INFINERA CORP, 10-Q filed on 8/2/2016
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 25, 2016
Jul. 26, 2016
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 25, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
INFN 
 
Entity Registrant Name
INFINERA CORP 
 
Entity Central Index Key
0001138639 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding (in shares)
 
143,188,664 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Current assets:
 
 
Cash and cash equivalents
$ 138,380 
$ 149,101 
Short-term investments
119,370 
125,561 
Short-term restricted cash
24,942 
0 
Accounts receivable, net of allowance for doubtful accounts of $630 in 2016 and 2015
193,414 
186,243 
Inventory
202,280 
174,699 
Prepaid expenses and other current assets
29,210 
29,511 
Total current assets
707,596 
665,115 
Property, plant and equipment, net
120,095 
110,861 
Intangible assets
142,108 
156,319 
Goodwill
189,982 
191,560 
Long-term investments
87,944 
76,507 
Cost-method investment
14,500 
14,500 
Long-term restricted cash
5,355 
5,310 
Other non-current assets
4,194 
4,009 
Total assets
1,271,774 
1,224,181 
Current liabilities:
 
 
Accounts payable
83,875 
92,554 
Accrued expenses
36,466 
33,736 
Accrued compensation and related benefits
41,461 
49,887 
Accrued warranty
17,737 
17,889 
Deferred revenue
47,277 
42,977 
Total current liabilities
226,816 
237,043 
Long-term debt, net
128,328 
123,327 
Accrued warranty, non-current
23,252 
20,955 
Deferred revenue, non-current
19,671 
13,881 
Deferred tax liability
33,264 
35,731 
Other long-term liabilities
18,182 
16,183 
Commitments and contingencies (Note 16)
   
   
Stockholders’ equity:
 
 
Preferred stock, $0.001 par value Authorized shares – 25,000 and no shares issued and outstanding
0 
0 
Issued and outstanding shares – 143,131 as of June 25, 2016 and 140,197 as of December 26, 2015
143 
140 
Additional paid-in capital
1,325,238 
1,300,301 
Accumulated other comprehensive income (loss)
(1,737)
1,123 
Accumulated deficit
(515,915)
(539,413)
Total Infinera Corporation stockholders’ equity
807,729 
762,151 
Noncontrolling interest
14,532 
14,910 
Total stockholders' equity
822,261 
777,061 
Total liabilities and stockholders’ equity
$ 1,271,774 
$ 1,224,181 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Statement of Financial Position [Abstract]
 
 
Net of allowance for doubtful accounts
$ 630 
$ 630 
Preferred stock, par value (in usd per share)
$ 0.001 
$ 0.001 
Preferred stock, shares authorized (in shares)
25,000,000 
25,000,000 
Preferred stock, shares issued (in shares)
0 
0 
Preferred stock, shares outstanding (in shares)
0 
0 
Common stock, par value (in usd per share)
$ 0.001 
$ 0.001 
Common stock, authorized shares (in shares)
500,000,000 
500,000,000 
Common stock, shares issued (in shares)
143,131,000 
140,197,000 
Common stock, shares outstanding (in shares)
143,131,000 
140,197,000 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Revenue:
 
 
 
 
Product
$ 227,532 
$ 178,982 
$ 443,614 
$ 339,825 
Services
31,290 
28,364 
60,026 
54,383 
Total revenue
258,822 
207,346 
503,640 
394,208 
Cost of revenue:
 
 
 
 
Cost of product
122,438 
99,491 
240,500 
188,997 
Cost of services
12,638 
11,059 
23,056 
20,303 
Total cost of revenue
135,076 
110,550 
263,556 
209,300 
Gross profit
123,746 
96,796 
240,084 
184,908 
Operating expenses:
 
 
 
 
Research and development
59,541 
43,421 
113,686 
82,678 
Sales and marketing
30,465 
21,535 
60,474 
42,577 
General and administrative
17,658 
15,310 
34,971 
27,966 
Total operating expenses
107,664 
80,266 
209,131 
153,221 
Income from operations
16,082 
16,530 
30,953 
31,687 
Other income (expense), net:
 
 
 
 
Interest income
595 
551 
1,117 
965 
Interest expense
(3,176)
(2,947)
(6,331)
(5,837)
Other gain (loss), net
(714)
4,780 
(928)
5,081 
Total other income (expense), net
(3,295)
2,384 
(6,142)
209 
Income before income taxes
12,787 
18,914 
24,811 
31,896 
Provision for income taxes
1,475 
1,008 
1,691 
1,624 
Net income
11,312 
17,906 
23,120 
30,272 
Less: Loss attributable to noncontrolling interest
(171)
0 
(378)
0 
Net income attributable to Infinera Corporation
$ 11,483 
$ 17,906 
$ 23,498 
$ 30,272 
Net income per common share attributable to Infinera Corporation:
 
 
 
 
Basic (in usd per share)
$ 0.08 
$ 0.14 
$ 0.17 
$ 0.23 
Diluted (in usd per share)
$ 0.08 
$ 0.13 
$ 0.16 
$ 0.22 
Weighted average shares used in computing net income per common share:
 
 
 
 
Basic (in shares)
142,396 
130,349 
141,600 
129,094 
Diluted (in shares)
145,891 
140,642 
146,385 
138,973 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 11,312 
$ 17,906 
$ 23,120 
$ 30,272 
Other comprehensive income:
 
 
 
 
Unrealized gain on available-for-sale investments
258 
(78)
639 
189 
Foreign currency translation adjustment
(6,769)
129 
(3,499)
(30)
Net change in accumulated other comprehensive income (loss)
(6,511)
51 
(2,860)
159 
Comprehensive loss attributable to noncontrolling interest
(171)
0 
(378)
0 
Comprehensive income attributable to Infinera Corporation
$ 4,972 
$ 17,957 
$ 20,638 
$ 30,431 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Statement of Cash Flows [Abstract]
 
 
Net income
$ 23,120 
$ 30,272 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
29,891 
12,850 
Amortization of debt discount and issuance costs
5,001 
4,524 
Amortization of premium on investments
733 
1,792 
Stock-based compensation expense
18,980 
15,417 
Other loss (gain)
84 
(4,780)
Changes in assets and liabilities:
 
 
Accounts receivable
(7,404)
45,140 
Inventory
(31,304)
(12,774)
Prepaid expenses and other assets
(328)
(1,080)
Accounts payable
(7,339)
(23,597)
Accrued liabilities and other expenses
(5,528)
1,491 
Deferred revenue
10,129 
4,216 
Accrued warranty
2,165 
1,399 
Net cash provided by operating activities
38,200 
74,870 
Cash Flows from Investing Activities:
 
 
Purchase of available-for-sale investments
(97,051)
(112,940)
Proceeds from sales of available-for-sale investments
0 
9,998 
Proceeds from maturities of investments
91,714 
143,483 
Purchase of property and equipment
(23,278)
(16,098)
Change in restricted cash
(60)
290 
Net cash provided by (used in) investing activities
(28,675)
24,733 
Cash Flows from Financing Activities:
 
 
Security pledge to acquire noncontrolling interest
(24,942)
0 
Proceeds from issuance of common stock
8,586 
16,488 
Minimum tax withholding paid on behalf of employees for net share settlement
(3,082)
(4,561)
Net cash provided by financing activities
(19,438)
11,927 
Effect of exchange rate changes on cash
(808)
(7)
Net change in cash and cash equivalents
(10,721)
111,523 
Cash and cash equivalents at beginning of period
149,101 
86,495 
Cash and cash equivalents at end of period
138,380 
198,018 
Supplemental disclosures of cash flow information:
 
 
Cash paid for income taxes, net of refunds
3,237 
1,481 
Cash paid for interest
1,410 
1,313 
Supplemental schedule of non-cash investing activities:
 
 
Transfer of inventory to fixed assets
$ 4,009 
$ 2,205 
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies
Basis of Presentation
Infinera Corporation (the "Company") prepared its interim condensed consolidated financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2015.
The Company has made certain estimates, assumptions and judgments that can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Significant estimates, assumptions and judgments made by management include revenue recognition, stock-based compensation, inventory valuation, accrued warranty, business combinations, fair value measurement of investments and accounting for income taxes. Other estimates, assumptions and judgments made by management include allowances for sales returns, allowances for doubtful accounts, useful life of intangible assets, property, plant and equipment, and fair value measurement of the liability component of the Company's $150.0 million of 1.75% convertible senior notes due June 1, 2018 (the "Notes"). Management believes that the estimates and judgments upon which they rely are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent there are material differences between these estimates and actual results, the Company’s condensed consolidated financial statements will be affected.
The interim financial information is unaudited, but reflects all adjustments that are, in management’s opinion, necessary to provide a fair presentation of results for the interim periods presented. All adjustments are of a normal recurring nature. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated.
The Company reclassified certain amounts reported in previous periods to conform to the current presentation. This interim information should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2015.    
To date, a few of the Company’s customers have accounted for a significant portion of its revenue.  For the three months ended June 25, 2016, two customers individually accounted for 15% and 11% of the Company's total revenue, respectively, and for the corresponding period in 2015, three customers individually accounted for 23%, 16% and 11% of the Company's total revenue, respectively. For the six months ended June 25, 2016, three customers individually accounted for 16%, 13% and 12% of the Company's total revenue, respectively, and for the corresponding period in 2015, four customers individually accounted for 14%, 13%, 12%, and 11% of the Company's total revenue, respectively.
There have been no material changes in the Company’s significant accounting policies for the six months ended June 25, 2016 as compared to those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2015.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"), which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for the Company in its first quarter of fiscal 2020 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements.
In May 2016, the FASB issued Accounting Standards Update 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients" ("ASU 2016-12"), which provides narrow scope improvements and technical expedients on assessing collectibility, presentation of sales taxes, evaluating contract modifications and completed contracts at transition and the disclosure requirement for the effect of the accounting change for the period of adoption. This guidance will be effective for the Company’s first quarter of 2018. The Company is currently evaluating the impact the adoption of ASU 2016-12 will have on its consolidated financial statements.
In May 2016, the FASB issued Accounting Standards Update 2016-11, "Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update)" ("ASU 2016-11"), which rescinds various standards codified as part of Topic 605, Revenue Recognition in relation to the future adoption of Topic 606. These rescissions include changes to topics pertaining to revenue and expense recognition for freight services in process, accounting for shipping and handling fees and costs, and accounting for consideration given by a vendor to a customer. This guidance is effective for the Company in its first quarter of fiscal 2018 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-11 will have on its consolidated financial statements.
In April 2016, the FASB issued Accounting Standards Update 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" ("ASU 2016-10"), to address the potential diversity in practice at initial application and cost; and the complexity of applying Topic 606, both at transition and on an ongoing basis related to identification of performance obligations and licensing arrangements. This guidance is effective for the Company in its first quarter of fiscal 2018 and early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2016-10 will have on its consolidated financial statements.
In March 2016, the FASB issued Accounting Standards Update 2016-09, "Improvements to Employee Share-Based Payment Accounting") ("ASU 2016-09"), which includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including the income tax effects of share-based payments and accounting for forfeitures. This guidance is effective for the Company in its first quarter of fiscal 2017 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.
In March 2016, the FASB issued Accounting Standards Update 2016-06, "Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force)" ("ASU 2016-06"), which applies to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options, and requires that embedded derivatives be separated from the host contract and accounted for separately as derivatives if certain criteria are met. One criterion is that the economic characteristics and risks of the embedded derivatives are not clearly and closely related to the economic characteristics and risks of the host contract. This guidance is effective for the Company in its first quarter of fiscal 2017 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-06 will have on its consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases (Topic 842)" ("ASU 2016-02"), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. This guidance is effective for the Company in its first quarter of fiscal 2019 and early adoption is permitted. ASU 2016-02 is required to be applied with a modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.
In September 2015, the FASB issued Accounting Standards Update 2015-16, "Business Combinations and Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The Company adopted ASU 2015-16 during the first quarter of fiscal 2016. The Company's adoption of ASU 2015-16 had no impact on the Company's financial position, results of operations or cash flow.
In July 2015, the FASB issued Accounting Standards Update 2015-11, "Simplifying the Measurement of Inventory" ("ASU 2015-11"), to simplify the guidance on the subsequent measurement of inventory, excluding inventory measured using last-in, first-out or the retail inventory method. Under ASU 2015-11, inventory should be at the lower of cost and net realizable value. This guidance is effective for the Company in its first quarter of fiscal 2017 with early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2015-11 will have on its consolidated financial statements.
In April 2015, the FASB issued Accounting Standards Update 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The Company adopted ASU 2015-03 during the first quarter of fiscal 2016. The December 26, 2015 balance sheet was retrospectively adjusted to reclassify $2.1 million from other non-current assets to a reduction of the Notes payable liability.
In May 2014, the FASB issued Accounting Standards Update 2014-09, "Revenue from Contracts from Customers" ("ASU 2014-09"). ASU 2014-09 provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 will require an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s), which include (i) identifying the contract(s) with the customer; (ii) identifying the separate performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the separate performance obligations; and (v) recognizing revenue when each performance obligation is satisfied. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date of December 15, 2016 (including interim reporting periods within those periods). ASU 2014-09 will be effective for the Company’s first quarter of 2018. The Company has the option to apply the provisions of ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of applying this standard recognized at the date of initial application. The Company is currently evaluating the method and impact the adoption of ASU 2014-09 will have on its consolidated financial statements.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
Pursuant to the accounting guidance for fair value measurements and its subsequent updates, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
Valuation techniques used by the Company are based upon observable and unobservable inputs. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about market participant assumptions based on the best information available. Observable inputs are the preferred source of values. These two types of inputs create the following fair value hierarchy:
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.
The Company measures its cash equivalents, foreign currency exchange forward contracts and marketable debt securities at fair value and classifies its investments in accordance with the fair value hierarchy. The Company’s money market funds and U.S. treasuries are classified within Level 1 of the fair value hierarchy and are valued based on quoted prices in active markets for identical securities.
The Company classifies its certificates of deposit, commercial paper, U.S. agency notes, corporate bonds and foreign currency exchange forward contracts within Level 2 of the fair value hierarchy as follows:
Certificates of Deposit
The Company reviews market pricing and other observable market inputs for the same or similar securities obtained from a number of industry standard data providers. In the event that a transaction is observed for the same or similar security in the marketplace, the price on that transaction reflects the market price and fair value on that day. In the absence of any observable market transactions for a particular security, the fair market value at period end would be equal to the par value. These inputs represent quoted prices for similar assets or these inputs have been derived from observable market data.
Commercial Paper
The Company reviews market pricing and other observable market inputs for the same or similar securities obtained from a number of industry standard data providers. In the event that a transaction is observed for the same or similar security in the marketplace, the price on that transaction reflects the market price and fair value on that day and then follows a revised accretion schedule to determine the fair market value at period end. In the absence of any observable market transactions for a particular security, the fair market value at period end is derived by accreting from the last observable market price. These inputs represent quoted prices for similar assets or these inputs have been derived from observable market data accreted mathematically to par.
U.S. Agency Notes
The Company reviews trading activity and pricing for its U.S. agency notes as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from a number of industry standard data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data.
Corporate Bonds
The Company reviews trading activity and pricing for each of the corporate bond securities in its portfolio as of the measurement date and determines if pricing data of sufficient frequency and volume in an active market exists in order to support Level 1 classification of these securities. If sufficient quoted pricing for identical securities is not available, the Company obtains market pricing and other observable market inputs for similar securities from a number of industry standard data providers. In instances where multiple prices exist for similar securities, these prices are used as inputs into a distribution-curve to determine the fair market value at period end.
Foreign Currency Exchange Forward Contracts
As discussed in Note 5, "Derivative Instruments" to the Notes to Condensed Consolidated Financial Statements, the Company mainly holds non-speculative foreign exchange forward contracts to hedge certain foreign currency exchange exposures. The Company estimates the fair values of derivatives based on quoted market prices or pricing models using current market rates. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit risk, foreign exchange rates, and forward and spot prices for currencies.
The following tables represent the Company’s fair value hierarchy for its assets and liabilities measured at fair value on a recurring basis (in thousands): 
 
