INFINERA CORP, 10-Q filed on 5/7/2013
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 30, 2013
Apr. 30, 2013
Entity Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 30, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
INFN 
 
Entity Registrant Name
INFINERA CORP 
 
Entity Central Index Key
0001138639 
 
Current Fiscal Year End Date
--12-28 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
115,880,286 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Current assets:
 
 
Cash and cash equivalents
$ 98,998 
$ 104,666 
Short-term investments
62,108 
76,146 
Accounts receivable, net of allowance for doubtful accounts of $100 in 2013 and $94 in 2012
112,133 
107,039 
Other receivables
3,298 
2,909 
Inventory
130,991 
127,809 
Deferred inventory costs
413 
1,029 
Prepaid expenses and other current assets
10,284 
9,899 
Total current assets
418,225 
429,497 
Property, plant and equipment, net
77,155 
80,343 
Deferred inventory costs, non-current
68 
100 
Long-term investments
2,874 
Cost-method investment
9,000 
9,000 
Long-term restricted cash
3,826 
3,868 
Deferred tax asset
745 
805 
Other non-current assets
1,779 
1,683 
Total assets
510,798 
528,170 
Current liabilities:
 
 
Accounts payable
52,104 
61,428 
Accrued expenses
19,940 
25,483 
Accrued compensation and related benefits
18,694 
22,325 
Accrued warranty
7,027 
7,262 
Deferred revenue
31,234 
26,744 
Deferred tax liability
745 
805 
Total current liabilities
129,744 
144,047 
Accrued warranty, non-current
9,645 
9,220 
Deferred revenue, non-current
3,059 
3,210 
Other long-term liabilities
15,909 
15,557 
Commitments and contingencies (Note 13)
   
   
Stockholders' equity:
 
 
Preferred stock, $0.001 par value Authorized shares-25,000 and no shares issued and outstanding
Common stock, $0.001 par value Authorized shares - 500,000 as of March 30, 2013 and December 29, 2012 Issued and outstanding shares - 115,617 as of March 30, 2013 and 112,461 as of December 29, 2012
116 
112 
Additional paid-in capital
942,490 
930,618 
Accumulated other comprehensive loss
(2,520)
(2,228)
Accumulated deficit
(587,645)
(572,366)
Total stockholders' equity
352,441 
356,136 
Total liabilities and stockholders' equity
$ 510,798 
$ 528,170 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Net of allowance for doubtful accounts
$ 100 
$ 94 
Preferred stock, par value
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
25,000 
25,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.001 
$ 0.001 
Common stock, authorized shares
500,000 
500,000 
Common stock, shares issued
115,617 
112,461 
Common stock, shares outstanding
115,617 
112,461 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Revenue:
 
 
Product
$ 107,809 
$ 92,391 
Ratable product and related support and services
534 
531 
Services
16,282 
11,779 
Total revenue
124,625 
104,701 
Cost of revenue:
 
 
Cost of product
75,352 
59,324 
Cost of ratable product and related support and services
95 
191 
Cost of services
6,476 
4,759 
Total cost of revenue
81,923 
64,274 
Gross profit
42,702 
40,427 
Operating expenses:
 
 
Research and development
29,726 
30,985 
Sales and marketing
18,046 
18,242 
General and administrative
9,872 
11,084 
Total operating expenses
57,644 
60,311 
Loss from operations
(14,942)
(19,884)
Other income (expense), net:
 
 
Interest income
197 
275 
Other gain (loss), net
(203)
(424)
Total other income (expense), net
(6)
(149)
Loss before income taxes
(14,948)
(20,033)
Provision for income taxes
331 
579 
Net loss
$ (15,279)
$ (20,612)
Net loss per common share
 
 
Basic
$ (0.13)
$ (0.19)
Diluted
$ (0.13)
$ (0.19)
Weighted average shares used in computing net loss per common share
 
 
Basic
114,308 
108,666 
Diluted
114,308 
108,666 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Net loss
$ (15,279)
$ (20,612)
Other comprehensive loss:
 
 
Unrealized gain on auction rate securities classified as available-for-sale investments
12 
Reclassification of realized gain on auction rate securities
(166)
Unrealized gain (loss) on all other available-for-sale investments
(9)
136 
Foreign currency translation adjustment
(117)
382 
Tax related to available-for-sale investment
(60)
Net change in accumulated other comprehensive loss
(292)
470 
Comprehensive loss
$ (15,571)
$ (20,142)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Cash Flows from Operating Activities:
 
 
Net loss
$ (15,279)
$ (20,612)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
6,334 
5,528 
(Recovery of) provision for other receivables
(88)
Amortization of premium on investments
314 
618 
Stock-based compensation expense
7,975 
9,437 
Non-cash tax benefit
(59)
Other gain
(243)
(22)
Changes in assets and liabilities:
 
 
Accounts receivable
(5,094)
15,172 
Other receivables
(558)
422 
Inventory
(5,041)
(12,050)
Prepaid expenses and other assets
(432)
2,173 
Deferred inventory costs
629 
1,167 
Accounts payable
(8,045)
(7,266)
Accrued liabilities and other expenses
(6,301)
(1,010)
Deferred revenue
4,340 
624 
Accrued warranty
190 
121 
Net cash used in operating activities
(21,299)
(5,757)
Cash Flows from Investing Activities:
 
 
Purchase of available-for-sale investments
(20,023)
(21,907)
Proceeds from sale of available-for-sale investments
2,850 
5,194 
Proceeds from maturities and calls of investments
33,835 
32,034 
Purchase of property and equipment
(4,936)
(13,649)
Reimbursement of manufacturing capacity advance
50 
Change in restricted cash
44 
(193)
Net cash provided by investing activities
11,770 
1,529 
Cash Flows from Financing Activities:
 
 
Proceeds from issuance of common stock
5,560 
7,005 
Repurchase of common stock
(1,493)
(832)
Net cash provided by financing activities
4,067 
6,173 
Effect of exchange rate changes on cash
(206)
306 
Net change in cash and cash equivalents
(5,668)
2,251 
Cash and cash equivalents at beginning of period
104,666 
94,458 
Cash and cash equivalents at end of period
98,998 
96,709 
Supplemental disclosures of cash flow information:
 
 
Cash paid for income taxes
210 
329 
Supplemental schedule of non-cash financing activities:
 
 
Non-cash settlement for manufacturing capacity advance
$ 0 
$ 275 
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies

1. Basis of Presentation and Significant Accounting Policies

Infinera Corporation (“Infinera” or 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 29, 2012.

