
$
|
(36
|
)
|
|
$
|
(58
|
)
|
Foreign currency translation adjustments, net
|
|
(549
|
)
|
|
(239
|
)
|
|
(52
|
)
|
|||
Total other comprehensive income (loss), net of tax
|
|
(461
|
)
|
|
(275
|
)
|
|
(110
|
)
|
|||
Comprehensive loss
|
|
$
|
(27,863
|
)
|
|
$
|
(26,608
|
)
|
|
$
|
(20,924
|
)
|
|
|
|
|
|
|
|
||||||
(1) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
||||||
Cost of revenue
|
|
$
|
672
|
|
|
$
|
709
|
|
|
$
|
1,120
|
|
Research and development
|
|
5,125
|
|
|
4,797
|
|
|
5,056
|
|
|||
Sales and marketing
|
|
4,586
|
|
|
4,712
|
|
|
5,601
|
|
|||
General and administrative
|
|
3,902
|
|
|
3,587
|
|
|
4,240
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
Additional
|
|
Other
|
|
|
|
|
|
Total
|
|||||||||||||||
|
|
Common Stock
|
|
Paid-in
|
|
Comprehensive
|
|
Accumulated
|
|
Treasury
|
|
Stockholders’
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Income (Loss)
|
|
Deficit
|
|
Stock
|
|
Equity
|
|||||||||||||
Balance at December 31, 2013
|
|
50,225
|
|
|
$
|
1,256
|
|
|
$
|
782,253
|
|
|
$
|
190
|
|
|
$
|
(509,776
|
)
|
|
$
|
—
|
|
|
$
|
273,923
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
16,017
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,017
|
|
||||||
Exercise of stock options
|
|
224
|
|
|
6
|
|
|
1,662
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,668
|
|
||||||
Issuance of vested performance restricted stock units, net of taxes withheld
|
|
99
|
|
|
2
|
|
|
(535
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(533
|
)
|
||||||
Issuance of vested restricted stock units, net of taxes withheld
|
|
449
|
|
|
11
|
|
|
(1,851
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,840
|
)
|
||||||
Stock issued under employee stock purchase plan
|
|
683
|
|
|
17
|
|
|
4,610
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,627
|
|
||||||
Shares withheld for taxes for vested restricted stock awards
|
|
(42
|
)
|
|
(1
|
)
|
|
(346
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(347
|
)
|
||||||
Restricted stock awards forfeited
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,814
|
)
|
|
—
|
|
|
(20,814
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(110
|
)
|
|
—
|
|
|
—
|
|
|
(110
|
)
|
||||||
Balance at December 31, 2014
|
|
51,628
|
|
|
1,291
|
|
|
801,810
|
|
|
80
|
|
|
(530,590
|
)
|
|
—
|
|
|
272,591
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
13,805
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,805
|
|
||||||
Exercise of stock options
|
|
97
|
|
|
2
|
|
|
636
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
638
|
|
||||||
Issuance of vested performance restricted stock units, net of taxes withheld
|
|
92
|
|
|
2
|
|
|
(473
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(471
|
)
|
||||||
Issuance of vested restricted stock units, net of taxes withheld
|
|
491
|
|
|
12
|
|
|
(1,733
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,721
|
)
|
||||||
Stock issued under employee stock purchase plan
|
|
762
|
|
|
19
|
|
|
4,869
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,888
|
|
||||||
Shares withheld for taxes for vested restricted stock awards
|
|
(20
|
)
|
|
—
|
|
|
(160
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,333
|
)
|
|
—
|
|
|
(26,333
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(275
|
)
|
|
—
|
|
|
—
|
|
|
(275
|
)
|
||||||
Repurchases of common stock
|
|
(3,541
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,177
|
)
|
|
(27,177
|
)
|
||||||
Balance at December 31, 2015
|
|
49,509
|
|
|
1,326
|
|
|
818,754
|
|
|
(195
|
)
|
|
(556,923
|
)
|
|
(27,177
|
)
|
|
235,785
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
14,285
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,285
|
|
||||||
Exercise of stock options
|
|
3
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||
Issuance of vested performance restricted stock units, net of taxes withheld
|
|
26
|
|
|
1
|
|
|
(115
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(114
|
)
|
||||||
Issuance of vested restricted stock units, net of taxes withheld
|
|
633
|
|
|
16
|
|
|
(2,003
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,987
|
)
|
||||||
Stock issued under employee stock purchase plan
|
|
1,010
|
|
|
25
|
|
|
5,625
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,650
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,402
|
)
|
|
—
|
|
|
(27,402
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(461
|
)
|
|
—
|
|
|
—
|
|
|
(461
|
)
|
||||||
Repurchases of common stock
|
|
(1,789
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,809
|
)
|
|
(12,809
|
)
|
||||||
Balance at December 31, 2016
|
|
49,392
|
|
|
$
|
1,368
|
|
|
$
|
836,563
|
|
|
$
|
(656
|
)
|
|
$
|
(584,325
|
)
|
|
$
|
(39,986
|
)
|
|
$
|
212,964
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(27,402
|
)
|
|
$
|
(26,333
|
)
|
|
$
|
(20,814
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
8,319
|
|
|
10,262
|
|
|
9,263
|
|
|||
Loss on retirement of property and equipment
|
|
—
|
|
|
24
|
|
|
50
|
|
|||
Amortization of intangible assets
|
|
5,805
|
|
|
18,561
|
|
|
18,561
|
|
|||
Amortization of premiums relating to available-for-sale securities
|
|
382
|
|
|
907
|
|
|
574
|
|
|||
Gain on sale of available-for-sale securities
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Stock-based compensation
|
|
14,285
|
|
|
13,805
|
|
|
16,017
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Restricted cash
|
|
—
|
|
|
295
|
|
|
—
|
|
|||
Accounts receivable, net
|
|
(4,185
|
)
|
|
(16,411
|
)
|
|
12,776
|
|
|||
Inventory
|
|
3,122
|
|
|
(915
|
)
|
|
4,319
|
|
|||
Deferred cost of revenue
|
|
(29,845
|
)
|
|
162
|
|
|
15,996
|
|
|||
Prepaid expenses and other assets
|
|
(1,197
|
)
|
|
2,889
|
|
|
(5,908
|
)
|
|||
Accounts payable
|
|
4,236
|
|
|
(4,021
|
)
|
|
467
|
|
|||
Accrued liabilities
|
|
34,913
|
|
|
(3,781
|
)
|
|
7,440
|
|
|||
Deferred revenue
|
|
16,398
|
|
|
(422
|
)
|
|
(21,178
|
)
|
|||
Other long-term liabilities
|
|
(412
|
)
|
|
(363
|
)
|
|
513
|
|
|||
Net cash provided by (used in) operating activities
|
|
24,419
|
|
|
(5,341
|
)
|
|
38,075
|
|
|||
Investing activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(9,839
|
)
|
|
(7,278
|
)
|
|
(11,961
|
)
|
|||
Purchases of marketable securities
|
|
(16,478
|
)
|
|
(60,002
|
)
|
|
(67,698
|
)
|
|||
Sales of marketable securities
|
|
—
|
|
|
—
|
|
|
615
|
|
|||
Maturities of marketable securities
|
|
38,400
|
|
|
71,945
|
|
|
3,600
|
|
|||
Net cash provided by (used in) investing activities
|
|
12,083
|
|
|
4,665
|
|
|
(75,444
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from exercise of stock options
|
|
17
|
|
|
638
|
|
|
1,668
|
|
|||
Proceeds from employee stock purchase plan
|
|
5,650
|
|
|
4,888
|
|
|
4,627
|
|
|||
Payments for repurchases of common stock
|
|
(12,809
|
)
|
|
(27,177
|
)
|
|
—
|
|
|||
Taxes paid for awards vested under equity incentive plans
|
|
(2,101
|
)
|
|
(2,352
|
)
|
|
(2,720
|
)
|
|||
Payments for debt issuance costs
|
|
—
|
|
|
(138
|
)
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
|
(9,243
|
)
|
|
(24,141
|
)
|
|
3,575
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(526
|
)
|
|
(386
|
)
|
|
(124
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
26,733
|
|
|
(25,203
|
)
|
|
(33,918
|
)
|
|||
Cash and cash equivalents at beginning of period
|
|
23,626
|
|
|
48,829
|
|
|
82,747
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
50,359
|
|
|
$
|
23,626
|
|
|
$
|
48,829
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
127
|
|
|
$
|
127
|
|
|
$
|
159
|
|
Income taxes paid
|
|
965
|
|
|
483
|
|
|
72
|
|
|||
Non-cash investing activities
|
|
|
|
|
|
|
||||||
Changes in accounts payable and accrued liabilities related to purchases of property and equipment
|
|
$
|
(478
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
1.
