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Level 1 | – | Quoted prices in active markets for identical assets or liabilities. | ||
Level 2 | – | Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
Level 3 | – | Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable. |
As of September 30, 2017 | As of December 31, 2016 | ||||||||||||||||||||||
Fair Value Measured Using | Fair Value Measured Using | ||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Money market funds | $ | 32,544 | $ | — | $ | 32,544 | $ | 41,773 | $ | — | $ | 41,773 | |||||||||||
Certificates of deposit | — | 240 | 240 | — | 1,881 | 1,881 | |||||||||||||||||
Commercial paper | — | 14,969 | 14,969 | — | 39,310 | 39,310 | |||||||||||||||||
Corporate bonds | — | 125,544 | 125,544 | — | 88,324 | 88,324 | |||||||||||||||||
U.S. agency notes | — | 10,694 | 10,694 | — | 11,759 | 11,759 | |||||||||||||||||
U.S. treasuries | 39,437 | — | 39,437 | 52,092 | — | 52,092 | |||||||||||||||||
Foreign currency exchange forward contracts | — | — | — | — | 187 | 187 | |||||||||||||||||
Total assets | $ | 71,981 | $ | 151,447 | $ | 223,428 | $ | 93,865 | $ | 141,461 | $ | 235,326 | |||||||||||
Liabilities | |||||||||||||||||||||||
Foreign currency exchange forward contracts | $ | — | $ | (80 | ) | $ | (80 | ) | $ | — | $ | (71 | ) | $ | (71 | ) |
September 30, 2017 | |||||||||||||||
Adjusted Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Cash | $ | 80,508 | $ | — | $ | — | $ | 80,508 | |||||||
Money market funds | 32,544 | — | — | 32,544 | |||||||||||
Commercial paper | 3,000 | — | — | 3,000 | |||||||||||
U.S. treasuries | 5,990 | — | — | 5,990 | |||||||||||
Total cash and cash equivalents | $ | 122,042 | $ | — | $ | — | $ | 122,042 | |||||||
Certificates of deposit | 240 | — | — | 240 | |||||||||||
Commercial paper | 11,971 | — | (2 | ) | 11,969 | ||||||||||
Corporate bonds | 86,024 | 2 | (73 | ) | 85,953 | ||||||||||
U.S. agency notes | 7,700 | — | (7 | ) | 7,693 | ||||||||||
U.S. treasuries | 28,506 | — | (42 | ) | 28,464 | ||||||||||
Total short-term investments | $ | 134,441 | $ | 2 | $ | (124 | ) | $ | 134,319 | ||||||
Corporate bonds | 39,630 | 3 | (42 | ) | 39,591 | ||||||||||
U.S. agency notes | 3,006 | — | (5 | ) | 3,001 | ||||||||||
U.S. treasuries | 4,998 | — | (15 | ) | 4,983 | ||||||||||
Total long-term investments | 47,634 | 3 | (62 | ) | 47,575 | ||||||||||
Total cash, cash equivalents and investments | $ | 304,117 | $ | 5 | $ | (186 | ) | $ | 303,936 |
December 31, 2016 | |||||||||||||||
Adjusted Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Cash | $ | 109,978 | $ | — | $ | — | $ | 109,978 | |||||||
Money market funds | 41,773 | — | — | 41,773 | |||||||||||
Commercial paper | 8,892 | — | (1 | ) | 8,891 | ||||||||||
U.S. agency notes | 1,999 | — | — | 1,999 | |||||||||||
Total cash and cash equivalents | $ | 162,642 | $ | — | $ | (1 | ) | $ | 162,641 | ||||||
Certificates of deposit | 1,881 | — | — | 1,881 | |||||||||||
Commercial paper | 30,425 | — | (6 | ) | 30,419 | ||||||||||
Corporate bonds | 63,097 | 1 | (59 | ) | 63,039 | ||||||||||
U.S. agency notes | 7,285 | — | (8 | ) | 7,277 | ||||||||||
U.S. treasuries | 39,093 | 9 | (21 | ) | 39,081 | ||||||||||
Total short-term investments | $ | 141,781 | $ | 10 | $ | (94 | ) | $ | 141,697 | ||||||
Corporate bonds | 25,374 | — | (89 | ) | 25,285 | ||||||||||
U.S. agency notes | 2,499 | — | (16 | ) | 2,483 | ||||||||||
U.S. treasuries | 13,032 | 2 | (23 | ) | 13,011 | ||||||||||
Total long-term investments | $ | 40,905 | $ | 2 | $ | (128 | ) | $ | 40,779 | ||||||
Total cash, cash equivalents and investments | $ | 345,328 | $ | 12 | $ | (223 | ) | $ | 345,117 |
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As of September 30, 2017 | As of December 31, 2016 | ||||||||||||||||||
