INFINERA CORP, 10-Q filed on 10/29/2014
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 27, 2014
Oct. 22, 2014
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 27, 2014 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
INFN 
 
Entity Registrant Name
INFINERA CORP 
 
Entity Central Index Key
0001138639 
 
Current Fiscal Year End Date
--12-27 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
125,286,347 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 27, 2014
Dec. 28, 2013
Current assets:
 
 
Cash and cash equivalents
$ 110,864 
$ 124,330 
Short-term investments
206,713 
172,660 
Accounts receivable, net of allowance for doubtful accounts of $20 in 2014 and $43 in 2013
136,085 
100,643 
Inventory
130,833 
123,685 
Prepaid expenses and other current assets
21,714 
17,752 
Total current assets
606,209 
539,070 
Property, plant and equipment, net
74,964 
79,668 
Long-term investments
55,886 
64,419 
Cost-method investment
14,500 
9,000 
Long-term restricted cash
4,224 
3,904 
Other non-current assets
5,309 
4,865 
Total assets
761,092 
700,926 
Current liabilities:
 
 
Accounts payable
51,456 
39,843 
Accrued expenses
23,593 
22,431 
Accrued compensation and related benefits
29,632 
33,899 
Accrued warranty
12,736 
12,374 
Deferred revenue
24,386 
32,402 
Total current liabilities
141,803 
140,949 
Long-term debt, net
114,888 
109,164 
Accrued warranty, non-current
15,070 
10,534 
Deferred revenue, non-current
8,633 
4,888 
Other long-term liabilities
18,741 
17,581 
Commitments and contingencies (Note 14)
   
   
Stockholders’ equity:
 
 
Preferred stock, $0.001 par value Authorized shares – 25,000 and no shares issued and outstanding
0 
0 
Issued and outstanding shares – 125,267 as of September 27, 2014 and 119,887 as of December 28, 2013
125 
120 
Additional paid-in capital
1,064,723 
1,025,661 
Accumulated other comprehensive loss
(3,655)
(3,486)
Accumulated deficit
(599,236)
(604,485)
Total stockholders’ equity
461,957 
417,810 
Total liabilities and stockholders’ equity
$ 761,092 
$ 700,926 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 27, 2014
Dec. 28, 2013
Statement of Financial Position [Abstract]
 
 
Net of allowance for doubtful accounts
$ 20 
$ 43 
Preferred stock, par value (USD per share)
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
25,000,000 
25,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value (USD per share)
$ 0.001 
$ 0.001 
Common stock, authorized shares
500,000,000 
500,000,000 
Common stock, shares issued
125,267,000 
119,887,000 
Common stock, shares outstanding
125,267,000 
119,887,000 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Revenue:
 
 
 
 
Product
$ 147,178 
$ 121,332 
$ 413,784 
$ 350,322 
Services
26,381 
20,688 
67,989 
54,708 
Total revenue
173,559 
142,020 
481,773 
405,030 
Cost of revenue:
 
 
 
 
Cost of product
86,703 
66,685 
251,047 
222,330 
Cost of services
11,554 
6,964 
26,765 
19,973 
Total cost of revenue
98,257 
73,649 
277,812 
242,303 
Gross profit
75,302 
68,371 
203,961 
162,727 
Operating expenses:
 
 
 
 
Research and development
35,051 
32,528 
96,135 
93,935 
Sales and marketing
20,794 
17,720 
56,738 
52,921 
General and administrative
11,977 
11,678 
36,612 
32,976 
Total operating expenses
67,822 
61,926 
189,485 
179,832 
Income (loss) from operations
7,480 
6,445 
14,476 
(17,105)
Other income (expense), net:
 
 
 
 
Interest income
373 
232 
1,046 
636 
Interest expense
(2,781)
(2,578)
(8,186)
(3,427)
Other gain (loss), net
(24)
(444)
(1,017)
(805)
Total other income (expense), net
(2,432)
(2,790)
(8,157)
(3,596)
Income (loss) before income taxes
5,048 
3,655 
6,319 
(20,701)
Provision for income taxes
205 
308 
1,070 
1,240 
Net income (loss)
$ 4,843 
$ 3,347 
$ 5,249 
$ (21,941)
Net income (loss) per common share:
 
 
 
 
Basic (USD per share)
$ 0.04 
$ 0.03 
$ 0.04 
$ (0.19)
Diluted (USD per share)
$ 0.04 
$ 0.03 
$ 0.04 
$ (0.19)
Weighted average shares used in computing net income (loss) per common share:
 
 
 
 
Basic weighted average common shares outstanding (in shares)
124,378 
118,740 
122,953 
116,653 
Diluted weighted average common shares outstanding (in shares)
128,964 
124,679 
127,062 
116,653 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income (loss)
$ 4,843 
$ 3,347 
$ 5,249 
$ (21,941)
Other comprehensive income (loss):
 
 
 
 
Reclassification of realized gain on auction rate securities
0 
0 
0 
(166)
Unrealized gain (loss) on all other available-for-sale investments
(90)
44 
(27)
(64)
Foreign currency translation adjustment
(473)
(98)
(142)
(1,016)
Tax related to available-for-sale investment
20 
0 
0 
0 
Net change in accumulated other comprehensive income (loss)
(543)
(54)
(169)
(1,246)
Comprehensive income (loss)
$ 4,300 
$ 3,293 
$ 5,080 
$ (23,187)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Cash Flows from Operating Activities:
 
 
Net income (loss)
$ 5,249 
$ (21,941)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
Depreciation and amortization
19,340 
18,574 
Amortization of debt discount and issuance costs
6,217 
2,552 
Amortization of premium on investments
2,720 
870 
Stock-based compensation expense
20,847 
23,802 
Other loss (gain)
15 
(278)
Changes in assets and liabilities:
 
 
Accounts receivable
(35,463)
19,805 
Inventory
(9,015)
(3,603)
Prepaid expenses and other assets
(4,965)
(6,427)
Accounts payable
11,009 
(30,624)
Accrued liabilities and other expenses
657 
1,640 
Deferred revenue
(4,272)
(1,655)
Accrued warranty
4,898 
6,680 
Net cash provided by operating activities
17,237 
9,395 
Cash Flows from Investing Activities:
 
 
Purchase of available-for-sale investments
(214,272)
(206,528)
Purchase of cost-method investment
(5,500)
0 
Proceeds from sale of available-for-sale investments
17,876 
2,850 
Proceeds from maturities and calls of investments
168,137 
77,143 
Purchase of property and equipment
(14,364)
(13,605)
Change in restricted cash
(320)
110 
Net cash used in investing activities
(48,443)
(140,030)
Cash Flows from Financing Activities:
 
 
Proceeds from issuance of debt, net
0 
144,469 
Proceeds from issuance of common stock
19,683 
21,551 
Minimum tax withholding paid on behalf of employees for net share settlement
(1,846)
(1,541)
Net cash provided by financing activities
17,837 
164,479 
Effect of exchange rate changes on cash
(97)
(881)
Net change in cash and cash equivalents
(13,466)
32,963 
Cash and cash equivalents at beginning of period
124,330 
104,666 
Cash and cash equivalents at end of period
110,864 
137,629 
Supplemental disclosures of cash flow information:
 
 
Cash paid for income taxes, net of refunds
1,056 
1,536 
Cash paid for interest
1,313 
0 
Supplemental schedule of non-cash financing activities:
 
 
Transfer of inventory to fixed assets
$ 1,838 
$ 6,672 
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies
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 28, 2013.
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, allowances for sales returns, allowances for doubtful accounts, accrued warranty, fair value measurement of the liability component of the convertible senior notes, fair value measurement of cash equivalents, investments and derivative instruments, other-than-temporary impairments and accounting for income taxes. 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 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 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 28, 2013.
There have been no material changes in the Company’s significant accounting policies for the nine months ended September 27, 2014 as compared to those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2013.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
Recent Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2013-11, "Income Taxes - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry Forward, a Similar Tax Loss, or a Tax Credit Carry Forwards Exists" ("ASU 2013-11"). ASU 2013-11 requires entities to present the unrecognized tax benefits in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. ASU 2013-11 is effective for annual and interim periods for fiscal years beginning on or after December 15, 2013. The Company's adoption of ASU 2013-11 during the first quarter of 2014 had no impact on the Company’s financial position, results of operations or cash flow.
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. ASU 2014-09 will be effective for the Company’s first quarter of 2017. 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 ASU recognized at the date of initial application. Early adoption is not permitted. The Company is currently evaluating the method and impact the adoption of ASU 2014-09 will have on the Company's condensed consolidated financial statements.
In June 2014, the FASB issued Accounting Standards Update No. 2014-12, "Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period" ("ASU 2014-12"). ASU 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Accounting Standard Codification ("ASC") 718, "Compensation—Stock Compensation" ("ASC 718"), as it relates to such awards. ASU 2014-12 is effective for us in our first quarter of fiscal 2017 with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date; or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements. The Company is currently evaluating the impact of the pending adoption of ASU 2014-12 on its condensed consolidated financial statements.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" ("ASU 2014-15"). ASU 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for the Company in its fourth quarter of fiscal 2017 with early adoption permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2014-15 on its condensed consolidated financial statements.
Fair Value Measurements and Other-Than-Temporary Impairments
Fair Value Measurements and Other-Than-Temporary Impairments
Fair Value Measurements and Other-Than-Temporary Impairments
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 debt securities at fair value and classifies its securities 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, 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.
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 September 27, 2014
 
As of December 28, 2013
 
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
$
15,369

 
$
—

 
$
—

 
$
15,369

 
$
51,749

 
$
—

 
$
—

 
$
51,749

Certificates of deposit
—

 
3,460

 
—

 
3,460

 
—

 
3,840

 
—

 
3,840

Commercial paper
—

 
83,838

 
—

 
83,838

 
—

 
85,860

 
—

 
85,860

Corporate bonds
—

 
202,804

 
—

 
202,804

 
—

 
150,595

 
—

 
150,595

U.S. treasuries
8,833

 
—

 
—

 
8,833

 
4,804

 
—

 
—

 
4,804

Foreign currency exchange forward contracts
—

 
—

 
—

 
—

 
—

 
29

 
—

 
29

Total assets
$
24,202

 
$
290,102

 
$
—

 
$
314,304

 
$
56,553

 
$
240,324

 
$
—

 
$
296,877

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange forward contracts
$
—

 
$
32

 
$
—

 
$
32

 
$
—

 
$
26

 
$
—

 
$
26


During the three and nine months ended September 27, 2014, there were no transfers of assets or liabilities between Level 1 and Level 2.