|
Description of Business and Significant Accounting Policies
|
•
|
Persuasive evidence of an arrangement exists. The Company generally relies upon sales agreements and customer purchase orders as evidence of an arrangement.
|
•
|
Delivery has occurred. The Company uses the shipping terms of the arrangement or evidence of customer acceptance to verify delivery or performance.
|
•
|
Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment. Payment terms to customers can range from net
30
to net
120
days.
|
•
|
Collectability is reasonably assured. The Company assesses collectability based primarily on creditworthiness of customers and their payment histories.
|
a.
|
Accounting for Income Taxes — The primary impact of the adoption was the recognition of excess tax benefits and tax deficiencies through the statement of operations when the awards vest or are settled rather than through paid-in capital. The new guidance eliminates the requirement to delay the recognition of excess tax benefits until it reduces current taxes payable and requires the recognition of excess tax benefits and tax deficiencies in the period they arise. The Company adopted this guidance on a modified retrospective basis beginning on January 1, 2017 and the adoption will have a cumulative-effect adjustment to the beginning balance of deferred tax asset and corresponding valuation allowance as of January 1, 2017. The adoption will have no cumulative-effect adjustment on January 1, 2017 accumulated deficit balance as the Company's net operating loss carryforwards are offset by a full valuation allowance.
|
b.
|
Classification of Excess Tax Benefits on the Statement of Cash Flows — ASU 2016-09 requires all tax-related cash flows resulting from share-based payments to be reported as operating activities on the statement of cash flows, a change from the current requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities. The Company adopted this guidance prospectively beginning on January 1, 2017.
|
c.
|
Forfeitures — The Company has historically recognized stock-based compensation expense net of estimated forfeitures on all unvested awards and elected to continuously do so with the adoption of this new guidance. Hence, the adoption of ASU 2016-09 as it relates to this matter will have no impact to the Company's consolidated financial statements.
|
d.
|
Minimum Statutory Tax Withholding Requirements — ASU 2016-09 allows companies to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award. The Company adopted this guidance using a modified retrospective approach. The adoption will have no impact on the January 1, 2017 accumulated deficit as the Company had no outstanding liability awards that would otherwise qualify for equity classification under this new guidance.
|
e.
|
Classification of Employee Taxes Paid on the Statement of Cash Flows When an Employer Withholds Shares for Tax-Withholding Purposes — ASU 2016-09 clarifies that all cash payments made to taxing authorities on the employees' behalf for withheld shares should be presented as financing activities on the statement of cash flows. The Company has historically presented the taxes paid related to net share settlement of equity awards as a financing activity on the statements of cash flows. Hence, the adoption of ASU 2016-09 as it relates to this matter will have no impact to the Company's consolidated financial statements.
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Cash and cash equivalents:
|
|
|
|
|
||||
Cash
|
|
$
|
34,340
|
|
|
$
|
13,378
|
|
Money market funds
|
|
15,020
|
|
|
10,248
|
|
||
Commercial paper
|
|
999
|
|
|
—
|
|
||
Total cash and cash equivalents
|
|
50,359
|
|
|
23,626
|
|
||
Marketable securities:
|
|
|
|
|
||||
Corporate debt securities
|
|
17,272
|
|
|
35,799
|
|
||
Commercial paper
|
|
6,275
|
|
|
3,645
|
|
||
U.S. government agency securities
|
|
4,201
|
|
|
10,520
|
|
||
Total marketable securities
|
|
27,748
|
|
|
49,964
|
|
||
Total cash, cash equivalents and marketable securities
|
|
$
|
78,107
|
|
|
$
|
73,590
|
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Corporate debt securities
|
|
$
|
17,279
|
|
|
$
|
1
|
|
|
$
|
(8
|
)
|
|
$
|
17,272
|
|
Commercial paper
|
|
6,275
|
|
|
—
|
|
|
—
|
|
|
6,275
|
|
||||
U.S. government agency securities
|
|
4,200
|
|
|
1
|
|
|
—
|
|
|
4,201
|
|
||||
Total marketable securities
|
|
$
|
27,754
|
|
|
$
|
2
|
|
|
$
|
(8
|
)
|
|
$
|
27,748
|
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Corporate debt securities
|
|
$
|
35,869
|
|
|
$
|
2
|
|
|
$
|
(72
|
)
|
|
$
|
35,799
|
|
Commercial paper
|
|
3,645
|
|
|
—
|
|
|
—
|
|
|
3,645
|
|
||||
U.S. government agency securities
|
|
10,544
|
|
|
—
|
|
|
(24
|
)
|
|
10,520
|
|
||||
Total marketable securities
|
|
$
|
50,058
|
|
|
$
|
2
|
|
|
$
|
(96
|
)
|
|
$
|
49,964
|
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
Due in 1 year or less
|
|
$
|
27,754
|
|
|
$
|
27,748
|
|
As of December 31, 2016
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Money market funds
|
|
$
|
15,020
|
|
|
$
|
—
|
|
|
$
|
15,020
|
|
Corporate debt securities
|
|
—
|
|
|
17,272
|
|
|
17,272
|
|
|||
Commercial paper
|
|
—
|
|
|
7,274
|
|
|
7,274
|
|
|||
U.S. government agency securities
|
|
—
|
|
|
4,201
|
|
|
4,201
|
|
|||
Total
|
|
$
|
15,020
|
|
|
$
|
28,747
|
|
|
$
|
43,767
|
|
As of December 31, 2015
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Money market funds
|
|
$
|
10,248
|
|
|
$
|
—
|
|
|
$
|
10,248
|
|
Corporate debt securities
|
|
—
|
|
|
35,799
|
|
|
35,799
|
|
|||
Commercial paper
|
|
—
|
|
|
3,645
|
|
|
3,645
|
|
|||
U.S. government agency securities
|
|
—
|
|
|
10,520
|
|
|
10,520
|
|
|||
Total
|
|
$
|
10,248
|
|
|
$
|
49,964
|
|
|
$
|
60,212
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Core developed technology
|
|
$
|
68,964
|
|
|
$
|
(68,151
|
)
|
|
$
|
813
|
|
|
$
|
68,964
|
|
|
$
|
(64,047
|
)
|
|
$
|
4,917
|
|
Customer relationships
|
|
54,740
|
|
|
(54,740
|
)
|
|
—
|
|
|
54,740
|
|
|
(53,039
|
)
|
|
1,701
|
|
||||||
Total intangible assets, excluding goodwill
|
|
$
|
123,704
|
|
|
$
|
(122,891
|
)
|
|
$
|
813
|
|
|
$
|
123,704
|
|
|
$
|
(117,086
|
)
|
|
$
|
6,618
|
|
Period
|
Expected Amortization Expense
|
||
2017
|
$
|
813