As of June 25, 2016
 
As of December 26, 2015
 
Fair Value Measured Using
 
Fair Value Measured Using
 
Level 1      
 
Level 2      
 
Level 3      
 
Total        
 
Level 1      
 
Level 2      
 
Level 3      
 
Total        
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
34,077

 
$
—

 
$
—

 
$
34,077

 
$
37,829

 
$
—

 
$
—

 
$
37,829

Certificates of deposit
—

 
2,604

 
—

 
2,604

 
—

 
5,001

 
—

 
5,001

Commercial paper
—

 
52,433

 
—

 
52,433

 
—

 
10,997

 
—

 
10,997

Corporate bonds
—

 
108,257

 
—

 
108,257

 
—

 
163,400

 
—

 
163,400

U.S. agency notes
—

 
10,775

 
—

 
10,775

 
—

 
10,717

 
—

 
10,717

U.S. treasuries
56,332

 
—

 
—

 
56,332

 
24,851

 
—

 
—

 
24,851

Foreign currency exchange forward contracts
—

 
346

 
—

 
346

 
—

 
490

 
—

 
490

Total assets
$
90,409

 
$
174,415

 
$
—

 
$
264,824

 
$
62,680

 
$
190,605

 
$
—

 
$
253,285

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange forward contracts
$
—

 
$
(277
)
 
$
—

 
$
(277
)
 
$
—

 
$
(44
)
 
$
—

 
$
(44
)

During the three and six months ended June 25, 2016, there were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy.
Investments at fair value were as follows (in thousands): 
 
June 25, 2016
 
Adjusted Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value    
Money market funds
$
34,077

 
$
—

 
$
—

 
$
34,077

Certificates of deposit
2,600

 
4

 
—

 
2,604

Commercial paper
52,450

 
—

 
(17
)
 
52,433

Corporate bonds
108,185

 
97

 
(25
)
 
108,257

U.S. agency notes
10,784

 
—

 
(9
)
 
10,775

U.S. treasuries
56,249

 
83

 
—

 
56,332

Total available-for-sale investments
$
264,345

 
$
184

 
$
(51
)
 
$
264,478

 
 
December 26, 2015
 
Adjusted Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value    
Money market funds
$
37,829

 
$
—

 
$
—

 
$
37,829

Certificates of deposit
5,000

 
1

 
—

 
5,001

Commercial paper
10,997

 
—

 
—

 
10,997

Corporate bonds
163,797

 
—

 
(397
)
 
163,400

U.S. agency notes
10,786

 
—

 
(69
)
 
10,717

U.S. treasuries
24,894

 
—

 
(43
)
 
24,851

Total available-for-sale investments
$
253,303

 
$
1

 
$
(509
)
 
$
252,795

As of June 25, 2016, the Company’s available-for-sale investments in certificates of deposit, commercial paper, U.S. agency notes and corporate bonds have a contractual maturity term of up to 22 months. Gross realized gains and losses on short-term and long-term investments for the three and six months ended June 25, 2016 and June 27, 2015 were insignificant in all periods. The specific identification method is used to account for gains and losses on available-for-sale investments.
As of June 25, 2016 and December 26, 2015, the Company held $81.2 million and $98.4 million of cash in banks, respectively, excluding restricted cash.
Cost-method Investment
Cost-method Investment
Cost-method Investment
As of June 25, 2016, the Company had an investment of $14.5 million in a privately-held company. This investment is accounted for as a cost-method investment as the Company owns less than 20% of the voting securities and does not have the ability to exercise significant influence over operating and financial policies of the entity. This investment is carried at historical cost in the Company's condensed consolidated financial statements. The Company regularly evaluates the carrying value of this cost-method investment for impairment. If the Company believes that the carrying value of the cost basis investment is in excess of estimated fair value, the Company’s policy is to record an impairment charge in other income (expense), net, in the accompanying condensed consolidated statements of operations to adjust the carrying value to estimated fair value, when the impairment is deemed other-than-temporary. As of June 25, 2016, no event had occurred that would adversely affect the carrying value of this investment and thus no impairment charges have been recorded for this cost-method investment.
Derivative Instruments
Derivative Instruments
Derivative Instruments
Foreign Currency Exchange Forward Contracts
The Company transacts business in various foreign currencies and has international sales, cost of sales, and expenses denominated in foreign currencies, and carries foreign-currency-denominated monetary assets and liabilities, subjecting the Company to foreign currency risk. The Company’s primary foreign currency risk management objective is to protect the U.S. dollar value of future cash flows and minimize the volatility of reported earnings. The Company utilizes foreign currency forward contracts, primarily short term in nature.
Historically, the Company and its Swedish subsidiary enter into foreign currency exchange forward contracts to manage its exposure to fluctuation in foreign exchange rates that arise from its euro and British pound denominated receivables and restricted cash balances. Gains and losses on these contracts are intended to offset the impact of foreign exchange rate fluctuations on the underlying foreign currency denominated accounts receivables and restricted cash, and therefore, do not subject the Company to material balance sheet risk.
During 2016, the Company also entered into foreign currency exchange contracts to reduce the volatility of cash flows primarily related to forecasted revenues and expenses denominated in euro, British pound and Swedish kronor ("SEK"). The contracts are settled for U.S. dollars and SEK at maturity and at rates agreed to at inception of the contracts. The gains and losses on these foreign currency derivatives are recorded to the condensed consolidated statement of operations line item, in the current period, to which the item that is being economically hedged is recorded.
For the three months ended June 25, 2016 and June 27, 2015, the before-tax effect of the foreign currency exchange forward contracts were a loss of $0.1 million and a loss of $0.9 million, respectively, and for the six months ended June 25, 2016 and June 27, 2015, the before-tax effect of the foreign currency exchange forward contracts were a loss of $0.6 million and a loss of $2.8 million, respectively. In each of these periods, the impact of the gross gains and losses were offset by foreign exchange rate fluctuations on the underlying foreign currency denominated amounts.
As of June 25, 2016, the Company did not designate foreign currency exchange forward contracts as hedges for accounting purposes and accordingly, changes in the fair value are recorded in the accompanying condensed consolidated statements of operations. These contracts were with two high-quality institutions and the Company consistently monitors the creditworthiness of the counterparties.
The fair value of derivative instruments in the Company’s condensed consolidated balance sheets was as follows (in thousands):
 
As of June 25, 2016
 
As of December 26, 2015
 
Gross Notional(1)  
 
Prepaid Expense and Other Assets
 
Other Accrued Liabilities
 
Gross Notional(1)  
 
Prepaid Expense and Other Assets
 
Other Accrued Liabilities
Foreign currency exchange forward contracts
 
 
 
 
 
 
 
 
 
 
 
Related to euro denominated receivables
$
35,923

 
$
312

 
$
(277
)
 
$
46,753

 
$
319

 
$
(44
)
Related to British pound denominated receivables
$
6,660

 
34

 
—

 
$
6,686

 
171

 
—

Related to restricted cash
$
256

 
—

 
—

 
$
252

 
—

 
—

 


 
$
346

 
$
(277
)
 


 
$
490

 
$
(44
)
 
 
 
(1) 
Represents the face amounts of forward contracts that were outstanding as of the period noted.
Business Combination
Business Combination
Business Combination
On August 20, 2015 (the "Acquisition Date”), the Company completed its public offer to the shareholders of Transmode AB ("Transmode"), acquiring 95.8% of the outstanding common shares and voting interest in Transmode. Transmode is a metro packet-optical networking company based in Stockholm, Sweden. The combination of the two companies brings together a complementary set of customers, products, and technologies into one company. With the acquisition of Transmode, the Company now offers an end-to-end product portfolio of packet-optical solutions for metro, data center interconnect, long-haul and subsea networks.
Shortly after the Acquisition Date, the Company initiated compulsory acquisition proceedings in accordance with Swedish law (the "Squeeze-out Proceedings") in order to acquire the remaining 4.2%, or 1.2 million Transmode shares, not tendered through the end of the offer period. As of the Acquisition Date, the fair value of the noncontrolling interest was approximately $15.4 million, which was based on the implied enterprise value of Transmode at the Acquisition Date. During the three months ended June 25, 2016, the Company recorded a security pledge of approximately SEK 210.8 million ($24.9 million as of June 25, 2016) associated with the Squeeze-out Proceedings. The Company expects a significant portion of this security pledge to be paid during 2016, upon award on advance title to acquire the remaining 4.2% of Transmode shares. As a result of this pledge, the Company reclassified this amount from cash and cash equivalents to short-term restricted cash on the condensed consolidated balance sheet as of June 25, 2016.
The Company has accounted for this transaction as a business combination in exchange for total consideration of $350.6 million, which consisted of the following (in thousands, except shares):
Cash
$
181,133

Common stock (7,873,055 shares)
169,507

Total
$
350,640


The fair value of the 7.9 million shares of common stock issued was determined based on the closing market price of the Company’s common stock on the Acquisition Date.
The Company allocated the fair value of the purchase price of the acquisition to the tangible and intangible assets acquired as well as liabilities assumed, based on their estimated fair values. The excess of the purchase price over the fair values of these identifiable assets and liabilities was recorded as goodwill.
The Company prepared an initial determination of the fair value of assets acquired and liabilities assumed as of the acquisition date using preliminary information. In accordance with Accounting Standard Codification 805, "Business Combinations," during the measurement period an acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect information obtained about facts and circumstances that existed as of the Acquisition Date that, if known, would have affected the measurement of the amounts recognized as of the Acquisition Date. Accordingly, the Company has recognized measurement period adjustments made during the first quarter of 2016 to the fair value of certain assets acquired and liabilities assumed as a result of additional information obtained. These adjustments were retrospectively applied to the Acquisition Date balance sheet. None of the adjustments had an impact on the Company’s previously reported results of operations.
The following table summarizes the Company’s preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed as of the Acquisition Date (in thousands):
 
Amounts Recognized as of Acquisition Date
 
Measurement Period Adjustments
 
Total
Cash
$
36,688

 
$
—

 
$
36,688

Accounts receivable
16,183

 
—

 
16,183

Inventory
19,886

 
—

 
19,886

Other assets
8,320

 
—

 
8,320

Intangible assets, net
161,845

 
—

 
161,845

Goodwill
187,220

 
669

 
187,889

Current liabilities
(24,320
)
 
(800
)
 
(25,120
)
Deferred tax liabilities
(39,221
)
 
131

 
(39,090
)
Long-term liabilities
(589
)
 
—

 
(589
)
Noncontrolling interest
(15,372
)
 
—

 
(15,372
)
Total net assets
$
350,640

 
$
—

 
$
350,640


The Company expects to finalize the allocation of the purchase consideration during the third quarter of 2016, pending finalization of income taxes and any other adjustments related to acquired assets or liabilities.
The following table presents details of the identified intangible assets acquired at the Acquisition Date (in thousands):
 
Fair Value
 
Estimated Useful Life (Years)
Trade name
$
234

 
0.5
Customer relationships
49,033

 
8
Developed technology
92,450

 
5
In-process technology
20,128

 
N/A
Total
$
161,845

 
 

Goodwill generated from this business combination is primarily attributable to the synergies from combining the operations of Transmode with that of the Company, which resulted in expanded selling opportunities of both metro and long-haul solutions. The goodwill recognized is not tax deductible for Swedish income tax purposes.
Noncontrolling interest was as follows (in thousands):
 
June 25, 2016
 
December 26, 2015
Beginning noncontrolling interest
$
14,910

 
$
—

Noncontrolling interest investment
—

 
15,373

Loss attributable to noncontrolling interest
(378
)
 
(463
)
Ending noncontrolling interest
$
14,532

 
$
14,910

Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill
Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired.
The following table presents details of the Company’s goodwill during the six months ended June 25, 2016 (in thousands):
Balance as of December 26, 2015
$
191,560

Foreign currency translation adjustments
(1,578
)
Accumulated impairment loss
—

Balance as of June 25, 2016
$
189,982


The gross carrying amount of goodwill may change due to the effects of foreign currency fluctuations as these assets are denominated in SEK. Additional information existing as of the Acquisition Date but unknown to the Company may become known during the remainder of the measurement period, not to exceed 12 months from the Acquisition Date, which may result in changes to the amounts and allocations recorded.
Intangible Assets
The following tables present details of the Company’s intangible assets as of June 25, 2016 and December 26, 2015 (in thousands):
 
June 25, 2016
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Weighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:


 


 


 
 
Trade names
$
237

 
$
(237
)
 
$
—

 
—

Customer relationships
49,579

 
(5,278
)
 
44,301

 
7.2

Developed technology
98,471

 
(16,302
)
 
82,169

 
4.2

Other intangible assets
819

 
(540
)
 
279

 
5.1

Total intangible assets with finite lives
$
149,106

 
$
(22,357
)
 
$
126,749

 
5.3

In-process technology
15,359

 
—

 
15,359

 
 
Total intangible assets
$
164,465

 
$
(22,357
)
 
$
142,108

 
 

 
December 26, 2015
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Weighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:
 
 
 
 
 
 
 
Trade names
$
239

 
$
(168
)
 
$
71

 
0.2

Customer relationships
49,991

 
(2,197
)
 
47,794

 
7.7

Developed technology
94,256

 
(6,629
)
 
87,627

 
4.6

Other intangible assets
819

 
(513
)
 
306

 
5.6

Total intangible assets with finite lives
$
145,305

 
$
(9,507
)
 
$
135,798

 
5.7

In-process technology
20,521

 
—

 
20,521

 
 
Total intangible assets
$
165,826

 
$
(9,507
)
 
$
156,319

 
 

The gross carrying amount of intangible assets and the related amortization expense of intangible assets may change due to the effects of foreign currency fluctuations as these assets are denominated in SEK. Amortization expense was $6.6 million and $13.1 million for the three and six months ended June 25, 2016 and was not significant for the corresponding periods in 2015.
Intangible assets are carried at cost less accumulated amortization. Amortization expenses are recorded to the appropriate cost and expense categories. During the six months ended June 25, 2016, the Company transferred $5.2 million of its in-process technology to developed technology, which is being amortized over a maximum useful life of 10 years. In-process technology of $15.4 million as of June 25, 2016 is not subject to amortization. As such, the Company excluded it in the future amortization expense table below.
The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of June 25, 2016 (in thousands):
 
 
 
Fiscal Years
 
Total
 
Remainder of 2016
 
2017
 
2018
 
2019
 
2020
 
2021 and Thereafter
Total future amortization expense
$
126,749

 
$
12,903

 
$
25,806

 
$
25,806

 
$
25,677

 
$
19,093

 
$
17,464

Balance Sheet Details
Balance Sheet Details
Balance Sheet Details
The following table provides details of selected balance sheet items (in thousands):
 
June 25, 2016
 
December 26, 2015
Inventory:
 