Gross Notional(1) | Other Accrued Liabilities | Gross Notional(1) | Prepaid Expense and Other Assets | Other Accrued Liabilities | |||||||||||||||
Foreign currency exchange forward contracts | |||||||||||||||||||
Related to euro denominated receivables | $ | 22,261 | $ | (79 | ) | $ | 23,887 | $ | 137 | $ | (71 | ) | |||||||
Related to British pound denominated receivables | $ | — | — | $ | 6,353 | 48 | — | ||||||||||||
Related to euro denominated restricted cash | $ | 248 | (1 | ) | $ | 242 | 2 | — | |||||||||||
$ | (80 | ) | $ | 187 | $ | (71 | ) |
(1) | Represents the face amounts of forward contracts that were outstanding as of the period noted. |
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Balance as of December 31, 2016 | $ | 176,760 | |
Foreign currency translation adjustments | 20,565 | ||
Accumulated impairment loss | — | ||
Balance as of September 30, 2017 | $ | 197,325 |
September 30, 2017 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted-Average Remaining Useful Life (In Years) | ||||||||||
Intangible assets with finite lives: | |||||||||||||
Customer relationships | $ | 51,497 | $ | (13,529 | ) | $ | 37,968 | 5.9 | |||||
Developed technology | 105,624 | (43,639 | ) | 61,985 | 3.0 | ||||||||
Total intangible assets | $ | 157,121 | $ | (57,168 | ) | $ | 99,953 | 4.1 |
December 31, 2016 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Useful Life (In Years) | ||||||||||
Intangible assets with finite lives: | |||||||||||||
Trade names | $ | 220 | $ | (220 | ) | $ | — | 0.0 | |||||
Customer relationships | 46,125 | (7,793 | ) | 38,332 | 6.6 | ||||||||
Developed technology | 94,320 | (24,715 | ) | 69,605 | 3.7 | ||||||||
Other intangible assets | 819 | (567 | ) | 252 | 4.6 | ||||||||
Total intangible assets with finite lives | $ | 141,484 | $ | (33,295 | ) | $ | 108,189 | 4.7 | |||||
In-process technology | 286 | — | 286 | ||||||||||
Total intangible assets | $ | 141,770 | $ | (33,295 | ) | $ | 108,475 |
Fiscal Years | |||||||||||||||||||||||||||
Total | Remainder of 2017 | 2018 | 2019 | 2020 | 2021 | 2022 and Thereafter | |||||||||||||||||||||
Total future amortization expense | $ | 99,953 | $ | 6,958 | $ | 27,832 | $ | 27,204 | $ | 19,852 | $ | 7,257 | $ | 10,850 |
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September 30, 2017 | December 31, 2016 | ||||||
Inventory: | |||||||
Raw materials | $ | 35,810 | $ | 33,158 | |||
Work in process | 84,334 | 74,533 | |||||
Finished goods | 122,704 | 125,264 | |||||
Total inventory | $ | 242,848 | $ | 232,955 | |||
Property, plant and equipment, net: | |||||||
Computer hardware | $ | 13,648 | $ | 12,775 | |||
Computer software(1) | 32,542 | 26,779 | |||||
Laboratory and manufacturing equipment | 244,784 | 222,311 | |||||
Land and building | 12,347 | — | |||||
Furniture and fixtures | 2,476 | 2,075 | |||||
Leasehold and building improvements | 42,846 | 42,267 | |||||
Construction in progress | 33,877 | 33,633 | |||||
Subtotal | $ | 382,520 | $ | 339,840 | |||
Less accumulated depreciation and amortization | (239,303 | ) | (215,040 | ) | |||
Total property, plant and equipment, net | $ | 143,217 | $ | 124,800 | |||
Accrued expenses: | |||||||
Loss contingency related to non-cancelable purchase commitments | $ | 4,012 | $ | 5,555 | |||
Professional and other consulting fees | 5,184 | 4,955 | |||||
Taxes payable | 2,523 | 2,384 | |||||
Royalties | 5,466 | 5,375 | |||||
Other accrued expenses | 12,895 | 13,311 | |||||
Total accrued expenses | $ | 30,080 | $ | 31,580 |
(1) | Included in computer software at September 30, 2017 and December 31, 2016 were $11.4 million and $9.1 million, respectively, related to enterprise resource planning (“ERP”) systems that the Company implemented. The unamortized ERP costs at September 30, 2017 and December 31, 2016 were $5.1 million and $4.0 million, respectively. |