Investments at fair value were as follows (in thousands): 
 
September 27, 2014
 
Adjusted Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized 
Losses
 
Fair Value    
Money market funds
$
15,369

 
$
—

 
$
—

 
$
15,369

Certificates of deposit
3,460

 
—

 
—

 
3,460

Commercial paper
83,838

 
2

 
(2
)
 
83,838

Corporate bonds
202,959

 
19

 
(174
)
 
202,804

U.S. treasuries
8,829

 
5

 
(1
)
 
8,833

Total available-for-sale investments
$
314,455

 
$
26

 
$
(177
)
 
$
314,304

 
 
December 28, 2013
 
Adjusted Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value    
Money market funds
$
51,749

 
$
—

 
$
—

 
$
51,749

Certificates of deposit
3,840

 
—

 
—

 
3,840

Commercial paper
85,870

 
2

 
(12
)
 
85,860

Corporate bonds
150,711

 
27

 
(143
)
 
150,595

U.S. treasuries
4,802

 
2

 
—

 
4,804

Total available-for-sale investments
$
296,972

 
$
31

 
$
(155
)
 
$
296,848

As of September 27, 2014, the Company’s available-for-sale investments have a contractual maturity term of no more than 18 months. Net realized gains (losses) on short-term and long-term investments for the three and nine months ended September 27, 2014 were insignificant in both periods. Net realized gains (losses) on short-term and long-term investments were zero and $0.2 million for the three and nine months ended September 28, 2013, respectively. The specific identification method is used to account for gains and losses on available-for-sale investments.
As of September 27, 2014 and December 28, 2013, the Company held $59.2 million and $64.6 million of cash in banks, respectively.
Other-Than-Temporary Impairments
As a result of the Company’s disposal of $3.1 million of its remaining auction rate securities (par value) during the first quarter of 2013, it recorded an approximately $0.2 million gain, which was recognized as other gain (loss), net, in the Company’s condensed consolidated statements of operations.
A roll-forward of amortized cost, cumulative other-than-temporary impairments ("OTTI") recognized in earnings and accumulated other comprehensive loss for the nine months ended September 28, 2013 were as follows (in thousands):  
 
Amortized
Cost
 
Cumulative
OTTI in
Earnings
 
 
Unrealized
Gain
 
OTTI Loss in
Accumulated
Other
Comprehensive
Loss
 
Accumulated
Other
Comprehensive
Income (Loss)
Balance at December 29, 2012
$
2,707

 
$
(394
)
 
 
$
784

 
$
(618
)
 
$
166

Call on investments
(87
)
 
13

 
 
(25
)
 
20

 
(5
)
Investments sold
(2,620
)
 
381

 
 
(759
)
 
598

 
(161
)
Balance at September 28, 2013
$
—

 
$
—

 
 
$
—

 
$
—

 
$
—

Cost-method Investment
Cost-method Investment
Cost-method Investment
During the three months ended September 27, 2014, the Company invested an additional $5.5 million in an existing cost-method equity investment. As of September 27, 2014, the Company’s investment in a privately-held company was $14.5 million. 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. The Company’s cost-method investment is carried at historical cost in its condensed consolidated financial statements and measured at fair value on a nonrecurring basis. 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. The Company regularly evaluates the carrying value of this cost-method investment for impairment. As of September 27, 2014, no event had occurred that would adversely affect the carrying value of this investment, therefore, the fair value of the cost-method investment is not estimated. The Company did not record any impairment charges for this cost-method investment during the three and nine months ended September 27, 2014 and September 28, 2013.
Derivative Instruments
Derivative Instruments
Derivative Instruments
Foreign Currency Exchange Forward Contracts
The Company enters into foreign currency exchange forward contracts to manage its exposure to fluctuations in foreign exchange rates that arise primarily from its euro and British pound denominated receivables and euro denominated restricted cash balance amounts that are pledged as collateral for certain stand-by and commercial letters of credit. 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. The forward contracts are with one high-quality institution and the Company consistently monitors the creditworthiness of the counterparty. The forward contracts entered into during the three and nine months ended September 27, 2014 were denominated in euros and British pounds, and had maturities of no more than 35 days. The contracts are settled for U.S. dollars at maturity at rates agreed to at inception of the contracts.
As of September 27, 2014, the Company did not designate foreign currency exchange forward contracts as hedges for accounting purposes, and accordingly changes in the fair value of these instruments are included in other gain (loss), net, in the accompanying condensed consolidated statements of operations. For the three months ended September 27, 2014 and September 28, 2013, the before-tax effect of foreign currency exchange forward contracts was a gain of $1.2 million and a loss of $1.2 million, respectively. For the nine months ended September 27, 2014 and September 28, 2013, the before-tax effect of foreign currency exchange forward contracts was a gain of $0.8 million and a loss of $1.4 million, respectively.

The fair value of derivative instruments not designated as hedging instruments in the Company’s condensed consolidated balance sheets was as follows (in thousands): 
 
As of September 27, 2014
 
As of December 28, 2013
 
Gross Notional(1)
 
Prepaid Expenses and Other Assets
 
Other
Accrued
   Liabilities   
 
Gross Notional(1)  
 
Prepaid Expenses and Other Assets
 
Other
Accrued
   Liabilities   
Foreign currency exchange forward contracts
 
 
 
 
 
 
 
 
 
 
 
Related to euro denominated receivables
$
20,980

 
—

 
$
(30
)
 
$
16,867

 
27

 
$
—

Related to British pound denominated receivables
165

 
—

 
—

 
13,271

 
—

 
(26
)
Related to restricted cash
1,287

 
—

 
(2
)
 
1,391

 
2

 
—

 
$
22,432

 
$
—

 
$
(32
)
 
$
31,529

 
$
29

 
$
(26
)
 _________________
(1) 
Represents the face amounts of forward contracts that were outstanding as of the period noted.
Balance Sheet Details
Balance Sheet Details
Balance Sheet Details
The following table provides details of selected balance sheet items (in thousands):
 
September 27, 2014
 
December 28, 2013
Inventory:
 
 
 
Raw materials
$
11,584

 
$
14,311

Work in process
44,462

 
49,172

Finished goods (1)
74,787

 
60,202

Total inventory
$
130,833

 
$
123,685

Property, plant and equipment, net:
 
 
 
Computer hardware
$
8,515

 
$
9,692

Computer software(2)
17,679

 
16,988

Laboratory and manufacturing equipment
158,446

 
146,834

Furniture and fixtures
1,343

 
1,347

Leasehold improvements
37,258

 
35,913

Construction in progress
6,465

 
8,950

Subtotal
$
229,706

 
$
219,724

Less accumulated depreciation and amortization
(154,742
)
 
(140,056
)
Total property, plant and equipment, net
$
74,964

 
$
79,668

Accrued expenses:
 
 
 
Loss contingency related to non-cancelable purchase commitments
$
6,242

 
$
5,120

Professional and other consulting fees
1,033

 
1,411

Taxes payable
1,620

 
2,372

Royalties
2,152

 
1,540

Accrued rebate and customer prepay liability
758

 
3,807

Accrued interest on convertible senior notes
875

 
219

Other accrued expenses
10,913

 
7,962

Total accrued expenses
$
23,593

 
$
22,431

 _________________
(1) 
Included in finished goods inventory at September 27, 2014 and December 28, 2013 were $16.2 million and $9.2 million, respectively, of inventory at customer locations for which product acceptance had not occurred.

(2) 
Included in computer software at September 27, 2014 and December 28, 2013 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 September 27, 2014 and December 28, 2013 were $5.4 million and $6.3 million, respectively.
Restricted Cash
The Company’s long-term restricted cash balance is primarily comprised of certificates of deposit, of which the majority is not insured by the Federal Deposit Insurance Corporation. These amounts primarily collateralize the Company’s issuances of stand-by and commercial letters of credit. Additionally, the Company’s restricted cash balance includes a leave encashment fund for India employees and a corporate bank card deposit for employees in the United Kingdom.
The following table sets forth the Company's restricted cash (in thousands):
 
September 27, 2014
 
December 28, 2013
Restricted cash related to outstanding standby letters of credit
 
 
 
Value added tax license
$
1,362

 
$
1,430

Customer proposal guarantee
1,771

 
1,446

Property leases
699

 
699

Other
392

 
329

Total restricted cash
$
4,224

 
$
3,904

Accumulated Comprehensive Loss
Accumulated Comprehensive Loss
Accumulated Comprehensive Loss
Other comprehensive loss includes certain changes in equity that are excluded from net income (loss). The following table sets forth the changes in accumulated other comprehensive loss by component for the nine months ended September 27, 2014 (in thousands): 
 
 
Unrealized Gain
on Other
Available-for-Sale
Securities
 
Foreign
Currency Translation     
 
     Accumulated     
Tax Effect
 
Total        
Balance at December 28, 2013
 
$
(124
)
 
$
(2,602
)
 
$
(760
)
 
$
(3,486
)
Net current-period other comprehensive loss
 
(27
)
 
(142
)
 
—

 
(169
)
Balance at September 27, 2014
 
$
(151
)
 
$
(2,744
)
 
$
(760
)
 
$
(3,655
)
Basic and Diluted Net Income (Loss) Per Common Share
Basic and Diluted Net Income (Loss) Per Common Share
Basic and Diluted Net Income (Loss) Per Common Share
Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed using net income (loss) 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 vesting of outstanding restricted stock units ("RSUs") and performance stock units ("PSUs"), assumed conversion of convertible senior notes from the conversion spread, and assumed issuance of stock under the Company’s Employee Stock Purchase Plan ("ESPP") using the treasury stock method. 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 are anti-dilutive and therefore, excluded from the diluted net loss calculation.
The following table sets forth the computation of net income (loss) per common share – basic and diluted (in thousands, except per share amounts):
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Numerator:
 
 
 
 
 
 
 
Net income (loss)
$
4,843

 
$
3,347

 
$
5,249

 
$
(21,941
)
Denominator:
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
124,378

 
118,740

 
122,953

 
116,653

Effect of dilutive securities:
 
 
 
 
 
 
 
Employee equity plans
4,586

 
5,939

 
4,109

 
—

Diluted weighted average common shares outstanding
128,964

 
124,679

 
127,062

 
116,653

 
 
 
 
 
 
 
 
Net income (loss) per common share
 
 
 
 
 
 
 
Basic
$
0.04

 
$
0.03

 
$ 0.04

 
$
(0.19
)
Diluted
$
0.04

 
$
0.03

 
$ 0.04

 
$
(0.19
)

The number of shares outstanding used in the computation of basic and diluted net income (loss) per share does not include the effect of the potential outstanding common stock listed in the following table. The effects of these potentially outstanding shares were not included in the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive under the treasury stock method or the performance condition of the award has not been met (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Stock options
447

 
408

 
706

 
6,603

Restricted stock units
68

 
89

 
250

 
6,559

Performance stock units
185

 
211

 
185

 
721

Employee stock purchase plan shares
801

 
675

 
921

 
675

Total
1,501

 
1,383

 
2,062

 
14,558


In the three and nine months ended September 27, 2014, and in the three months ended September 28, 2013, the Company excluded the potential shares issuable upon early conversion of the convertible senior notes in the calculation of diluted earnings per share because the market price was below the conversion price. In the future, the Company would include these dilutive effects of the convertible senior notes in the calculation of diluted net income per common share if the market price is above the conversion price. Upon conversion of the convertible senior 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 unless their effect is anti-dilutive.
Convertible Senior Notes
Convertible Senior Notes
Convertible Senior Notes
In May 2013, the Company issued $150.0 million of 1.75% convertible senior notes due June 1, 2018 (the “Notes”). The Notes 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 as cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, for any remaining conversion obligation. 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 September 28, 2013 (and only during such fiscal quarter) if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