The Company has made estimates and judgments affecting the amounts reported in its condensed consolidated financial statements and the accompanying notes. The Company’s actual results may differ materially from these estimates. The accounting estimates that require most significant, difficult, and subjective judgment include revenue recognition, stock-based compensation, inventory valuation, allowances for sales returns, allowances for doubtful accounts, accrued warranty, cash equivalents, fair value measurement of investments, other-than-temporary impairments, derivative instruments and accounting for income taxes.

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 29, 2012.

There have been no material changes in the Company’s significant accounting policies for the three months ended March 30, 2013 as compared to those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012.

Recent Accounting Pronouncements
Recent Accounting Pronouncements

2. Recent Accounting Pronouncements

In February 2013, the FASB issued Accounting Standards Update 2013-02, Comprehensive Income (Topic 220) – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company adopted the guidance for ASU 2013-02 beginning in its fiscal quarter ended March 30, 2013. Other than requiring additional disclosures, the Company’s adoption of ASU 2013-02 did not have an impact on the Company’s financial position, results of operations or cash flow.

Fair Value Measurements and Other-Than-Temporary Impairments
Fair Value Measurements and Other-Than-Temporary Impairments

3. 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 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, derivative instruments 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, and result in the classification of these securities as Level 2 of the fair value hierarchy.

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, and result in the classification of these securities as Level 2 of the fair value hierarchy.

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. Since 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. As a result, the Company classifies its corporate bonds as Level 2 of the fair value hierarchy.

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. As a result, the Company classifies its derivative instruments as Level 2 of the fair value hierarchy.

The Company classifies its ARS within Level 3 of the fair value hierarchy. The Company’s ARS are classified within Level 3 because they are valued, in part, by using inputs that are unobservable in the market and are significant to the valuation. As of March 30, 2013, all of the Company’s ARS had been either called at par value or tendered at a price equal to 95% of par value.

 

During the first quarter of 2013, the Company disposed of its remaining $3.1 million (par value) ARS, with $0.1 million of ARS called at par value and $3.0 million of ARS tendered at 95% of par value. 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 March 30, 2013      As of December 29, 2012  
     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

   $ 40,799       $ 0       $ 0       $ 40,799       $ 25,560       $ 0       $ 0       $ 25,560   

Certificates of deposit

     0         1,440         0         1,440         0         2,160         0         2,160   

Commercial paper

     0         25,769         0         25,769         0         14,843         0         14,843   

Corporate bonds

     0         31,634         0         31,634         0         57,467         0         57,467   

U.S. agency notes

     0         0         0         0         0         0         0         0   

U.S. treasuries

     9,013         0         0         9,013         15,020         0         0         15,020   

ARS

     0         0         0         0         0         0         2,873         2,873   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 49,812       $ 58,843       $ 0       $ 108,655       $ 40,580       $ 74,470       $ 2,873       $ 117,923   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

                       

Foreign currency exchange forward contracts

   $ 0       $ 71       $ 0       $ 71       $ 0       $ 112       $ 0       $ 112   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

During the three months ended March 30, 2013, there were no transfers of assets or liabilities between Level 1 and Level 2 financial assets and all Level 3 financial assets were disposed.

The following tables present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable (Level 3) inputs (in thousands):

 

       Three Months Ended  
       December 29,
2012
       Total Net Gains
Included in Other
Comprehensive Loss
    Calls     Sold     March 30,
2013
 

ARS – available-for-sale

     $ 2,873         $ 0 (1)    $ (92 )(2)    $ (2,781 )(3)    $ 0   
       Three Months Ended        
       December 31,
2011
       Total Net Gains
Included in Other
Comprehensive Loss
    Calls     March 31,
2012
       

ARS – available-for-sale

     $ 7,675         $ 16 (1)    $ (136 )(2)    $ 7,555     

 

(1) 

Amount represents the change in the non-credit loss related other-than-temporary impairments (“OTTI”) recorded in Accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets.

(2) 

Amount represents the fair market value of the securities called at par value. Realized gains for the three months ended March 30, 2013 and March 31, 2012 were not significant.

(3) 

Amount represents the fair market value of the securities sold at 95% of par value. Realized gains for the three months ended March 30, 2013 were $0.2 million.

 

Investments at fair value were as follows (in thousands):

 

     March 30, 2013  
     Adjusted
Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair Value  

Money market funds

   $ 40,799       $ 0       $ 0      $ 40,799   

Certificates of deposit

     1,440         0         0        1,440   

Commercial paper

     25,776         5         (12     25,769   

Corporate bonds

     31,624         13         (3     31,634   

U.S. treasuries

     9,009         4         0        9,013   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total available-for-sale investments

   $ 108,648       $ 22       $ (15   $ 108,655   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

     December 29, 2012  
     Adjusted
Amortized
Cost
    Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair Value  

Money market funds

   $ 25,560      $ 0       $ 0      $ 25,560   

Certificates of deposit

     2,160        0         0        2,160   

Commercial paper

     14,848        0         (5     14,843   

Corporate bonds

     57,451        22         (6     57,467   

U.S. treasuries

     15,015        5         0        15,020   

ARS

     2,707 (1)      166         0        2,873   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total available-for-sale investments

   $ 117,741      $ 193       $ (11   $ 117,923   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(1) 

Amount represents the par value less $0.4 million of credit-related OTTI recognized through earnings in prior years.

As of March 30, 2013, the Company’s available-for-sale investments in certificates of deposit, commercial paper, corporate bonds, and U.S. treasuries have a contractual maturity term of no more than 11 months. Proceeds from sales, maturities and calls of available-for-sale investments were $36.7 million for the three months ended March 30, 2013, and $37.2 million for the three months ended March 31, 2012. Net realized gains (losses) on short-term and long-term investments were $0.2 million for the three months ended March 30, 2013 and were not significant for the three months ended March 31, 2012. The specific identification method is used to account for gains and losses on available-for-sale investments.

Other-Than-Temporary Impairments

As a result of the Company’s disposal of $3.1 million ARS (par value) during the three months ended March 30, 2013, it recorded an approximately $0.2 million gain, which was recognized as Other gain (loss) in the Company’s condensed consolidated statements of operations.

A roll-forward of amortized cost, cumulative OTTI recognized in earnings and Accumulated other comprehensive loss is 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 March 30, 2013

   $ 0      $ 0       $ 0      $ 0      $ 0   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 
Cost-method Investment
Cost-method Investment

4. Cost-method Investment

As of March 30, 2013, the Company’s investment in a privately-held company was $9.0 million. This investment is accounted for as a cost-basis 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 investment is in an entity that is not publicly traded and, therefore, no established market for the securities exists. 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 March 30, 2013, 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 months ended March 30, 2013 and March 31, 2012.

Derivative Instruments
Derivative Instruments

5. 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 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 changes 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. None of the Company’s derivative instruments contain credit-risk related contingent features, any rights to reclaim cash collateral or any obligation to return cash collateral. The forward contracts entered into during the three months ended March 30, 2013 were denominated in Euros and typically had maturities of no more than 30 days. The contracts are settled for U.S. dollars at maturity at rates agreed to at inception of the contracts.