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Accounts receivable
|
|
$
|
52,792
|
|
|
$
|
48,319
|
|
Allowance for doubtful accounts
|
|
(518
|
)
|
|
(501
|
)
|
||
Product return reserve
|
|
(938
|
)
|
|
(663
|
)
|
||
Accounts receivable, net
|
|
$
|
51,336
|
|
|
$
|
47,155
|
|
|
|
Balance at Beginning of Year
|
|
Additions Charged to Costs or Expenses or Revenue
|
|
Deductions and Write Offs
|
|
Balance at
End of Year
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
501
|
|
|
$
|
232
|
|
|
$
|
(215
|
)
|
|
$
|
518
|
|
Product return reserve
|
|
663
|
|
|
3,679
|
|
|
(3,404
|
)
|
|
938
|
|
||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
241
|
|
|
$
|
405
|
|
|
$
|
(145
|
)
|
|
$
|
501
|
|
Product return reserve
|
|
508
|
|
|
4,224
|
|
|
(4,069
|
)
|
|
663
|
|
||||
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
358
|
|
|
$
|
154
|
|
|
$
|
(271
|
)
|
|
$
|
241
|
|
Product return reserve
|
|
764
|
|
|
4,805
|
|
|
(5,061
|
)
|
|
508
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Raw materials
|
|
$
|
1,827
|
|
|
$
|
2,209
|
|
Finished goods
|
|
42,718
|
|
|
45,458
|
|
||
Total inventory
|
|
$
|
44,545
|
|
|
$
|
47,667
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Test equipment
|
|
$
|
43,580
|
|
|
$
|
39,035
|
|
Computer equipment and purchased software
|
|
30,306
|
|
|
27,736
|
|
||
Furniture and fixtures
|
|
2,831
|
|
|
1,833
|
|
||
Leasehold improvements
|
|
6,898
|
|
|
6,554
|
|
||
Total
|
|
83,615
|
|
|
75,158
|
|
||
Accumulated depreciation and amortization
|
|
(65,631
|
)
|
|
(58,009
|
)
|
||
Property and equipment, net
|
|
$
|
17,984
|
|
|
$
|
17,149
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Advance customer payments
|
|
$
|
20,726
|
|
|
$
|
1,094
|
|
Accrued compensation and related benefits
|
|
19,541
|
|
|
13,809
|
|
||
Accrued warranty and retrofit
|
|
12,214
|
|
|
9,564
|
|
||
Accrued professional and consulting fees
|
|
8,205
|
|
|
2,813
|
|
||
Accrued customer rebates
|
|
1,931
|
|
|
784
|
|
||
Accrued excess and obsolete inventory at contract manufacturers
|
|
1,327
|
|
|
1,011
|
|
||
Accrued freight
|
|
1,198
|
|
|
486
|
|
||
Accrued insurance
|
|
804
|
|
|
—
|
|
||
Accrued non-income related taxes
|
|
699
|
|
|
905
|
|
||
Accrued business travel expenses
|
|
463
|
|
|
580
|
|
||
Accrued rent
|
|
421
|
|
|
381
|
|
||
Accrued hosting services
|
|
240
|
|
|
466
|
|
||
Income taxes payable
|
|
231
|
|
|
322
|
|
||
Accrued other
|
|
1,715
|
|
|
3,297
|
|
||
Total accrued liabilities
|
|
$
|
69,715
|
|
|
$
|
35,512
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Current:
|
|
|
|
|
||||
Product and services
|
|
$
|
24,472
|
|
|
$
|
8,937
|
|
Extended warranty
|
|
3,382
|
|
|
3,187
|
|
||
|
|
27,854
|
|
|
12,124
|
|
||
Non-current:
|
|
|
|
|
||||
Product and services
|
|
22
|
|
|
58
|
|
||
Extended warranty
|
|
20,215
|
|
|
19,511
|
|
||
|
|
20,237
|
|
|
19,569
|
|
||
Total deferred revenue
|
|
$
|
48,091
|
|
|
$
|
31,693
|
|
Period
|
|
Minimum Future Lease Payments
|
||
2017
|
|
$
|
3,103
|
|
2018
|
|
2,774
|
|
|
2019
|
|
1,061
|
|
|
2020
|
|
717
|
|
|
2021
|
|
283
|
|
|
Thereafter
|
|
19
|
|
|
Total
|
|
$
|
7,957
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
|
$
|
9,564
|
|
|
$
|
9,553
|
|
|
$
|
10,856
|
|
Provision for warranty and retrofit charged to cost of revenue
|
|
9,898
|
|
|
4,661
|
|
|
3,394
|
|
|||
Utilization of reserve
|
|
(6,816
|
)
|
|
(4,115
|
)
|
|
(3,328
|
)
|
|||
Adjustments to pre-existing reserve
|
|
(432
|
)
|
|
(535
|
)
|
|
(1,369
|
)
|
|||
Balance at end of period
|
|
$
|
12,214
|
|
|
$
|
9,564
|
|
|
$
|
9,553
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Numerator:
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(27,402
|
)
|
|
$
|
(26,333
|
)
|
|
$
|
(20,814
|
)
|
Denominator:
|
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding
|
|
48,730
|
|
|
51,489
|
|
|
50,808
|
|
|||
Basic and diluted net loss per common share
|
|
$
|
(0.56
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.41
|
)
|
Potentially dilutive shares, weighted-average
|
|
5,890
|
|
|
6,120
|
|
|
5,020
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|||||
|
|
|
|
|
|
Average
|
|
|
|||||
|
|
|
|
Weighted-
|
|
Remaining
|
|
|
|||||
|
|
|
|
Average
|
|
Contractual
|
|
Aggregate
|
|||||
|
|
Number of
|
|
Exercise Price
|
|
Life
|
|
Intrinsic
|
|||||
Stock Options
|
|
Shares
|
|
Per Share
|
|
(in years)
|
|
Value
(1)
|
|||||
Outstanding as of December 31, 2015
|
|
2,655
|
|
|
$
|
11.81
|
|
|
|
|
|
||
Granted
|
|
680
|
|
|
6.96
|
|
|
|
|
|
|||
Exercised
|
|
(3
|
)
|
|
5.77
|
|
|
|
|
|
|||
Forfeited
|
|
(3
|
)
|
|
7.97
|
|
|
|
|
|
|||
Expired
|
|
(120
|
)
|
|
29.31
|
|
|
|
|
|
|||
Outstanding as of December 31, 2016
|
|
3,209
|
|
|
$
|
10.14
|
|
|
6.3
|
|
$
|
703
|
|
Vested and expected to vest as of December 31, 2016
|
|
3,113
|
|
|
$
|
10.23
|
|
|
6.1
|
|
$
|
652
|
|
Options exercisable as of December 31, 2016
|
|
2,125
|
|
|
$
|
11.47
|
|
|
4.9
|
|
$
|
201
|
|
|
|
|
|
|
|
|
|
|
|||||
(1) Amounts represent the difference between the exercise price and the fair market value of common stock at December 31, 2016 for all in the money options outstanding.
|
|
|
RSUs
|
|
PRSUs
|
||||||||||
|
|
|
|
Weighted-
|
|
|
|
Weighted-
|
||||||
|
|
|
|
Average
|
|
|
|
Average
|
||||||
|
|
|
|
Grant Date
|
|
|
|
Grant Date
|
||||||
|
|
Number of
|
|
Fair Value
|
|
Number of
|
|
Fair Value
|
||||||
|
|
Shares
|
|
Per Share
|
|
Shares
|
|
Per Share
|
||||||
Outstanding at December 31, 2015
|
|
2,469
|
|
|
$
|
8.64
|
|
|
184
|
|
|
$
|
9.21
|
|
Granted
|
|
1,287
|
|
|
6.91
|
|
|
550
|
|
|
7.42
|
|
||
Vested
|
|
(919
|
)
|
|
8.46
|
|
|
(45
|
)
|
|
11.71
|
|
||
Canceled
|
|
(239
|
)
|
|
8.45
|
|
|
(124
|
)
|
|
8.09
|
|
||
Outstanding at December 31, 2016
|
|
2,598
|
|
|
$
|
7.86
|
|
|
565
|
|
|
$
|
7.51
|
|
(i)
|
Expected volatility of the Company's common stock - The Company computes its expected volatility assumption based on a blended volatility (
50%
historical volatility and
50%
implied volatility from traded options on the Company's common stock). The selection of a blended volatility assumption was based upon the Company's assessment that a blended volatility is more representative of the Company's future stock price trend as it weighs the historical volatility with the future implied volatility.