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

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

•
at any time on or after December 1, 2017 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.
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 will, 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 amounts recorded in connection with the issuance of the Notes and related amortization consisted of the following (in thousands):
 
Other Non-Current Assets
 
Long-Term Debt
 
Additional Paid-in Capital
Principal amount
$
—

 
$
150,000

 
$
—

Debt discount
—

 
(45,000
)
 
—

Equity component
—

 
—

 
45,000

Debt issuance cost
3,872

 
—

 
(1,659
)
Initial transaction amounts
$
3,872

 
$
105,000

 
$
43,341

Amortization of debt issuance cost
(851
)
 
—

 
—

Amortization of debt discount
—

 
9,888

 
—

Net carrying amount at September 27, 2014
$
3,021

 
$
114,888

 
$
43,341


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. The remaining debt discount amount to be amortized over the remaining years until maturity of the Notes was $35.1 million as of September 27, 2014.
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 recorded as other non-current assets and will be amortized to interest expense over the term of the Notes. 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
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Contractual interest expense
$
656

 
$
656

 
$
1,969

 
$
875

Amortization of debt issuance costs
169

 
152

 
493

 
202

Amortization of debt discount
1,956

 
1,770

 
5,724

 
2,350

Total interest expense
$
2,781

 
$
2,578

 
$
8,186

 
$
3,427


The coupon rate was 1.75%. 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 September 27, 2014, the fair value of the Notes was $167.3 million. The fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on September 26, 2014. The Notes are classified as Level 2 of the fair value hierarchy. Based on the closing price of the Company’s common stock of $10.61 on September 26, 2014, the if-converted value of the Notes was less than 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. As of September 27, 2014, there were a total of 17.5 million shares of common stock available for grant under the Company’s 2007 Equity Incentive Plan ("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 28, 2013
6,367

 
$
7.26

 
$
17,452

Stock options granted
25

 
$
9.02

 
 
Stock options exercised
(1,280
)
 
$
6.99

 
$
3,210

Stock options canceled
(92
)
 
$
12.39

 


Outstanding at September 27, 2014
5,020

 
$
7.24

 
$
17,631

Vested and expected to vest as of September 27, 2014
5,017

 
 
 
$
17,622

Exercisable at September 27, 2014
4,921

 
$
7.24

 
$
17,329


 
 
Number of
Restricted
Stock Units
 
Weighted-
Average
 Grant Date 
Fair Value
Per Share
 
  Aggregate  
Intrinsic
Value
Outstanding at December 28, 2013
6,583

 
$
7.72

 
$
64,443

RSUs granted
2,415

 
$
8.37

 


RSUs released
(2,625
)
 
$
7.74

 
$
22,477

RSUs canceled
(424
)
 
$
7.88

 


Outstanding at September 27, 2014
5,949

 
$
7.97

 
$
63,122

Expected to vest at September 27, 2014
5,751

 


 
$
61,021


 
 
Number of
Performance
Stock Units
 
Weighted-
Average
 Grant Date 
Fair Value
Per Share
 
  Aggregate  
Intrinsic
Value
Outstanding at December 28, 2013
721

 
$
7.04

 
$
7,054

PSUs granted
508

 
$
7.53

 

PSUs released
(255
)
 
$
6.36

 
$
2,097

PSUs canceled
(97
)
 
$
7.18

 

Outstanding at September 27, 2014
877

 
$
7.49

 
$
9,298

Expected to vest at September 27, 2014
659

 

 
$
6,994


The aggregate intrinsic value of unexercised stock options is calculated as the difference between the closing price of the Company’s common stock of $10.61 at September 26, 2014 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 $10.61 at September 26, 2014. 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 September 27, 2014. 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
317

 
1.5
RSUs
30,599

 
2.3
PSUs
2,704

 
1.6

Employee Stock Options
The estimated values of stock options, as well as assumptions used in calculating these values were based on estimates as follows (expense amounts in thousands):
 
Three Months Ended
 
Nine Months Ended
Employee and Director Stock Options
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Volatility
N/A
 
N/A
 
52%
 
N/A
Risk-free interest rate
N/A
 
N/A
 
1.3%
 
N/A
Expected life
N/A
 
N/A
 
4.3 years
 
N/A
Estimated fair value
N/A
 
N/A
 
$3.85
 
N/A
Total stock-based compensation expense
$108
 
$665
 
$623
 
$2,190
_________________
N/A
Not applicable because the Company did not grant any stock options to employees for the periods presented.


Employee Stock Purchase Plan

The fair value of the ESPP shares was estimated at the date of grant using the following assumptions (expense amounts in thousands):
 
Three Months Ended
 
Nine Months Ended
Employee Stock Purchase Plan
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Volatility
46%
 
49%
 
46% - 51%
 
46% - 49%
Risk-free interest rate
0.06%
 
0.10%
 
0.02% - 0.11%
 
0.10% - 0.14%
Expected life
0.5 years
 
0.5 years
 
0.25 - 0.5 years
 
0.5 years
Estimated fair value
$2.54
 
$3.00
 
$2.05 - $2.57
 
$1.87 - $3.00
Total stock-based compensation expense
$1,092
 
$777
 
$2,726
 
$2,050

Restricted Stock Units
During the three and nine months ended September 27, 2014, the Company granted RSUs to employees and members of the Company’s board of directors to receive an aggregate of 0.1 million shares and 2.4 million shares of the Company’s common stock, respectively. 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 nine months ended September 27, 2014 and September 28, 2013 was approximately $5.6 million and $15.9 million, respectively, and approximately $5.5 million and $18.2 million, respectively.

Performance Stock Units
Pursuant to the 2007 Plan, during fiscal 2012, the Company granted 0.5 million shares of PSUs to certain of its executive officers. These PSUs will only vest upon the achievement of certain specific revenue and operating profit criteria and are subject to each named executive officer’s continued service to the Company. If the financial performance metrics are not met within the time limits specified in the award agreements, the PSUs will be canceled. During the three and nine months ended September 27, 2014, the Company did not release any shares subject to these PSUs.
Pursuant to the 2007 Plan, during fiscal 2013, the Company granted 0.6 million shares of PSUs to certain of its executive officers. The number of shares to be issued upon vesting of PSUs range from 0 to 1.5 times the number of PSUs granted depending on the relative performance of the Company’s common stock price compared to the NASDAQ Telecom Composite Index over the span of one, two and three years of total shareholder returns. During the three and nine months ended September 27, 2014, the Company released zero shares and 0.3 million shares of PSUs, respectively, based on a payout of 1.5 times of the target number of PSUs.

The ranges of estimated values of the PSUs granted, as well as assumptions used in calculating these values were based on estimates as follows:
 
Year Ended
 
December 28, 2013
Infinera Volatility
55%
NASDAQ Telecom Composite Index Volatility
23%
Risk-free interest rate
0.42%
Correlation with NASDAQ Telecom Composite Index
0.56
Estimated fair value
$6.27 - $7.06

Pursuant to the 2007 Plan, during the three and nine months ended September 27, 2014, the Company granted zero shares and 0.4 million shares of PSUs, respectively, to certain of its executive officers. The number of shares to be issued upon vesting of PSUs range from 0 to 1.5 times the number of PSUs granted depending on the relative performance of the Company's common stock price compared to the iShares North American Tech-Multimedia Networking ("IGN") Index over the span of one, two and three years of total shareholder returns.

The ranges of estimated values of the PSUs granted, as well as assumptions used in calculating these values were based on estimates as follows:
 
 
Nine Months Ended
 
 
September 27, 2014
Infinera Volatility
 
49% - 50%
IGN Index Volatility
 
25%
Risk-free interest rate
 
0.66% - 0.71%
Correlation with IGN Index
 
0.60
Estimated fair value
 
$6.59 - $7.60

Pursuant to the 2007 Plan, during the three months ended September 27, 2014, the Company granted 0.1 million shares of PSUs to several employees. These PSUs will only vest upon the achievement of certain specific performance criteria and are subject to each employee's continued service to the Company. If the specific performance metrics are not met within the time limits specified in the award agreements, the PSUs will be cancelled.
Amortization of stock-based compensation related to PSUs in the three and nine months ended September 27, 2014 was approximately $0.6 million and $1.5 million, respectively. Amortization of stock-based compensation related to PSUs in the three months ended September 28, 2013 was approximately $0.5 million. Amortization of stock-based compensation in the nine months ended September 28, 2013 was approximately $0.1 million, including $1.5 million of expense offset by a $1.4 million decrease in fair value for one award classified as a liability award, in accordance with ASC 718.
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):
 
September 27, 2014
 
December 28, 2013
Stock-based compensation effects in inventory
$
3,160

 
$
3,189

Stock-based compensation effects in deferred inventory cost
$
13

 
$
15

Stock-based compensation effects in fixed assets
$
126

 
$
145

 
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Stock-based compensation effects included in net income (loss) before income taxes
 
 
 
 
 
 
 
Cost of revenue
$
492

 
$
422

 
$
1,421

 
$
1,382

Research and development
2,270

 
2,434

 
6,488

 
8,175

Sales and marketing
1,982

 
1,853

 
5,517

 
5,659

General and administration
1,628

 
1,807

 
4,707

 
4,167

 
6,372

 
6,516

 
18,133

 
19,383

Cost of revenue – amortization from balance sheet (1)
999

 
1,127

 
2,714

 
4,419

Total stock-based compensation expense
$
7,371

 
$
7,643

 
$
20,847

 
$
23,802

_________________
(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 for the three and nine months ended September 27, 2014 was $0.2 million and $1.1 million, respectively, on pre-tax income of $5.0 million and $6.3 million, respectively. This compared to a tax provision of $0.3 million and $1.2 million, respectively, on pre-tax income of $3.7 million and a pre-tax loss of $20.7 million, respectively, for the three and nine months ended September 28, 2013. In all periods, the tax expense primarily represents foreign taxes of the Company's overseas subsidiaries compensated on a cost plus basis and remains relatively similar in all periods, regardless of the level of consolidated earnings. Because of the Company's significant 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 nominal amounts of state taxes for which the losses are limited by statute. 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 regularly assesses the need for the valuation allowance on its deferred tax assets based on the technical accounting guidance available. Based upon that guidance and its historical operating losses, the Company believes that its deferred tax assets are not more-likely-than-not to be realized. Accordingly, the Company has provided a full valuation allowance against its domestic deferred tax assets, net of deferred tax liabilities, as of September 27, 2014 and December 28, 2013. In assessing this position, the Company will consider historical cumulative operating profits and losses, future market growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which it operates, and prudent and feasible tax planning strategies in determining the need for a valuation allowance. To the extent that the Company determines that deferred tax assets are realizable on a more-likely-than-not basis and an 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
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Americas:
 
 
 
 
 
 
 