As of March 30, 2013, the Company did not designate foreign currency exchange forward contracts related to Euro denominated receivables and restricted cash 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 March 30, 2013 and March 31, 2012, the before-tax effect of foreign currency exchange forward contracts for Euro denominated receivables and restricted cash not designated as hedging instruments was a gain of $0.5 million and a loss of $0.8 million, respectively, included in Other gain (loss), net in the condensed consolidated statements of operations.

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 March 30, 2013     As of December 29, 2012  
     Gross
Notional(1)
     Other
Accrued
Liabilities
    Gross
Notional(1)
     Other
Accrued
Liabilities
 

Foreign currency exchange forward contracts

          

Related to Euro denominated receivables

   $ 21,646       $ (67   $ 22,882       $ (105

Related to restricted cash

     1,452         (4     1,495         (7
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 23,098       $ (71   $ 24,377       $ (112
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)

Represents the face amounts of forward contracts that were outstanding as of the period noted.

Balance Sheet Details
Balance Sheet Details

6. Balance Sheet Details

The following table provides details of selected balance sheet items (in thousands):

 

     March 30,
2013
    December 29,
2012
 

Inventory

    

Raw materials

   $ 12,224      $ 13,003   

Work in process

     53,136        57,281   

Finished goods(1)

     65,631        57,525   
  

 

 

   

 

 

 

Total inventory

   $ 130,991      $ 127,809   
  

 

 

   

 

 

 

Property, plant and equipment, net:

    

Computer hardware

   $ 9,066      $ 9,024   

Computer software

     16,134        15,834   

Laboratory and manufacturing equipment

     125,633        120,543   

Furniture and fixtures

     1,299        1,285   

Leasehold improvements

     33,120        33,370   

Construction in progress

     14,781        17,513   
  

 

 

   

 

 

 

Subtotal

   $ 200,033      $ 197,569   

Less accumulated depreciation and amortization

     (122,878     (117,226
  

 

 

   

 

 

 

Total property, plant and equipment, net

   $ 77,155      $ 80,343   
  

 

 

   

 

 

 

Accrued expenses:

    

Loss contingency related to non-cancelable purchase commitments

   $ 4,687      $ 5,401   

Professional and other consulting fees

     3,379        3,703   

Taxes payable

     3,068        3,588   

Royalties

     704        1,516   

Accrued rebate and customer prepay liability

     1,102        1,284   

Other accrued expenses

     7,000        9,991   
  

 

 

   

 

 

 

Total accrued expenses

   $ 19,940      $ 25,483   
  

 

 

   

 

 

 

 

(1) 

Included in finished goods inventory at March 30, 2013 and December 29, 2012 were $12.6 million and $15.6 million, respectively, of inventory at customer locations for which product acceptance had not occurred.

The Company had $3.6 million of standby letters of credit outstanding as of March 30, 2013 and December 29, 2012. These consisted of $1.5 million related to a value added tax license, $0.7 million related to property leases and $1.4 million related to a customer proposal guarantee.

Comprehensive Loss
Comprehensive Loss

7. Comprehensive Loss

Total comprehensive loss consists of other comprehensive loss and net loss. Other comprehensive loss includes certain changes in equity that are excluded from net loss. Specifically, cumulative foreign currency translation adjustments and unrealized holding gains and losses on available-for-sale investments are included in Accumulated other comprehensive loss in the condensed consolidated balance sheets.

 

The following table sets forth the changes in accumulated other comprehensive loss by component for the three months ended March 30, 2013 (in thousands):

 

    Unrealized
Gain on
Auction Rate
Securities
    Unrealized Gain
on Other
Available-for-Sale
Securities
    Foreign Currency
Translation
    Accumulated Tax
Effect
    Total  

Beginning balance

  $                   166      $                     16      $ (1,650   $ (760   $ (2,228
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss before reclassifications

    0        (9     (117                           0                        (126

Amounts reclassified from accumulated other comprehensive loss

    (166     0                              0        0        (166
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net current-period other comprehensive loss

    (166     (9     (117     0        (292
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 0      $ 7      $ (1,767   $ (760   $ (2,520
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following table provides details about reclassifications out of accumulated other comprehensive loss for the three months ended March 30, 2013 (in thousands):

 

Details about Accumulated Other
Comprehensive Loss Components

   Amount
Reclassified from
Accumulated Other
Comprehensive Loss
   

Affected Line Item in
the Statement Where
Net Loss is Presented

Unrealized gain on auction rate securities

   $ (166   Other gain (loss), net
     0      Provision for income taxes
  

 

 

   

Total reclassifications for the period

   $ (166   Total, net of income tax
  

 

 

   
Basic and Diluted Net Loss Per Common Share
Basic and Diluted Net Loss Per Common Share

8. Basic and Diluted Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed using net 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 exercise of outstanding warrants, and assumed issuance of stock under the Company’s employee stock purchase plan (“ESPP”) using the treasury stock method.

The following table sets forth the computation of net loss per common share – basic and diluted (in thousands, except per share amounts):

 

     Three Months Ended  
         March 30,    
2013
        March 31,    
2012
 

Net loss

   $ (15,279   $ (20,612

Weighted average common shares outstanding

       114,308          108,666   
  

 

 

   

 

 

 

Net loss per common share – basic and diluted

   $ (0.13   $ (0.19
  

 

 

   

 

 

 

 

The Company had the following equity awards outstanding that could potentially dilute basic net loss per common share in the future, but were excluded from the computation of diluted loss per common share in the periods presented as their effect would have been anti-dilutive (in thousands):

 

     As of  
         March 30,    
2013
         March 31,    
2012
 

Stock options

     8,591         9,485   

RSUs

     5,407         6,061   

PSUs

     553         1,317   

ESPP

     601         694   

Warrants to purchase common stock

     0         93   
  

 

 

    

 

 

 

Total

     15,152         17,650   
  

 

 

    

 

 

 
Stockholders' Equity
Stockholders' Equity

9. Stockholders’ Equity

Stock-based Compensation Plans

The Company’s stock-based compensation plans include stock options, RSUs, PSUs and employee stock purchases under the Company’s ESPP. As of March 30, 2013, there were a total of 19.4 million shares available for grant under the Company’s 2007 Equity Incentive Plan. The following tables summarize the Company’s equity award activity and related information (in thousands, except per share data):

 

         Number of    
Options
    Average
Exercise
Price
    Per Share    
         Aggregate    
Intrinsic Value
 