 
 
Raw materials
$
39,062

 
$
27,879

Work in process
60,988

 
52,599

Finished goods
102,230

 
94,221

Total inventory
$
202,280

 
$
174,699

Property, plant and equipment, net:
 
 
 
Computer hardware
$
12,388

 
$
11,097

Computer software(1)
25,170

 
22,548

Laboratory and manufacturing equipment
207,901

 
189,168

Furniture and fixtures
2,012

 
1,897

Leasehold improvements
41,924

 
38,946

Construction in progress
29,930

 
31,060

Subtotal
$
319,325

 
$
294,716

Less accumulated depreciation and amortization
(199,230
)
 
(183,855
)
Total property, plant and equipment, net
$
120,095

 
$
110,861

Accrued expenses:
 
 
 
Loss contingency related to non-cancelable purchase commitments
$
5,822

 
$
6,821

Professional and other consulting fees
4,246

 
5,363

Taxes payable
6,186

 
3,295

Royalties
5,045

 
4,290

Other accrued expenses
15,167

 
13,967

Total accrued expenses
$
36,466

 
$
33,736

 
 
 
(1) 
Included in computer software at June 25, 2016 and December 26, 2015 were $7.9 million and $7.9 million, respectively, related to an enterprise resource planning ("ERP") system that the Company implemented during 2012. The unamortized ERP costs at June 25, 2016 and December 26, 2015 were $3.5 million and $4.0 million, respectively.
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income
Accumulated other comprehensive income includes certain changes in equity that are excluded from net income. The following table sets forth the changes in accumulated other comprehensive income by component for the six months ended June 25, 2016 (in thousands): 
 
 
Unrealized Gain (Loss)
on Other
Available-for-Sale
Securities
 
Foreign
Currency Translation     
 
     Accumulated     
Tax Effect
 
Total        
Balance at December 26, 2015
 
$
(506
)
 
$
2,389

 
$
(760
)
 
$
1,123

Net current-period other comprehensive income
 
639

 
(3,499
)
 
—

 
(2,860
)
Balance at June 25, 2016
 
$
133

 
$
(1,110
)
 
$
(760
)
 
$
(1,737
)
Basic and Diluted Net Income Per Common Share
Basic and Diluted Net Income Per Common Share
Basic and Diluted Net Income Per Common Share
Basic net income per common share is computed by dividing net income attributable to Infinera Corporation by the weighted average number of common shares outstanding during the period. Diluted net income attributable to Infinera Corporation per common share is computed using net income attributable to Infinera Corporation and the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the assumed exercise of outstanding stock options, assumed release of outstanding restricted stock units ("RSUs") and performance stock units ("PSUs"), and assumed issuance of common stock under the Company’s 2007 Employee Stock Purchase Plan ("ESPP") using the treasury stock method. Potentially dilutive common shares also include the assumed conversion of convertible senior notes from the conversion spread (as discussed in Note 11, "Convertible Senior Notes"). The Company includes the common shares underlying PSUs in the calculation of diluted net income per share only when they become contingently issuable. In net loss periods, these potentially diluted common shares have been excluded from the diluted net loss calculation.
The following table sets forth the computation of net income per common share – basic and diluted (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Numerator:
 
 
 
 
 
 
 
Net income attributable to Infinera Corporation
$
11,483

 
$
17,906

 
$
23,498

 
$
30,272

Denominator:
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
142,396

 
130,349

 
141,600

 
129,094

Effect of dilutive securities:
 
 
 
 
 
 
 
Employee equity plans
2,775

 
5,766

 
3,299

 
6,168

Assumed conversion of convertible senior notes from conversion spread
720

 
4,527

 
1,486

 
3,711

Diluted weighted average common shares outstanding
145,891

 
140,642

 
146,385

 
138,973

 
 
 
 
 
 
 
 
Net income per common share attributable to Infinera Corporation
 
 
 
 
 
 
 
Basic
$
0.08

 
$
0.14

 
$
0.17

 
$
0.23

Diluted
$
0.08

 
$
0.13

 
$
0.16

 
$
0.22


During the three and six months ended June 25, 2016 and June 27, 2015, the Company included the dilutive effects of the Notes in the calculation of diluted net income per common share as the average market price was above the conversion price of the Notes. The dilutive impact of the Notes was based on the difference between the Company's average stock price during the period and the conversion price of the Notes. Upon conversion of the Notes, it is the Company’s intention to pay cash equal to the lesser of the aggregate principal amount or the conversion value of the Notes being converted, therefore, only the conversion spread relating to the Notes would be included in the Company’s diluted earnings per share calculation.
The effects of certain potentially outstanding shares were not included in the calculation of diluted net income per share for the three and six months ended June 25, 2016 and June 27, 2015 because their effect were anti-dilutive under the treasury stock method or the performance condition of the award had not been met.
The following sets forth the potentially dilutive shares excluded from the computation of the diluted net income per share because their effect was anti-dilutive (in thousands):
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Stock options
13

 
10

 
11

 
10

RSUs
2,663

 
73

 
1,721

 
789

PSUs
846

 
129

 
594

 
210

ESPP shares
—

 
—

 
291

 
207

Total
3,522

 
212

 
2,617

 
1,216

Convertible Senior Notes
Convertible Senior Notes
Convertible Senior Notes
In May 2013, the Company issued the Notes, which will mature on June 1, 2018, unless earlier purchased by the Company or converted. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2013. The net proceeds to the Company were approximately $144.5 million.
The Notes are governed by an indenture dated as of May 30, 2013 (the "Indenture"), between the Company, as issuer, and U.S. Bank National Association, as trustee. The Notes are unsecured and do not contain any financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by the Company.
Upon conversion, it is the Company's intention to pay cash equal to the lesser of the aggregate principal amount or the conversion value of the Notes. For any remaining conversion obligation, the Company intends to pay cash, shares of common stock or a combination of cash and shares of common stock, at its election. The initial conversion rate is 79.4834 shares of common stock per $1,000 principal amount of Notes, subject to anti-dilution adjustments. The initial conversion price is approximately $12.58 per share of common stock.
Throughout the term of the Notes, the conversion rate may be adjusted upon the occurrence of certain events, including for any cash dividends. Holders of the Notes will not receive any cash payment representing accrued and unpaid interest upon conversion of a Note. Accrued but unpaid interest will be deemed to be paid in full upon conversion rather than canceled, extinguished or forfeited. Holders may convert their Notes under the following circumstances:

•
during any fiscal quarter commencing after the fiscal quarter ended on March 28, 2013 (and only during such fiscal quarter) if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•
during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

•
upon the occurrence of specified corporate events described under the Indenture, such as a consolidation, merger or binding share exchange; or

•
at any time on or after December 1, 2017 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.
If the Company undergoes a fundamental change as defined in the Indenture governing the Notes, holders may require the Company to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, upon the occurrence of a “make-whole fundamental change” (as defined in the Indenture), the Company may, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Notes in connection with such make-whole fundamental change.

The net carrying amounts of the debt obligation were as follows (in thousands):
 
June 25, 2016
 
December 26, 2015
Principal
$
150,000

 
$
150,000

Unamortized discount (1)
(19,955
)
 
(24,560
)
Unamortized issuance cost (1)
(1,717
)
 
(2,113
)
Net carrying amount
$
128,328

 
$
123,327

 
 
 
(1) 
Unamortized debt conversion discount and issuance costs will be amortized over the remaining life of the Notes, which is approximately two years.

As of June 25, 2016 and December 26, 2015, the carrying amount of the equity component of the Notes was $43.3 million.
In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount ("debt discount") is amortized to interest expense over the term of the Notes.
In accounting for the issuance costs of $5.5 million related to the Notes, the Company allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were initially recorded as other non-current assets and will be amortized to interest expense over the term of the Notes. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The Company adopted ASU 2015-03 during the first quarter of 2016. The December 26, 2015 balance sheet was retrospectively adjusted to reclassify $2.1 million from other non-current assets to a reduction of the Notes payable liability.
The issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity. Additionally, the Company initially recorded a deferred tax liability of $17.0 million in connection with the issuance of the Notes, and a corresponding reduction in valuation allowance. The impact of both was recorded to stockholders’ equity.
The Company determined that the embedded conversion option in the Notes does not require separate accounting treatment as a derivative instrument because it is both indexed to the Company’s own stock and would be classified in stockholder’s equity if freestanding.
The following table sets forth total interest expense recognized related to the Notes (in thousands): 
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Contractual interest expense
$
656

 
$
656

 
$
1,313

 
$
1,313

Amortization of debt issuance costs
201

 
182

 
396

 
358

Amortization of debt discount
2,331

 
2,109

 
4,605

 
4,166

Total interest expense
$
3,188

 
$
2,947

 
$
6,314

 
$
5,837


The coupon rate is 1.75%. For the three and six months ended June 25, 2016 and June 27, 2015, the debt discount and debt issuance costs are amortized, using an annual effective interest rate of 10.23%, to interest expense over the term of the Notes.
As of June 25, 2016, the fair value of the Notes was $167.1 million. The fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on June 24, 2016. The Notes are classified as Level 2 of the fair value hierarchy.
During the three months ended June 25, 2016, the closing price of the Company's common stock did not meet the conversion criteria; therefore, holders of the Notes may not convert their notes during the third quarter of 2016. Should the closing price conditions be met during the 30 consecutive trading days prior to the end of the third quarter of 2016 or a future quarter, the Notes will be convertible at their holders’ option during the immediately following quarter. Based on the closing price of the Company’s common stock of $10.96 on June 24, 2016, the if-converted value of the Notes did not exceed their principal amount.
Stockholders' Equity
Stockholders' Equity
Stockholders’ Equity
Stock-based Compensation Plans
The Company has stock-based compensation plans pursuant to which the Company has granted stock options, RSUs and PSUs. The Company also has an ESPP for all eligible employees.
In February 2016, the Company's board of directors adopted the 2016 Equity Incentive Plan ("2016 Plan") and the Company's stockholders approved the 2016 Plan in May 2016. As of June 25, 2016, the Company reserved a total of 7.4 million shares of common stock for issuance of stock options, RSUs and PSUs to employees, non-employees, consultants and members of the Company's board of directors, pursuant to the 2016 Plan, plus any shares subject to awards granted under the Company’s 2007 Equity Incentive Plan (the “2007 Plan”) that, after the effective date of the 2016 Plan, expire, are forfeited or otherwise terminate without having been exercised in full to the extent such awards were exercisable, and shares issued pursuant to awards granted under the 2007 Plan that, after the effective date of the 2016 Plan, are forfeited to or repurchased by the Company due to failure to vest. The 2016 Plan has a maximum term of 10 years from the date of adoption, or it can be earlier terminated by the Company's board of directors. The 2007 Plan was canceled, however, it continues to govern outstanding grants under the 2007 Plan.
The following tables summarize the Company’s equity award activity and related information (in thousands, except per share data): 
 
Number of Stock
Options
 
Weighted-Average
Exercise
Price
  Per Share  
 
  Aggregate  
Intrinsic
Value
Outstanding at December 26, 2015
2,511

 
$
7.26

 
$
28,288

Stock options granted
—

 
$
—

 
 
Stock options exercised
(259
)
 
$
4.24

 
$
2,334

Stock options canceled
—

 
$
—

 


Outstanding at June 25, 2016
2,252

 
$
7.60

 
$
7,853

Vested and expected to vest as of June 25, 2016
2,252

 
 
 
$
7,852

Exercisable at June 25, 2016
2,243

 
$
7.60

 
$
7,834


 
 
Number of
Restricted
Stock Units
 
Weighted-
Average
 Grant Date 
Fair Value
Per Share
 
  Aggregate  
Intrinsic
Value
Outstanding at December 26, 2015
4,932

 
$
12.76

 
$
91,285

RSUs granted
2,418

 
$
15.08

 


RSUs released
(1,838
)
 
$
10.50

 
$
22,584

RSUs canceled
(186
)
 
$
13.06

 


Outstanding at June 25, 2016
5,326

 
$
14.59

 
$
58,371

Expected to vest at June 25, 2016
4,995

 


 
$
54,748


 
 
Number of
Performance
Stock Units
 
Weighted-
Average
 Grant Date 
Fair Value
Per Share
 
  Aggregate  
Intrinsic
Value
Outstanding at December 26, 2015
731

 
$
12.35

 
$
13,540

PSUs granted
647

 
$
15.28

 

PSUs performance earned(1)
154

 
$
9.43

 
 
PSUs released
(462
)
 
$
9.43

 
$
6,650

PSUs canceled
(71
)
 
$
15.65

 

Outstanding at June 25, 2016
999

 
$
14.23

 
$
10,946

Expected to vest at June 25, 2016
962

 

 
$
10,543


 
 
 
(1) 
Represents the additional PSUs awarded resulting from the achievement of performance goals above the performance targets established at grant since the original grants were at 100% of target amounts.

The aggregate intrinsic value of unexercised stock options is calculated as the difference between the closing price of the Company’s common stock of $10.96 at June 24, 2016 (the last trading day of the fiscal quarter) and the exercise prices of the underlying stock options. The aggregate intrinsic value of the stock options that have been exercised is calculated as the difference between the fair market value of the common stock at the date of exercise and the exercise price of the underlying stock options.
The aggregate intrinsic value of unreleased RSUs and unreleased PSUs is calculated using the closing price of the Company's common stock of $10.96 at June 24, 2016 (the last trading day of the fiscal quarter). The aggregate intrinsic value of RSUs and PSUs released is calculated using the fair market value of the common stock at the date of release.

The following table presents total stock-based compensation cost for instruments granted but not yet amortized, net of estimated forfeitures, of the Company’s equity compensation plans as of June 25, 2016. These costs are expected to be amortized on a straight-line basis over the following weighted-average periods (in thousands, except for weighted-average period):
 
Unrecognized
Compensation
Expense, Net
 
Weighted-
Average Period
(in years)
Stock options
$
35

 
1.6
RSUs
$
58,826

 
2.7
PSUs
$
8,676

 
1.7

Employee Stock Options
The Company did not grant any stock options during the three and six months ended June 25, 2016. Amortization of stock-based compensation related to stock options in the three and six months ended June 25, 2016 and June 27, 2015 was insignificant in both periods.