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Unrealized Gain (Loss) on Other Available-for-Sale Securities | Foreign Currency Translation | Accumulated Tax Effect | Total | |||||||||||||
Balance at December 31, 2016 | $ | (209 | ) | $ | (27,236 | ) | $ | (879 | ) | $ | (28,324 | ) | ||||
Net current-period other comprehensive income (loss) | 27 | 37,257 | (11 | ) | 37,273 | |||||||||||
Balance at September 30, 2017 | $ | (182 | ) | $ | 10,021 | $ | (890 | ) | $ | 8,949 |
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• | during any fiscal quarter (and only during such fiscal quarter) if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day (the “Stock Price Conversion Trigger”); |
• | during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; |
• | upon the occurrence of specified corporate events described under the Indenture, such as a consolidation, merger or binding share exchange; or |
• | at any time on or after December 1, 2017 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. |
September 30, 2017 | December 31, 2016 | ||||||
Principal | $ | 150,000 | $ | 150,000 | |||
Unamortized discount (1) | (7,380 | ) | (15,114 | ) | |||
Unamortized issuance cost (1) | (635 | ) | (1,300 | ) | |||
Net carrying amount | $ | 141,985 | $ | 133,586 |
(1) | Unamortized debt conversion discount and issuance costs will be amortized over the remaining life of the Notes, which is approximately 8 months. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
Contractual interest expense | $ | 656 | $ | 656 | $ | 1,969 | $ | 1,969 | |||||||
Amortization of debt issuance costs | 228 | 206 | 665 | 602 | |||||||||||
Amortization of debt discount | 2,643 | 2,391 | 7,734 | 6,996 | |||||||||||
Total interest expense | $ | 3,527 | $ | 3,253 | $ | 10,368 | $ | 9,567 |
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Number of Stock Options | Weighted-Average Exercise Price Per Share | Aggregate Intrinsic Value | ||||||||
Outstanding at December 31, 2016 | 1,655 | $ | 8.30 | $ | 965 | |||||
Stock options granted | — | $ | — | |||||||
Stock options exercised | (196 | ) | $ | 7.78 | $ | 373 | ||||
Stock options canceled | (53 | ) | $ | 13.02 | ||||||
Outstanding at September 30, 2017 | 1,406 | $ | 8.19 | $ | 1,223 | |||||
Exercisable at September 30, 2017 | 1,404 | $ | 8.19 | $ | 1,223 |
Number of Restricted Stock Units | Weighted- Average Grant Date Fair Value Per Share | Aggregate Intrinsic Value | ||||||||
Outstanding at December 31, 2016 | 5,293 | $ | 14.10 | $ | 44,939 | |||||
RSUs granted | 3,289 | $ | 10.48 | |||||||
RSUs released | (2,023 | ) | $ | 13.55 | $ | 19,398 | ||||
RSUs canceled | (200 | ) | $ | 13.72 | ||||||
Outstanding at September 30, 2017 | 6,359 | $ | 12.41 | $ | 56,405 |
Number of Performance Stock Units | Weighted- Average Grant Date Fair Value Per Share | Aggregate Intrinsic Value | ||||||||
Outstanding at December 31, 2016 | 904 | $ | 14.13 | $ | 7,672 | |||||
PSUs granted | 916 | $ | 16.36 | |||||||
PSUs released | (26 | ) | $ | 11.83 | $ | 225 | ||||
PSUs canceled | (360 | ) | $ | 11.58 | ||||||
Outstanding at September 30, 2017 | 1,434 | $ | 16.24 | $ | 12,719 | |||||
Expected to vest at September 30, 2017 | 968 | $ | 8,582 |
Unrecognized Compensation Expense, Net | Weighted- Average Period (in years) | ||||
Stock options | $ | 7 | 0.3 | ||
RSUs | $ | 61,090 | 2.7 | ||
PSUs | $ | 12,879 | 1.6 |
Three Months Ended | Nine Months Ended | ||||||
Employee Stock Purchase Plan | September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||
Volatility | 47% | 67% | 47% - 51% | 56% - 67% | |||
Risk-free interest rate | 1.16% | 0.51% | 0.81% - 1.16% | 0.51% - 0.52% | |||
Expected life | 0.5 years | 0.5 years | 0.5 years | 0.5 years | |||
Estimated fair value | $2.44 | $3.16 | $2.44 - $3.46 | $3.16 - $4.53 | |||