Outstanding at December 29, 2012

     9,008      $ 7.13       $ 5,726   

Options exercised

     (140   $ 2.96       $ 549   

Options canceled

     (277   $ 7.56      
  

 

 

      

Outstanding at March 30, 2013

     8,591      $ 7.19       $ 7,314   
  

 

 

      

Vested and expected to vest as of March 30, 2013

     8,569         $ 7,313   

Exercisable at March 30, 2013

     7,764      $ 7.10       $ 7,260   
     Number of
Restricted
    Stock Units    
    Weighted-
Average
Grant Date
Fair Value
    Per Share    
         Aggregate    
Intrinsic Value
 

Outstanding at December 29, 2012

     6,703      $ 8.01       $ 38,873   

RSUs granted

     383      $ 6.69      

RSUs released

     (1,474   $ 8.03       $ 11,008   

RSUs canceled

     (205   $ 7.94      
  

 

 

      

Outstanding at March 30, 2013

     5,407      $ 7.91       $ 37,849   
  

 

 

      

Expected to vest at March 30, 2013

     5,280         $ 36,961   
     Number of
Performance
    Stock Units    
    Weighted-
Average
Grant Date
Fair Value
    Per Share    
         Aggregate    
Intrinsic Value
 

Outstanding at December 29, 2012

     1,368      $ 10.53       $ 7,933   

PSUs granted

     329      $ 6.76      

PSUs released

     (684   $ 10.53       $ 4,284   

PSUs canceled

     (460   $ 11.82      
  

 

 

      

Outstanding at March 30, 2013

     553      $ 7.22       $ 3,871   
  

 

 

      

Expected to vest at March 30, 2013

     312         $ 2,184   

 

The aggregate intrinsic value of unexercised options, unreleased RSUs and unreleased PSUs is calculated as the difference between the closing price of the Company’s common stock of $7.00 at March 28, 2013 and the exercise prices of the underlying equity awards. The aggregate intrinsic value of the options which have been exercised and RSUs released is calculated as the difference between the fair market value of the common stock at the date of exercise or release and the exercise price of the underlying equity awards.

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 March 30, 2013. 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

   $ 2,969         1.2   

RSUs

   $ 25,585         1.9   

PSUs

   $ 1,924         2.1   

Employee Stock Options

The ranges of estimated values of stock options and performance-based stock options granted, as well as ranges of assumptions used in calculating these values were based on estimates as follows:

 

     Three Months Ended

Employee and Director Stock Options

       March 30,    
2013
       March 31,    
2012

Volatility

   N/A    65% - 68%

Risk-free interest rate

   N/A    0.7% - 1.0%

Expected life

   N/A    4.0 - 5.3 years

Estimated fair value

   N/A    $3.75 - $3.76

Stock-based compensation expense (in thousands)

   $803    $2,401

 

N/A Not applicable because the Company did not grant any options to employees during the three months ended March 30, 2013.

Employee Stock Purchase Plan

The fair value of the ESPP shares was estimated at the date of grant using the following assumptions:

 

     Three Months Ended

Employee Stock Purchase Plan

       March 30,    
2013
         March 31,    
2012

Volatility

   46%      57%

Risk-free interest rate

   0.14%      0.16%

Expected life

   0.5 years      0.5 years

Estimated fair value

   $1.87      $2.63

Stock-based compensation expense (in thousands)

   $708      $896

Restricted Stock Units

During the three months ended March 30, 2013, the Company granted RSUs to employees to receive an aggregate of 0.4 million shares of the Company’s common stock, at no cost. 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 months ended March 30, 2013 and March 31, 2012 was approximately $6.9 million and $6.3 million, respectively.

 

Performance Stock Units

During 2009, the Company granted PSUs primarily to members of the Company’s board of directors and executive officers. The number of shares to be issued upon vesting of PSUs range from 0.5 to 2.0 times the number of PSUs granted depending on the relative performance of the Company’s common stock price compared to the NASDAQ Composite Index over a three-year or four-year period. During the three months ended March 30, 2013, the Company released 0.5 million of PSUs based on a payout of 0.5 times of the target number of PSUs.

Pursuant to the Company’s 2007 Equity Incentive Plan, during 2012, the Company granted 0.5 million shares of PSUs to certain of the Company’s 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 cancelled. During the three months ended March 30, 2013, the Company released 0.2 million shares of PSUs upon achievement of certain performance goals.

Pursuant to the Company’s 2007 Equity Incentive Plan, during the three months ended March 30, 2013, the Company granted 0.3 million shares of PSUs to certain of the Company’s 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.

Amortization of stock-based compensation related to PSUs in the three months ended March 30, 2013 was a credit of approximately $0.8 million, including $0.6 million of expense offset by a $1.4 million decrease in fair value for one award classified as a liability award, in accordance with Accounting Standard Codification 718, Compensation – Stock Compensation. Amortization of stock-based compensation related to PSUs in the three months ended March 31, 2012 was approximately $0.5 million.

Common Stock Warrants

During the first quarter of 2013, warrants to purchase 92,592 shares of common stock were net exercised. The aggregate consideration for such exercises was approximately $0.5 million. As of March 30, 2013, there were no warrants of common stock outstanding.

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):

 

         March 30,    
2013
        December 29,    
2012
 

Stock-based compensation effects in inventory

   $ 4,555      $ 4,891   

Stock-based compensation effects in deferred inventory cost

   $ 23      $ 42   

Stock-based compensation effects in fixed assets

   $ 165      $ 171   
     Three Months Ended  
     March 30,
2013
    March 31,
2012
 

Stock-based compensation effects in net loss before income taxes

    

Cost of revenue

   $ 486      $ 606   

Research and development

     3,119        3,320   

Sales and marketing

     1,999        2,219   

General and administration

     769        2,223   
  

 

 

   

 

 

 
     6,373        8,368   

Cost of revenue – amortization from balance sheet(1)

     1,602        1,069   
  

 

 

   

 

 

 

Total stock-based compensation expense

   $ 7,975      $ 9,437   
  

 

 

   

 

 

 

 

(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

10. Income Taxes

Provision for income taxes for the three months ended March 30, 2013 was $0.3 million, or negative 2.2% on a pre-tax loss of $15.0 million, compared to a tax provision of $0.6 million, or negative 2.9%, on a pre-tax loss of $20.0 million for the three months ended March 31, 2012. The difference between the Company’s effective tax rates and the federal statutory rate of 35% is primarily attributable to unbenefited U.S. losses, foreign taxes provided on the income of the Company’s foreign subsidiaries, non-deductible stock-based compensation expense, and various discrete items. The lower tax expense in 2013 relates to a release of transfer pricing reserves following a statute of limitations lapse.