Employee Stock Purchase Plan

The fair value of the shares was estimated at the date of grant using the following assumptions (expense amounts in thousands):
 
Three Months Ended
 
Six Months Ended
Employee Stock Purchase Plan
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Volatility
56%
 
53%
 
56%
 
53%
Risk-free interest rate
0.52%
 
0.13%
 
0.52%
 
0.13%
Expected life
0.5 years
 
0.5 years
 
0.5 years
 
0.5 years
Estimated fair value
$4.53
 
$5.15
 
4.53
 
$5.15
Total stock-based compensation expense
$1,247
 
$1,077
 
$2,489
 
$2,128

Restricted Stock Units
The Company granted RSUs to employees and members of the Company’s board of directors to receive shares of the Company’s common stock. All RSUs awarded are subject to each individual's continued service to the Company through each applicable vesting date. The Company accounted for the fair value of the RSUs using the closing market price of the Company’s common stock on the date of grant. Amortization of stock-based compensation related to RSUs in the three and six months ended June 25, 2016 and June 27, 2015 was approximately $7.7 million and $13.8 million, respectively, and $5.9 million and $11.1 million, respectively.
Performance Stock Units
Pursuant to the 2007 Plan, the Company has granted PSUs to certain of the Company’s executive officers, senior management and employees. All PSUs awarded are subject to each individual's continued service to the Company through each applicable vesting date and if the performance metrics are not met within the time limits specified in the award agreements, the PSUs will be canceled.
A number of PSUs granted to the Company’s executive officers and senior management are based on the total shareholder return of the Company's common stock price as compared to the total shareholder return of a designated index over the span of one year, two years and three years. The number of shares to be issued upon vesting of these PSUs range from 0 to 2.0 times the target number of PSUs granted depending on the Company’s performance against the index.
The ranges of estimated values of the PSUs granted that are compared to an index, as well as the assumptions used in calculating these values were based on estimates as follows:
 
 
2016
 
2015
 
2014
Index
 
SPGIIPTR
 
SPGIIPTR
 
SPGIIPTR
Index volatility
 
18%
 
18% - 19%
 
25%
Infinera volatility
 
55%
 
48%
 
49% - 50%
Risk-free interest rate
 
0.95% - 1.07%
 
0.97% - 1.10%
 
0.66% - 0.71%
Correlation with index
 
0.58 - 0.59
 
0.52
 
0.60
Estimated fair value
 
$10.31 - $16.62
 
$18.08 - $19.29
 
$6.59 - $7.60


In addition, certain other PSUs granted to the Company’s executive officers, senior management and certain employees will only vest upon the achievement of specific financial or operational performance criteria.

The following table summarizes by grant year, the Company’s PSU activity for the six months ended June 25, 2016 (in thousands):
 
 
Total Number of Performance Stock Units
 
2013
 
2014
 
2015
 
2016
Outstanding at December 26, 2015
 
731

 
147

 
260

 
324

 
—

PSUs granted
 
647

 
—

 
—

 
—

 
647

PSUs performance earned(1)
 
154

 
70

 
53

 
31

 
—

PSUs released
 
(462
)
 
(211
)
 
(158
)
 
(93
)
 
—

PSUs canceled
 
(71
)
 
(6
)
 
(8
)
 
(57
)
 
—

Outstanding at June 25, 2016
 
999

 
—

 
147

 
205

 
647

 
 
 
(1) 
Represents the additional PSUs awarded resulting from the achievement of performance goals above the performance targets established at grant since the original grants were at 100% of target amounts.
Amortization of stock-based compensation related to PSUs in the three and six months ended June 25, 2016 and June 27, 2015 was approximately $2.3 million and $3.2 million, respectively, and $1.3 million and $2.2 million, respectively.
Stock-Based Compensation
The following tables summarize the effects of stock-based compensation on the Company’s condensed consolidated balance sheets and statements of operations for the periods presented (in thousands):
 
June 25, 2016
 
December 26, 2015
Stock-based compensation effects in inventory
$
3,579

 
$
3,129

Stock-based compensation effects in deferred inventory cost
$
13

 
$
13

Stock-based compensation effects in property, plant and equipment, net
$
80

 
$
93

 
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Stock-based compensation effects included in net income before income taxes
 
 
 
 
 
 
 
Cost of revenue
$
746

 
$
613

 
$
1,419

 
$
1,095

Research and development
3,904

 
2,817

 
6,225

 
5,395

Sales and marketing
2,945

 
2,070

 
5,180

 
3,791

General and administration
2,486

 
1,829

 
4,385

 
3,495

 
$
10,081

 
$
7,329

 
$
17,209

 
$
13,776

Cost of revenue – amortization from balance sheet (1)
912

 
880

 
1,771

 
1,641

Total stock-based compensation expense
$
10,993

 
$
8,209

 
$
18,980

 
$
15,417

 
 
 
(1) 
Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period.
Income Taxes
Income Taxes
Income Taxes
Provision for income taxes during the three and six months ended June 25, 2016 was $1.5 million and $1.7 million, respectively, on pre-tax income of $12.8 million and $24.8 million, respectively. This compared to a tax provision of $1.0 million and $1.6 million, respectively, on a pre-tax income of $18.9 million and $31.9 million, respectively, for the three and six months ended June 27, 2015. The results for the three months ended June 25, 2016 reflect approximately $7.0 million of purchase accounting amortization and other charges related to the acquisition of Transmode, with a corresponding tax benefit of approximately $1.6 million. Exclusive of this tax benefit, provision for income taxes otherwise increased by approximately $2.0 million in the three months ended June 25, 2016 compared to June 27, 2015, which relates to a higher effective tax rate applied to a higher pre-tax income. The results for the six months ended June 25, 2016 reflected approximately $14.1 million of purchase accounting amortization and other charges related to the acquisition of Transmode, with a corresponding tax benefit of approximately $3.1 million. Exclusive of this tax benefit, provision for income taxes otherwise increased by approximately $3.2 million in the six months ended June 25, 2016 compared to June 27, 2015, which relates to a higher effective tax rate applied to a higher pre-tax income. The increase in effective tax rate is attributed to higher state income taxes provided in those states where loss carryforwards are now exhausted as well as higher foreign income taxes related to the Transmode operations and increased spending in certain of the Company's cost-plus foreign subsidiaries.
In all periods, the tax expense projected in the Company's effective tax rate assumptions primarily represents foreign taxes of the Company's overseas subsidiaries compensated on a cost-plus basis, as well as the operating results of Transmode, inclusive of purchase accounting charges and amortization for the three and six months ended June 25, 2016. Due to the Company's significant U.S. loss carryforward position and corresponding full valuation allowance, the Company has not been subject to federal or state tax on its U.S. income because of the availability of loss carryforwards, with the exception of some state taxes for which the losses are limited. The release of transfer pricing reserves in the future will have a beneficial impact to tax expense, but the timing of the impact depends on factors such as expiration of the statute of limitations or settlements with tax authorities. No significant releases are expected in the near future based on information available at this time.
The Company must assess the likelihood that some portion or all of its deferred tax assets will be recovered from future taxable income within the respective jurisdictions. In the past, the Company established a valuation allowance against its deferred tax assets as it determined that its ability to recover the value of these assets did not meet the “more-likely-than-not” standard. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management judgment is required on an on-going basis to determine whether it needs to maintain the valuation allowance recorded against its net deferred tax assets. At June 25, 2016, the Company has been profitable for nine consecutive quarters beginning with the second quarter of 2014. Despite this trend, the Company must consider other positive and negative evidence, including its forecasts of taxable income over the applicable carryforward periods, its current financial performance, its market environment, and other factors in evaluating the need for a valuation allowance against its net U.S. deferred tax assets. At June 25, 2016, the Company believes that it is more-likely-than-not, that it would not be able to utilize its deferred tax assets in the foreseeable future. Accordingly, the domestic net deferred tax assets continued to be fully reserved with a valuation allowance. To the extent that the Company determines that deferred tax assets are realizable on a more-likely-than-not basis, and adjustment is needed, that adjustment will be recorded in the period that the determination is made and would generally decrease the valuation allowance and record a corresponding benefit to earnings.
Segment Information
Segment Information
Segment Information
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Company’s Chief Executive Officer ("CEO"). The Company’s CEO reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region for purposes of allocating resources and evaluating financial performance. The Company has one business activity. Accordingly, the Company is considered to be in a single reporting segment and operating unit structure.
Revenue by geographic region is based on the shipping address of the customer. The following tables set forth revenue and long-lived assets by geographic region (in thousands):
Revenue
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Americas:
 
 
 
 
 
 
 
United States
$
166,710

 
$
154,762

 
$
341,225

 
$
281,765

Other Americas
11,267

 
11,984

 
14,526

 
19,070

 
177,977

 
166,746

 
355,751

 
300,835

Europe, Middle East and Africa
64,570

 
26,629

 
124,446

 
72,508

Asia Pacific and Japan
16,275

 
13,971

 
23,443

 
20,865

Total revenue
$
258,822

 
$
207,346

 
$
503,640

 
$
394,208



Property, plant and equipment, net
 
June 25, 2016
 
December 26, 2015
United States
$
112,289

 
$
102,702

Other Americas
278

 
173

 
112,567

 
102,875

Europe, Middle East and Africa
5,001

 
5,417

Asia Pacific and Japan
2,527

 
2,569

Total property, plant and equipment, net
$
120,095

 
$
110,861

Guarantees
Guarantees
Guarantees
Product Warranties
The Company warrants that its products will operate substantially in conformity with product specifications. Hardware warranties provide the purchaser with protection in the event that the product does not perform to product specifications. During the warranty period, the purchaser’s sole and exclusive remedy in the event of such defect or failure to perform is limited to the correction of the defect or failure by repair, refurbishment or replacement, at the Company’s sole option and expense. The Company's hardware warranty periods generally range from one to five years from date of acceptance for hardware and the Company's software warranty is 90 days. Upon delivery of the Company's products, the Company provides for the estimated cost to repair or replace products that may be returned under warranty. The hardware warranty accrual is based on actual historical returns and cost of repair experience and the application of those historical rates to the Company's in-warranty installed base. The provision for warranty claims fluctuates depending upon the installed base of products and the failure rates and costs of repair associated with these products under warranty. Furthermore, the Company's costs of repair vary based on repair volume and its ability to repair, rather than replace, defective units. In the event that actual product failure rates and costs to repair differ from the Company's estimates, revisions to the warranty provision are required. In addition, from time to time, specific hardware warranty accruals may be made if unforeseen technical problems arise with specific products. The Company regularly assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
Activity related to product warranty was as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Beginning balance
$
39,999

 
$
25,539

 
$
38,844

 
$
27,040

Charges to operations
7,308

 
6,019

 
14,062

 
11,367

Utilization
(3,702
)
 
(3,003
)
 
(8,689
)
 
(4,821
)
Change in estimate(1)
(2,616
)
 
(116
)
 
(3,228
)
 
(5,147
)
Balance at the end of the period
$
40,989

 
$
28,439

 
$
40,989

 
$
28,439

 
 
 
(1) 
The Company records hardware warranty liabilities based on the latest quality and cost information available as of that date. The changes in estimate shown here are due to changes in overall actual failure rates, the mix of new versus used units related to replacement of failed units, and changes in the estimated cost of repair. As the Company's products mature over time, failure rates and repair costs generally decline leading to favorable changes in warranty reserves.
Letters of Credit and Bank Guarantees
The Company had $5.4 million of standby letters of credit and bank guarantees outstanding as of June 25, 2016 that consisted of $3.5 million related to customer performance guarantees, $1.2 million related to a value added tax and customs' licenses, and $0.7 million related to property leases. The Company had $5.2 million of standby letters of credit and bank guarantees outstanding as of December 26, 2015, respectively. These consisted of $3.1 million related to customer performance guarantees, $1.2 million related to a value added tax and customs' licenses, and $0.9 million related to property leases.
As of June 25, 2016 and December 26, 2015, the Company had a line of credit for approximately $1.3 million and $1.5 million, respectively, to support the issuance of letters of credit, of which $0.3 million had been issued and outstanding. The Company has pledged approximately $4.7 million of assets of a subsidiary to secure this line of credit and other obligations as of June 25, 2016 and December 26, 2015.
Litigation and Contingencies
Litigation and Contingencies
Litigation and Contingencies
From time to time, the Company is subject to various legal proceedings, claims and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material effect on its consolidated financial position, results of operations or cash flows.
The Company is subject to the possibility of various losses arising in the ordinary course of business. These may relate to disputes, litigation and other legal actions. In the preparation of its quarterly and annual financial statements, the Company considers the likelihood of loss or the incurrence of a liability, including whether it is probable, reasonably possible or remote that a liability has been incurred, as well as the Company’s ability to reasonably estimate the amount of loss, in determining loss contingencies. In accordance with U.S. GAAP, an estimated loss contingency is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company regularly evaluates current information to determine whether any accruals should be adjusted and whether new accruals are required. As of June 25, 2016, the Company has accrued the estimated liabilities associated with the Company's potential loss contingencies.
Intellectual Property Indemnification
The Company has agreed to indemnify certain customers for claims made against the Company’s products, where such claims allege infringement of third party intellectual property rights, including, but not limited to, patents, registered trademarks, and/or copyrights. Under the aforementioned indemnification clauses, the Company may be obligated to defend the customer and pay for the damages awarded against the customer under an infringement claim as well as the customer’s attorneys’ fees and costs. The Company’s indemnification obligations generally do not expire after termination or expiration of the agreement containing the indemnification obligation. In certain cases, there are limits on and exceptions to the Company’s potential liability for indemnification. Although historically the Company has not made significant payments under these indemnification obligations, the Company cannot estimate the amount of potential future payments, if any, that it might be required to make as a result of these agreements. The maximum potential amount of any future payments that the Company could be required to make under these indemnification obligations could be significant.
Basis of Presentation and Significant Accounting Policies (Policies)
Recent Accounting Pronouncements
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"), which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for the Company in its first quarter of fiscal 2020 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements.
In May 2016, the FASB issued Accounting Standards Update 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients" ("ASU 2016-12"), which provides narrow scope improvements and technical expedients on assessing collectibility, presentation of sales taxes, evaluating contract modifications and completed contracts at transition and the disclosure requirement for the effect of the accounting change for the period of adoption. This guidance will be effective for the Company’s first quarter of 2018. The Company is currently evaluating the impact the adoption of ASU 2016-12 will have on its consolidated financial statements.
In May 2016, the FASB issued Accounting Standards Update 2016-11, "Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update)" ("ASU 2016-11"), which rescinds various standards codified as part of Topic 605, Revenue Recognition in relation to the future adoption of Topic 606. These rescissions include changes to topics pertaining to revenue and expense recognition for freight services in process, accounting for shipping and handling fees and costs, and accounting for consideration given by a vendor to a customer. This guidance is effective for the Company in its first quarter of fiscal 2018 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-11 will have on its consolidated financial statements.
In April 2016, the FASB issued Accounting Standards Update 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" ("ASU 2016-10"), to address the potential diversity in practice at initial application and cost; and the complexity of applying Topic 606, both at transition and on an ongoing basis related to identification of performance obligations and licensing arrangements. This guidance is effective for the Company in its first quarter of fiscal 2018 and early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2016-10 will have on its consolidated financial statements.
In March 2016, the FASB issued Accounting Standards Update 2016-09, "Improvements to Employee Share-Based Payment Accounting") ("ASU 2016-09"), which includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including the income tax effects of share-based payments and accounting for forfeitures. This guidance is effective for the Company in its first quarter of fiscal 2017 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.
In March 2016, the FASB issued Accounting Standards Update 2016-06, "Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force)" ("ASU 2016-06"), which applies to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options, and requires that embedded derivatives be separated from the host contract and accounted for separately as derivatives if certain criteria are met. One criterion is that the economic characteristics and risks of the embedded derivatives are not clearly and closely related to the economic characteristics and risks of the host contract. This guidance is effective for the Company in its first quarter of fiscal 2017 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-06 will have on its consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases (Topic 842)" ("ASU 2016-02"), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. This guidance is effective for the Company in its first quarter of fiscal 2019 and early adoption is permitted. ASU 2016-02 is required to be applied with a modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.
In September 2015, the FASB issued Accounting Standards Update 2015-16, "Business Combinations and Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The Company adopted ASU 2015-16 during the first quarter of fiscal 2016. The Company's adoption of ASU 2015-16 had no impact on the Company's financial position, results of operations or cash flow.
In July 2015, the FASB issued Accounting Standards Update 2015-11, "Simplifying the Measurement of Inventory" ("ASU 2015-11"), to simplify the guidance on the subsequent measurement of inventory, excluding inventory measured using last-in, first-out or the retail inventory method. Under ASU 2015-11, inventory should be at the lower of cost and net realizable value. This guidance is effective for the Company in its first quarter of fiscal 2017 with early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2015-11 will have on its consolidated financial statements.
In April 2015, the FASB issued Accounting Standards Update 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The Company adopted ASU 2015-03 during the first quarter of fiscal 2016. The December 26, 2015 balance sheet was retrospectively adjusted to reclassify $2.1 million from other non-current assets to a reduction of the Notes payable liability.
In May 2014, the FASB issued Accounting Standards Update 2014-09, "Revenue from Contracts from Customers" ("ASU 2014-09"). ASU 2014-09 provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 will require an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s), which include (i) identifying the contract(s) with the customer; (ii) identifying the separate performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the separate performance obligations; and (v) recognizing revenue when each performance obligation is satisfied. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date of December 15, 2016 (including interim reporting periods within those periods). ASU 2014-09 will be effective for the Company’s first quarter of 2018. The Company has the option to apply the provisions of ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of applying this standard recognized at the date of initial application. The Company is currently evaluating the method and impact the adoption of ASU 2014-09 will have on its consolidated financial statements.
Fair Value Measurements (Tables)
Assets and Liabilities Measured at Fair Value on Recurring Basis 
The following tables represent the Company’s fair value hierarchy for its assets and liabilities measured at fair value on a recurring basis (in thousands): 
 