United States
$
120,769

 
$
103,113

 
$
367,802

 
$
270,437

Other Americas
9,230

 
2,024

 
17,526

 
6,544

 
129,999

 
105,137

 
385,328

 
276,981

Europe, Middle East and Africa
34,131

 
32,262

 
78,978

 
103,022

Asia Pacific and Japan
9,429

 
4,621

 
17,467

 
25,027

Total revenue
$
173,559

 
$
142,020

 
$
481,773

 
$
405,030



Property, plant and equipment, net 
 
September 27, 2014
 
December 28,
2013
United States
$
72,428

 
$
76,850

Other Americas
237

 
319

Europe, Middle East and Africa
943

 
1,451

Asia Pacific and Japan
1,356

 
1,048

Total property, plant and equipment, net
$
74,964

 
$
79,668

Guarantees
Guarantees
Guarantees
Product Warranties
Upon delivery of products, the Company provides for the estimated cost to repair or replace products including the related components that may be returned under hardware warranties. In general, hardware warranty periods range from one to five years. 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 or replacement. The Company estimates its hardware warranty obligations based on the Company’s historical experience of known product failure rates, use of materials and labor to repair or replace defective products, and service delivery costs incurred in correcting product failures. In addition, from time to time, specific hardware warranty accruals may be made if unforeseen technical problems arise with specific products. Management periodically assesses the adequacy of the Company’s recorded warranty liabilities and adjusts the amounts as necessary.
Activity related to product warranty was as follows (in thousands): 
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Beginning balance
$
27,948

 
$
19,701

 
$
22,908

 
$
16,482

Charges to operations
5,820

 
5,220

 
18,181

 
16,646

Utilization
(2,312
)
 
(2,645
)
 
(7,924
)
 
(6,783
)
Change in estimate (1)
(3,650
)
 
886

 
(5,359
)
 
(3,183
)
Balance at the end of the period
$
27,806

 
$
23,162

 
$
27,806

 
$
23,162

 _________________
(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 and the resulting impact of these changes on the Company’s estimate of expected future returns, as well as changes in the estimated cost and the mix of new versus used units related to replacement of failed units.
Litigation and Contingencies
Litigation and Contingencies
Litigation and Contingencies
Legal Matters
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.
Cambrian Science Patent Infringement Litigation
On July 12, 2011, the Company was notified by Level 3 that Cambrian Science Corporation ("Cambrian") filed suit against Level 3 and six other defendants, including Cox Communications, Inc., XO Communications, LLC, Global Crossing Limited, 360Networks (USA), Inc., Integra Telecom, Inc. and IXC, Inc. dba Telekenex (collectively, the "Defendants") in the U.S. District Court for the Central District of California alleging infringement of patent no. 6,775,312 (the "'312 Patent") and requesting damages for such alleged infringement (the "Cambrian Claim"). The nature of the Cambrian Claim involves allegations of infringement of the '312 Patent resulting from the Defendants’ use of certain products and systems in the Defendants’ networks, including our DTN platform. On August 24, 2011, Cambrian amended the complaint to name the Company as a defendant. The Company assumed the defense of the Cambrian Claim and filed an answer to Cambrian’s complaint on September 21, 2011, in which the Company denied infringement of the '312 Patent and raised other defenses. Cambrian filed a second amended complaint on October 6, 2011, which included many of the same allegations as in the original complaint. The Company filed its answer to the second amended complaint on October 21, 2011, in which the Company maintained the same denials and defenses as in the Company’s initial answer. On December 23, 2011, the Company filed a motion requesting that the court stay the case with respect to each of the above-noted customer Defendants. Cambrian filed its opposition to the Company’s motion on December 30, 2011. The Company’s request was denied in the court’s decision on March 7, 2012. The Company presented evidence on the appropriate meanings of relevant key words used in the patent claims during a claim construction hearing on November 20, 2012.

On June 17, 2013, the court issued an order regarding claim construction, in which the court agreed with almost all of the Company’s proposed claim constructions. On October 17, 2013, the parties met for a court-mandated mediation. On April 24, 2014, the Company filed two motions for summary judgment relating to non-infringement and Cambrian’s claim to an earlier date of invention. The court held a hearing on the summary judgment motions on June 9, 2014. On July 2, 2014, the court granted the Company's motion for summary judgment on non-infringement and entered a final judgment of non-infringement of the '312 Patent. On August 1, 2014, Cambrian filed a notice of appeal regarding the ruling of non-infringement to the Court of Appeals for the Federal Circuit. The Company is seeking to recover certain costs and attorney's fees from Cambrian.

Based on the information available at this time, the Company has concluded that the likelihood of a loss with respect to this suit is reasonably possible. The Company has further concluded that the range of the reasonably possible loss is an insignificant amount and will not have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. Accordingly, the Company has accrued an insignificant amount, which did not have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. Factors that the Company considered in the determination of the likelihood of a loss and the estimate of that loss in respect to this matter included the merits of the case, the nature of the litigation (including the complex and technical nature of patent litigation), the length of time the matter has been pending, the status of the plaintiff as a non-operating entity and the likelihood of the plaintiff accepting the estimated amount. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties.
Loss Contingencies
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 September 27, 2014, the Company has not accrued or recorded any such material liabilities other than for the accrual associated with the Cambrian lawsuit.
Recent Accounting Pronouncements Recent Accounting Pronouncements (Policies)
Income tax
The Company's adoption of ASU 2013-11 during the first quarter of 2014 had no impact on the Company’s financial position, results of operations or cash flow.
Fair Value Measurements and Other-Than-Temporary Impairments (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 September 27, 2014
 
As of December 28, 2013
 
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
$
15,369

 
$
—

 
$
—

 
$
15,369

 
$
51,749

 
$
—

 
$
—

 
$
51,749

Certificates of deposit
—

 
3,460

 
—

 
3,460

 
—

 
3,840

 
—

 
3,840

Commercial paper
—

 
83,838

 
—

 
83,838

 
—

 
85,860

 
—

 
85,860

Corporate bonds
—

 
202,804

 
—

 
202,804

 
—

 
150,595

 
—

 
150,595

U.S. treasuries
8,833

 
—

 
—

 
8,833

 
4,804

 
—

 
—

 
4,804

Foreign currency exchange forward contracts
—

 
—

 
—

 
—

 
—

 
29

 
—

 
29

Total assets
$
24,202

 
$
290,102

 
$
—

 
$
314,304

 
$
56,553

 
$
240,324

 
$
—

 
$
296,877

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange forward contracts
$
—

 
$
32

 
$
—

 
$
32

 
$
—

 
$
26

 
$
—

 
$
26

Investments at Fair Value 
Investments at fair value were as follows (in thousands): 
 
September 27, 2014
 
Adjusted Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized 
Losses
 
Fair Value    
Money market funds
$
15,369

 
$
—

 
$
—

 
$
15,369

Certificates of deposit
3,460

 
—

 
—

 
3,460

Commercial paper
83,838

 
2

 
(2
)
 
83,838

Corporate bonds
202,959

 
19

 
(174
)
 
202,804

U.S. treasuries
8,829

 
5

 
(1
)
 
8,833

Total available-for-sale investments
$
314,455

 
$
26

 
$
(177
)
 
$
314,304

 
 
December 28, 2013
 
Adjusted Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value    
Money market funds
$
51,749

 
$
—

 
$
—

 
$
51,749

Certificates of deposit
3,840

 
—

 
—

 
3,840

Commercial paper
85,870

 
2

 
(12
)
 
85,860

Corporate bonds
150,711

 
27

 
(143
)
 
150,595

U.S. treasuries
4,802

 
2

 
—

 
4,804

Total available-for-sale investments
$
296,972

 
$
31

 
$
(155
)
 
$
296,848

Schedule of Amortized Cost Cumulative Other Than Temporary Impairment Recognized in Earnings and Accumulated Other Comprehensive Loss 
A roll-forward of amortized cost, cumulative other-than-temporary impairments ("OTTI") recognized in earnings and accumulated other comprehensive loss for the nine months ended September 28, 2013 were as follows (in thousands):  
 
Amortized
Cost
 
Cumulative
OTTI in
Earnings
 
 
Unrealized
Gain
 
OTTI Loss in
Accumulated
Other
Comprehensive
Loss
 
Accumulated
Other
Comprehensive
Income (Loss)
Balance at December 29, 2012
$
2,707

 
$
(394
)
 
 
$
784

 
$
(618
)
 
$
166

Call on investments
(87
)
 
13

 
 
(25
)
 
20

 
(5
)
Investments sold
(2,620
)
 
381

 
 
(759
)
 
598

 
(161
)
Balance at September 28, 2013
$
—

 
$
—

 
 
$
—

 
$
—

 
$
—

Derivative Instruments (Tables)
Fair Value of Derivative Instruments not Designated as Hedging Instruments
The fair value of derivative instruments not designated as hedging instruments in the Company’s condensed consolidated balance sheets was as follows (in thousands): 
 
As of September 27, 2014
 
As of December 28, 2013
 
Gross Notional(1)
 
Prepaid Expenses and Other Assets
 
Other
Accrued
   Liabilities   
 
Gross Notional(1)  
 
Prepaid Expenses and Other Assets
 
Other
Accrued
   Liabilities   
Foreign currency exchange forward contracts
 
 
 
 
 
 
 
 
 
 
 
Related to euro denominated receivables
$
20,980

 
—

 
$
(30
)
 
$
16,867

 
27

 
$
—

Related to British pound denominated receivables
165

 
—

 
—

 
13,271

 
—

 
(26
)
Related to restricted cash
1,287

 
—

 
(2
)
 
1,391

 
2

 
—

 
$
22,432

 
$
—

 
$
(32
)
 
$
31,529

 
$
29

 
$
(26
)
 _________________
(1) 
Represents the face amounts of forward contracts that were outstanding as of the period noted.
Balance Sheet Details (Tables)
Details of Selected Balance Sheet Items 
The following table provides details of selected balance sheet items (in thousands):
 
September 27, 2014
 
December 28, 2013
Inventory:
 
 
 
Raw materials
$
11,584

 
$
14,311

Work in process
44,462

 
49,172

Finished goods (1)
74,787

 
60,202

Total inventory
$
130,833

 
$
123,685

Property, plant and equipment, net:
 
 
 
Computer hardware
$
8,515

 
$
9,692

Computer software(2)
17,679

 
16,988

Laboratory and manufacturing equipment
158,446

 
146,834

Furniture and fixtures
1,343

 
1,347

Leasehold improvements
37,258

 
35,913

Construction in progress
6,465

 
8,950

Subtotal
$
229,706

 
$
219,724

Less accumulated depreciation and amortization
(154,742
)
 
(140,056
)
Total property, plant and equipment, net
$
74,964

 
$
79,668

Accrued expenses:
 
 
 
Loss contingency related to non-cancelable purchase commitments
$
6,242

 
$
5,120

Professional and other consulting fees
1,033

 
1,411

Taxes payable
1,620

 
2,372

Royalties
2,152

 
1,540

Accrued rebate and customer prepay liability
758

 
3,807

Accrued interest on convertible senior notes
875

 
219

Other accrued expenses
10,913

 
7,962

Total accrued expenses
$
23,593

 
$
22,431

 _________________
(1) 
Included in finished goods inventory at September 27, 2014 and December 28, 2013 were $16.2 million and $9.2 million, respectively, of inventory at customer locations for which product acceptance had not occurred.