|
(ii)
|
Expected life of the option award - Represents the weighted-average period that the stock options are expected to remain outstanding. The Company's computation of expected life utilizes the simplified method in accordance with Staff Accounting Bulletin No. 110 ("SAB 110") due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The mid-point between the vesting date and the expiration date is used as the expected term under this method.
|
(iii)
|
Expected dividend yield - Assumption is based on the Company's history of not paying dividends and no future expectations of dividend payouts.
|
(iv)
|
Risk-free interest rate - Based on the U.S. Treasury yield curve in effect at the time of grant with maturities approximating the grant's expected life.
|
|
|
Years Ended December 31,
|
|||||||
Stock Options
|
|
2016
|
|
2015
|
|
2014
|
|||
Expected volatility
|
|
53
|
%
|
|
52
|
%
|
|
52
|
%
|
Expected life (years)
|
|
6.25
|
|
|
6.25
|
|
|
6.21
|
|
Expected dividend yield
|
|
—
|
|
|
—
|
|
|
—
|
|
Risk-free interest rate
|
|
1.60
|
%
|
|
1.56
|
%
|
|
1.87
|
%
|
|
|
Years Ended December 31,
|
|||||||
ESPP
|
|
2016
|
|
2015
|
|
2014
|
|||
Expected volatility
|
|
46
|
%
|
|
46
|
%
|
|
45
|
%
|
Expected life (years)
|
|
0.52
|
|
|
0.46
|
|
|
0.50
|
|
Expected dividend yield
|
|
—
|
|
|
—
|
|
|
—
|
|
Risk-free interest rate
|
|
0.47
|
%
|
|
0.18
|
%
|
|
0.07
|
%
|
|
|
As of December 31, 2016
|
||||||||||||||
|
|
Stock Option
|
|
RSU
|
|
PRSU
|
|
ESPP
|
||||||||
Unrecognized stock-based compensation expense
|
|
$
|
3,661
|
|
|
$
|
13,380
|
|
|
$
|
1,328
|
|
|
$
|
721
|
|
Weighted-average amortization period (in years)
|
|
2.9
|
|
|
2.5
|
|
|
0.9
|
|
|
0.4
|
|
Expiration Date
|
|
Exercise Price
Per Share
|
|
Number of Warrants Outstanding
|
||
September 4, 2017
|
|
$
|
19.56
|
|
|
15
|
|
|
As of December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Stock options outstanding
|
|
3,209
|
|
|
2,655
|
|
|
3,701
|
|
Restricted stock units outstanding
|
|
2,598
|
|
|
2,469
|
|
|
1,734
|
|
Performance restricted stock units outstanding
|
|
565
|
|
|
184
|
|
|
362
|
|
Shares available for future grant under 2010 Plan
|
|
1,603
|
|
|
2,749
|
|
|
2,283
|
|
Shares available for future issuance under ESPP
|
|
119
|
|
|
1,129
|
|
|
1,891
|
|
Common stock warrants
|
|
15
|
|
|
15
|
|
|
15
|
|
Total
|
|
8,109
|
|
|
9,201
|
|
|
9,986
|
|
|
|
Year Ended December 31, 2016
|
||||||||||
|
|
Unrealized Gains and Losses on Available-for-Sale Marketable Securities
|
|
Foreign Currency Translation Adjustments
|
|
Total
|
||||||
Balance at beginning of period
|
|
$
|
(94
|
)
|
|
$
|
(101
|
)
|
|
$
|
(195
|
)
|
Other comprehensive income (loss)
|
|
88
|
|
|
(549
|
)
|
|
(461
|
)
|
|||
Balance at end of period
|
|
$
|
(6
|
)
|
|
$
|
(650
|
)
|
|
$
|
(656
|
)
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2015
|
||||||||||
|
|
Unrealized Gains and Losses on Available-for-Sale Marketable Securities
|
|
Foreign Currency Translation Adjustments
|
|
Total
|
||||||
Balance at beginning of period
|
|
$
|
(58
|
)
|
|
$
|
138
|
|
|
$
|
80
|
|
Other comprehensive loss
|
|
(36
|
)
|
|
(239
|
)
|
|
(275
|
)
|
|||
Balance at end of period
|
|
$
|
(94
|
)
|
|
$
|
(101
|
)
|
|
$
|
(195
|
)
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2014
|
||||||||||
|
|
Unrealized Gains and Losses on Available-for-Sale Marketable Securities
|
|
Foreign Currency Translation Adjustments
|
|
Total
|
||||||
Balance at beginning of period
|
|
$
|
—
|
|
|
$
|
190
|
|
|
$
|
190
|
|
Other comprehensive loss before
|
|
|
|
|
|
|
||||||
reclassification adjustment
|
|
(57
|
)
|
|
(52
|
)
|
|
(109
|
)
|
|||
Reclassification adjustment for realized gains on
|
|
|
|
|
|
|
||||||
marketable securities included in net loss
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Other comprehensive loss
|
|
(58
|
)
|
|
(52
|
)
|
|
(110
|
)
|
|||
Balance at end of period
|
|
$
|
(58
|
)
|
|
$
|
138
|
|
|
$
|
80
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Domestic
|
|
$
|
(28,931
|
)
|
|
$
|
(27,674
|
)
|
|
$
|
(21,495
|
)
|
Foreign
|
|
1,876
|
|
|
1,876
|
|
|
1,262
|
|
|||
Loss before provision for income taxes
|
|
$
|
(27,055
|
)
|
|
$
|
(25,798
|
)
|
|
$
|
(20,233
|
)
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
|
||||||
State
|
|
$
|
102
|
|
|
$
|
90
|
|
|
$
|
104
|
|
Foreign
|
|
673
|
|
|
493
|
|
|
469
|
|
|||
Current income tax
|
|
775
|
|
|
583
|
|
|
573
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Foreign
|
|
(428
|
)
|
|
(48
|
)
|
|
8
|
|
|||
Deferred income tax
|
|
(428
|
)
|
|
(48
|
)
|
|
8
|
|
|||
Provision for income taxes
|
|
$
|
347
|
|
|
$
|
535
|
|
|
$
|
581
|
|
|
|
Years Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Federal statutory rate
|
|
34.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
State statutory rate
|
|
6.1
|
%
|
|
2.6
|
%
|
|
2.5
|
%
|
Foreign operations
|
|
0.6
|
%
|
|
1.1
|
%
|
|
(0.1
|
)%
|
R&D tax credits
|
|
6.4
|
%
|
|
11.2
|
%
|
|
9.2
|
%
|
Foreign income inclusion
|
|
(0.7
|
)%
|
|
(2.4
|
)%
|
|
(0.3
|
)%
|
Non-deductible stock compensation
|
|
(5.1
|
)%
|
|
(1.9
|
)%
|
|
(0.9
|
)%
|
Other permanent items
|
|
(1.4
|
)%
|
|
(2.0
|
)%
|
|
(1.5
|
)%
|
Tax true-up
|
|
21.0
|
%
|
|
(1.3
|
)%
|
|
(0.2
|
)%
|
Valuation allowance
|
|
(62.2
|
)%
|
|
(43.4
|
)%
|
|
(45.6
|
)%
|
Effective tax rate
|
|
(1.3
|
)%
|
|
(2.1
|
)%
|
|
(2.9
|
)%
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
167,668
|
|
|
$
|
167,387
|
|
Tax credit carryforwards
|
|
36,026
|
|
|
27,654
|
|
||
Depreciation and amortization
|
|
2,538
|
|
|
1,947
|
|
||
Accruals and reserves
|
|
13,462
|
|
|
12,427
|
|
||
Deferred revenue
|
|
12,954
|
|
|
9,822
|
|
||
Stock-based compensation
|
|
6,159
|
|
|
5,198
|
|
||
Other
|
|
1,124
|
|
|
528
|
|
||
Gross deferred tax assets
|
|
239,931
|
|
|
224,963
|
|
||
Valuation allowance
|
|
(239,238
|
)
|
|
(222,410
|
)
|
||
Net deferred tax assets
|
|
693
|
|
|
2,553
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Intangible assets