As of June 25, 2016
 
As of December 26, 2015
 
Fair Value Measured Using
 
Fair Value Measured Using
 
Level 1      
 
Level 2      
 
Level 3      
 
Total        
 
Level 1      
 
Level 2      
 
Level 3      
 
Total        
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
34,077

 
$
—

 
$
—

 
$
34,077

 
$
37,829

 
$
—

 
$
—

 
$
37,829

Certificates of deposit
—

 
2,604

 
—

 
2,604

 
—

 
5,001

 
—

 
5,001

Commercial paper
—

 
52,433

 
—

 
52,433

 
—

 
10,997

 
—

 
10,997

Corporate bonds
—

 
108,257

 
—

 
108,257

 
—

 
163,400

 
—

 
163,400

U.S. agency notes
—

 
10,775

 
—

 
10,775

 
—

 
10,717

 
—

 
10,717

U.S. treasuries
56,332

 
—

 
—

 
56,332

 
24,851

 
—

 
—

 
24,851

Foreign currency exchange forward contracts
—

 
346

 
—

 
346

 
—

 
490

 
—

 
490

Total assets
$
90,409

 
$
174,415

 
$
—

 
$
264,824

 
$
62,680

 
$
190,605

 
$
—

 
$
253,285

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange forward contracts
$
—

 
$
(277
)
 
$
—

 
$
(277
)
 
$
—

 
$
(44
)
 
$
—

 
$
(44
)
Investments at Fair Value 
Investments at fair value were as follows (in thousands): 
 
June 25, 2016
 
Adjusted Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value    
Money market funds
$
34,077

 
$
—

 
$
—

 
$
34,077

Certificates of deposit
2,600

 
4

 
—

 
2,604

Commercial paper
52,450

 
—

 
(17
)
 
52,433

Corporate bonds
108,185

 
97

 
(25
)
 
108,257

U.S. agency notes
10,784

 
—

 
(9
)
 
10,775

U.S. treasuries
56,249

 
83

 
—

 
56,332

Total available-for-sale investments
$
264,345

 
$
184

 
$
(51
)
 
$
264,478

 
 
December 26, 2015
 
Adjusted Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value    
Money market funds
$
37,829

 
$
—

 
$
—

 
$
37,829

Certificates of deposit
5,000

 
1

 
—

 
5,001

Commercial paper
10,997

 
—

 
—

 
10,997

Corporate bonds
163,797

 
—

 
(397
)
 
163,400

U.S. agency notes
10,786

 
—

 
(69
)
 
10,717

U.S. treasuries
24,894

 
—

 
(43
)
 
24,851

Total available-for-sale investments
$
253,303

 
$
1

 
$
(509
)
 
$
252,795

Derivative Instruments (Tables)
Fair Value of Derivative Instruments not Designated as Hedging Instruments
The fair value of derivative instruments in the Company’s condensed consolidated balance sheets was as follows (in thousands):
 
As of June 25, 2016
 
As of December 26, 2015
 
Gross Notional(1)  
 
Prepaid Expense and Other Assets
 
Other Accrued Liabilities
 
Gross Notional(1)  
 
Prepaid Expense and Other Assets
 
Other Accrued Liabilities
Foreign currency exchange forward contracts
 
 
 
 
 
 
 
 
 
 
 
Related to euro denominated receivables
$
35,923

 
$
312

 
$
(277
)
 
$
46,753

 
$
319

 
$
(44
)
Related to British pound denominated receivables
$
6,660

 
34

 
—

 
$
6,686

 
171

 
—

Related to restricted cash
$
256

 
—

 
—

 
$
252

 
—

 
—

 


 
$
346

 
$
(277
)
 


 
$
490

 
$
(44
)
 
 
 
(1) 
Represents the face amounts of forward contracts that were outstanding as of the period noted.
Business Combination (Tables)
Schedule of Business Acquisitions by Acquisition, Equity Interest Issued or Issuable 
The Company has accounted for this transaction as a business combination in exchange for total consideration of $350.6 million, which consisted of the following (in thousands, except shares):
Cash
$
181,133

Common stock (7,873,055 shares)
169,507

Total
$
350,640

Schedule of Business Acquisitions, by Acquisition 
The following table summarizes the Company’s preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed as of the Acquisition Date (in thousands):
 
Amounts Recognized as of Acquisition Date
 
Measurement Period Adjustments
 
Total
Cash
$
36,688

 
$
—

 
$
36,688

Accounts receivable
16,183

 
—

 
16,183

Inventory
19,886

 
—

 
19,886

Other assets
8,320

 
—

 
8,320

Intangible assets, net
161,845

 
—

 
161,845

Goodwill
187,220

 
669

 
187,889

Current liabilities
(24,320
)
 
(800
)
 
(25,120
)
Deferred tax liabilities
(39,221
)
 
131

 
(39,090
)
Long-term liabilities
(589
)
 
—

 
(589
)
Noncontrolling interest
(15,372
)
 
—

 
(15,372
)
Total net assets
$
350,640

 
$
—

 
$
350,640

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination 
The following table presents details of the identified intangible assets acquired at the Acquisition Date (in thousands):
 
Fair Value
 
Estimated Useful Life (Years)
Trade name
$
234

 
0.5
Customer relationships
49,033

 
8
Developed technology
92,450

 
5
In-process technology
20,128

 
N/A
Total
$
161,845

 
 
Schedule of Indefinite-lived Intangible Assets Acquired as Part of Business Combination 
The following table presents details of the identified intangible assets acquired at the Acquisition Date (in thousands):
 
Fair Value
 
Estimated Useful Life (Years)
Trade name
$
234

 
0.5
Customer relationships
49,033

 
8
Developed technology
92,450

 
5
In-process technology
20,128

 
N/A
Total
$
161,845

 
 
Noncontrolling Interest Rollfoward 
Noncontrolling interest was as follows (in thousands):
 
June 25, 2016
 
December 26, 2015
Beginning noncontrolling interest
$
14,910

 
$
—

Noncontrolling interest investment
—

 
15,373

Loss attributable to noncontrolling interest
(378
)
 
(463
)
Ending noncontrolling interest
$
14,532

 
$
14,910

Goodwill and Intangible Assets (Tables)
Schedule of Goodwill 
The following table presents details of the Company’s goodwill during the six months ended June 25, 2016 (in thousands):
Balance as of December 26, 2015
$
191,560

Foreign currency translation adjustments
(1,578
)
Accumulated impairment loss
—

Balance as of June 25, 2016
$
189,982

Schedule of Finite-Lived Intangible Assets 
The following tables present details of the Company’s intangible assets as of June 25, 2016 and December 26, 2015 (in thousands):
 
June 25, 2016
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Weighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:


 


 


 
 
Trade names
$
237

 
$
(237
)
 
$
—

 
—

Customer relationships
49,579

 
(5,278
)
 
44,301

 
7.2

Developed technology
98,471

 
(16,302
)
 
82,169

 
4.2

Other intangible assets
819

 
(540
)
 
279

 
5.1

Total intangible assets with finite lives
$
149,106

 
$
(22,357
)
 
$
126,749

 
5.3

In-process technology
15,359

 
—

 
15,359

 
 
Total intangible assets
$
164,465

 
$
(22,357
)
 
$
142,108

 
 

 
December 26, 2015
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Weighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:
 
 
 
 
 
 
 
Trade names
$
239

 
$
(168
)
 
$
71

 
0.2

Customer relationships
49,991

 
(2,197
)
 
47,794

 
7.7

Developed technology
94,256

 
(6,629
)
 
87,627

 
4.6

Other intangible assets
819

 
(513
)
 
306

 
5.6

Total intangible assets with finite lives
$
145,305

 
$
(9,507
)
 
$
135,798

 
5.7

In-process technology
20,521

 
—

 
20,521

 
 
Total intangible assets
$
165,826

 
$
(9,507
)
 
$
156,319

 
 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense 
The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of June 25, 2016 (in thousands):
 
 
 
Fiscal Years
 
Total
 
Remainder of 2016
 
2017
 
2018
 
2019
 
2020
 
2021 and Thereafter
Total future amortization expense
$
126,749

 
$
12,903

 
$
25,806

 
$
25,806

 
$
25,677

 
$
19,093

 
$
17,464

Balance Sheet Details (Tables)
Details of Selected Balance Sheet Items
The following table provides details of selected balance sheet items (in thousands):
 
June 25, 2016
 
December 26, 2015
Inventory:
 
 
 
Raw materials
$
39,062

 
$
27,879

Work in process
60,988

 
52,599

Finished goods
102,230

 
94,221

Total inventory
$
202,280

 
$
174,699

Property, plant and equipment, net:
 
 
 
Computer hardware
$
12,388

 
$
11,097

Computer software(1)
25,170

 
22,548

Laboratory and manufacturing equipment
207,901

 
189,168

Furniture and fixtures
2,012

 
1,897

Leasehold improvements
41,924

 
38,946

Construction in progress
29,930

 
31,060

Subtotal
$
319,325

 
$
294,716

Less accumulated depreciation and amortization
(199,230
)
 
(183,855
)
Total property, plant and equipment, net
$
120,095

 
$
110,861

Accrued expenses:
 
 
 
Loss contingency related to non-cancelable purchase commitments
$
5,822

 
$
6,821

Professional and other consulting fees
4,246

 
5,363

Taxes payable
6,186

 
3,295

Royalties
5,045

 
4,290

Other accrued expenses
15,167

 
13,967

Total accrued expenses
$
36,466

 
$
33,736

 
 
 
(1) 
Included in computer software at June 25, 2016 and December 26, 2015 were $7.9 million and $7.9 million, respectively, related to an enterprise resource planning ("ERP") system that the Company implemented during 2012. The unamortized ERP costs at June 25, 2016 and December 26, 2015 were $3.5 million and $4.0 million, respectively
Accumulated Other Comprehensive Income (Tables)
Summary of Changes in Accumulated Other Comprehensive Income (Loss)
The following table sets forth the changes in accumulated other comprehensive income by component for the six months ended June 25, 2016 (in thousands): 
 
 
Unrealized Gain (Loss)
on Other
Available-for-Sale
Securities
 
Foreign
Currency Translation     
 
     Accumulated     
Tax Effect
 
Total        
Balance at December 26, 2015
 
$
(506
)
 
$
2,389

 
$
(760
)
 
$
1,123

Net current-period other comprehensive income
 
639

 
(3,499
)
 
—

 
(2,860
)
Balance at June 25, 2016
 
$
133

 
$
(1,110
)
 
$
(760
)
 
$
(1,737
)
Basic and Diluted Net Income Per Common Share (Tables)
Computation of Net Income (Loss) Per Common Share Basic and Diluted 
The following table sets forth the computation of net income per common share – basic and diluted (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Numerator:
 
 
 
 
 
 
 
Net income attributable to Infinera Corporation
$
11,483

 
$
17,906

 
$
23,498

 
$
30,272

Denominator:
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
142,396

 
130,349

 
141,600

 
129,094

Effect of dilutive securities:
 
 
 
 
 
 
 
Employee equity plans
2,775

 
5,766

 
3,299

 
6,168

Assumed conversion of convertible senior notes from conversion spread
720

 
4,527

 
1,486

 
3,711

Diluted weighted average common shares outstanding
145,891

 
140,642

 
146,385

 
138,973

 
 
 
 
 
 
 
 
Net income per common share attributable to Infinera Corporation
 
 
 
 
 
 
 
Basic
$
0.08

 
$
0.14

 
$
0.17

 
$
0.23

Diluted
$
0.08

 
$
0.13

 
$
0.16

 
$
0.22

Antidilutive Shares Excluded from Computation of Diluted Net Income (Loss) Per Share 
The following sets forth the potentially dilutive shares excluded from the computation of the diluted net income per share because their effect was anti-dilutive (in thousands):
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Stock options
13

 
10

 
11

 
10

RSUs
2,663

 
73

 
1,721

 
789

PSUs
846

 
129

 
594

 
210

ESPP shares
—

 
—

 
291

 
207

Total
3,522

 
212

 
2,617

 
1,216

Convertible Senior Notes (Tables)
Components of Convertible Senior Notes 
The net carrying amounts of the debt obligation were as follows (in thousands):
 
June 25, 2016
 
December 26, 2015
Principal
$
150,000

 
$
150,000

Unamortized discount (1)
(19,955
)
 
(24,560
)
Unamortized issuance cost (1)
(1,717
)
 
(2,113
)
Net carrying amount
$
128,328

 
$
123,327

 
 
 
(1) 
Unamortized debt conversion discount and issuance costs will be amortized over the remaining life of the Notes, which is approximately two years.
Interest expense recognized related to Notes 
The following table sets forth total interest expense recognized related to the Notes (in thousands): 
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Contractual interest expense
$
656

 
$
656

 
$
1,313

 
$
1,313

Amortization of debt issuance costs
201

 
182

 
396

 
358

Amortization of debt discount
2,331

 
2,109

 
4,605

 
4,166

Total interest expense
$
3,188

 
$
2,947

 
$
6,314

 
$
5,837

Stockholders' Equity (Tables)
Summary of Company's Equity Award Activity - Options 
The following tables summarize the Company’s equity award activity and related information (in thousands, except per share data): 
 
Number of Stock
Options
 
Weighted-Average
Exercise
Price
  Per Share  
 
  Aggregate  
Intrinsic
Value
Outstanding at December 26, 2015
2,511

 
$
7.26

 
$
28,288

Stock options granted
—

 
$
—

 
 
Stock options exercised
(259
)
 
$
4.24

 
$
2,334

Stock options canceled
—

 
$
—

 


Outstanding at June 25, 2016
2,252

 
$
7.60

 
$
7,853

Vested and expected to vest as of June 25, 2016
2,252

 
 
 
$
7,852

Exercisable at June 25, 2016
2,243

 
$
7.60

 
$
7,834

Summary of Company's Equity Award Activity - RSUs 
 
Number of
Restricted
Stock Units
 
Weighted-
Average
 Grant Date 
Fair Value
Per Share
 
  Aggregate  
Intrinsic
Value
Outstanding at December 26, 2015
4,932

 
$
12.76

 
$
91,285

RSUs granted
2,418

 
$
15.08

 