(2) 
Included in computer software at September 27, 2014 and December 28, 2013 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 September 27, 2014 and December 28, 2013 were $5.4 million and $6.3 million, respectively.
Schedule of Components of Restricted Cash 
The following table sets forth the Company's restricted cash (in thousands):
 
September 27, 2014
 
December 28, 2013
Restricted cash related to outstanding standby letters of credit
 
 
 
Value added tax license
$
1,362

 
$
1,430

Customer proposal guarantee
1,771

 
1,446

Property leases
699

 
699

Other
392

 
329

Total restricted cash
$
4,224

 
$
3,904

Accumulated Comprehensive Loss (Tables)
Summary of Changes in Accumulated Other Comprehensive Income (Loss)
Other comprehensive loss includes certain changes in equity that are excluded from net income (loss). The following table sets forth the changes in accumulated other comprehensive loss by component for the nine months ended September 27, 2014 (in thousands): 
 
 
Unrealized Gain
on Other
Available-for-Sale
Securities
 
Foreign
Currency Translation     
 
     Accumulated     
Tax Effect
 
Total        
Balance at December 28, 2013
 
$
(124
)
 
$
(2,602
)
 
$
(760
)
 
$
(3,486
)
Net current-period other comprehensive loss
 
(27
)
 
(142
)
 
—

 
(169
)
Balance at September 27, 2014
 
$
(151
)
 
$
(2,744
)
 
$
(760
)
 
$
(3,655
)
Basic and Diluted Net Income (Loss) 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 (loss) per common share – basic and diluted (in thousands, except per share amounts):
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Numerator:
 
 
 
 
 
 
 
Net income (loss)
$
4,843

 
$
3,347

 
$
5,249

 
$
(21,941
)
Denominator:
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
124,378

 
118,740

 
122,953

 
116,653

Effect of dilutive securities:
 
 
 
 
 
 
 
Employee equity plans
4,586

 
5,939

 
4,109

 
—

Diluted weighted average common shares outstanding
128,964

 
124,679

 
127,062

 
116,653

 
 
 
 
 
 
 
 
Net income (loss) per common share
 
 
 
 
 
 
 
Basic
$
0.04

 
$
0.03

 
$ 0.04

 
$
(0.19
)
Diluted
$
0.04

 
$
0.03

 
$ 0.04

 
$
(0.19
)
Antidilutive Shares Excluded from Computation of Diluted Net Income (Loss) Per Share 
The effects of these potentially outstanding shares were not included in the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive under the treasury stock method or the performance condition of the award has not been met (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Stock options
447

 
408

 
706

 
6,603

Restricted stock units
68

 
89

 
250

 
6,559

Performance stock units
185

 
211

 
185

 
721

Employee stock purchase plan shares
801

 
675

 
921

 
675

Total
1,501

 
1,383

 
2,062

 
14,558


Convertible Senior Notes (Tables)
Components of Convertible Senior Notes 
The amounts recorded in connection with the issuance of the Notes and related amortization consisted of the following (in thousands):
 
Other Non-Current Assets
 
Long-Term Debt
 
Additional Paid-in Capital
Principal amount
$
—

 
$
150,000

 
$
—

Debt discount
—

 
(45,000
)
 
—

Equity component
—

 
—

 
45,000

Debt issuance cost
3,872

 
—

 
(1,659
)
Initial transaction amounts
$
3,872

 
$
105,000

 
$
43,341

Amortization of debt issuance cost
(851
)
 
—

 
—

Amortization of debt discount
—

 
9,888

 
—

Net carrying amount at September 27, 2014
$
3,021

 
$
114,888

 
$
43,341

Interest Expense Recognized Related to Notes 
The following table sets forth total interest expense recognized related to the Notes (in thousands): 
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Contractual interest expense
$
656

 
$
656

 
$
1,969

 
$
875

Amortization of debt issuance costs
169

 
152

 
493

 
202

Amortization of debt discount
1,956

 
1,770

 
5,724

 
2,350

Total interest expense
$
2,781

 
$
2,578

 
$
8,186

 
$
3,427

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 28, 2013
6,367

 
$
7.26

 
$
17,452

Stock options granted
25

 
$
9.02

 
 
Stock options exercised
(1,280
)
 
$
6.99

 
$
3,210

Stock options canceled
(92
)
 
$
12.39

 


Outstanding at September 27, 2014
5,020

 
$
7.24

 
$
17,631

Vested and expected to vest as of September 27, 2014
5,017

 
 
 
$
17,622

Exercisable at September 27, 2014
4,921

 
$
7.24

 
$
17,329

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 28, 2013
6,583

 
$
7.72

 
$
64,443

RSUs granted
2,415

 
$
8.37

 


RSUs released
(2,625
)
 
$
7.74

 
$
22,477

RSUs canceled
(424
)
 
$
7.88

 


Outstanding at September 27, 2014
5,949

 
$
7.97

 
$
63,122

Expected to vest at September 27, 2014
5,751

 


 
$
61,021

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 28, 2013
721

 
$
7.04

 
$
7,054

PSUs granted
508

 
$
7.53

 

PSUs released
(255
)
 
$
6.36

 
$
2,097

PSUs canceled
(97
)
 
$
7.18

 

Outstanding at September 27, 2014
877

 
$
7.49

 
$
9,298

Expected to vest at September 27, 2014
659

 

 
$
6,994

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 September 27, 2014. 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
317

 
1.5
RSUs
30,599

 
2.3
PSUs
2,704

 
1.6
Ranges of Estimated Values of Stock Options and Performance-Based Stock Options Granted 
The estimated values of stock options, as well as assumptions used in calculating these values were based on estimates as follows (expense amounts in thousands):
 
Three Months Ended
 
Nine Months Ended
Employee and Director Stock Options
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Volatility
N/A
 
N/A
 
52%
 
N/A
Risk-free interest rate
N/A
 
N/A
 
1.3%
 
N/A
Expected life
N/A
 
N/A
 
4.3 years
 
N/A
Estimated fair value
N/A
 
N/A
 
$3.85
 
N/A
Total stock-based compensation expense
$108
 
$665
 
$623
 
$2,190
_________________
N/A
Not applicable because the Company did not grant any stock options to employees for the periods presented.
Estimated Fair Value of ESPP Shares 
The fair value of the ESPP shares was estimated at the date of grant using the following assumptions (expense amounts in thousands):
 
Three Months Ended
 
Nine Months Ended
Employee Stock Purchase Plan
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Volatility
46%
 
49%
 
46% - 51%
 
46% - 49%
Risk-free interest rate
0.06%
 
0.10%
 
0.02% - 0.11%
 
0.10% - 0.14%
Expected life
0.5 years
 
0.5 years
 
0.25 - 0.5 years
 
0.5 years
Estimated fair value
$2.54
 
$3.00
 
$2.05 - $2.57
 
$1.87 - $3.00
Total stock-based compensation expense
$1,092
 
$777
 
$2,726
 
$2,050
Schedule of Share-based Payment Award, Valuation Assumptions 
The ranges of estimated values of the PSUs granted, as well as assumptions used in calculating these values were based on estimates as follows:
 
Year Ended
 
December 28, 2013
Infinera Volatility
55%
NASDAQ Telecom Composite Index Volatility
23%
Risk-free interest rate
0.42%
Correlation with NASDAQ Telecom Composite Index
0.56
Estimated fair value
$6.27 - $7.06
Schedule of Additional Share-based Payment Award, Valuation Assumptions 
The ranges of estimated values of the PSUs granted, as well as assumptions used in calculating these values were based on estimates as follows:
 
 
Nine Months Ended
 
 
September 27, 2014
Infinera Volatility
 
49% - 50%
IGN Index Volatility
 
25%
Risk-free interest rate
 
0.66% - 0.71%
Correlation with IGN Index
 
0.60
Estimated fair value
 
$6.59 - $7.60
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):
 
September 27, 2014
 
December 28, 2013
Stock-based compensation effects in inventory
$
3,160

 
$
3,189

Stock-based compensation effects in deferred inventory cost
$
13

 
$
15

Stock-based compensation effects in fixed assets
$
126

 
$
145

 
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Stock-based compensation effects included in net income (loss) before income taxes
 
 
 
 
 
 
 
Cost of revenue
$
492

 
$
422

 
$
1,421

 
$
1,382

Research and development
2,270

 
2,434

 
6,488

 
8,175

Sales and marketing
1,982

 
1,853

 
5,517

 
5,659

General and administration
1,628

 
1,807

 
4,707

 
4,167

 
6,372

 
6,516

 
18,133

 
19,383

Cost of revenue – amortization from balance sheet (1)
999

 
1,127

 
2,714

 
4,419

Total stock-based compensation expense
$
7,371

 
$
7,643

 
$
20,847

 
$
23,802

_________________
(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
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Americas:
 
 
 
 
 
 
 
United States
$
120,769

 
$
103,113

 
$
367,802

 
$
270,437

Other Americas
9,230

 
2,024

 
17,526

 
6,544

 
129,999

 
105,137

 
385,328

 
276,981

Europe, Middle East and Africa
34,131

 
32,262

 
78,978

 
103,022

Asia Pacific and Japan
9,429

 
4,621

 
17,467

 
25,027

Total revenue
$
173,559

 
$
142,020

 
$
481,773

 
$
405,030

Property, Plant and Equipment, Net 
Property, plant and equipment, net 
 
September 27, 2014
 
December 28,
2013
United States
$
72,428

 
$
76,850

Other Americas
237

 
319

Europe, Middle East and Africa
943

 
1,451

Asia Pacific and Japan
1,356

 
1,048

Total property, plant and equipment, net
$
74,964

 
$
79,668

Guarantees (Tables)
Activity Related to Product Warranty
Activity related to product warranty was as follows (in thousands): 
 
Three Months Ended
 
Nine Months Ended
 
September 27, 2014
 
September 28, 2013
 
September 27, 2014
 
September 28, 2013
Beginning balance
$
27,948

 
$
19,701

 
$
22,908

 
$
16,482

Charges to operations
5,820

 
5,220

 
18,181

 
16,646

Utilization
(2,312
)
 
(2,645
)
 
(7,924
)
 
(6,783
)
Change in estimate (1)
(3,650
)
 
886

 
(5,359
)
 
(3,183
)
Balance at the end of the period
$
27,806

 
$
23,162

 
$
27,806

 
$
23,162

 _________________
(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 and the resulting impact of these changes on the Company’s estimate of expected future returns, as well as changes in the estimated cost and the mix of new versus used units related to replacement of failed units.
Fair Value Measurements and Other-Than-Temporary Impairments - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 28, 2013
Mar. 30, 2013
Sep. 27, 2014
Sep. 28, 2013
Dec. 28, 2013
Fair Value Disclosures [Abstract]
 
 
 
 
 
Available-for-sale investments
 
 
18 months 
 
 
Available-for-sale Securities, Gross Realized Gain (Loss)
$ 0 
 
 
$ 0.2 
 
Cash
 
 
59.2 
 
64.6 
Disposal of auction rate securities par value
 
3.1 
 
 
 
Realized gain on calls
 
$ 0.2 
 
 
 
Fair Value Measurements and Other-Than-Temporary Impairments - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) (Fair Value, Measurements, Recurring [Member], USD $)
In Thousands, unless otherwise specified
Sep. 27, 2014
Dec. 28, 2013
Assets
 