Total stock-based compensation expense | $1,502 | $1,565 | $4,575 | $4,054 |
2017 | 2016 | 2015 | ||||
Index | SPGIIPTR | SPGIIPTR | SPGIIPTR | |||
Index volatility | 33% - 34% | 18% | 18% - 19% | |||
Infinera volatility | 55% - 56% | 55% | 48% | |||
Risk-free interest rate | 1.41% - 1.63% | 0.95% - 1.07% | 0.97% - 1.10% | |||
Correlation with index/index component | 0.10 - 0.49 | 0.58 - 0.59 | 0.52 | |||
Estimated fair value | $15.23 - $17.35 | $10.31 - $16.62 | $18.08 - $19.29 |
Grant Year | |||||||||||||||
Total Number of Performance Stock Units | 2014 | 2015 | 2016 | 2017 | |||||||||||
Outstanding at December 31, 2016 | 904 | 123 | 148 | 633 | — | ||||||||||
PSUs granted | 916 | — | — | — | 916 | ||||||||||
PSUs released | (26 | ) | (21 | ) | (5 | ) | — | — | |||||||
PSUs canceled | (360 | ) | (102 | ) | (60 | ) | (194 | ) | (4 | ) | |||||
Outstanding at September 30, 2017 | 1,434 | — | 83 | 439 | 912 |
September 30, 2017 | December 31, 2016 | ||||||
Stock-based compensation effects in inventory | $ | 5,373 | $ | 4,911 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
Stock-based compensation effects included in net income (loss) before income taxes | |||||||||||||||
Cost of revenue | $ | 779 | $ | 756 | $ | 2,337 | $ | 2,175 | |||||||
Research and development | 4,040 | 3,496 | 12,004 | 9,721 | |||||||||||
Sales and marketing | 3,025 | 2,826 | 9,024 | 8,006 | |||||||||||
General and administration | 3,039 | 2,465 | 8,431 | 6,850 | |||||||||||
$ | 10,883 | $ | 9,543 | $ | 31,796 | $ | 26,752 | ||||||||
Cost of revenue – amortization from balance sheet (1) | 1,284 | 668 | 3,628 | 2,439 | |||||||||||
Total stock-based compensation expense | $ | 12,167 | $ | 10,211 | $ | 35,424 | $ | 29,191 |
(1) | Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period. |
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Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
United States | $ | 113,617 | $ | 104,045 | $ | 325,593 | $ | 445,270 | |||||||
Other Americas | 5,636 | 17,390 | 14,642 | 31,916 | |||||||||||
Europe, Middle East and Africa | 58,391 | 51,940 | 163,714 | 176,386 | |||||||||||
Asia Pacific | 14,936 | 12,077 | 40,974 | 35,520 | |||||||||||
Total revenue | $ | 192,580 | $ | 185,452 | $ | 544,923 | $ | 689,092 |
September 30, 2017 | December 31, 2016 | ||||||
United States | $ | 135,440 | $ | 117,715 | |||
Other Americas | 620 | 218 | |||||
Europe, Middle East and Africa | 3,875 | 3,822 | |||||
Asia Pacific | 3,282 | 3,045 | |||||
Total property, plant and equipment, net | $ | 143,217 | $ | 124,800 |
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Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
Beginning balance | $ | 32,400 | $ | 40,989 | $ | 40,342 | $ | 38,844 | |||||||
Charges to operations | 4,550 | 5,196 | 14,231 | 19,258 | |||||||||||
Utilization | (3,484 | ) | (5,002 | ) | (10,773 | ) | (13,691 | ) | |||||||
Change in estimate(1) | (1,304 | ) | (2,562 | ) | (11,638 | ) | (5,790 | ) | |||||||
Balance at the end of the period | $ | 32,162 | $ | 38,621 | $ | 32,162 | $ | 38,621 |
(1) | The Company records product warranty liabilities based on the latest quality and cost information available as of the date the revenue is recorded. The changes in estimate shown here are due to changes in overall actual failure rates, the mix of new versus used units related to replacement of failed units, and changes in the estimated cost of repair. As the Company's products mature over time, failure rates and repair costs generally decline leading to favorable changes in warranty reserves. In addition, during the first quarter of 2017, due to product quality improvements, the Company revised certain estimates used in calculating its product warranties that resulted in a one-time reduction to the warranty accrual of $2.2 million. |