The realization of tax benefits of deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are scheduled to be deductible or taxable. Based on the available objective evidence, management believes it is more likely than not that the domestic net deferred tax assets will not be realizable. Accordingly, the Company has provided a full valuation allowance against its domestic deferred tax assets, net of deferred tax liabilities, as of March 30, 2013 and December 29, 2012. In determining future taxable income, the Company makes assumptions to forecast federal, state and international operating income, the reversal of temporary differences, and the implementation of any feasible and prudent tax planning strategies. The assumptions require significant judgment regarding the forecasts of future taxable income and are consistent with the Company’s forecasts used to manage its business. The Company intends to maintain the remaining valuation allowance until sufficient positive evidence exists to support a reversal of, or decrease, in the valuation allowance.

Segment Information
Segment Information

11. 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. The Company’s chief executive officer 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, and there are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. 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  
         March 30,    
2013
         March 31,    
2012
 

Americas:

     

United States

   $ 79,073       $ 70,898   

Other Americas

     718         3,992   
  

 

 

    

 

 

 
   $ 79,791       $ 74,890   

Europe, Middle East and Africa

     38,806         26,151   

Asia Pacific

     6,028         3,660   
  

 

 

    

 

 

 

Total revenue

   $   124,625       $   104,701   
  

 

 

    

 

 

 

 

Property, plant and equipment, net

 

         March 30,    
2013
     December 29,
2012
 

United States

   $ 75,313       $ 78,309   

Other Americas

     191         198   

Europe, Middle East and Africa

     74         24   

Asia Pacific

     1,577         1,812   
  

 

 

    

 

 

 

Total property, plant and equipment, net

   $ 77,155       $ 80,343   
  

 

 

    

 

 

 
Guarantees
Guarantees

12. Guarantees

Product Warranties

Upon delivery of products, the Company provides for the estimated cost to repair or replace products or 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, refurbishment or replacement, at the Company’s sole option and expense. The Company estimates its hardware warranty obligations based on the Company’s historical experience of known product failure rates, use of materials 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  
         March 30,    
2013
        March 31,    
2012
 

Beginning balance

   $ 16,482      $ 12,865   

Charges to operations

     4,168        2,721   

Utilization

     (2,083     (1,973

Change in estimate(1)

     (1,895     (627
  

 

 

   

 

 

 

Balance at the end of the period

   $ 16,672      $ 12,986   
  

 

 

   

 

 

 

 

(1) 

The Company records hardware warranty liabilities based on the latest quality and cost information available as of that date. The favorable changes in estimate shown here are due to continued improvements in overall actual failure rates and the impact of these improvements on the Company’s estimate of expected future returns and changes in the estimated cost of replacing failed units using either repaired or new units.

Litigation and Contingencies
Litigation and Contingencies

13. 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. A complete description of the Company’s legal proceedings can be found in “Item 3. Legal Proceedings” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012 filed with the SEC on March 5, 2013, which is incorporated herein by reference. Any updates to the information contained in the Company’s Annual Report on Form 10-K are set forth below.

 

Cheetah Patent Infringement Litigation

Based on the information available at this time, the Company concluded that the likelihood of a loss with respect to this suit is now 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 our business, consolidated financial position, results of operations, or cash flows. No provision has been made for this lawsuit in our financial statements. Factors that the Company considered in the determination of the likelihood of a loss and the estimate of the range 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 lift of the stay by the court, the status of the plaintiff as a non-operating entity, the Company’s intention to vigorously defend the case unless it can be settled for an insignificant amount and the likelihood of the plaintiff accepting an amount in this range. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties.

Cambrian Science Patent Infringement Litigation

Based on the information available at this time, the Company concluded that the likelihood of a loss with respect to this suit is less than reasonably possible and therefore, a range of loss cannot be provided. As a result, the Company has made no provision for this lawsuit in its financial statements. Factors that the Company considered in the determination of the likelihood of a 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, and the status of the plaintiff as a non-operating entity. There have been no updates in the Company’s legal proceedings for the three months ended March 30, 2013 as compared to those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012.

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 March 30, 2013, the Company has not accrued or recorded any such material liabilities.

Recent Accounting Pronouncements (Policies)
Comprehensive income

In February 2013, the FASB issued Accounting Standards Update 2013-02, Comprehensive Income (Topic 220) – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company adopted the guidance for ASU 2013-02 beginning in its fiscal quarter ended March 30, 2013. Other than requiring additional disclosures, the Company’s adoption of ASU 2013-02 did not have an impact on the Company’s financial position, results of operations or cash flow.

Fair Value Measurements and Other-Than-Temporary Impairments (Tables)

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 March 30, 2013      As of December 29, 2012  
     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

   $ 40,799       $ 0       $ 0       $ 40,799       $ 25,560       $ 0       $ 0       $ 25,560   

Certificates of deposit

     0         1,440         0         1,440         0         2,160         0         2,160   

Commercial paper

     0         25,769         0         25,769         0         14,843         0         14,843   

Corporate bonds

     0         31,634         0         31,634         0         57,467         0         57,467   

U.S. agency notes

     0         0         0         0         0         0         0         0   

U.S. treasuries

     9,013         0         0         9,013         15,020         0         0         15,020   

ARS

     0         0         0         0         0         0         2,873         2,873   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 49,812       $ 58,843       $ 0       $ 108,655       $ 40,580       $ 74,470       $ 2,873       $ 117,923   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

                       

Foreign currency exchange forward contracts

   $ 0       $ 71       $ 0       $ 71       $ 0       $ 112       $ 0       $ 112   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The following tables present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable (Level 3) inputs (in thousands):

 

       Three Months Ended  
       December 29,
2012
       Total Net Gains
Included in Other
Comprehensive Loss
    Calls     Sold     March 30,
2013
 

ARS – available-for-sale

     $ 2,873         $ 0 (1)    $ (92 )(2)    $ (2,781 )(3)    $ 0   
       Three Months Ended        
       December 31,
2011
       Total Net Gains
Included in Other
Comprehensive Loss
    Calls     March 31,
2012
       

ARS – available-for-sale

     $ 7,675         $ 16 (1)    $ (136 )(2)    $ 7,555     

 

(1) 

Amount represents the change in the non-credit loss related other-than-temporary impairments (“OTTI”) recorded in Accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets.

(2) 

Amount represents the fair market value of the securities called at par value. Realized gains for the three months ended March 30, 2013 and March 31, 2012 were not significant.

(3) 

Amount represents the fair market value of the securities sold at 95% of par value. Realized gains for the three months ended March 30, 2013 were $0.2 million.