 
Total Assets
$ 314,304 
$ 296,877 
Money Market Funds [Member]
 
 
Assets
 
 
Total Assets
15,369 
51,749 
Certificates of Deposit [Member]
 
 
Assets
 
 
Total Assets
3,460 
3,840 
Commercial Paper [Member]
 
 
Assets
 
 
Total Assets
83,838 
85,860 
Corporate Bonds [Member]
 
 
Assets
 
 
Total Assets
202,804 
150,595 
U.S. Treasuries [Member]
 
 
Assets
 
 
Total Assets
8,833 
4,804 
Foreign Currency Exchange Forward Contracts [Member]
 
 
Assets
 
 
Total Assets
0 
29 
Liabilities
 
 
Total Liabilities
32 
26 
Level 1 [Member]
 
 
Assets
 
 
Total Assets
24,202 
56,553 
Level 1 [Member] |
Money Market Funds [Member]
 
 
Assets
 
 
Total Assets
15,369 
51,749 
Level 1 [Member] |
Certificates of Deposit [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 1 [Member] |
Commercial Paper [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 1 [Member] |
Corporate Bonds [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 1 [Member] |
U.S. Treasuries [Member]
 
 
Assets
 
 
Total Assets
8,833 
4,804 
Level 1 [Member] |
Foreign Currency Exchange Forward Contracts [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Liabilities
 
 
Total Liabilities
0 
0 
Level 2 [Member]
 
 
Assets
 
 
Total Assets
290,102 
240,324 
Level 2 [Member] |
Money Market Funds [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 2 [Member] |
Certificates of Deposit [Member]
 
 
Assets
 
 
Total Assets
3,460 
3,840 
Level 2 [Member] |
Commercial Paper [Member]
 
 
Assets
 
 
Total Assets
83,838 
85,860 
Level 2 [Member] |
Corporate Bonds [Member]
 
 
Assets
 
 
Total Assets
202,804 
150,595 
Level 2 [Member] |
U.S. Treasuries [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 2 [Member] |
Foreign Currency Exchange Forward Contracts [Member]
 
 
Assets
 
 
Total Assets
0 
29 
Liabilities
 
 
Total Liabilities
32 
26 
Level 3 [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 3 [Member] |
Money Market Funds [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 3 [Member] |
Certificates of Deposit [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 3 [Member] |
Commercial Paper [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 3 [Member] |
Corporate Bonds [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 3 [Member] |
U.S. Treasuries [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Level 3 [Member] |
Foreign Currency Exchange Forward Contracts [Member]
 
 
Assets
 
 
Total Assets
0 
0 
Liabilities
 
 
Total Liabilities
$ 0 
$ 0 
Fair Value Measurements and Other-Than-Temporary Impairments - Investments at Fair Value (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 27, 2014
Dec. 28, 2013
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
$ 314,455 
$ 296,972 
Gross Unrealized Gains
26 
31 
Gross Unrealized Losses
(177)
(155)
Fair Value
314,304 
296,848 
Money Market Funds [Member]
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
15,369 
51,749 
Gross Unrealized Gains
0 
0 
Gross Unrealized Losses
0 
0 
Fair Value
15,369 
51,749 
Certificates of Deposit [Member]
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
3,460 
3,840 
Gross Unrealized Gains
0 
0 
Gross Unrealized Losses
0 
0 
Fair Value
3,460 
3,840 
Commercial Paper [Member]
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
83,838 
85,870 
Gross Unrealized Gains
2 
2 
Gross Unrealized Losses
(2)
(12)
Fair Value
83,838 
85,860 
Corporate Bonds [Member]
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
202,959 
150,711 
Gross Unrealized Gains
19 
27 
Gross Unrealized Losses
(174)
(143)
Fair Value
202,804 
150,595 
U.S. Treasuries [Member]
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Adjusted Amortized Cost
8,829 
4,802 
Gross Unrealized Gains
5 
2 
Gross Unrealized Losses
(1)
0 
Fair Value
$ 8,833 
$ 4,804 
Fair Value Measurements and Other-Than-Temporary Impairments - Roll-Forward of Amortized Cost, Cumulative OTTI Recognized in Earnings and Accumulated Other Comprehensive Loss (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 27, 2014
Dec. 28, 2013
Sep. 28, 2013
OTTI Recognized in Earnings and Accumulated Other Comprehensive Loss [Member]
Amortized Cost
 
 
 
Amortized Cost, Beginning balance
$ 314,455 
$ 296,972 
$ 2,707 
Amortized Cost, Call on investments
 
 
(87)
Amortized Cost, Investments sold
 
 
(2,620)
Amortized Cost, Ending balance
314,455 
296,972 
0 
Cumulative OTTI in Earnings
 
 
 
Cumulative OTTI in Earnings, Beginning balance
 
 
(394)
Cumulative OTTI in Earnings, Call on investments
 
 
13 
Cumulative OTTI in Earnings, Investments sold
 
 
381 
Cumulative OTTI in Earnings, Ending balance
 
 
0 
Unrealized Gain
 
 
 
Unrealized Gain, Beginning balance
 
 
784 
Unrealized Gain, Call on investments
 
 
(25)
Unrealized Gain, Investments Sold
 
 
(759)
Unrealized Gain, Ending balance
 
 
0 
OTTI Loss in Accumulated Other Comprehensive Loss
 
 
 
OTTI Loss in Accumulated Other Comprehensive Loss, Beginning balance
 
 
(618)
OTTI Loss in Accumulated Other Comprehensive Loss, Call on investments
 
 
20 
OTTI Loss in Accumulated Other Comprehensive Loss, Investments sold
 
 
598 
OTTI Loss in Accumulated Other Comprehensive Loss, Ending balance
 
 
0 
Accumulated Other Comprehensive Income (Loss)
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
166 
Accumulated Other Comprehensive Income (Loss), Call on investments
 
 
(5)
Accumulated Other Comprehensive Income (Loss), Investments sold
 
 
(161)
Accumulated Other Comprehensive Income (Loss), Ending balance
 
 
$ 0 
Cost-method Investment - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 27, 2014
Sep. 28, 2013
Dec. 28, 2013
Investments, All Other Investments [Abstract]
 
 
 
 
Payments to Acquire Investments
$ 5,500 
$ 5,500 
$ 0 
 
Cost-method investment
$ 14,500 
$ 14,500 
 
$ 9,000 
Less than percent of voting securities
 
20.00% 
 
 
Derivative Instruments - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]
 
 
 
 
British pound denominated receivables and typically maturities period
35 days 
 
35 days 
 
Euro denominated forward contracts maturity period
35 days 
 
35 days 
 
Before-tax effect of foreign currency exchange forward contracts not designated as hedging instruments, gain (loss)
$ 1.2 
$ (1.2)
$ 0.8 
$ (1.4)
Derivative Instruments - Fair Value of Derivative Instruments Not Designated as Hedging Activities (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 27, 2014
Dec. 28, 2013
Derivative [Line Items]
 
 
Gross Notional
$ 22,432 1
$ 31,529 1
Prepaid Expenses and Other Assets
21,714 
17,752 
Other Accrued Liabilities
(32)
(26)
Designated as Hedging Instrument [Member]
 
 
Derivative [Line Items]
 
 
Prepaid Expenses and Other Assets
0 
29 
Designated as Hedging Instrument [Member] |
Euro Denominated Exchange Forward Contracts Receivables [Member]
 
 
Derivative [Line Items]
 
 
Gross Notional
20,980 1
16,867 1
Prepaid Expenses and Other Assets
0 
27 
Other Accrued Liabilities
(30)
0 
Designated as Hedging Instrument [Member] |
GBP Denominated Exchange Forward Contracts Receivables [Member]
 
 
Derivative [Line Items]
 
 
Gross Notional
165 1
13,271 1
Prepaid Expenses and Other Assets
0 
0 
Other Accrued Liabilities
0 
(26)
Designated as Hedging Instrument [Member] |
Foreign Currency Exchange Restricted Cash Forward Contracts [Member]
 
 
Derivative [Line Items]
 
 
Gross Notional
1,287 1
1,391 1
Prepaid Expenses and Other Assets
0 
2 
Other Accrued Liabilities
$ (2)
$ 0 
Balance Sheet Details - Selected Balance Sheet Items (Details) (USD $)
Sep. 27, 2014
Dec. 28, 2013
Inventory:
 
 
Raw materials
$ 11,584,000 
$ 14,311,000 
Work in process
44,462,000 
49,172,000 
Finished goods
74,787,000 1
60,202,000 1
Total inventory
130,833,000 
123,685,000 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
229,706,000 
219,724,000 
Less accumulated depreciation and amortization
(154,742,000)
(140,056,000)
Total property, plant and equipment, net
74,964,000 
79,668,000 
Accrued expenses:
 
 
Loss contingency related to non-cancelable purchase commitments
6,242,000 
5,120,000 
Professional and other consulting fees
1,033,000 
1,411,000 
Taxes payable
1,620,000 
2,372,000 
Royalties
2,152,000 
1,540,000 
Accrued rebate and customer prepay liability
758,000 
3,807,000 
Accrued interest on convertible senior notes
875,000 
219,000 
Other accrued expenses
10,913,000 
7,962,000 
Total accrued expenses
23,593,000 
22,431,000 
Enterprise Resource Planning Systems [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
7,900,000 
7,900,000 
Total property, plant and equipment, net
5,400,000 
6,300,000 
Computer Hardware [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
8,515,000 
9,692,000 
Computer Software [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
17,679,000 2
16,988,000 2
Laboratory and Manufacturing Equipment [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
158,446,000 
146,834,000 
Furniture and Fixtures [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
1,343,000 
1,347,000 
Leasehold Improvements [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
37,258,000 
35,913,000 
Construction in Progress [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment, gross
6,465,000 
8,950,000 
Customer Locations [Member]
 
 
Accrued expenses:
 
 
Inventory Awaiting Customer Acceptance
$ 16,200,000 
$ 9,200,000 
Balance Sheet Details - Restricted Cash (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 27, 2014
Dec. 28, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
Value added tax license
$ 1,362 
$ 1,430 
Customer proposal guarantee
1,771 
1,446 
Property leases
699 
699 
Other restricted cash
392 
329 
Long-term restricted cash
$ 4,224 
$ 3,904 
Accumulated Comprehensive Loss - Summary of Changes in Accumulated Other Comprehensive Loss (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
 
 
 
 
Beginning balance
 
 
$ (3,486)
 
Net change in accumulated other comprehensive loss
(543)
(54)
(169)
(1,246)
Ending balance
(3,655)
 
(3,655)
 
Unrealized Gain on Other Available-for-Sale Securities [Member]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
 
 
 
 
Beginning balance
 
 
(124)
 
Net change in accumulated other comprehensive loss
 
 
(27)
 
Ending balance
(151)
 
(151)
 
Foreign Currency Translation [Member]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
 
 
 
 
Beginning balance
 
 
(2,602)
 
Net change in accumulated other comprehensive loss
 
 
(142)
 
Ending balance
(2,744)
 
(2,744)
 
Accumulated Tax Effect [Member]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
 
 
 
 
Beginning balance
 
 
(760)
 