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As of September 30, 2017 | As of December 31, 2016 | ||||||||||||||||||||||
Fair Value Measured Using | Fair Value Measured Using | ||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Money market funds | $ | 32,544 | $ | — | $ | 32,544 | $ | 41,773 | $ | — | $ | 41,773 | |||||||||||
Certificates of deposit | — | 240 | 240 | — | 1,881 | 1,881 | |||||||||||||||||
Commercial paper | — | 14,969 | 14,969 | — | 39,310 | 39,310 | |||||||||||||||||
Corporate bonds | — | 125,544 | 125,544 | — | 88,324 | 88,324 | |||||||||||||||||
U.S. agency notes | — | 10,694 | 10,694 | — | 11,759 | 11,759 | |||||||||||||||||
U.S. treasuries | 39,437 | — | 39,437 | 52,092 | — | 52,092 | |||||||||||||||||
Foreign currency exchange forward contracts | — | — | — | — | 187 | 187 | |||||||||||||||||
Total assets | $ | 71,981 | $ | 151,447 | $ | 223,428 | $ | 93,865 | $ | 141,461 | $ | 235,326 | |||||||||||
Liabilities | |||||||||||||||||||||||
Foreign currency exchange forward contracts | $ | — | $ | (80 | ) | $ | (80 | ) | $ | — | $ | (71 | ) | $ | (71 | ) |
September 30, 2017 | |||||||||||||||
Adjusted Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Cash | $ | 80,508 | $ | — | $ | — | $ | 80,508 | |||||||
Money market funds | 32,544 | — | — | 32,544 | |||||||||||
Commercial paper | 3,000 | — | — | 3,000 | |||||||||||
U.S. treasuries | 5,990 | — | — | 5,990 | |||||||||||
Total cash and cash equivalents | $ | 122,042 | $ | — | $ | — | $ | 122,042 | |||||||
Certificates of deposit | 240 | — | — | 240 | |||||||||||
Commercial paper | 11,971 | — | (2 | ) | 11,969 | ||||||||||
Corporate bonds | 86,024 | 2 | (73 | ) | 85,953 | ||||||||||
U.S. agency notes | 7,700 | — | (7 | ) | 7,693 | ||||||||||
U.S. treasuries | 28,506 | — | (42 | ) | 28,464 | ||||||||||
Total short-term investments | $ | 134,441 | $ | 2 | $ | (124 | ) | $ | 134,319 | ||||||
Corporate bonds | 39,630 | 3 | (42 | ) | 39,591 | ||||||||||
U.S. agency notes | 3,006 | — | (5 | ) | 3,001 | ||||||||||
U.S. treasuries | 4,998 | — | (15 | ) | 4,983 | ||||||||||
Total long-term investments | 47,634 | 3 | (62 | ) | 47,575 | ||||||||||
Total cash, cash equivalents and investments | $ | 304,117 | $ | 5 | $ | (186 | ) | $ | 303,936 |
December 31, 2016 | |||||||||||||||
Adjusted Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Cash | $ | 109,978 | $ | — | $ | — | $ | 109,978 | |||||||
Money market funds | 41,773 | — | — | 41,773 | |||||||||||
Commercial paper | 8,892 | — | (1 | ) | 8,891 | ||||||||||
U.S. agency notes | 1,999 | — | — | 1,999 | |||||||||||
Total cash and cash equivalents | $ | 162,642 | $ | — | $ | (1 | ) | $ | 162,641 | ||||||
Certificates of deposit | 1,881 | — | — | 1,881 | |||||||||||
Commercial paper | 30,425 | — | (6 | ) | 30,419 | ||||||||||
Corporate bonds | 63,097 | 1 | (59 | ) | 63,039 | ||||||||||
U.S. agency notes | 7,285 | — | (8 | ) | 7,277 | ||||||||||
U.S. treasuries | 39,093 | 9 | (21 | ) | 39,081 | ||||||||||
Total short-term investments | $ | 141,781 | $ | 10 | $ | (94 | ) | $ | 141,697 | ||||||
Corporate bonds | 25,374 | — | (89 | ) | 25,285 | ||||||||||
U.S. agency notes | 2,499 | — | (16 | ) | 2,483 | ||||||||||
U.S. treasuries | 13,032 | 2 | (23 | ) | 13,011 | ||||||||||
Total long-term investments | $ | 40,905 | $ | 2 | $ | (128 | ) | $ | 40,779 | ||||||
Total cash, cash equivalents and investments | $ | 345,328 | $ | 12 | $ | (223 | ) | $ | 345,117 |
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As of September 30, 2017 | As of December 31, 2016 | ||||||||||||||||||
Gross Notional(1) | Other Accrued Liabilities | Gross Notional(1) | Prepaid Expense and Other Assets | Other Accrued Liabilities | |||||||||||||||
Foreign currency exchange forward contracts | |||||||||||||||||||