|
|
(157
|
)
|
|
(2,229
|
)
|
||
Other
|
|
—
|
|
|
(130
|
)
|
||
Gross deferred tax liabilities
|
|
(157
|
)
|
|
(2,359
|
)
|
||
Net deferred tax assets reflected in balance sheet
|
|
$
|
536
|
|
|
$
|
194
|
|
|
|
Years Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
|
$
|
16,597
|
|
|
$
|
15,421
|
|
Additions for tax positions related to prior year
|
|
420
|
|
|
56
|
|
||
Reductions for tax positions related to prior year
|
|
(145
|
)
|
|
(59
|
)
|
||
Additions for tax positions related to current year
|
|
1,477
|
|
|
1,179
|
|
||
Balance at end of period
|
|
$
|
18,349
|
|
|
$
|
16,597
|
|
|
|
Fiscal Year 2016 Quarter Ended
|
||||||||||||||
|
|
March 26
|
|
June 25
|
|
September 24
|
|
December 31
|
||||||||
Revenue
|
|
$
|
98,375
|
|
|
$
|
107,425
|
|
|
$
|
121,187
|
|
|
$
|
131,800
|
|
Gross profit
|
|
45,482
|
|
|
50,006
|
|
|
53,544
|
|
|
52,186
|
|
||||
Operating income (loss)
|
|
(10,738
|
)
|
|
(5,881
|
)
|
|
735
|
|
|
(12,235
|
)
|
||||
Net income (loss)
|
|
(10,729
|
)
|
|
(5,826
|
)
|
|
636
|
|
|
(11,483
|
)
|
||||
Net income (loss) per common share, basic
|
|
$
|
(0.22
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.23
|
)
|
Net income (loss) per common share, diluted
|
|
$
|
(0.22
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.23
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Fiscal Year 2015 Quarter Ended
|
||||||||||||||
|
|
March 28
|
|
June 27
|
|
September 26
|
|
December 31
|
||||||||
Revenue
|
|
$
|
91,038
|
|
|
$
|
99,129
|
|
|
$
|
112,297
|
|
|
$
|
104,999
|
|
Gross profit
|
|
42,490
|
|
|
48,289
|
|
|
53,113
|
|
|
46,537
|
|
||||
Operating income (loss)
|
|
(11,887
|
)
|
|
(5,765
|
)
|
|
877
|
|
|
(9,735
|
)
|
||||
Net income (loss)
|
|
(11,930
|
)
|
|
(5,779
|
)
|
|
922
|
|
|
(9,546
|
)
|
||||
Net income (loss) per common share, basic
|
|
$
|
(0.23
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.19
|
)
|
Net income (loss) per common share, diluted
|
|
$
|
(0.23
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.19
|
)
|
ITEM 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
ITEM 9A.
|
Controls and Procedures
|
ITEM 9B.
|
Other Information
|
ITEM 10.
|
Directors, Executive Officers and Corporate Governance
|
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 Accountant Fees and Services
|
ITEM 15.
|
Exhibits, Financial Statement Schedules
|
ITEM 16.
|
Form 10-K Summary
|
|
|
CALIX, INC.
(Registrant)
|
||
|
|
|
||
Dated:
|
February 28, 2017
|
By:
|
|
/s/ Carl Russo
|
|
|
|
|
Carl Russo
|
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
||
Dated:
|
February 28, 2017
|
By:
|
|
/s/ William J. Atkins
|
|
|
|
|
William J. Atkins
|
|
|
|
|
EVP and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
||
Dated:
|
February 28, 2017
|
By:
|
|
/s/ Sheila Cheung
|
|
|
|
|
Sheila Cheung
|
|
|
|
|
Vice President, Finance and Accounting
(Principal Accounting Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Carl Russo
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 28, 2017
|
Carl Russo
|
|
|
|
|
|
|
|
||
/s/ William J. Atkins
|
|
EVP and Chief Financial Officer
(Principal Financial Officer) |
|
February 28, 2017
|
William J. Atkins
|
|
|
|
|
|
|
|
|
|
/s/ Sheila Cheung
|
|
Vice President, Finance and Accounting
(Principal Accounting Officer)
|
|
February 28, 2017
|
Sheila Cheung
|
|
|
|
|
|
|
|
||
/s/ Don Listwin
|
|
Chairman of the Board of Directors
|
|
February 28, 2017
|
Don Listwin
|
|
|
|
|
|
|
|
||
/s/ Christopher Bowick
|
|
Director
|
|
February 28, 2017
|
Christopher Bowick
|
|
|
|
|
|
|
|
|
|
/s/ Kevin DeNuccio
|
|
Director
|
|
February 28, 2017
|
Kevin DeNuccio
|
|
|
|
|
|
|
|
||
/s/ Michael Everett
|
|
Director
|
|
February 28, 2017
|
Michael Everett
|
|
|
|
|
|
|
|
||
/s/ Michael Flynn
|
|
Director
|
|
February 28, 2017
|
Michael Flynn
|
|
|
|
|
|
|
|
|
|
/s/ Michael Matthews
|
|
Director
|
|
February 28, 2017
|
Michael Matthews
|
|
|
|
|
|
|
|
||
/s/ Thomas Pardun
|
|
Director
|
|
February 28, 2017
|
Thomas Pardun
|
|
|
|
|
|
|
|
|
|
/s/ Kevin Peters
|
|
Director
|
|
February 28, 2017
|
Kevin Peters
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
|
2.1
|
|
Agreement and Plan of Merger and Reorganization, dated as of September 16, 2010, by and among Calix, Inc., Ocean Sub I, Inc., Ocean Sub II, LLC, Occam Networks, Inc. (filed as Exhibit 2.1 to Calix’s Registration Statement on Form S-4 originally filed with the Securities and Exchange Commission on November 2, 2010 (File No. 333-170282), as amended by Amendment No. 1 filed December 14, 2010, as amended by Post-Effective Amendment No. 1, filed December 14, 2010 and as amended by Post-Effective Amendment No. 2, filed February 7, 2011 and incorporated by reference).
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Calix, Inc. (filed as Exhibit 3.3 to Amendment No. 7 to Calix’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 23, 2010 (File No. 333-163252) and incorporated by reference).
|
3.2
|
|
Amended and Restated Bylaws of Calix, Inc. (filed as Exhibit 3.5 to Amendment No. 7 to Calix’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 23, 2010 (File No. 333-163252) and incorporated by reference).
|
4.1
|
|
Form of Calix, Inc.’s Common Stock Certificate (filed as Exhibit 4.1 to Amendment No. 7 to Calix’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 23, 2010 (File No. 333-163252) and incorporated by reference).
|
4.2
|
|
Warrant to Purchase Stock, between Calix, Inc. and Greater Bay Venture Banking, a division of Greater Bay Bank N.A., dated September 4, 2007 (filed as Exhibit 4.27 to Calix’s Registration Statement on Form S-1 filed with the SEC on November 20, 2009 (File No. 333-163252) and incorporated by reference).
|
10.1*
|
|
Calix Networks, Inc. Amended and Restated 2002 Stock Plan and related documents (filed as Exhibit 10.2 to Amendment No. 6 to Calix’s Registration Statement on Form S-1 filed with the SEC on March 8, 2010 (File No. 333-163252) and incorporated by reference).