Net change in accumulated other comprehensive loss
 
 
0 
 
Ending balance
$ (760)
 
$ (760)
 
Basic and Diluted Net Income (Loss) Per Common Share Basic and Diluted Net Income (Loss) Per Common Share - Computation of Net Loss Per Common Share Basic and Diluted (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Earnings Per Share [Abstract]
 
 
 
 
Net income (loss)
$ 4,843 
$ 3,347 
$ 5,249 
$ (21,941)
Basic weighted average common shares outstanding (in shares)
124,378 
118,740 
122,953 
116,653 
Employee equity plans (in shares)
4,586 
5,939 
4,109 
0 
Diluted weighted average common shares outstanding (in shares)
128,964 
124,679 
127,062 
116,653 
Net income (loss) per common share
 
 
 
 
Basic (USD per share)
$ 0.04 
$ 0.03 
$ 0.04 
$ (0.19)
Diluted (USD per share)
$ 0.04 
$ 0.03 
$ 0.04 
$ (0.19)
Basic and Diluted Net Income (Loss) Per Common Share Basic and Diluted Net Income (Loss) Per Common Share - Antidilutive Shares Excluded from Computation of Diluted Net Loss Per Share (Details)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation
1,501 
1,383 
2,062 
14,558 
Stock Options [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation
447 
408 
706 
6,603 
RSUs [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation
68 
89 
250 
6,559 
PSUs [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation
185 
211 
185 
721 
ESPP [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from earnings per share computation
801 
675 
921 
675 
Convertible Senior Notes - Additional Information (Details) (USD $)
1 Months Ended 9 Months Ended 9 Months Ended 12 Months Ended
May 31, 2013
Sep. 27, 2014
Sep. 28, 2013
Sep. 26, 2014
May 30, 2013
Sep. 27, 2014
1.75% Convertible Senior Notes Due June 1, 2018 [Member]
Dec. 28, 2013
1.75% Convertible Senior Notes Due June 1, 2018 [Member]
May 30, 2013
1.75% Convertible Senior Notes Due June 1, 2018 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
 
 
Debt instrument issued
 
 
 
 
 
 
 
$ 150,000,000.0 
Debt instrument interest percentage
 
1.75% 
 
 
 
 
 
1.75% 
Proceeds from issuance of debt, net
 
0 
144,469,000 
 
 
 
144,469,000 
 
Initial conversion rate per $1,000 principal amount of Notes
0.0794834 
 
 
 
 
 
 
 
Initial conversion price
 
 
 
 
$ 12.58 
 
 
 
Convertible threshold trading days
20 days 
 
 
 
 
 
 
 
Convertible threshold consecutive trading days
30 days 
 
 
 
 
 
 
 
Convertible threshold minimum percentage
130.00% 
 
 
 
 
 
 
 
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% 
 
 
 
 
 
 
 
Debt instrument discount to be amortized
 
 
 
 
 
35,100,000 
 
 
Debt issuance cost
 
 
 
 
 
5,500,000 
 
 
Deferred tax liability
 
 
 
 
 
17,000,000 
 
 
Additional effective rate of interest to be used on amortized carrying value
 
10.23% 
 
 
 
 
 
 
Total estimated fair value of the notes
 
$ 167,300,000 
 
 
 
 
 
 
Closing price of common stock (in usd per share)
 
 
 
$ 10.61 
 
 
 
 
Convertible Senior Notes - Components of Convertible Senior Notes (Details) (1.75% Convertible Senior Notes Due June 1, 2018 [Member], USD $)
May 30, 2013
Sep. 27, 2014
Additional Paid-in Capital [Member]
Sep. 27, 2014
Other Noncurrent Assets [Member]
Sep. 27, 2014
Long-term Debt [Member]
Debt Instrument [Line Items]
 
 
 
 
Principal amount
$ 150,000,000.0 
 
 
$ 150,000,000 
Debt discount
 
 
 
(45,000,000)
Equity component
 
45,000,000 
 
 
Initial transaction amounts and debt issuance cost
 
 
3,872,000 
 
Debt issuance cost
 
(1,659,000)
 
 
Initial transaction amounts, long-term debt
 
 
 
105,000,000 
Initial transaction amount and net carrying amount, APIC
 
43,341,000 
 
 
Amortization of debt issuance cost
 
 
(851,000)
 
Amortization of debt discount
 
 
 
9,888,000 
Net carrying amount, other non-current assets
 
 
3,021,000 
 
Net carrying amount, long-term debt
 
 
 
$ 114,888,000 
Convertible Senior Notes - Interest Expense Recognized Related to Notes Prior to Capitalization of Interest (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Debt Disclosure [Abstract]
 
 
 
 
Contractual interest expense
$ 656 
$ 656 
$ 1,969 
$ 875 
Amortization of debt issuance costs
169 
152 
493 
202 
Amortization of debt discount
1,956 
1,770 
5,724 
2,350 
Total interest expense recognized related to notes prior to capitalization of interest
$ 2,781 
$ 2,578 
$ 8,186 
$ 3,427 
Stockholders' Equity - Additional Information (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 27, 2014
Sep. 26, 2014
Dec. 28, 2013
NASDAQ Telecom Composite Index [Member]
Sep. 27, 2014
IGN Index [Member]
Sep. 27, 2014
IGN Index [Member]
Sep. 27, 2014
Performance Stock Units Grants [Member]
Sep. 28, 2013
Performance Stock Units Grants [Member]
Sep. 27, 2014
Performance Stock Units Grants [Member]
Sep. 28, 2013
Performance Stock Units Grants [Member]
Dec. 29, 2012
Performance Stock Units Grants [Member]
Dec. 28, 2013
PSUs [Member]
Minimum [Member]
Dec. 28, 2013
PSUs [Member]
Maximum [Member]
Sep. 27, 2014
Restricted Stock Units [Member]
Sep. 28, 2013
Restricted Stock Units [Member]
Sep. 27, 2014
Restricted Stock Units [Member]
Sep. 28, 2013
Restricted Stock Units [Member]
Sep. 27, 2014
2007 Equity Incentive Plan [Member]
NASDAQ Telecom Composite Index [Member]
Minimum [Member]
Sep. 27, 2014
2007 Equity Incentive Plan [Member]
NASDAQ Telecom Composite Index [Member]
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted options to employees to purchase shares of common stock (in shares)
17.5 
17.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closing price of common stock (in usd per share)
 
 
$ 10.61 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares available for grant cost (in shares)
0.1 
2.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of stock-based compensation
 
 
 
 
 
 
$ 0.6 
$ 0.5 
$ 1.5 
$ 0.1 
 
 
 
$ 5.6 
$ 5.5 
$ 15.9 
$ 18.2 
 
 
Shares of PSUs to executive officers (in shares)
 
 
 
0.6 
0 
0.4 
0.1 
 
 
 
0.5 
 
 
 
 
 
 
 
 
Ranges of number of shares issued on vesting of PSUs
 
 
 
 
 
 
 
 
 
 
 
0 
1.5 
 
 
 
 
0 
1.5 
Amortization of stock based compensation expense offset
 
 
 
 
 
 
 
 
 
1.5 
 
 
 
 
 
 
 
 
 
Decrease in fair value
 
 
 
 
 
 
 
 
 
$ 1.4 
 
 
 
 
 
 
 
 
 
Stockholders' Equity - Summary of Company's Equity Award Activity - Options (Details) (Stock Options [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified
9 Months Ended
Sep. 27, 2014
Stock Options [Member]
 
Number of Stock Options
 
Number of Options, beginning balance (in shares)
6,367 
Number of options, granted (in shares)
25 
Number of Options, exercised (in shares)
(1,280)
Number of Options, canceled (in shares)
(92)
Number of Options, ending balance (in shares)
5,020 
Number of Options, vested and expected to vest (in shares)
5,017 
Number of Options, exercisable (in shares)
4,921 
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)
$ 9.02 
Weighted-Average Exercise Price Per Share, Options exercised (in usd per share)
$ 6.99 
Weighted-Average Exercise Price Per Share, Options canceled (in usd per share)
$ 12.39 
Weighted-Average Exercise Price Per Share, ending balance (in usd per share)
$ 7.24 
Average Exercise Price Per Share, Exercisable
$ 7.24 
Aggregate Intrinsic Value
 
Aggregate Intrinsic Value, beginning balance
$ 17,452 
Aggregate Intrinsic Value, Options exercised
3,210 
Aggregate Intrinsic Value, ending balance
17,631 
Aggregate Intrinsic Value, Vested and expected to vest
17,622 
Aggregate Intrinsic Value, Exercisable
$ 17,329 
Stockholders' Equity - Summary of Company's Equity Award Activity - RSUs (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 27, 2014
Restricted Stock Units [Member]
 
 
Number of Restricted Stock Units
 
 
Number of Restricted/Performance Stock Units, beginning balance (in shares)
 
6,583 
Number of Restricted Stock Units, granted (in shares)
 
2,415 
Number of Restricted Stock Units, released (in shares)
 
(2,625)
Number of Restricted Stock Units, canceled (in shares)
 
(424)
Number of Restricted/Performance Stock Units, ending balance (in shares)
5,949 
5,949 
Number of Restricted Stock Units, Expected to vest (in shares)
5,751 
5,751 
Weighted- Average Grant Date Fair Value Per Share
 
 
Weighted-Average Grant Date Fair Value Per Share, beginning balance (in usd per share)
 
$ 7.72 
Weighted-Average Grant Date Fair Value Per Share, granted (in usd per share)
 
$ 8.37 
Weighted-Average Grant Date Fair Value Per Share, released (in usd per share)
 
$ 7.74 
Weighted-Average Grant Date Fair Value Per Share, canceled (in usd per share)
 
$ 7.88 
Aggregate Intrinsic Value
 
 
Aggregate Intrinsic Value, beginning balance
 
$ 64,443 
Aggregate Intrinsic Value, RSUs released
 
22,477 
Aggregate Intrinsic Value, ending balance
63,122 
63,122 
Aggregate Intrinsic Value, Expected to vest
$ 61,021 
$ 61,021 
Fiscal Year 2013 Grant [Member]
 
 
Number of Restricted Stock Units
 
 
Number of Restricted Stock Units, released (in shares)
0 
(300)
Stockholders' Equity - Summary of Company's Equity Award Activity - PSUs (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
9 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 9 Months Ended
Sep. 27, 2014
PSUs [Member]
Dec. 28, 2013
PSUs [Member]
Sep. 27, 2014
PSUs [Member]
Sep. 27, 2014
Minimum [Member]
PSUs [Member]
Dec. 28, 2013
Minimum [Member]
PSUs [Member]
Sep. 27, 2014
Maximum [Member]
PSUs [Member]
Dec. 28, 2013
Maximum [Member]
PSUs [Member]
Sep. 27, 2014
Fiscal Year 2013 Grant [Member]
Sep. 27, 2014
Fiscal Year 2013 Grant [Member]
Number of Performance Stock Units
 
 
 
 
 
 
 
 
 
Number of Restricted/Performance Stock Units, beginning balance (in shares)
721 
 
 
 
 
 
 
 