Related to euro denominated receivables | $ | 22,261 | $ | (79 | ) | $ | 23,887 | $ | 137 | $ | (71 | ) | |||||||
Related to British pound denominated receivables | $ | — | — | $ | 6,353 | 48 | — | ||||||||||||
Related to euro denominated restricted cash | $ | 248 | (1 | ) | $ | 242 | 2 | — | |||||||||||
$ | (80 | ) | $ | 187 | $ | (71 | ) |
(1) | Represents the face amounts of forward contracts that were outstanding as of the period noted. |
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Balance as of December 31, 2016 | $ | 176,760 | |
Foreign currency translation adjustments | 20,565 | ||
Accumulated impairment loss | — | ||
Balance as of September 30, 2017 | $ | 197,325 |
December 31, 2016 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Useful Life (In Years) | ||||||||||
Intangible assets with finite lives: | |||||||||||||
Trade names | $ | 220 | $ | (220 | ) | $ | — | 0.0 | |||||
Customer relationships | 46,125 | (7,793 | ) | 38,332 | 6.6 | ||||||||
Developed technology | 94,320 | (24,715 | ) | 69,605 | 3.7 | ||||||||
Other intangible assets | 819 | (567 | ) | 252 | 4.6 | ||||||||
Total intangible assets with finite lives | $ | 141,484 | $ | (33,295 | ) | $ | 108,189 | 4.7 | |||||
In-process technology | 286 | — | 286 | ||||||||||
Total intangible assets | $ | 141,770 | $ | (33,295 | ) | $ | 108,475 |
September 30, 2017 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted-Average Remaining Useful Life (In Years) | ||||||||||
Intangible assets with finite lives: | |||||||||||||
Customer relationships | $ | 51,497 | $ | (13,529 | ) | $ | 37,968 | 5.9 | |||||
Developed technology | 105,624 | (43,639 | ) | 61,985 | 3.0 | ||||||||
Total intangible assets | $ | 157,121 | $ | (57,168 | ) | $ | 99,953 | 4.1 |
December 31, 2016 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Useful Life (In Years) | ||||||||||
Intangible assets with finite lives: | |||||||||||||
Trade names | $ | 220 | $ | (220 | ) | $ | — | 0.0 | |||||
Customer relationships | 46,125 | (7,793 | ) | 38,332 | 6.6 | ||||||||
Developed technology | 94,320 | (24,715 | ) | 69,605 | 3.7 | ||||||||
Other intangible assets | 819 | (567 | ) | 252 | 4.6 | ||||||||
Total intangible assets with finite lives | $ | 141,484 | $ | (33,295 | ) | $ | 108,189 | 4.7 | |||||
In-process technology | 286 | — | 286 | ||||||||||
Total intangible assets | $ | 141,770 | $ | (33,295 | ) | $ | 108,475 |
Fiscal Years | |||||||||||||||||||||||||||
Total | Remainder of 2017 | 2018 | 2019 | 2020 | 2021 | 2022 and Thereafter | |||||||||||||||||||||
Total future amortization expense | $ | 99,953 | $ | 6,958 | $ | 27,832 | $ | 27,204 | $ | 19,852 | $ | 7,257 | $ | 10,850 |
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September 30, 2017 | December 31, 2016 | ||||||
Inventory: | |||||||
Raw materials | $ | 35,810 | $ | 33,158 | |||
Work in process | 84,334 | 74,533 | |||||
Finished goods | 122,704 | 125,264 | |||||
Total inventory | $ | 242,848 | $ | 232,955 | |||
Property, plant and equipment, net: | |||||||
Computer hardware | $ | 13,648 | $ | 12,775 | |||
Computer software(1) | 32,542 | 26,779 | |||||
Laboratory and manufacturing equipment | 244,784 | 222,311 | |||||
Land and building | 12,347 | — | |||||
Furniture and fixtures | 2,476 | 2,075 | |||||
Leasehold and building improvements | 42,846 | 42,267 | |||||
Construction in progress | 33,877 | 33,633 | |||||
Subtotal | $ | 382,520 | $ | 339,840 | |||
Less accumulated depreciation and amortization | (239,303 | ) | (215,040 | ) | |||
Total property, plant and equipment, net | $ | 143,217 | $ | 124,800 | |||
Accrued expenses: | |||||||
Loss contingency related to non-cancelable purchase commitments | $ | 4,012 | $ | 5,555 | |||
Professional and other consulting fees | 5,184 | 4,955 | |||||
Taxes payable | 2,523 | 2,384 | |||||
Royalties | 5,466 | 5,375 | |||||