Investments at fair value were as follows (in thousands):

 

     March 30, 2013  
     Adjusted
Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair Value  

Money market funds

   $ 40,799       $ 0       $ 0      $ 40,799   

Certificates of deposit

     1,440         0         0        1,440   

Commercial paper

     25,776         5         (12     25,769   

Corporate bonds

     31,624         13         (3     31,634   

U.S. treasuries

     9,009         4         0        9,013   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total available-for-sale investments

   $ 108,648       $ 22       $ (15   $ 108,655   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

     December 29, 2012  
     Adjusted
Amortized
Cost
    Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair Value  

Money market funds

   $ 25,560      $ 0       $ 0      $ 25,560   

Certificates of deposit

     2,160        0         0        2,160   

Commercial paper

     14,848        0         (5     14,843   

Corporate bonds

     57,451        22         (6     57,467   

U.S. treasuries

     15,015        5         0        15,020   

ARS

     2,707 (1)      166         0        2,873   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total available-for-sale investments

   $ 117,741      $ 193       $ (11   $ 117,923   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(1) 

Amount represents the par value less $0.4 million of credit-related OTTI recognized through earnings in prior years.

A roll-forward of amortized cost, cumulative OTTI recognized in earnings and Accumulated other comprehensive loss is 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 March 30, 2013

   $ 0      $ 0       $ 0      $ 0      $ 0   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 
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 March 30, 2013     As of December 29, 2012  
     Gross
Notional(1)
     Other
Accrued
Liabilities
    Gross
Notional(1)
     Other
Accrued
Liabilities
 

Foreign currency exchange forward contracts

          

Related to Euro denominated receivables

   $ 21,646       $ (67   $ 22,882       $ (105

Related to restricted cash

     1,452         (4     1,495         (7
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 23,098       $ (71   $ 24,377       $ (112
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(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):

 

     March 30,
2013
    December 29,
2012
 

Inventory

    

Raw materials

   $ 12,224      $ 13,003   

Work in process

     53,136        57,281   

Finished goods(1)

     65,631        57,525   
  

 

 

   

 

 

 

Total inventory

   $ 130,991      $ 127,809   
  

 

 

   

 

 

 

Property, plant and equipment, net:

    

Computer hardware

   $ 9,066      $ 9,024   

Computer software

     16,134        15,834   

Laboratory and manufacturing equipment

     125,633        120,543   

Furniture and fixtures

     1,299        1,285   

Leasehold improvements

     33,120        33,370   

Construction in progress

     14,781        17,513   
  

 

 

   

 

 

 

Subtotal

   $ 200,033      $ 197,569   

Less accumulated depreciation and amortization

     (122,878     (117,226
  

 

 

   

 

 

 

Total property, plant and equipment, net

   $ 77,155      $ 80,343   
  

 

 

   

 

 

 

Accrued expenses:

    

Loss contingency related to non-cancelable purchase commitments

   $ 4,687      $ 5,401   

Professional and other consulting fees

     3,379        3,703   

Taxes payable

     3,068        3,588   

Royalties

     704        1,516   

Accrued rebate and customer prepay liability

     1,102        1,284   

Other accrued expenses

     7,000        9,991   
  

 

 

   

 

 

 

Total accrued expenses

   $ 19,940      $ 25,483   
  

 

 

   

 

 

 

 

(1) 

Included in finished goods inventory at March 30, 2013 and December 29, 2012 were $12.6 million and $15.6 million, respectively, of inventory at customer locations for which product acceptance had not occurred.

Comprehensive Loss (Tables)

The following table sets forth the changes in accumulated other comprehensive loss by component for the three months ended March 30, 2013 (in thousands):

 

    Unrealized
Gain on
Auction Rate
Securities
    Unrealized Gain
on Other
Available-for-Sale
Securities
    Foreign Currency
Translation
    Accumulated Tax
Effect
    Total  

Beginning balance

  $                   166      $                     16      $ (1,650   $ (760   $ (2,228
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss before reclassifications

    0        (9     (117                           0                        (126

Amounts reclassified from accumulated other comprehensive loss

    (166     0                              0        0        (166
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net current-period other comprehensive loss

    (166     (9     (117     0        (292
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 0      $ 7      $ (1,767   $ (760   $ (2,520
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following table provides details about reclassifications out of accumulated other comprehensive loss for the three months ended March 30, 2013 (in thousands):

 

Details about Accumulated Other
Comprehensive Loss Components

   Amount
Reclassified from
Accumulated Other
Comprehensive Loss
   

Affected Line Item in
the Statement Where
Net Loss is Presented

Unrealized gain on auction rate securities

   $ (166   Other gain (loss), net
     0      Provision for income taxes
  

 

 

   

Total reclassifications for the period

   $ (166   Total, net of income tax
  

 

 

   
Basic and Diluted Net Loss Per Common Share (Tables)

The following table sets forth the computation of net loss per common share – basic and diluted (in thousands, except per share amounts):

 

     Three Months Ended  
         March 30,    
2013
        March 31,    
2012
 

Net loss

   $ (15,279   $ (20,612

Weighted average common shares outstanding

       114,308          108,666   
  

 

 

   

 

 

 

Net loss per common share – basic and diluted

   $ (0.13   $ (0.19
  

 

 

   

 

 

 

The Company had the following equity awards outstanding that could potentially dilute basic net loss per common share in the future, but were excluded from the computation of diluted loss per common share in the periods presented as their effect would have been anti-dilutive (in thousands):

 

     As of  
         March 30,    
2013
         March 31,    
2012
 

Stock options

     8,591         9,485   

RSUs

     5,407         6,061   

PSUs

     553         1,317   

ESPP

     601         694   

Warrants to purchase common stock

     0         93   
  

 

 

    

 

 

 

Total

     15,152         17,650   
  

 

 

    

 

 

 
Stockholders' Equity (Tables)

The following tables summarize the Company’s equity award activity and related information (in thousands, except per share data):

 

         Number of    
Options
    Average
Exercise
Price
    Per Share    
         Aggregate    
Intrinsic Value
 

Outstanding at December 29, 2012

     9,008      $ 7.13       $ 5,726   

Options exercised

     (140   $ 2.96       $ 549   

Options canceled

     (277   $ 7.56      
  

 

 

      

Outstanding at March 30, 2013

     8,591      $ 7.19       $ 7,314   
  

 

 

      

Vested and expected to vest as of March 30, 2013

     8,569         $ 7,313   

Exercisable at March 30, 2013

     7,764      $ 7.10       $ 7,260   
     Number of
Restricted
    Stock Units    
    Weighted-
Average
Grant Date
Fair Value
    Per Share    
         Aggregate    
Intrinsic Value
 

Outstanding at December 29, 2012

     6,703      $ 8.01       $ 38,873   

RSUs granted

     383      $ 6.69      

RSUs released

     (1,474   $ 8.03       $ 11,008   

RSUs canceled

     (205   $ 7.94      
  

 

 

      

Outstanding at March 30, 2013

     5,407      $ 7.91       $ 37,849   
  

 