|
10.2*
|
|
Calix, Inc. 2010 Equity Incentive Award Plan and related documents (filed as Exhibit 10.2 to Amendment No. 6 to Calix’s Registration Statement on Form S-1 filed with the SEC on March 8, 2010 (File No. 333-163252) and incorporated by reference).
|
10.3
|
|
Form of Indemnification Agreement made by and between Calix, Inc. and each of its directors, executive officers and some employees (filed as Exhibit 10.5 to Amendment No. 6 to Calix’s Registration Statement on Form S-1 filed with the SEC on March 8, 2010 (File No. 333-163252) and incorporated by reference).
|
10.4
|
|
Lease, between RNM Lakeville, LLC and Calix, Inc., dated February 13, 2009 (filed as Exhibit 10.6 to Calix’s Registration Statement on Form S-1 filed with the SEC on November 20, 2009 (File No. 333-163252) and incorporated by reference).
|
10.5
|
|
First Amendment to Lease, by and between 1031, 1035, 1039 North McDowell, LLC and Calix, Inc., effective January 28, 2013 (filed as Exhibit 10.25 to Calix's Form 10-K filed with the SEC on February 22, 2013 (File No. 001-34674) and incorporated by reference).
|
10.6
|
|
Credit Agreement, among Calix, Inc., certain of its subsidiaries, Bank of America, N.A. and the other lenders party thereto, dated July 29, 2013 (filed as Exhibit 10.1 to Calix’s Form 10-Q filed with the SEC on August 6, 2013 (File No. 001-34674) and incorporated by reference).
|
10.7
|
|
First Amendment to Credit Agreement dated as of December 23, 2015 by and among Calix, Inc. and Bank of America, N.A. as administrative agent and lender (filed as Exhibit 10.1 to Calix's Form 8-K filed with the SEC on December 28, 2015 (File No. 001-34674) and incorporated by reference).
|
10.8*
|
|
Offer Letter, between Calix, Inc. and Carl Russo, dated November 1, 2006 (filed as Exhibit 10.8 to Amendment No. 1 to Calix’s Registration Statement on Form S-1 filed with the SEC on December 31, 2009 (File No. 333-163252) and incorporated by reference).
|
10.9*
|
|
Offer Letter, between Calix, Inc. and John Colvin, dated March 3, 2004 (filed as Exhibit 10.11 to Amendment No. 1 to Calix’s Registration Statement on Form S-1 filed with the SEC on December 31, 2009 (File No. 333-163252) and incorporated by reference).
|
10.10*
|
|
Employment Agreement, between Calix, Inc. and Andrew Lockhart, dated February 2, 2011 (filed as Exhibit 10.20 to Calix's Form 10-Q filed with the SEC on May 3, 2012 (File No. 001-34674) and incorporated by reference).
|
10.11*
|
|
Offer Letter, between Calix, Inc. and William Atkins, dated December 21, 2013 (filed as Exhibit 10.15 to Calix's Form 10-K filed with the SEC on February 20, 2014 (File No. 001-34674) and incorporated by reference).
|
10.12*
|
|
Calix, Inc. Amended And Restated Employee Stock Purchase Plan (Effective as of May 23, 2012) (filed as Exhibit 10.1 to Calix’s Form 10-Q filed with the SEC on August 7, 2012 (File No. 001-34674) and incorporated by reference).
|
10.13†
|
|
Asset Purchase Agreement between Ericsson Inc. and Calix, Inc., dated August 20, 2012 (filed as Exhibit 10.1 to Calix’s Form 10-Q/A filed with the SEC on December 18, 2012 (File No. 001-34674) and incorporated by reference).
|
10.14*
|
|
Calix, Inc. Non-Employee Director Restricted Stock Unit Deferred Compensation Plan, effective January 1, 2013 (filed as Exhibit 10.22 to Calix's Form 10-K filed with the SEC on February 22, 2013 (File No. 001-34674) and incorporated by reference).
|
10.15*
|
|
Calix, Inc. Management Bonus Program Under the 2010 Equity Incentive Award Plan (filed as Exhibit 10.1 to Calix's Form 8-K filed with the SEC on February 28, 2012 (File No. 001-34674) and incorporated by reference).
|
10.16*
|
|
Calix, Inc. Long Term Incentive Program Under the 2010 Equity Incentive Award Plan (filed as Exhibit 10.2 to Calix's Form 8-K filed with the SEC on February 28, 2012 (File No. 001-34674) and incorporated by reference).
|
10.17*
|
|
Calix, Inc. Non-Employee Director Cash Compensation Policy, as amended April 22, 2014 (filed as Exhibit 10.1 to Calix's Form 8-K filed with the SEC on July 8, 2014 (File No. 001-34674) and incorporated by reference).
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
|
10.18*
|
|
Calix, Inc. Non-Employee Director Equity Compensation Policy, as amended October 18, 2011, July 25, 2012, April 22, 2014 and April 26, 2016.
|
10.19*
|
|
Offer Letter by and between Calix, Inc. and Michael Weening dated May 20, 2016 (filed as Exhibit 10.1 to Calix’s Form 10-Q filed with the SEC on August 3, 2016 (File No. 001-34674) and incorporated by reference).
|
10.20*
|
|
Letter Agreement dated June 22, 2016 amending Employment Agreement by and between Calix, Inc. and Andrew Lockhart (filed as Exhibit 10.2 to Calix’s Form 10-Q filed with the SEC on August 3, 2016 (File No. 001-34674) and incorporated by reference).
|
10.21*
|
|
Consulting Agreement by and between Calix, Inc. and Kevin Peters dated July 29, 2016 (filed as Exhibit 10.3 to Calix’s Form 10-Q filed with the SEC on August 3, 2016 (File No. 001-34674) and incorporated by reference).
|
10.22*
|
|
Amendment to Consulting Agreement effective as of September 3, 2016 by and between Calix, Inc. and Kevin Peters (filed as Exhibit 10.1 to Calix’s Form 10-Q filed with the SEC on November 2, 2016 (File No. 001-34674) and incorporated by reference).
|
10.23*
|
|
Settlement Agreement by and between Calix, Inc. and Andrew Lockhart dated December 7, 2016.
|
10.24*
|
|
Offer Letter by and between Calix, Inc. and Greg Billings dated December 8, 2016.
|
10.25*
|
|
Separation Agreement and General Release of All Claims by and between Calix, Inc. and John Colvin dated January 9, 2017.
|
16.1
|
|
Letter of Ernst & Young dated March 4, 2016 (filed as Exhibit 16.1 to Calix’s Form 8-K filed with the SEC on March 4, 2016 (File No. 001-34674) and incorporated by reference).
|
21.1
|
|
Subsidiaries of the Registrant.
|
23.1
|
|
Consent of KPMG LLP, independent registered public accounting firm.
|
23.2
|
|
Consent of Ernst & Young LLP, independent registered public accounting firm.
|
24.1
|
|
Power of Attorney (included on signature page to this Annual Report on Form 10-K).
|
31.1
|
|
Certification of Principal Executive Officer of Calix, Inc. Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
|
31.2
|
|
Certification of Principal Financial Officer of Calix, Inc. Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
|
32.1
|
|
Certification of Principal Executive Officer and Principle Financial Officer of Calix, Inc. 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.
|
*
|
|
Indicates management contract or compensatory plan or arrangement.
|
†
|
|
Confidential treatment has been granted as to certain portions of this agreement.
|
(1)
|
Calix, Inc
. a Delaware corporation with the registered address of
1035 N. McDowell Boulevard, Petaluma, California, 94954, United States
(the
“
Company
”); and
|
(2)
|
Andrew Lockhart
whose address is [redacted] (the “
Employee
”).
|
(A)
|
The Employee was employed by the Company on the Employment Contract.
|
(B)
|
The Employee’s employment with the Company shall terminate on the Termination Date.