Other accrued expenses | 12,895 | 13,311 | |||||
Total accrued expenses | $ | 30,080 | $ | 31,580 |
(1) | Included in computer software at September 30, 2017 and December 31, 2016 were $11.4 million and $9.1 million, respectively, related to enterprise resource planning (“ERP”) systems that the Company implemented. The unamortized ERP costs at September 30, 2017 and December 31, 2016 were $5.1 million and $4.0 million, respectively. |
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Unrealized Gain (Loss) on Other Available-for-Sale Securities | Foreign Currency Translation | Accumulated Tax Effect | Total | |||||||||||||
Balance at December 31, 2016 | $ | (209 | ) | $ | (27,236 | ) | $ | (879 | ) | $ | (28,324 | ) | ||||
Net current-period other comprehensive income (loss) | 27 | 37,257 | (11 | ) | 37,273 | |||||||||||
Balance at September 30, 2017 | $ | (182 | ) | $ | 10,021 | $ | (890 | ) | $ | 8,949 |
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September 30, 2017 | December 31, 2016 | ||||||
Principal | $ | 150,000 | $ | 150,000 | |||
Unamortized discount (1) | (7,380 | ) | (15,114 | ) | |||
Unamortized issuance cost (1) | (635 | ) | (1,300 | ) | |||
Net carrying amount | $ | 141,985 | $ | 133,586 |
(1) | Unamortized debt conversion discount and issuance costs will be amortized over the remaining life of the Notes, which is approximately 8 months. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
Contractual interest expense | $ | 656 | $ | 656 | $ | 1,969 | $ | 1,969 | |||||||
Amortization of debt issuance costs | 228 | 206 | 665 | 602 | |||||||||||
Amortization of debt discount | 2,643 | 2,391 | 7,734 | 6,996 | |||||||||||
Total interest expense | $ | 3,527 | $ | 3,253 | $ | 10,368 | $ | 9,567 |
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Number of Stock Options | Weighted-Average Exercise Price Per Share | Aggregate Intrinsic Value | ||||||||
Outstanding at December 31, 2016 | 1,655 | $ | 8.30 | $ | 965 | |||||
Stock options granted | — | $ | — | |||||||
Stock options exercised | (196 | ) | $ | 7.78 | $ | 373 | ||||
Stock options canceled | (53 | ) | $ | 13.02 | ||||||
Outstanding at September 30, 2017 | 1,406 | $ | 8.19 | $ | 1,223 | |||||
Exercisable at September 30, 2017 | 1,404 | $ | 8.19 | $ | 1,223 |
Number of Restricted Stock Units | Weighted- Average Grant Date Fair Value Per Share | Aggregate Intrinsic Value | ||||||||
Outstanding at December 31, 2016 | 5,293 | $ | 14.10 | $ | 44,939 | |||||
RSUs granted | 3,289 | $ | 10.48 | |||||||
RSUs released | (2,023 | ) | $ | 13.55 | $ | 19,398 | ||||
RSUs canceled | (200 | ) | $ | 13.72 | ||||||
Outstanding at September 30, 2017 | 6,359 | $ | 12.41 | $ | 56,405 |
Number of Performance Stock Units | Weighted- Average Grant Date Fair Value Per Share | Aggregate Intrinsic Value | ||||||||
Outstanding at December 31, 2016 | 904 | $ | 14.13 | $ | 7,672 | |||||
PSUs granted | 916 | $ | 16.36 | |||||||
PSUs released | (26 | ) | $ | 11.83 | $ | 225 | ||||
PSUs canceled | (360 | ) | $ | 11.58 | ||||||
Outstanding at September 30, 2017 | 1,434 | $ | 16.24 | $ | 12,719 | |||||
Expected to vest at September 30, 2017 | 968 | $ | 8,582 |
Unrecognized Compensation Expense, Net | Weighted- Average Period (in years) | ||||
Stock options | $ | 7 | 0.3 | ||
RSUs | $ | 61,090 | 2.7 | ||
PSUs | $ | 12,879 | 1.6 |
Three Months Ended | Nine Months Ended | ||||||
Employee Stock Purchase Plan | September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||
Volatility | 47% | 67% | 47% - 51% | 56% - 67% | |||
Risk-free interest rate | 1.16% | 0.51% | 0.81% - 1.16% | 0.51% - 0.52% | |||
Expected life | 0.5 years | 0.5 years | 0.5 years | 0.5 years | |||
Estimated fair value | $2.44 | $3.16 | $2.44 - $3.46 | $3.16 - $4.53 | |||
Total stock-based compensation expense | $1,502 | $1,565 | $4,575 | $4,054 |