 

      

Expected to vest at March 30, 2013

     5,280         $ 36,961   
     Number of
Performance
    Stock Units    
    Weighted-
Average
Grant Date
Fair Value
    Per Share    
         Aggregate    
Intrinsic Value
 

Outstanding at December 29, 2012

     1,368      $ 10.53       $ 7,933   

PSUs granted

     329      $ 6.76      

PSUs released

     (684   $ 10.53       $ 4,284   

PSUs canceled

     (460   $ 11.82      
  

 

 

      

Outstanding at March 30, 2013

     553      $ 7.22       $ 3,871   
  

 

 

      

Expected to vest at March 30, 2013

     312         $ 2,184   

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 March 30, 2013. 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

   $ 2,969         1.2   

RSUs

   $ 25,585         1.9   

PSUs

   $ 1,924         2.1   

The ranges of estimated values of stock options and performance-based stock options granted, as well as ranges of assumptions used in calculating these values were based on estimates as follows:

 

     Three Months Ended

Employee and Director Stock Options

       March 30,    
2013
       March 31,    
2012

Volatility

   N/A    65% - 68%

Risk-free interest rate

   N/A    0.7% - 1.0%

Expected life

   N/A    4.0 - 5.3 years

Estimated fair value

   N/A    $3.75 - $3.76

Stock-based compensation expense (in thousands)

   $803    $2,401

 

N/A Not applicable because the Company did not grant any options to employees during the three months ended March 30, 2013.

The fair value of the ESPP shares was estimated at the date of grant using the following assumptions:

 

     Three Months Ended

Employee Stock Purchase Plan

       March 30,    
2013
         March 31,    
2012

Volatility

   46%      57%

Risk-free interest rate

   0.14%      0.16%

Expected life

   0.5 years      0.5 years

Estimated fair value

   $1.87      $2.63

Stock-based compensation expense (in thousands)

   $708      $896

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):

 

         March 30,    
2013
        December 29,    
2012
 

Stock-based compensation effects in inventory

   $ 4,555      $ 4,891   

Stock-based compensation effects in deferred inventory cost

   $ 23      $ 42   

Stock-based compensation effects in fixed assets

   $ 165      $ 171   
     Three Months Ended  
     March 30,
2013
    March 31,
2012
 

Stock-based compensation effects in net loss before income taxes

    

Cost of revenue

   $ 486      $ 606   

Research and development

     3,119        3,320   

Sales and marketing

     1,999        2,219   

General and administration

     769        2,223   
  

 

 

   

 

 

 
     6,373        8,368   

Cost of revenue – amortization from balance sheet(1)

     1,602        1,069   
  

 

 

   

 

 

 

Total stock-based compensation expense

   $ 7,975      $ 9,437   
  

 

 

   

 

 

 

 

(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 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  
         March 30,    
2013
         March 31,    
2012
 

Americas:

     

United States

   $ 79,073       $ 70,898   

Other Americas

     718         3,992   
  

 

 

    

 

 

 
   $ 79,791       $ 74,890   

Europe, Middle East and Africa

     38,806         26,151   

Asia Pacific

     6,028         3,660   
  

 

 

    

 

 

 

Total revenue

   $   124,625       $   104,701   
  

 

 

    

 

 

 

Property, plant and equipment, net

 

         March 30,    
2013
     December 29,
2012
 

United States

   $ 75,313       $ 78,309   

Other Americas

     191         198   

Europe, Middle East and Africa

     74         24   

Asia Pacific

     1,577         1,812   
  

 

 

    

 

 

 

Total property, plant and equipment, net

   $ 77,155       $ 80,343   
  

 

 

    

 

 

 
Guarantees (Tables)
Activity Related to Product Warranty

Activity related to product warranty was as follows (in thousands):

 

     Three Months Ended  
         March 30,    
2013
        March 31,    
2012
 

Beginning balance

   $ 16,482      $ 12,865   

Charges to operations

     4,168        2,721   

Utilization

     (2,083     (1,973

Change in estimate(1)

     (1,895     (627
  

 

 

   

 

 

 

Balance at the end of the period

   $ 16,672      $ 12,986   
  

 

 

   

 

 

 

 

(1) 

The Company records hardware warranty liabilities based on the latest quality and cost information available as of that date. The favorable changes in estimate shown here are due to continued improvements in overall actual failure rates and the impact of these improvements on the Company’s estimate of expected future returns and changes in the estimated cost of replacing failed units using either repaired or new units.

Fair Value Measurements and Other-Than-Temporary Impairments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
 
 
Disposal of ARS (par value)
$ 3.1 
 
Available-for-sale auction rate securities called at par value
0.1 
 
Percent of par value at tender price
95.00% 
 
Tender price
3.0 
 
Available-for-sale investments
11 months 
 
Proceeds from sales, maturities and calls of available-for-sale investments
36.7 
37.2 
Realized gains on calls
$ 0.2 
 
Fair Value Measurements and Other-Than-Temporary Impairments - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (Fair value, measurements, recurring [Member], USD $)
In Thousands, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Assets
 
 
Total Assets
$ 108,655 
$ 117,923 
Money market funds [Member]
 
 
Assets
 
 
Total Assets
40,799 
25,560 
Certificates of deposit [Member]
 
 
Assets
 
 
Total Assets
1,440 
2,160 
Commercial paper [Member]
 
 
Assets
 
 
Total Assets
25,769 
14,843 
Corporate bonds [Member]
 
 
Assets
 
 
Total Assets
31,634 
57,467 
U.S. agency notes [Member]
 
 
Assets
 
 
Total Assets
U.S. treasuries [Member]
 
 
Assets
 
 
Total Assets
9,013 
15,020 
ARS [Member]
 
 
Assets
 
 
Total Assets
2,873 
Foreign currency exchange forward contracts [Member]
 
 
Liabilities
 
 
Total Liabilities
71 
112 
Level 1 [Member]
 
 
Assets
 
 
Total Assets
49,812 
40,580 
Level 1 [Member] |
Money market funds [Member]
 
 
Assets
 
 
Total Assets
40,799 
25,560 
Level 1 [Member] |
Certificates of deposit [Member]
 
 
Assets
 
 
Total Assets
Level 1 [Member] |
Commercial paper [Member]
 
 
Assets
 
 
Total Assets
Level 1 [Member] |
Corporate bonds [Member]
 
 
Assets
 
 
Total Assets
Level 1 [Member] |
U.S. agency notes [Member]
 
 
Assets
 
 
Total Assets
Level 1 [Member] |
U.S. treasuries [Member]
 
 
Assets
 
 
Total Assets
9,013 
15,020 
Level 1 [Member] |
ARS [Member]
 