 
Number of Restricted Stock Units, granted (in shares)
508 
 
 
 
 
 
 
 
 
Number of Restricted Stock Units, released (in shares)
(255)
 
 
 
 
 
 
0 
(300)
Number of Restricted Stock Units, canceled (in shares)
(97)
 
 
 
 
 
 
 
 
Number of Restricted/Performance Stock Units, ending balance (in shares)
877 
721 
 
 
 
 
 
 
 
Number of Restricted Stock Units, Expected to vest (in shares)
659 
 
 
 
 
 
 
 
 
Weighted- Average Grant Date Fair Value Per Share
 
 
 
 
 
 
 
 
 
Weighted-Average Grant Date Fair Value Per Share, beginning balance (in usd per share)
$ 7.04 
 
$ 7.49 
 
 
 
 
 
 
Weighted-Average Grant Date Fair Value Per Share, granted (in usd per share)
$ 7.53 
 
 
$ 6.59 
$ 6.27 
$ 7.60 
$ 7.06 
 
 
Weighted-Average Grant Date Fair Value Per Share, released (in usd per share)
$ 6.36 
 
 
 
 
 
 
 
 
Weighted-Average Grant Date Fair Value Per Share, canceled (in usd per share)
$ 7.18 
 
 
 
 
 
 
 
 
Aggregate Intrinsic Value
 
 
 
 
 
 
 
 
 
Aggregate Intrinsic Value, beginning balance
$ 7,054 
 
 
 
 
 
 
 
 
Aggregate Intrinsic Value, PSUs released
2,097 
 
 
 
 
 
 
 
 
Aggregate Intrinsic Value, ending balance
9,298 
7,054 
 
 
 
 
 
 
 
Aggregate Intrinsic Value, Expected to vest
$ 6,994 
 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, NASDAQ Telecom Composite Index, Expected Volatility Rate
 
23.00% 
 
 
 
 
 
 
 
Risk-free interest rate
 
0.42% 
 
0.66% 
 
0.71% 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Correction with NASDAQ Telecom Composite Index
 
56.00% 
 
 
 
 
 
 
 
Stockholders' Equity - Total Stock Based Compensation Cost for Instruments Granted but Not Yet Amortized (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 27, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Stock options, Unrecognized Compensation Expense, Net
$ 317 
Stock options, Weighted-Average Period (in years)
1 year 6 months 15 days 
Restricted Stock Units [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unrecognized Compensation Expense, Net
30,599 
Weighted-Average Period (in years)
2 years 3 months 26 days 
PSUs [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unrecognized Compensation Expense, Net
$ 2,704 
Weighted-Average Period (in years)
1 year 6 months 26 days 
Stockholders' Equity - Ranges of Estimated Values of Stock Options and Performance-Based Stock Options Granted (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Stock Compensation Plan [Member]
Sep. 28, 2013
Stock Compensation Plan [Member]
Sep. 27, 2014
Stock Compensation Plan [Member]
Sep. 28, 2013
Stock Compensation Plan [Member]
Sep. 27, 2014
Employee Stock Purchase Plans [Member]
Sep. 28, 2013
Employee Stock Purchase Plans [Member]
Sep. 27, 2014
Employee Stock Purchase Plans [Member]
Sep. 28, 2013
Employee Stock Purchase Plans [Member]
Sep. 27, 2014
Employee Stock Purchase Plans [Member]
Minimum [Member]
Sep. 28, 2013
Employee Stock Purchase Plans [Member]
Minimum [Member]
Sep. 27, 2014
Employee Stock Purchase Plans [Member]
Maximum [Member]
Sep. 28, 2013
Employee Stock Purchase Plans [Member]
Maximum [Member]
Sep. 27, 2014
PSUs [Member]
Dec. 28, 2013
PSUs [Member]
Sep. 27, 2014
PSUs [Member]
Minimum [Member]
Dec. 28, 2013
PSUs [Member]
Minimum [Member]
Sep. 27, 2014
PSUs [Member]
Maximum [Member]
Dec. 28, 2013
PSUs [Member]
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-Average Grant Date Fair Value Per Share, granted (in usd per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 7.53 
 
$ 6.59 
$ 6.27 
$ 7.60 
$ 7.06 
Volatility
 
 
 
 
 
 
52.00% 
 
46.00% 
49.00% 
 
 
46.00% 
46.00% 
51.00% 
49.00% 
 
55.00% 
49.00% 
 
50.00% 
 
Risk-free interest rate
 
 
 
 
 
 
1.30% 
 
0.06% 
0.10% 
 
 
0.02% 
0.10% 
0.11% 
0.14% 
 
0.42% 
0.66% 
 
0.71% 
 
Expected life
 
 
 
 
 
 
4 years 4 months 2 days 
 
6 months 
6 months 
 
6 months 
3 months 
 
6 months 
 
 
 
 
 
 
 
Estimated fair value
 
 
 
 
 
 
$ 3.85 
 
$ 2.54 
$ 3.00 
 
 
$ 2.05 
$ 1.87 
$ 2.57 
$ 3.00 
 
 
 
 
 
 
Stock-based compensation expense
$ 7,371 
$ 7,643 
$ 20,847 
$ 23,802 
$ 108 
$ 665 
$ 623 
$ 2,190 
$ 1,092 
$ 777 
$ 2,726 
$ 2,050 
 
 
 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, NASDAQ Telecom Composite Index, Expected Volatility Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25.00% 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Correction with NASDAQ Telecom Composite Index
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60.00% 
 
 
 
 
 
Stockholders' Equity - Estimated Fair Value of ESPP Shares (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
PSUs [Member]
Dec. 28, 2013
PSUs [Member]
Sep. 27, 2014
Employee Stock Purchase Plans [Member]
Sep. 28, 2013
Employee Stock Purchase Plans [Member]
Sep. 27, 2014
Employee Stock Purchase Plans [Member]
Sep. 28, 2013
Employee Stock Purchase Plans [Member]
Sep. 27, 2014
Minimum [Member]
PSUs [Member]
Dec. 28, 2013
Minimum [Member]
PSUs [Member]
Sep. 27, 2014
Minimum [Member]
Employee Stock Purchase Plans [Member]
Sep. 28, 2013
Minimum [Member]
Employee Stock Purchase Plans [Member]
Sep. 27, 2014
Maximum [Member]
PSUs [Member]
Dec. 28, 2013
Maximum [Member]
PSUs [Member]
Sep. 27, 2014
Maximum [Member]
Employee Stock Purchase Plans [Member]
Sep. 28, 2013
Maximum [Member]
Employee Stock Purchase Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-Average Grant Date Fair Value Per Share, granted (in usd per share)
 
 
 
 
$ 7.53 
 
 
 
 
 
$ 6.59 
$ 6.27 
 
 
$ 7.60 
$ 7.06 
 
 
Volatility
 
 
 
 
 
55.00% 
46.00% 
49.00% 
 
 
49.00% 
 
46.00% 
46.00% 
50.00% 
 
51.00% 
49.00% 
Risk-free interest rate
 
 
 
 
 
0.42% 
0.06% 
0.10% 
 
 
0.66% 
 
0.02% 
0.10% 
0.71% 
 
0.11% 
0.14% 
Expected life
 
 
 
 
 
 
6 months 
6 months 
 
6 months 
 
 
3 months 
 
 
 
6 months 
 
Estimated fair value
 
 
 
 
 
 
$ 2.54 
$ 3.00 
 
 
 
 
$ 2.05 
$ 1.87 
 
 
$ 2.57 
$ 3.00 
Stock-based compensation expense
$ 7,371 
$ 7,643 
$ 20,847 
$ 23,802 
 
 
$ 1,092 
$ 777 
$ 2,726 
$ 2,050 
 
 
 
 
 
 
 
 
Stockholders' Equity - Summary of Effects of Stock-Based Compensation on Company's Balance Sheets (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 27, 2014
Dec. 28, 2013
Stock-Based Compensation Effects in Inventory [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects Of Stock Based Compensation
$ 3,160 
$ 3,189 
Stock-Based Compensation Effects in Deferred Inventory Cost [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects Of Stock Based Compensation
13 
15 
Stock-Based Compensation Effects in Fixed Assets [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects Of Stock Based Compensation
$ 126 
$ 145 
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 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income (loss) before income taxes
$ 6,372 
$ 6,516 
$ 18,133 
$ 19,383 
Cost of revenue - amortization from balance sheet
999 1
1,127 1
2,714 1
4,419 
Allocated Share-based Compensation Expense
7,371 
7,643 
20,847 
23,802 
Cost of revenue
 
 
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income (loss) before income taxes
492 
422 
1,421 
1,382 
Research and development
 
 
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income (loss) before income taxes
2,270 
2,434 
6,488 
8,175 
Sales and marketing
 
 
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income (loss) before income taxes
1,982 
1,853 
5,517 
5,659 
General and administration
 
 
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
 
 
Stock-based compensation effects included in net income (loss) before income taxes
$ 1,628 
$ 1,807 
$ 4,707 
$ 4,167 
Income Taxes - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Income Tax Disclosure [Abstract]
 
 
 
 
Provision for income taxes
$ 205 
$ 308 
$ 1,070 
$ 1,240 
Pre-tax income (loss)
$ 5,048 
$ 3,655 
$ 6,319 
$ (20,701)
Segment Information - Revenue and Long-Lived Assets by Geographic Region (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
$ 173,559 
$ 142,020 
$ 481,773 
$ 405,030 
Operating Segments [Member] |
United States [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
120,769 
103,113 
367,802 
270,437 
Operating Segments [Member] |
Other Americas [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
9,230 
2,024 
17,526 
6,544 
Operating Segments [Member] |
Americas [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
129,999 
105,137 
385,328 
276,981 
Operating Segments [Member] |
Europe, Middle East and Africa [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
34,131 
32,262 
78,978 
103,022 
Operating Segments [Member] |
Asia Pacific and Japan [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Total revenue
$ 9,429 
$ 4,621 
$ 17,467 
$ 25,027 
Segment Information - Property, Plant and Equipment, Net (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 27, 2014
Dec. 28, 2013
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
$ 74,964 
$ 79,668 
Operating Segments [Member] |
United States [Member]
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
72,428 
76,850 
Operating Segments [Member] |
Other Americas [Member]
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
237 
319 
Operating Segments [Member] |
Europe, Middle East and Africa [Member]
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
943 
1,451 
Operating Segments [Member] |
Asia Pacific and Japan [Member]
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
$ 1,356 
$ 1,048 
Guarantees - Additional Information (Details)
9 Months Ended
Sep. 27, 2014
Minimum [Member]
 
Guarantor Obligations [Line Items]
 
Product warranty period
1 year 
Maximum [Member]
 
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 9 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
Movement in Standard Product Warranty Accrual [Roll Forward]
 
 
 
 
Beginning balance
$ 27,948 
$ 19,701 
$ 22,908 
$ 16,482 
Charges to operations
5,820 
5,220 
18,181 
16,646 
Utilization
(2,312)
(2,645)
(7,924)
(6,783)
Change in estimate
(3,650)1
886 1
(5,359)1
(3,183)1
Balance at the end of the period
$ 27,806 
$ 23,162 
$ 27,806 
$ 23,162