|
(C)
|
The parties have entered into this Agreement to record and implement the terms on which they have agreed to settle any claims which the Employee has or may have in connection with his employment or its termination or otherwise against the Company and any Group Company (as defined below) or its officers, employees or agents whether or not those claims are, or could be, in the contemplation of the parties at the time of signing this Agreement, and including, in particular, the statutory complaints which the Employee raises in this Agreement.
|
(D)
|
The parties intend this Agreement to be an effective waiver of any such claims and to satisfy the conditions relating to settlement agreements in the relevant legislation.
|
(E)
|
The Company enters into this Agreement for itself and as agent and trustee for any Group Company and it is authorised to do so. It is the parties' intention that each Group Company should be able to enforce any rights it has under this Agreement, subject to and in accordance with the Contracts (Rights of Third Parties) Act 1999.
|
1.
|
Interpretation
|
1.1
|
The definitions in this clause apply in this Agreement.
|
(a)
|
details of any trade secrets, customer lists, trading details or other information of a confidential nature relating to the goodwill and secrets of the Company and any Group Company, including (without limitation):
|
(i)
|
financial information (including but not limited to business plans, business models, confidential pricing information (specifically including but not limited to commission rates) or any information relating to prospective or actual tenders for contracts with prospective or actual suppliers or investors or customers of the Company and any Group Company) relating to the Company and any Group Company;
|
(ii)
|
any information relating to any portfolio in respect of which the Company and any Group Company provides investment services or advises in relation to investment strategy;
|
(iii)
|
any information about investment strategy employed by the Company and any Group Company, or specific investments made or planned by the Company and any Group Company (and their terms);
|
(iv)
|
any materials or information (including unpublished price sensitive information) not publicly known regarding any investment or potential investment by the Company and any Group Company;
|
(v)
|
any Intellectual Property created or developed by the Company’s and any Group Company’s employees or consultants;
|
(vi)
|
the business and operating plans, sales and marketing plans and strategies, incentive and/or commissions plans, pricing strategies, customer plans, marketing and product go-to-market plans or methods of the Company and any Group Company;
|
(vii)
|
details of any client, prospective client, investor, prospective investor, broker, prospective broker or customer or prospective customer lists and files and the names or details of service suppliers (including the terms of business) which relate to the business of the Company and any Group Company;
|
(viii)
|
the name or details of employees, members and officers of the Company and any Group Company, their performance records, medical records, incentive plan targets, appraisal information, remuneration and other benefits;
|
(b)
|
any other information specifically designated by the Company and any Group Company as confidential; and
|
(c)
|
any information in relation to which the Company and any Group Company owes a duty of confidentiality to any third party, including without limitation all client and other third party information under non-disclosure arrangements between Company and any Group Company and such third party.
|
1.2
|
The headings in this agreement are inserted for convenience only and shall not affect its construction.
|
1.3
|
A reference to a particular law is a reference to it as it is in force for the time being taking account of any amendment, extension, or re-enactment and includes any subordinate legislation for the time being in force made under it.
|
1.4
|
A reference to one gender includes a reference to other genders.
|
1.5
|
Unless the context otherwise requires, words in the singular include the plural and in the plural include the singular.
|
1.6
|
The schedules to this agreement form part of (and are incorporated into) this agreement.
|
2.
|
Arrangements on Termination
|
2.1
|
The Employee's employment with the Company shall terminate on the Termination Date.
|
2.2
|
The Employee was placed on garden leave on September 29, 2016 and is currently working his three months’ notice period. The Employee shall be paid his accrued basic salary, sales commissions and executive bonus payments until the Termination Date in accordance with the usual payroll procedures and as though the Employee was fully employed and not on garden leave up to and including the Termination Date together with all benefits to which he is entitled during his
|
2.3
|
The Employee will be paid in respect of any accrued annual leave which he has not used while on garden leave.
|
2.4
|
The Employee is required to sign and deliver to the Board letters of resignation from directorships, appointments and other authorizations in relation to the Company’s Subsidiaries and Holding Companies, representative offices and branches.
|
2.5
|
The Employee agrees and accepts, without limitation, that, save as set out in this Agreement, all payments due to him (of whatsoever kind) by the Company and/or all any Group Company have been paid to him, and, except as set out in this Agreement, that he neither has nor will have any entitlement to or eligibility for any further payments or benefits or to participate in any benefit schemes whatsoever, including in all and any share/stock purchase, share/stock option, pension, commission, bonus, incentive, LTIP and/or insurance schemes (of whatsoever kind) operated by the Company and/or any Group Company or in which any such company may participate after the Termination Date. In particular, the Employee accepts that other than the Accelerated Stock, any unvested stock options granted to him under the Calix, Inc. 2010 Equity Incentive Award Plan shall lapse with effect from the Termination Date. The Company shall procure that the Accelerated Stock vests and becomes exercisable as of the Termination Date, subject to applicable U.S. federal and state securities and regulatory rules and requirements.
|
2.6
|
The payments and benefits in this clause
2
shall be subject to the income tax and National Insurance contributions that the Company is obliged by law to pay or deduct.
|
2.7
|
The Company shall continue to provide the Employee with healthcare insurance (private medical insurance) with Global Benefits Group until June 29, 2017 for the benefit of the Employee and his dependents and paid for by the Company, consistent with the provision of such benefit to the Employee prior to the Termination Date, as stated in the CICSP.
|
2.8
|
The Company shall pay the Employee a £16,000 tax-free lump sum at the same time as the Termination Payment as an ex-gratia compensation payment for loss of employment and office.
|
3.
|
Termination Payment
|
3.1
|
Subject to and conditional on the Employee complying with the terms of this Agreement including clauses 3.2 and 3.3 of the Agreement below, the Company shall within 10 days of the Termination Date or compliance with the conditions
|
3.2
|
The parties agree that:
|
(a)
|
an amount equal to the sums paid to Employee while on garden leave (except in relation to annual leave) shall be deducted from the Termination Payment consistent with the CICSP. This amount to be deducted is £46,818; and
|
(b)
|
the Termination Payment shall be inclusive of any statutory entitlements, excluding the Statutory Redundancy Payment.
|
3.3
|
Payment of the Termination Payment is conditional on the Company receiving:
|
(a)
|
a copy of this Agreement signed by the Employee;
|
(b)
|
the completed Adviser’s certificate (as set out in Schedule 3); and
|
(c)
|
letters of resignation from directorships, appointments and other authorizations in relation to the Company’s Subsidiaries and Holding Companies, representative offices and branches signed by the Employee (as set out in Schedule 4).
|
3.4
|
The Termination Payment shall be subject to the income tax and National Insurance contributions that the Company is obliged by law to pay or deduct.
|
4.
|
Legal Fees
|
5.
|
Waiver of Claims
|
5.1
|
The Employee agrees that the terms of this Agreement are offered by the Company without any admission of liability on the part of the Company and are in full and final settlement of all and any claims or rights of action that the Employee has or may have against the Company and any Group Company or its or their officers or employees whether arising out of his employment with the Company or its termination or from events occurring after this Agreement has been entered into, whether under common law, contract, statute or otherwise, whether such claims are, or could be, known to the parties or in their contemplation at the date of this Agreement in any jurisdiction and including, but not limited to, the claims specified in Schedule 1 (each of which is hereby intimated and waived). In particular, the Employee waives all and any claims of unfair dismissal and breach of contract.
|
5.2
|
The waiver in clause 5.1 of this Agreement shall not apply to the following:
|
(a)
|
any claims by the Employee to enforce this Agreement;
|
(b)
|
claims in respect of personal injury of which the Employee is not aware and could not reasonably be expected to be aware at the date of this Agreement (other than claims under discrimination legislation; and
|
(c)
|
any claims in relation to accrued entitlements under any pension scheme.