RSUs released
(1,838
)
 
$
10.50

 
$
22,584

RSUs canceled
(186
)
 
$
13.06

 


Outstanding at June 25, 2016
5,326

 
$
14.59

 
$
58,371

Expected to vest at June 25, 2016
4,995

 


 
$
54,748

Summary of Company's Equity Award Activity - PSUs 
 
Number of
Performance
Stock Units
 
Weighted-
Average
 Grant Date 
Fair Value
Per Share
 
  Aggregate  
Intrinsic
Value
Outstanding at December 26, 2015
731

 
$
12.35

 
$
13,540

PSUs granted
647

 
$
15.28

 

PSUs performance earned(1)
154

 
$
9.43

 
 
PSUs released
(462
)
 
$
9.43

 
$
6,650

PSUs canceled
(71
)
 
$
15.65

 

Outstanding at June 25, 2016
999

 
$
14.23

 
$
10,946

Expected to vest at June 25, 2016
962

 

 
$
10,543


 
 
 
(1) 
Represents the additional PSUs awarded resulting from the achievement of performance goals above the performance targets established at grant since the original grants were at 100% of target amounts.
Total Stock Based Compensation Cost for Instruments Granted but Not Yet Amortized 
The following table presents total stock-based compensation cost for instruments granted but not yet amortized, net of estimated forfeitures, of the Company’s equity compensation plans as of June 25, 2016. These costs are expected to be amortized on a straight-line basis over the following weighted-average periods (in thousands, except for weighted-average period):
 
Unrecognized
Compensation
Expense, Net
 
Weighted-
Average Period
(in years)
Stock options
$
35

 
1.6
RSUs
$
58,826

 
2.7
PSUs
$
8,676

 
1.7
Estimated Fair Value of ESPP Shares 
The fair value of the shares was estimated at the date of grant using the following assumptions (expense amounts in thousands):
 
Three Months Ended
 
Six Months Ended
Employee Stock Purchase Plan
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Volatility
56%
 
53%
 
56%
 
53%
Risk-free interest rate
0.52%
 
0.13%
 
0.52%
 
0.13%
Expected life
0.5 years
 
0.5 years
 
0.5 years
 
0.5 years
Estimated fair value
$4.53
 
$5.15
 
4.53
 
$5.15
Total stock-based compensation expense
$1,247
 
$1,077
 
$2,489
 
$2,128
Schedule of Share-based Payment Award, Valuation Assumptions 
The ranges of estimated values of the PSUs granted that are compared to an index, as well as the assumptions used in calculating these values were based on estimates as follows:
 
 
2016
 
2015
 
2014
Index
 
SPGIIPTR
 
SPGIIPTR
 
SPGIIPTR
Index volatility
 
18%
 
18% - 19%
 
25%
Infinera volatility
 
55%
 
48%
 
49% - 50%
Risk-free interest rate
 
0.95% - 1.07%
 
0.97% - 1.10%
 
0.66% - 0.71%
Correlation with index
 
0.58 - 0.59
 
0.52
 
0.60
Estimated fair value
 
$10.31 - $16.62
 
$18.08 - $19.29
 
$6.59 - $7.60
Schedule Of Nonvested Performance Based Units Activity By Grant Year 
The following table summarizes by grant year, the Company’s PSU activity for the six months ended June 25, 2016 (in thousands):
 
 
Total Number of Performance Stock Units
 
2013
 
2014
 
2015
 
2016
Outstanding at December 26, 2015
 
731

 
147

 
260

 
324

 
—

PSUs granted
 
647

 
—

 
—

 
—

 
647

PSUs performance earned(1)
 
154

 
70

 
53

 
31

 
—

PSUs released
 
(462
)
 
(211
)
 
(158
)
 
(93
)
 
—

PSUs canceled
 
(71
)
 
(6
)
 
(8
)
 
(57
)
 
—

Outstanding at June 25, 2016
 
999

 
—

 
147

 
205

 
647

 
 
 
(1) 
Represents the additional PSUs awarded resulting from the achievement of performance goals above the performance targets established at grant since the original grants were at 100% of target amounts.
Summary of Effects of Stock-Based Compensation on Company's Balance Sheets and Statements of Operations 
The following tables summarize the effects of stock-based compensation on the Company’s condensed consolidated balance sheets and statements of operations for the periods presented (in thousands):
 
June 25, 2016
 
December 26, 2015
Stock-based compensation effects in inventory
$
3,579

 
$
3,129

Stock-based compensation effects in deferred inventory cost
$
13

 
$
13

Stock-based compensation effects in property, plant and equipment, net
$
80

 
$
93

 
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Stock-based compensation effects included in net income before income taxes
 
 
 
 
 
 
 
Cost of revenue
$
746

 
$
613

 
$
1,419

 
$
1,095

Research and development
3,904

 
2,817

 
6,225

 
5,395

Sales and marketing
2,945

 
2,070

 
5,180

 
3,791

General and administration
2,486

 
1,829

 
4,385

 
3,495

 
$
10,081

 
$
7,329

 
$
17,209

 
$
13,776

Cost of revenue – amortization from balance sheet (1)
912

 
880

 
1,771

 
1,641

Total stock-based compensation expense
$
10,993

 
$
8,209

 
$
18,980

 
$
15,417

 
 
 
(1) 
Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period.

Segment Information (Tables)
Revenue and Long-Lived Assets by Geographic Region 
Revenue by geographic region is based on the shipping address of the customer. The following tables set forth revenue and long-lived assets by geographic region (in thousands):
Revenue
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Americas:
 
 
 
 
 
 
 
United States
$
166,710

 
$
154,762

 
$
341,225

 
$
281,765

Other Americas
11,267

 
11,984

 
14,526

 
19,070

 
177,977

 
166,746

 
355,751

 
300,835

Europe, Middle East and Africa
64,570

 
26,629

 
124,446

 
72,508

Asia Pacific and Japan
16,275

 
13,971

 
23,443

 
20,865

Total revenue
$
258,822

 
$
207,346

 
$
503,640

 
$
394,208

Property, Plant and Equipment, Net 
Property, plant and equipment, net
 
June 25, 2016
 
December 26, 2015
United States
$
112,289

 
$
102,702

Other Americas
278

 
173

 
112,567

 
102,875

Europe, Middle East and Africa
5,001

 
5,417

Asia Pacific and Japan
2,527

 
2,569

Total property, plant and equipment, net
$
120,095

 
$
110,861

Guarantees (Tables)
Activity Related to Product Warranty
Activity related to product warranty was as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
June 25, 2016
 
June 27, 2015
 
June 25, 2016
 
June 27, 2015
Beginning balance
$
39,999

 
$
25,539

 
$
38,844

 
$
27,040

Charges to operations
7,308

 
6,019

 
14,062

 
11,367

Utilization
(3,702
)
 
(3,003
)
 
(8,689
)
 
(4,821
)
Change in estimate(1)
(2,616
)
 
(116
)
 
(3,228
)
 
(5,147
)
Balance at the end of the period
$
40,989

 
$
28,439

 
$
40,989

 
$
28,439

 
 
 
(1) 
The Company records hardware warranty liabilities based on the latest quality and cost information available as of that date. The changes in estimate shown here are due to changes in overall actual failure rates, the mix of new versus used units related to replacement of failed units, and changes in the estimated cost of repair. As the Company's products mature over time, failure rates and repair costs generally decline leading to favorable changes in warranty reserves.
Basis of Presentation and Significant Accounting Polices (Details) (USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 25, 2016
customer
Jun. 27, 2015
customer
Jun. 25, 2016
customer
Jun. 27, 2015
customer
Jun. 25, 2016
Sales revenue, net
Customer One
Customer concentration risk
Jun. 27, 2015
Sales revenue, net
Customer One
Customer concentration risk
Jun. 25, 2016
Sales revenue, net
Customer One
Customer concentration risk
Jun. 27, 2015
Sales revenue, net
Customer One
Customer concentration risk
Jun. 25, 2016
Sales revenue, net
Customer Two
Customer concentration risk
Jun. 27, 2015
Sales revenue, net
Customer Two
Customer concentration risk
Jun. 25, 2016
Sales revenue, net
Customer Two
Customer concentration risk
Jun. 27, 2015
Sales revenue, net
Customer Two
Customer concentration risk
Jun. 27, 2015
Sales revenue, net
Customer Three
Customer concentration risk
Jun. 25, 2016
Sales revenue, net
Customer Three
Customer concentration risk
Jun. 27, 2015
Sales revenue, net
Customer Three
Customer concentration risk
Jun. 27, 2015
Sales revenue, net
Customer Four
Customer concentration risk
Jun. 25, 2016
1.75% Convertible Senior Notes Due June 1, 2018
May 30, 2013
1.75% Convertible Senior Notes Due June 1, 2018
Concentration Risk [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 150,000,000.0 
Debt instrument interest percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.75% 
1.75% 
Customers accounting for a significant portion of revenue
2 
3 
3 
4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk
 
 
 
 
15.00% 
23.00% 
16.00% 
14.00% 
11.00% 
16.00% 
13.00% 
13.00% 
11.00% 
12.00% 
12.00% 
11.00% 
 
 
Recent Accounting Pronouncements (Details) (Accounting Standards Update 2015-03, USD $)
In Millions, unless otherwise specified
Dec. 26, 2015
Other noncurrent assets
 
Debt issuance costs
$ (2.1)
Long-term debt
 
Debt issuance costs
$ 2.1 
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) (Fair value, measurements, recurring, USD $)
In Thousands, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Assets
 
 
Total assets
$ 264,824 
$ 253,285 
Foreign currency exchange forward contracts
 
 
Assets
 
 
Total assets
346 
490 
Liabilities
 
 
Total liabilities
(277)
(44)
Money market funds
 
 
Assets
 
 
Total assets
34,077 
37,829 
Certificates of deposit
 
 
Assets
 
 
Total assets
2,604 
5,001 
Commercial paper
 
 
Assets
 
 
Total assets
52,433 
10,997 
Corporate bonds
 
 
Assets
 
 
Total assets
108,257 
163,400 
U.S. agency notes
 
 
Assets
 
 
Total assets
10,775 
10,717 
U.S. treasuries
 
 
Assets
 
 
Total assets
56,332 
24,851 
Level 1
 
 
Assets
 
 
Total assets
90,409 
62,680 
Level 1 |
Foreign currency exchange forward contracts
 
 
Assets
 
 
Total assets
0 
0 
Liabilities
 
 
Total liabilities
0 
0 
Level 1 |
Money market funds
 
 
Assets
 
 
Total assets
34,077 
37,829 
Level 1 |
Certificates of deposit
 
 
Assets
 
 
Total assets
0 
0 
Level 1 |
Commercial paper
 
 
Assets
 
 
Total assets
0 
0 
Level 1 |
Corporate bonds
 
 
Assets
 
 
Total assets
0 
0 
Level 1 |
U.S. agency notes
 
 
Assets
 
 
Total assets
0 
0 
Level 1 |
U.S. treasuries
 
 
Assets
 
 
Total assets
56,332 
24,851 
Level 2
 
 
Assets
 
 
Total assets
174,415 
190,605 
Level 2 |
Foreign currency exchange forward contracts
 
 
Assets
 
 
Total assets
346 
490 
Liabilities
 
 
Total liabilities
(277)
(44)
Level 2 |
Money market funds
 
 
Assets
 
 
Total assets
0 
0 
Level 2 |
Certificates of deposit
 
 
Assets
 
 
Total assets
2,604 
5,001 
Level 2 |
Commercial paper
 
 
Assets
 
 
Total assets
52,433 
10,997 
Level 2 |
Corporate bonds
 
 
Assets
 
 
Total assets
108,257 
163,400 
Level 2 |
U.S. agency notes
 
 
Assets
 
 
Total assets
10,775 
10,717 
Level 2 |
U.S. treasuries
 
 
Assets
 
 
Total assets
0 
0 
Level 3
 
 
Assets
 
 
Total assets
0 
0 
Level 3 |
Foreign currency exchange forward contracts
 
 
Assets
 
 
Total assets
0 
0 
Liabilities
 
 
Total liabilities
0 
0 
Level 3 |
Money market funds
 
 
Assets
 
 
Total assets
0 
0 
Level 3 |
Certificates of deposit
 
 
Assets
 
 
Total assets
0 
0 
Level 3 |
Commercial paper
 
 
Assets
 
 
Total assets
0 
0 
Level 3 |
Corporate bonds
 
 
Assets
 
 
Total assets
0 
0 
Level 3 |
U.S. agency notes
 
 
Assets
 
 
Total assets
0 
0 
Level 3 |
U.S. treasuries
 
 
Assets
 
 
Total assets
$ 0 
$ 0 
Fair Value Measurements - Investments at Fair Value (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
$ 264,345 
$ 253,303 
Gross Unrealized Gains
184 
1 
Gross Unrealized Losses
(51)
(509)
Fair Value
264,478 
252,795 
Money market funds
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
34,077 
37,829 
Gross Unrealized Gains
0 
0 
Gross Unrealized Losses
0 
0 
Fair Value
34,077 
37,829 
Certificates of deposit
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
2,600 
5,000 
Gross Unrealized Gains
4 
1 
Gross Unrealized Losses
0 
0 
Fair Value
2,604 
5,001 
Commercial paper
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
52,450 
10,997 
Gross Unrealized Gains
0 
0 
Gross Unrealized Losses
(17)
0 
Fair Value
52,433 
10,997 
Corporate bonds
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
108,185 
163,797 
Gross Unrealized Gains
97 
0 
Gross Unrealized Losses
(25)
(397)
Fair Value
108,257 
163,400 
U.S. agency notes
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
10,784 
10,786 
Gross Unrealized Gains
0 
0 
Gross Unrealized Losses
(9)
(69)
Fair Value
10,775 
10,717 
U.S. treasuries
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
56,249 
24,894 
Gross Unrealized Gains
83 
0 
Gross Unrealized Losses
0 
(43)
Fair Value
$ 56,332 
$ 24,851 
Fair Value Measurements - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 25, 2016
Dec. 26, 2015
Fair Value Disclosures [Abstract]
 
 
Available-for-sale investments
22 months 
 
Cash
$ 81.2 
$ 98.4 
Cost-method Investment - Additional Information (Details) (USD $)
6 Months Ended
Jun. 25, 2016
Dec. 26, 2015
Investments, All Other Investments [Abstract]
 
 
Cost-method investment
$ 14,500,000 
$ 14,500,000 
Less than percent of voting securities
20.00% 
 
Impairment charge on cost-method investments
$ 0 
 
Derivative Instruments - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
 
 
 
 
Foreign currency exchange forward contracts, maturities
1 year 
 
 
 
Before-tax effect of foreign currency exchange forward contracts not designated as hedging instruments, gain (loss)
$ (0.1)
$ (0.9)
$ (0.6)
$ (2.8)
Derivative Instruments - Fair Value of Derivative Instruments Not Designated as Hedging Activities (Details) (USD $)
Jun. 25, 2016
Dec. 26, 2015
Derivative [Line Items]
 
 
Prepaid expenses and other current assets
$ 29,210,000 
$ 29,511,000 
Not designated as hedging instrument
 
 
Derivative [Line Items]
 
 
Prepaid expenses and other current assets
346,000 
490,000 
Other accrued liabilities
(277,000)
(44,000)
Not designated as hedging instrument |
Related to euro denominated receivables
 