2017 | 2016 | 2015 | ||||
Index | SPGIIPTR | SPGIIPTR | SPGIIPTR | |||
Index volatility | 33% - 34% | 18% | 18% - 19% | |||
Infinera volatility | 55% - 56% | 55% | 48% | |||
Risk-free interest rate | 1.41% - 1.63% | 0.95% - 1.07% | 0.97% - 1.10% | |||
Correlation with index/index component | 0.10 - 0.49 | 0.58 - 0.59 | 0.52 | |||
Estimated fair value | $15.23 - $17.35 | $10.31 - $16.62 | $18.08 - $19.29 |
Grant Year | |||||||||||||||
Total Number of Performance Stock Units | 2014 | 2015 | 2016 | 2017 | |||||||||||
Outstanding at December 31, 2016 | 904 | 123 | 148 | 633 | — | ||||||||||
PSUs granted | 916 | — | — | — | 916 | ||||||||||
PSUs released | (26 | ) | (21 | ) | (5 | ) | — | — | |||||||
PSUs canceled | (360 | ) | (102 | ) | (60 | ) | (194 | ) | (4 | ) | |||||
Outstanding at September 30, 2017 | 1,434 | — | 83 | 439 | 912 |
September 30, 2017 | December 31, 2016 | ||||||
Stock-based compensation effects in inventory | $ | 5,373 | $ | 4,911 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
Stock-based compensation effects included in net income (loss) before income taxes | |||||||||||||||
Cost of revenue | $ | 779 | $ | 756 | $ | 2,337 | $ | 2,175 | |||||||
Research and development | 4,040 | 3,496 | 12,004 | 9,721 | |||||||||||
Sales and marketing | 3,025 | 2,826 | 9,024 | 8,006 | |||||||||||
General and administration | 3,039 | 2,465 | 8,431 | 6,850 | |||||||||||
$ | 10,883 | $ | 9,543 | $ | 31,796 | $ | 26,752 | ||||||||
Cost of revenue – amortization from balance sheet (1) | 1,284 | 668 | 3,628 | 2,439 | |||||||||||
Total stock-based compensation expense | $ | 12,167 | $ | 10,211 | $ | 35,424 | $ | 29,191 |
(1) | Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period. |
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Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
United States | $ | 113,617 | $ | 104,045 | $ | 325,593 | $ | 445,270 | |||||||
Other Americas | 5,636 | 17,390 | 14,642 | 31,916 | |||||||||||
Europe, Middle East and Africa | 58,391 | 51,940 | 163,714 | 176,386 | |||||||||||
Asia Pacific | 14,936 | 12,077 | 40,974 | 35,520 | |||||||||||
Total revenue | $ | 192,580 | $ | 185,452 | $ | 544,923 | $ | 689,092 |
September 30, 2017 | December 31, 2016 | ||||||
United States | $ | 135,440 | $ | 117,715 | |||
Other Americas | 620 | 218 | |||||
Europe, Middle East and Africa | 3,875 | 3,822 | |||||
Asia Pacific | 3,282 | 3,045 | |||||
Total property, plant and equipment, net | $ | 143,217 | $ | 124,800 |
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Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | ||||||||||||
Beginning balance | $ | 32,400 | $ | 40,989 | $ | 40,342 | $ | 38,844 | |||||||
Charges to operations | 4,550 | 5,196 | 14,231 | 19,258 | |||||||||||
Utilization | (3,484 | ) | (5,002 | ) | (10,773 | ) | (13,691 | ) | |||||||
Change in estimate(1) | (1,304 | ) | (2,562 | ) | (11,638 | ) | (5,790 | ) | |||||||
Balance at the end of the period | $ | 32,162 | $ | 38,621 | $ | 32,162 | $ | 38,621 |
(1) | The Company records product warranty liabilities based on the latest quality and cost information available as of the date the revenue is recorded. The changes in estimate shown here are due to changes in overall actual failure rates, the mix of new versus used units related to replacement of failed units, and changes in the estimated cost of repair. As the Company's products mature over time, failure rates and repair costs generally decline leading to favorable changes in warranty reserves. In addition, during the first quarter of 2017, due to product quality improvements, the Company revised certain estimates used in calculating its product warranties that resulted in a one-time reduction to the warranty accrual of $2.2 million. |
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