|
5.3
|
The Employee warrants that:
|
(a)
|
before entering into this Agreement he received independent advice from the Adviser as to the terms and effect of this Agreement and, in particular, on its effect on his ability to pursue any complaint before an employment tribunal or other court;
|
(b)
|
the Adviser has confirmed to the Employee that they are a solicitor holding a current practising certificate and that there is in force a policy of insurance covering the risk of a claim by the Employee in respect of any loss arising in consequence of their advice;
|
(c)
|
the Adviser shall sign and deliver to the Company a letter in the form set out at Schedule 3 to this Agreement;
|
(d)
|
before receiving the advice the Employee disclosed to the Adviser all facts and circumstances that may give rise to a claim by the Employee against the Company and any Group Company or their officers or employees;
|
(e)
|
the only claims that the Employee has or may have against the Company and any Group Company or their officers or employees (whether at the time of entering into this Agreement or in the future) relating to his employment with the Company or its termination are specified in clause 5.1
of the Agreement
; and
|
(f)
|
the Employee is not aware of any facts or circumstances that may give rise to any claim against the Company and any Group Company or their officers or employees other than those claims specified in clause 5.1
of the Agreement
.
|
5.4
|
The Employee acknowledges that the conditions relating to compromise agreements and settlement agreements under section 147(3) of the Equality Act 2010, section 77(4A) of the Sex Discrimination Act 1975 (in relation to claims under that Act and the Equal Pay Act 1970), section 72(4A) of the Race Relations Act 1976, paragraph 2 of Schedule 3A to the Disability Discrimination Act 1995, paragraph 2(2) of Schedule 4 to the Employment Equality (Sexual Orientation) Regulations 2003, paragraph 2(2) of Schedule 4 to the Employment Equality (Religion or Belief) Regulations 2003, paragraph 2(2) of Schedule 5 to the Employment Equality (Age) Regulations 2006, section 288(2B) of the Trade
|
5.5
|
The Employee agrees that, except for the payments and benefits provided for in this Agreement, and subject to the waiver in clause 5.1 of the Agreement, he shall not be eligible for any further payment from the Company or any Group Company relating to his employment or its termination and without limitation to the generality of the foregoing, he expressly waives any right or claim that he has or may have to payment of bonuses, any benefit or award programme or grant of equity interest, or to any other benefit, payment or award he may have received had his employment not terminated.
|
6.
|
Employee Indemnities
|
6.1
|
If the Employee breaches any material provision of this Agreement or pursues a claim against the Company or any Group Company arising out of his employment or its termination other than those excluded under clause 5 of the Agreement, he agrees to indemnify the Company for any losses suffered as a result thereof, including all reasonable legal and professional fees incurred.
|
7.
|
Return of Company Property
|
7.1
|
The Employee shall, before the Termination Date, return to the Company:
|
(a)
|
all Confidential Information and Copies;
|
(b)
|
all property belonging to the Company in satisfactory condition; and
|
(c)
|
all documents and Copies (whether written, printed, electronic, recorded or otherwise and wherever located) made, compiled or acquired by him during his employment with the Company or relating to the business or affairs of the Company and any Group Company or their business contacts,
|
7.2
|
The Employee shall, before the Termination Date, delete irretrievably any information relating to the business of the Company and any Group Company that he has stored on any magnetic or optical disk or memory stick and all matter derived from such sources which is in his possession or under his control outside the premises of the Company.
|
8.
|
Employee Warranties and Acknowledgments
|
8.1
|
As at the date of this Agreement, the Employee warrants and represents to the Company that there are no circumstances of which the Employee is aware or of which the Employee ought reasonably to be aware which would amount to a repudiatory breach by the Employee of any express or implied term of the Employee's Contract of Employment which would entitle (or would have entitled) the Company to terminate the Employee's employment without notice or payment in lieu of notice and any payment to the Employee pursuant to clause
3 of the Agreement
is conditional on this being so.
|
8.2
|
The Employee agrees to make himself available to, and to cooperate with, the Company or its advisers in any internal investigation or administrative, regulatory, judicial or quasi-judicial proceedings. The Company shall reimburse any reasonable expenses incurred by the Employee as a consequence of complying with his obligations under this clause, provided that such expenses are approved in advance by the Company. The Employee shall up until the Termination Date, complete a full handover of his responsibilities and fully comply with the transition plan as reasonably set out by any person designated by the Company at its absolute discretion from time to time and notified to the Employee in writing.
|
9.
|
Continuing obligations and Additional Agreed Restrictions
|
9.1
|
The Employee acknowledges that the obligations specified under clauses 14 (confidentiality), 15 (inventions and other works) and 17 (restrictions) of the Employment Contract shall continue to apply to him after the Termination Date.
|
9.2
|
In consideration of additional payment of £15,606 (to be paid at the same time as the Termination Payment), and in recognition of the Company’s legitimate business interests, the Employee shall not at any time directly or indirectly, either alone or jointly with or on behalf of any third party and whether as principal, manager, employee, contractor, consultant, agent or otherwise howsoever at any time within the period of six (6) months from the Termination Date directly or indirectly engage or be concerned or interested in any of the Key Competitors and the Employee expressly acknowledges that in the twelve months prior to September 29, 2016 he was materially concerned in a business of the Company or any Group Company which competed with the Key Competitors. The payment in this clause 9.2 shall be subject to the income tax and National Insurance contributions that the Company is obliged by law to pay or deduct.
|
10.
|
Entire Agreement and Previous Contracts
|
10.1
|
Each party on behalf of itself and, in the case of the Company, as agent for any Group Companies acknowledges and agrees with the other party that:
|
(a)
|
this Agreement constitutes the entire agreement and understanding between the Employee and the Company and any Group Company and supersedes any previous arrangement, understanding or agreement (whether in writing or not) between them relating to the Employee’s employment by the Company;
|
(b)
|
in entering into this Agreement neither party has relied on any statement, representation, assurance or warranty of any person (whether party to this agreement or not and whether in writing or not) other than as expressly set out in this agreement; and
|
(c)
|
the only rights or remedies available to the parties arising out of any statement, representation, assurance or warranty shall be for breach of contract under the terms of this Agreement.
|
10.2
|
Nothing in this agreement shall, however, operate to limit or exclude any liability for fraud.
|
11.
|
Variation
|
12.
|
Governing Law and Jurisdiction
|
12.1
|
This Agreement shall be governed by and construed in accordance with the law of England and Wales.
|
12.2
|
Each party irrevocably agrees to submit to the exclusive jurisdiction of the courts of England and Wales over any claim or matter arising under or in connection with this Agreement.
|
13.
|
Subject to Contract and Without Prejudice
|
14.
|
Counterparts
|
Very truly yours,
Calix, Inc.
/s/ Carl Russo
Carl Russo
President and Chief Executive Officer
|
ACCEPTED AND AGREED:
Signature:
/s/ Greg Billings
Date: 12/8/2017
|
•
|
Where the disclosure is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or
|
•
|
Where the disclosure is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. See 18 U.S.C. § 1833(b)(1)).
|
Entity Name
|
|
Jurisdiction
|
Calix Networks Canada, Inc.
|
|
Canada
|
Calix Network Technology Development (Nanjing) Co. Ltd.
|
|
China
|
Calix Networks UK, Ltd
|
|
England, UK
|
Calix Brasil Servicos Ltda
|
|
Brazil
|
1.
|
I have reviewed this annual report on Form 10-K of Calix, Inc. for the year ended
December 31, 2016
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 28, 2017
|
|
|
|
/s/ Carl Russo
|
|
|
|
|
Carl Russo
|
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of Calix, Inc. for the year ended
December 31, 2016
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 28, 2017
|
|
|
|
/s/ William J. Atkins
|
|
|
|
|
William J. Atkins
|
|
|
|
|
EVP and Chief Financial Officer
(Principal Financial Officer) |
|
|
|
|
Date: February 28, 2017
|
|
|
|
/s/ Carl Russo
|
|
|
|
|
Carl Russo
|
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Date: February 28, 2017
|
|
|
|
/s/ William J. Atkins
|
|
|
|
|
William J. Atkins
|
|
|
|
|
EVP and Chief Financial Officer
(Principal Financial Officer) |
|
|
|
|