 
Derivative [Line Items]
 
 
Forward contract notional amount
35,923,000 1
46,753,000 1
Prepaid expenses and other current assets
312,000 
319,000 
Other accrued liabilities
(277,000)
(44,000)
Not designated as hedging instrument |
Related to British pound denominated receivables
 
 
Derivative [Line Items]
 
 
Forward contract notional amount
6,660,000 1
6,686,000 1
Prepaid expenses and other current assets
34,000 
171,000 
Other accrued liabilities
0 
0 
Not designated as hedging instrument |
Related to restricted cash
 
 
Derivative [Line Items]
 
 
Forward contract notional amount
256,000 1
252,000 1
Prepaid expenses and other current assets
0 
0 
Other accrued liabilities
$ 0 
$ 0 
Business Combination (Details)
In Thousands, except Share data in Millions, unless otherwise specified
0 Months Ended 12 Months Ended
Jun. 25, 2016
USD ($)
Dec. 26, 2015
USD ($)
Dec. 27, 2014
USD ($)
Aug. 20, 2015
Transmode
USD ($)
Jun. 25, 2016
Transmode
USD ($)
Jun. 25, 2016
Transmode
SEK (kr)
Aug. 20, 2015
Transmode
USD ($)
Dec. 31, 2016
Transmode
Scenario, forecast
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
Percentage of acquiree common shares acquired
 
 
 
 
 
 
95.80% 
4.20% 
Remaining acquiree shares (in shares)
 
 
 
 
 
 
 
1.2 
Noncontrolling interest
$ 14,532 
$ 14,910 
$ 0 
 
 
 
$ 15,372 
 
Security pledge associated with Squeeze-out Proceedings
24,942 
0 
 
 
24,900 
210,800 
 
 
Total consideration transfered
 
 
 
$ 350,640 
 
 
 
 
Business Combination Total Consideration For Acquisition (Details) (Transmode, USD $)
In Thousands, except Share data, unless otherwise specified
0 Months Ended
Aug. 20, 2015
Transmode
 
Business Acquisition [Line Items]
 
Cash
$ 181,133 
Common stock (7,873,055 shares)
169,507 
Total
$ 350,640 
Common shares issued in acquisition (in shares)
7,873,055 
Business Combination Allocation Of Purchase Consideration (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Dec. 27, 2014
Aug. 20, 2015
Transmode
Aug. 20, 2015
Scenario, previously reported
Transmode
Aug. 20, 2015
Scenario, adjustment
Transmode
Business Acquisition [Line Items]
 
 
 
 
 
 
Cash
 
 
 
$ 36,688 
$ 36,688 
$ 0 
Accounts receivable
 
 
 
16,183 
16,183 
0 
Inventory
 
 
 
19,886 
19,886 
0 
Other assets
 
 
 
8,320 
8,320 
0 
Intangible assets, net
 
 
 
161,845 
161,845 
0 
Goodwill
189,982 
191,560 
 
187,889 
187,220 
669 
Current liabilities
 
 
 
(25,120)
(24,320)
(800)
Deferred tax liabilities
 
 
 
(39,090)
(39,221)
131 
Long-term liabilities
 
 
 
(589)
(589)
0 
Noncontrolling interest
(14,532)
(14,910)
0 
(15,372)
(15,372)
0 
Total net assets
 
 
 
$ 350,640 
$ 350,640 
$ 0 
Business Combination Intangible Assets Acquired (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 0 Months Ended
Jun. 25, 2016
Dec. 26, 2015
Jun. 25, 2016
Trade name
Dec. 26, 2015
Trade name
Jun. 25, 2016
Customer relationships
Dec. 26, 2015
Customer relationships
Jun. 25, 2016
Developed technology
Dec. 26, 2015
Developed technology
Aug. 20, 2015
Transmode
Aug. 20, 2015
Transmode
In-process technology
Aug. 20, 2015
Transmode
Trade name
Aug. 20, 2015
Transmode
Customer relationships
Aug. 20, 2015
Transmode
Developed technology
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Finite lived intangible assets acquired
 
 
 
 
 
 
 
 
 
 
$ 234 
$ 49,033 
$ 92,450 
Indefinite-lived intangible assets acquired
 
 
 
 
 
 
 
 
 
20,128 
 
 
 
Intangible assets gross
$ 164,465 
$ 165,826 
 
 
 
 
 
 
$ 161,845 
 
 
 
 
Estimated useful life (in years)
5 years 3 months 18 days 
5 years 8 months 16 days 
0 days 
1 month 24 days 
7 years 2 months 12 days 
7 years 7 months 24 days 
4 years 2 months 12 days 
4 years 7 months 24 days 
 
 
6 months 
8 years 
5 years 
Business Combination Noncontrolling Interest (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Dec. 26, 2015
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
 
 
 
 
 
Beginning noncontrolling interest
 
 
$ 14,910 
$ 0 
$ 0 
Less: Loss attributable to noncontrolling interest
(171)
0 
(378)
0 
(463)
Ending noncontrolling interest
14,532 
 
14,532 
 
14,910 
Noncontrolling Interest
 
 
 
 
 
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
 
 
 
 
 
Noncontrolling interest investment
 
 
$ 0 
 
$ 15,373 
Goodwill and Intangible Assets (Details) (USD $)
3 Months Ended 6 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
In-process technology
Dec. 26, 2015
In-process technology
Jun. 25, 2016
Developed technology
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
 
 
 
 
Amortization expense
$ 6,600,000 
$ 0 
$ 13,100,000 
$ 0 
 
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
Finite-lived intangible assets, period increase (decrease)
 
 
 
 
 
 
5,200,000 
Maximum finite-lived intangible asset, useful life (in years)
 
 
 
 
 
 
10 years 
Indefinite-lived intangible assets
 
 
 
 
$ 15,359,000 
$ 20,521,000 
 
Goodwill and Intangible Assets Goodwill Roll Forward (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 25, 2016
Goodwill [Roll Forward]
 
Balance as of December 26, 2015
$ 191,560 
Foreign currency translation adjustments
(1,578)
Accumulated impairment loss
0 
Balance as of June 25, 2016
$ 189,982 
Goodwill and Intangible Assets - Purchased Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 25, 2016
Dec. 26, 2015
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 149,106 
$ 145,305 
Accumulated Amortization
(22,357)
(9,507)
Net Carrying Amount
126,749 
135,798 
Intangible assets gross
164,465 
165,826 
Intangible assets
142,108 
156,319 
Weighted average remaining useful life (in years)
5 years 3 months 18 days 
5 years 8 months 16 days 
In-process technology
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Indefinite-lived intangible assets
15,359 
20,521 
Trade name
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
237 
239 
Accumulated Amortization
(237)
(168)
Net Carrying Amount
0 
71 
Weighted average remaining useful life (in years)
0 days 
1 month 24 days 
Customer relationships
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
49,579 
49,991 
Accumulated Amortization
(5,278)
(2,197)
Net Carrying Amount
44,301 
47,794 
Weighted average remaining useful life (in years)
7 years 2 months 12 days 
7 years 7 months 24 days 
Developed technology
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
98,471 
94,256 
Accumulated Amortization
(16,302)
(6,629)
Net Carrying Amount
82,169 
87,627 
Weighted average remaining useful life (in years)
4 years 2 months 12 days 
4 years 7 months 24 days 
Other intangible assets
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
819 
819 
Accumulated Amortization
(540)
(513)
Net Carrying Amount
$ 279 
$ 306 
Weighted average remaining useful life (in years)
5 years 1 month 6 days 
5 years 7 months 13 days 
Goodwill and Intangible Assets Future Amortization Expense (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Net Carrying Amount
$ 126,749 
$ 135,798 
Remainder of 2016
12,903 
 
2017
25,806 
 
2018
25,806 
 
2019
25,677 
 
2020
19,093 
 
2021 and Thereafter
$ 17,464 
 
Balance Sheet Details Selected Balance Sheet Items (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Inventory:
 
 
Raw materials
$ 39,062 
$ 27,879 
Work in process
60,988 
52,599 
Finished goods
102,230 
94,221 
Total inventory
202,280 
174,699 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
319,325 
294,716 
Less accumulated depreciation and amortization
(199,230)
(183,855)
Total property, plant and equipment, net
120,095 
110,861 
Accrued expenses:
 
 
Loss contingency related to non-cancelable purchase commitments
5,822 
6,821 
Professional and other consulting fees
4,246 
5,363 
Taxes payable
6,186 
3,295 
Royalties
5,045 
4,290 
Other accrued expenses
15,167 
13,967 
Total accrued expenses
36,466 
33,736 
Computer hardware
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
12,388 
11,097 
Computer software
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
25,170 1
22,548 1
Laboratory and manufacturing equipment
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
207,901 
189,168 
Furniture and fixtures
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
2,012 
1,897 
Leasehold improvements
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
41,924 
38,946 
Construction in progress
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
29,930 
31,060 
Enterprise Resource Planning Systems
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
7,900 
7,900 
Total property, plant and equipment, net
$ 3,500 
$ 4,000 
Accumulated Other Comprehensive Income - Summary of Changes in Accumulated Other Comprehensive Loss (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
 
 
 
 
Beginning balance
 
 
$ 1,123 
 
Net current-period other comprehensive income
(6,511)
51 
(2,860)
159 
Ending balance
(1,737)
 
(1,737)
 
Unrealized gain (loss) on other available-for-sale securities
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
 
 
 
 
Beginning balance
 
 
(506)
 
Net current-period other comprehensive income
 
 
639 
 
Ending balance
133 
 
133 
 
Foreign currency translation
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
 
 
 
 
Beginning balance
 
 
2,389 
 
Net current-period other comprehensive income
 
 
(3,499)
 
Ending balance
(1,110)
 
(1,110)
 
Accumulated tax effect
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
 
 
 
 
Beginning balance
 
 
(760)
 
Net current-period other comprehensive income
 
 
0 
 
Ending balance
$ (760)
 
$ (760)
 
Basic and Diluted Net Income Per Common Share - Computation of Net Income Per Common Share Basic and Diluted (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Numerator:
 
 
 
 
Net income attributable to Infinera Corporation
$ 11,483 
$ 17,906 
$ 23,498 
$ 30,272 
Denominator:
 
 
 
 
Basic weighted average common shares outstanding (in shares)
142,396 
130,349 
141,600 
129,094 
Effect of dilutive securities:
 
 
 
 
Employee equity plans (in shares)
2,775 
5,766 
3,299 
6,168 
Assumed conversion of convertible senior notes from conversion spread (in shares)
720 
4,527 
1,486 
3,711 
Diluted weighted average common shares outstanding (in shares)
145,891 
140,642 
146,385 
138,973 
Net income per common share attributable to Infinera Corporation
 
 
 
 
Basic (in usd per share)
$ 0.08 
$ 0.14 
$ 0.17 
$ 0.23 
Diluted (in usd per share)
$ 0.08 
$ 0.13 
$ 0.16 
$ 0.22 
Basic and Diluted Net Income Per Common Share - Antidilutive Shares Excluded from Computation of Diluted Income Loss Per Share (Details)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation (in shares)
3,522 
212 
2,617 
1,216 
Stock options
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation (in shares)
13 
10 
11 
10 
RSUs
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation (in shares)
2,663 
73 
1,721 
789 
PSUs
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation (in shares)
846 
129 
594 
210 
ESPP shares
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation (in shares)
0 
0 
291 
207 
Convertible Senior Notes - Additional Information (Details) (USD $)
1 Months Ended 6 Months Ended 1 Months Ended 6 Months Ended 1 Months Ended 3 Months Ended 1 Months Ended
May 31, 2013
Jun. 25, 2016
Mar. 25, 2016
Dec. 26, 2015
May 30, 2013
Dec. 26, 2015
Other noncurrent assets
Accounting Standards Update 2015-03
Dec. 26, 2015
Long-term debt
Accounting Standards Update 2015-03
May 31, 2013
1.75% Convertible Senior Notes Due June 1, 2018
Jun. 25, 2016
1.75% Convertible Senior Notes Due June 1, 2018
Dec. 26, 2015
1.75% Convertible Senior Notes Due June 1, 2018
Jun. 27, 2015
1.75% Convertible Senior Notes Due June 1, 2018
May 30, 2013
1.75% Convertible Senior Notes Due June 1, 2018
May 31, 2013
Convertible senior notes, conversion circumstance one
D
Jun. 25, 2016
Convertible senior notes, conversion circumstance one
May 31, 2013
Convertible senior notes, conversion circumstance two
D
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from issuance of debt, net
 
 
 
 
 
 
 
 
$ 144,500,000 
 
 
 
 
 
 
Initial conversion rate per $1,000 principal amount of Notes
 
 
 
 
 
 
 
0.0794834 
 
 
 
 
 
 
 
Initial conversion price (in usd per share)
 
 
 
 
 
 
 
 
 
 
 
$ 12.58 
 
 
 
Threshold trading days for debt instrument conversion
 
 
 
 
 
 
 
 
 
 
 
 
20 
 
 
Convertible threshold consecutive trading days
 
 
 
 
 
 
 
 
 
 
 
 
30 days 
30 days 
5 days 
Convertible threshold minimum percentage
 
 
 
 
 
 
 
 
 
 
 
 
130.00% 
 
 
Convertible threshold business days
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 
Debt instrument, convertible, if-converted value in excess of principal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
Convertible, threshold maximum percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98.00% 
Purchase price as a percentage on principal amount of the notes upon the occurrence of a fundamental change
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Remaining life of note
 
2 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net equity component carrying amount
 
 
 
 
 
 
 
 
43,300,000 
43,300,000 
 
 
 
 
 
Debt issuance costs, gross
 
 
 
 
5,500,000 
 
 
 
 
 
 
 
 
 
 
Debt issuance costs
 
 
 
 
 
(2,100,000)
2,100,000 
 
 
 
 
 
 
 
 
Deferred tax liability
 
33,264,000 
 
35,731,000 
 
 
 
 
17,000,000 
 
 
 
 
 
 
Debt instrument interest percentage
 
 
 
 
 
 
 
 
1.75% 
 
 
1.75% 
 
 
 
Additional effective rate of interest to be used on amortized carrying value
 
 
 
 
 
 
 
 
10.23% 
 
10.23% 
 
 
 
 
Total estimated fair value of the notes
 
$ 167,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closing price of common stock (in usd per share)
 
 
$ 10.96 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible Senior Notes - Components of Convertible Senior Notes (Details) (USD $)
Jun. 25, 2016
Dec. 26, 2015
May 30, 2013
Debt Instrument [Line Items]
 
 
 
Unamortized discount
$ (19,955,000)1
$ (24,560,000)1
 
Unamortized issuance cost
(1,717,000)1
(2,113,000)1
 
1.75% Convertible Senior Notes Due June 1, 2018
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
 
 
150,000,000.0 
Net carrying amount
128,328,000 
123,327,000 
 
1.75% Convertible Senior Notes Due June 1, 2018 |
Long-term debt
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
$ 150,000,000 
$ 150,000,000 
 
Convertible Senior Notes - Interest Expense Recognized Related to Notes Prior to Capitalization of Interest (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Debt Disclosure [Abstract]
 
 
 
 
Contractual interest expense
$ 656 
$ 656 
$ 1,313 
$ 1,313 
Amortization of debt issuance costs
201 
182 
396 
358 
Amortization of debt discount
2,331 
2,109 
4,605 
4,166 
Total interest expense
$ 3,188 
$ 2,947 
$ 6,314 
$ 5,837 
Stockholders' Equity - Additional Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Closing price of common stock (in usd per share)
$ 10.96 
 
$ 10.96 
 
2016 Equity Incentive Plan
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Reserved Common stock for issuance of options (in shares)
7,400,000 
 
7,400,000 
 
2016 Plan maximum term
 
 
10 years 
 
Restricted stock units
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Number of shares available for grant cost (in shares)
 
 
2,418,000 
 
Amortization of stock-based compensation
$ 7.7 
$ 5.9 
$ 13.8 
$ 11.1 
PSUs
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Number of shares available for grant cost (in shares)
 
 
647,000 
 
PSUs |
Two Thousand And Seven Equity Incentive Plan |
Minimum
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Ranges of number of shares issued on vesting of PSUs
 
 
0 
 
PSUs |
Two Thousand And Seven Equity Incentive Plan |
Maximum
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Ranges of number of shares issued on vesting of PSUs
 
 
2.0 
 
PSUs |
Existing employees |
Vesting 1
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Duration of grants based on shareholder return of common stock price versus designated index
 
 
1 year 
 
PSUs |
Existing employees |
Vesting 2
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Duration of grants based on shareholder return of common stock price versus designated index
 
 
2 years 
 
PSUs |
Existing employees |
Vesting 3
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Duration of grants based on shareholder return of common stock price versus designated index
 
 
3 years 
 
Performance stock unit grants
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Amortization of stock-based compensation
$ 2.3 
$ 1.3 
$ 3.2 
$ 2.2 
Stockholders' Equity - Summary of Company's Equity Award Activity - Options (Details) (Stock options, USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Jun. 25, 2016
Stock options
 
Number of Stock Options
 
Number of options, beginning balance (in shares)
2,511 
Number of options, granted (in shares)
0 
Number of options, exercised (in shares)
(259)
Number of options, canceled (in shares)
0 
Number of options, ending balance (in shares)
2,252 
Number of options, vested and expected to vest (in shares)
2,252 
Number of options, exercisable (in shares)
2,243 
Weighted-Average Exercise Price Per Share
 
Weighted-average exercise price per share, beginning balance (in usd per share)
$ 7.26 
Weighted-average exercise per share, options granted (in usd per share)
$ 0.00 
Weighted-average exercise price per share, options exercised (in usd per share)
$ 4.24 
Weighted-average exercise price per share, options canceled (in usd per share)
$ 0.00 
Weighted-average exercise price per share, ending balance (in usd per share)
$ 7.60 
Average exercise price per dhare, exercisable (in usd per share)
$ 7.60 
Aggregate Intrinsic Value
 
Aggregate intrinsic value, beginning balance
$ 28,288 
Aggregate intrinsic value, options exercised
2,334 
Aggregate intrinsic value, ending balance
7,853 
Aggregate intrinsic value, vested and expected to vest
7,852 
Aggregate intrinsic value, exercisable
$ 7,834 
Stockholders' Equity - Summary of Company's Equity Award Activity - RSUs (Details) (Restricted stock units, USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Jun. 25, 2016
Restricted stock units
 
Number of Restricted Stock Units
 
Number of restricted/performance stock units, beginning balance (in shares)
4,932 
Number of shares available for grant cost (in shares)
2,418 
Number of restricted/performance stock units, released (in shares)
(1,838)
Number of restricted stock units, canceled (in shares)
(186)
Number of restricted/performance stock units, ending balance (in shares)
5,326 
Number of restricted stock units, expected to vest (in shares)
4,995 
Weighted- Average Grant Date Fair Value Per Share
 
Weighted-average grant date fair value per share, beginning balance (in usd per share)
$ 12.76 
Weighted-average fair value, granted (in usd per share)
$ 15.08 
Weighted-average grant date fair value per share, released (in usd per share)
$ 10.50 
Weighted-average grant date fair value per dhare, canceled (in usd per share)
$ 13.06 
Weighted-average grant date fair value per share, ending balance (in usd per share)
$ 14.59 
Aggregate Intrinsic Value
 
Aggregate intrinsic value, beginning balance
$ 91,285 
Aggregate intrinsic value, RSUs released
22,584 
Aggregate intrinsic value, ending balance
58,371 
Aggregate intrinsic value, expected to vest
$ 54,748 
Stockholders' Equity - Summary of Company's Equity Award Activity - PSUs (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 25, 2016
Jun. 25, 2016
Dec. 26, 2015
Dec. 27, 2014
PSUs
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
SPGIIPTR Index Expected Volatility Rate
18.00% 
 
 
25.00% 
Volatility
55.00% 
 
48.00% 
 
Correlation With SPGIIPTR Index
 
 
0.52 
0.60 
Number of Performance Stock Units
 
 
 
 
Number of restricted/performance stock units, beginning balance (in shares)
 
731 
 
 
Number of shares available for grant cost (in shares)
 
647 
 
 
Number of restricted/performance stock units, released (in shares)
 
(462)
 
 
Number of restricted stock units, canceled (in shares)
 
(71)
 
 
Number of restricted/performance stock units, ending balance (in shares)
999 
999 
731 
 
Number of restricted stock units, expected to vest (in shares)
962 
962 
 
 
Weighted- Average Grant Date Fair Value Per Share
 
 
 
 
Weighted-average grant date fair value per share, beginning balance (in usd per share)
 
$ 12.35 
 
 
Weighted-average fair value, granted (in usd per share)
 
$ 15.28 
 
 
Weighted-average grant date fair value per share, released (in usd per share)
 
$ 9.43 
 
 
Weighted-average grant date fair value per dhare, canceled (in usd per share)
 
$ 15.65 
 
 
Weighted-average grant date fair value per share, ending balance (in usd per share)
$ 14.23 
$ 14.23 
$ 12.35 
 
Aggregate Intrinsic Value
 
 
 
 
Aggregate intrinsic value, beginning balance
 
$ 13,540 
 
 
Aggregate Intrinsic Value, PSUs released
 
6,650 
 
 
Aggregate intrinsic value, ending balance
10,946 
10,946 
13,540 
 
Aggregate intrinsic value, expected to vest
$ 10,543 
$ 10,543 
 
 
Additional grants for performance
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of shares available for grant cost (in shares)
 
154 1
 
 
Weighted- Average Grant Date Fair Value Per Share
 
 
 
 
Weighted-average fair value, granted (in usd per share)
 
$ 9.43 1
 
 
2013 |
PSUs
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of restricted/performance stock units, beginning balance (in shares)
 
147 
 
 
Number of shares available for grant cost (in shares)
 
0 
 
 
Number of restricted/performance stock units, released (in shares)
 
(211)
 
 
Number of restricted stock units, canceled (in shares)
 
(6)
 
 
Number of restricted/performance stock units, ending balance (in shares)
0 
0 
 
 
2013 |
Additional grants for performance
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of shares available for grant cost (in shares)
 
70 1
 
 
2014 |
PSUs
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of restricted/performance stock units, beginning balance (in shares)
 
260 
 
 
Number of shares available for grant cost (in shares)
 
0 
 
 
Number of restricted/performance stock units, released (in shares)
 
(158)
 
 
Number of restricted stock units, canceled (in shares)
 
(8)
 
 
Number of restricted/performance stock units, ending balance (in shares)
147 
147 
 
 
2014 |
Additional grants for performance
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of shares available for grant cost (in shares)
 
53 1
 
 
2015 |
PSUs
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of restricted/performance stock units, beginning balance (in shares)
 
324 
 
 
Number of shares available for grant cost (in shares)
 
0 
 
 
Number of restricted/performance stock units, released (in shares)
 
(93)
 
 
Number of restricted stock units, canceled (in shares)
 
(57)
 
 
Number of restricted/performance stock units, ending balance (in shares)
205 
205 
 
 
2015 |
Additional grants for performance
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of shares available for grant cost (in shares)
 
31 1
 
 
2016 |
PSUs
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of restricted/performance stock units, beginning balance (in shares)
 
0 
 
 
Number of shares available for grant cost (in shares)
 
647 
 
 
Number of restricted/performance stock units, released (in shares)
 
0 
 
 
Number of restricted stock units, canceled (in shares)
 
0 
 
 
Number of restricted/performance stock units, ending balance (in shares)
647 
647 
 
 
2016 |
Additional grants for performance
 
 
 
 
Number of Performance Stock Units
 
 
 
 
Number of shares available for grant cost (in shares)
 
0 1
 
 
Minimum |
PSUs
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
SPGIIPTR Index Expected Volatility Rate
 
 
18.00% 
 
Volatility
 
 
 
49.00% 
Risk-free interest rate
 
0.95% 
0.97% 
0.66% 
Correlation With SPGIIPTR Index
 
0.58 
 
 
Weighted- Average Grant Date Fair Value Per Share
 
 
 
 
Weighted-average fair value, granted (in usd per share)
$ 12.10 
$ 10.31 
$ 18.08 
$ 6.59 
Maximum |
PSUs
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
SPGIIPTR Index Expected Volatility Rate
 
 
19.00% 
 
Volatility
 
 
 
50.00% 
Risk-free interest rate
 
1.07% 
1.10% 
0.71% 
Correlation With SPGIIPTR Index
 
0.59 
 
 
Weighted- Average Grant Date Fair Value Per Share
 
 
 
 
Weighted-average fair value, granted (in usd per share)
$ 16.62 
$ 16.62 
$ 19.29 
$ 7.60 
Stockholders' Equity - Total Stock Based Compensation Cost for Instruments Granted but Not Yet Amortized (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 25, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Stock options, unrecognized compensation expense, net
$ 35 
Stock options, weighted-average period (in years)
1 year 6 months 19 days 
Restricted stock units
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unrecognized compensation expense, net
58,826 
Weighted-average period (in years)
2 years 8 months 23 days 
PSUs
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unrecognized compensation expense, net
$ 8,676 
Weighted-average period (in years)
1 year 8 months 12 days 
Stockholders' Equity - Estimated Fair Value of ESPP Shares (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Stock-based compensation expense
$ 10,993 
$ 8,209 
$ 18,980 
$ 15,417 
Employee Stock Purchase Plans
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Volatility
56.00% 
53.00% 
56.00% 
53.00% 
Risk-free interest rate
0.52% 
0.13% 
0.52% 
0.13% 
Expected life
6 months 
6 months 
6 months 
6 months 
Estimated fair value (in usd per share)
$ 4.53 
$ 5.15 
$ 4.53 
$ 5.15 
Stock-based compensation expense
$ 1,247 
$ 1,077 
$ 2,489 
$ 2,128 
Stockholders' Equity - Summary of Effects of Stock-Based Compensation on Company's Balance Sheets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Stock-based compensation effects in inventory
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects of stock based compensation
$ 3,579 
$ 3,129 
Stock-based compensation effects in deferred inventory cost
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects of stock based compensation
13 
13 
Stock-based compensation effects in fixed assets
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects of stock based compensation
$ 80 
$ 93 
Stockholders' Equity - Summary of Effects of Stock-Based Compensation on Company's Statements of Operations (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income before income taxes
$ 10,081 
$ 7,329 
$ 17,209 
$ 13,776 
Cost of revenue - amortization from balance sheet
912 1
880 1
1,771 1
1,641 1
Stock-based compensation expense
10,993 
8,209 
18,980 
15,417 
Cost of revenue
 
 
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income before income taxes
746 
613 
1,419 
1,095 
Research and development
 
 
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income before income taxes
3,904 
2,817 
6,225 
5,395 
Sales and marketing
 
 
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income before income taxes
2,945 
2,070 
5,180 
3,791 
General and administration
 
 
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income before income taxes
$ 2,486 
$ 1,829 
$ 4,385 
$ 3,495 
Stockholders' Equity - Ranges of Estimated Values of Stock Options and Performance-Based Stock Options Granted (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Allocated share-based compensation expense
$ 10,993 
$ 8,209 
$ 18,980 
$ 15,417 
Stock options
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Allocated share-based compensation expense
$ 7 
$ 70 
 
 
Income Taxes - Additional Information (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Business Acquisition [Line Items]
 
 
 
 
Provision (benefit) for income taxes
$ 1,475,000 
$ 1,008,000 
$ 1,691,000 
$ 1,624,000 
Pre-tax income (loss)
12,787,000 
18,914,000 
24,811,000 
31,896,000 
Income tax benefit increase (decrease)
2,000,000 
 
3,200,000 
 
Transmode
 
 
 
 
Business Acquisition [Line Items]
 
 
 
 
Provision (benefit) for income taxes
(1,600,000)
 
(3,100,000)
 
Purchase accounting amortization expense
$ 7,000,000 
 
$ 14,100,000 
 
Segment Information - Revenue and Long-Lived Assets by Geographic Region (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
segment
Jun. 27, 2015
Segment Reporting [Abstract]
 
 
 
 
Number of reporting segments
 
 
1 
 
Number of operating segments
 
 
1 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
$ 258,822 
$ 207,346 
$ 503,640 
$ 394,208 
Operating segments |
United States
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
166,710 
154,762 
341,225 
281,765 
Operating segments |
Other Americas
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
11,267 
11,984 
14,526 
19,070 
Operating segments |
Americas
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
177,977 
166,746 
355,751 
300,835 
Operating segments |
Europe, Middle East and Africa
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
64,570 
26,629 
124,446 
72,508 
Operating segments |
Asia Pacific and Japan
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
$ 16,275 
$ 13,971 
$ 23,443 
$ 20,865 
Segment Information - Property, Plant and Equipment, Net (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 25, 2016
Dec. 26, 2015
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
$ 120,095 
$ 110,861 
Operating segments |
United States
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
112,289 
102,702 
Operating segments |
Other Americas
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
278 
173 
Operating segments |
Americas
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
112,567 
102,875 
Operating segments |
Europe, Middle East and Africa
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
5,001 
5,417 
Operating segments |
Asia Pacific and Japan
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
$ 2,527 
$ 2,569 
Guarantees - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 25, 2016
Dec. 26, 2015
Guarantor Obligations [Line Items]
 
 
Software warranty period
90 days 
 
Outstanding standby letters of credit
$ 5.4 
$ 5.2 
Debt instrument, collateral amount
4.7 
4.7 
Banker's guarantees or performance bonds
 
 
Guarantor Obligations [Line Items]
 
 
Line of credit facility, maximum borrowing capacity
1.3 
1.5 
Proceeds from lines of credit
0.3 
0.3 
Letter of credit
 
 
Guarantor Obligations [Line Items]
 
 
Customer proposal guarantee
3.5 
3.1 
Value added tax license
1.2 
1.2 
Property leases
$ 0.7 
$ 0.9 
Minimum
 
 
Guarantor Obligations [Line Items]
 
 
Product warranty period
1 year 
 
Maximum
 
 
Guarantor Obligations [Line Items]
 
 
Product warranty period
5 years 
 
Guarantees - Activity Related to Product Warranty (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 25, 2016
Jun. 27, 2015
Jun. 25, 2016
Jun. 27, 2015
Movement in Standard Product Warranty Accrual [Roll Forward]
 
 
 
 
Beginning balance
$ 39,999 
$ 25,539 
$ 38,844 
$ 27,040 
Charges to operations
7,308 
6,019 
14,062 
11,367 
Utilization
(3,702)
(3,003)
(8,689)
(4,821)
Change in estimate
(2,616)1
(116)1
(3,228)1
(5,147)1
Balance at the end of the period
$ 40,989 
$ 28,439 
$ 40,989 
$ 28,439