 
Assets
 
 
Total Assets
Level 1 [Member] |
Foreign currency exchange forward contracts [Member]
 
 
Liabilities
 
 
Total Liabilities
Level 2 [Member]
 
 
Assets
 
 
Total Assets
58,843 
74,470 
Level 2 [Member] |
Money market funds [Member]
 
 
Assets
 
 
Total Assets
Level 2 [Member] |
Certificates of deposit [Member]
 
 
Assets
 
 
Total Assets
1,440 
2,160 
Level 2 [Member] |
Commercial paper [Member]
 
 
Assets
 
 
Total Assets
25,769 
14,843 
Level 2 [Member] |
Corporate bonds [Member]
 
 
Assets
 
 
Total Assets
31,634 
57,467 
Level 2 [Member] |
U.S. agency notes [Member]
 
 
Assets
 
 
Total Assets
Level 2 [Member] |
U.S. treasuries [Member]
 
 
Assets
 
 
Total Assets
Level 2 [Member] |
ARS [Member]
 
 
Assets
 
 
Total Assets
Level 2 [Member] |
Foreign currency exchange forward contracts [Member]
 
 
Liabilities
 
 
Total Liabilities
71 
112 
Level 3 [Member]
 
 
Assets
 
 
Total Assets
2,873 
Level 3 [Member] |
Money market funds [Member]
 
 
Assets
 
 
Total Assets
Level 3 [Member] |
Certificates of deposit [Member]
 
 
Assets
 
 
Total Assets
Level 3 [Member] |
Commercial paper [Member]
 
 
Assets
 
 
Total Assets
Level 3 [Member] |
Corporate bonds [Member]
 
 
Assets
 
 
Total Assets
Level 3 [Member] |
U.S. agency notes [Member]
 
 
Assets
 
 
Total Assets
Level 3 [Member] |
U.S. treasuries [Member]
 
 
Assets
 
 
Total Assets
Level 3 [Member] |
ARS [Member]
 
 
Assets
 
 
Total Assets
2,873 
Level 3 [Member] |
Foreign currency exchange forward contracts [Member]
 
 
Liabilities
 
 
Total Liabilities
$ 0 
$ 0 
Fair Value Measurements and Other-Than-Temporary Impairments - Reconciliation of All Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (Fair value, measurements, recurring [Member], Level 3 [Member], ARS [Member], USD $)
In Thousands, unless otherwise specified
3 Months Ended
Dec. 29, 2012
Dec. 31, 2011
Fair value, measurements, recurring [Member] |
Level 3 [Member] |
ARS [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Beginning balance
$ 2,873 
$ 7,675 
Total Net Gains Included in Other Comprehensive Income
16 
Calls
(92)
(136)
Sold
(2,781)
 
Ending balance
$ 0 
$ 7,555 
Fair Value Measurements and Other-Than-Temporary Impairments - Reconciliation of All Assets and Liabilities Measured at Fair Value on Recurring Basis (Parenthetical) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Realized gains on these calls
$ 0.2 
Available-for-sale auction rate securities tender value as percent of par value
95.00% 
Fair Value Measurements and Other-Than-Temporary Impairments - Investments at Fair Value (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Adjusted Amortized Cost
$ 108,648 
$ 117,741 
Gross Unrealized Gains
22 
193 
Gross Unrealized Losses
(15)
(11)
Fair Value
108,655 
117,923 
Money market funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Adjusted Amortized Cost
40,799 
25,560 
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
40,799 
25,560 
Certificates of deposit [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Adjusted Amortized Cost
1,440 
2,160 
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
1,440 
2,160 
Commercial paper [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Adjusted Amortized Cost
25,776 
14,848 
Gross Unrealized Gains
Gross Unrealized Losses
(12)
(5)
Fair Value
25,769 
14,843 
Corporate bonds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Adjusted Amortized Cost
31,624 
57,451 
Gross Unrealized Gains
13 
22 
Gross Unrealized Losses
(3)
(6)
Fair Value
31,634 
57,467 
U.S. treasuries [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Adjusted Amortized Cost
9,009 
15,015 
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
9,013 
15,020 
ARS [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Adjusted Amortized Cost
 
2,707 
Gross Unrealized Gains
 
166 
Gross Unrealized Losses
 
Fair Value
 
$ 2,873 
Fair Value Measurements and Other-Than-Temporary Impairments - Investments at Fair Value (Parenthetical) (Detail) (ARS [Member], USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 29, 2012
ARS [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
OTTI credit related to prior period
$ 0.4 
Fair Value Measurements and Other-Than-Temporary Impairments - Roll Forward of Amortized Cost Cumulative OTTI Recognized in Earnings and Accumulated Other Comprehensive Loss (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Dec. 29, 2012
Mar. 30, 2013
OTTI recognized in earnings and Accumulated other comprehensive loss [Member]
Fair Value Measurements And Other Than Temporary Impairments [Line Items]
 
 
 
Amortized Cost, Beginning Balance
$ 108,648 
$ 117,741 
$ 2,707 
Amortized Cost, Call on investments
 
 
(87)
Amortized Cost, Investments sold
 
 
(2,620)
Amortized Cost, Ending Balance
108,648 
117,741 
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
 
 
Unrealized Gain, Beginning balance
 
 
784 
Unrealized gain, Call on investments
 
 
(25)
Unrealized Gain, Investments sold
 
 
(759)
Unrealized Gain, Ending balance
 
 
OTTI Loss in Accumulated Other Comprehensive Loss, Beginning Balance
166 
(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
166 
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 (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Dec. 29, 2012
Schedule of Investments [Line Items]
 
 
Cost of Company Investment
$ 9,000 
$ 9,000 
Less than percent of voting securities
20.00% 
 
Derivative Instruments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
 
 
Euro denominated forward contracts maturity period
no more than 30 days 
 
Before-tax effect of foreign currency exchange forward contracts not designated as hedging instruments, gain (loss)
$ 0.5 
$ 0.8 
Derivative Instruments - Fair Value of Derivative Instruments Not Designated as Hedging Instruments (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Derivative [Line Items]
 
 
Gross Notional
$ 23,098 
$ 24,377 
Other Accrued Liabilities
(71)
(112)
Designated as Hedging Instrument [Member] |
Euro Denominated Exchange Forward Contracts Receivables [Member]
 
 
Derivative [Line Items]
 
 
Gross Notional
21,646 
22,882 
Other Accrued Liabilities
(67)
(105)
Designated as Hedging Instrument [Member] |
Foreign Currency Exchange Restricted Cash Forward Contracts [Member]
 
 
Derivative [Line Items]
 
 
Gross Notional
1,452 
1,495 
Other Accrued Liabilities
$ (4)
$ (7)
Balance Sheet Details - Details of Selected Balance Sheet Items (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 30, 2013
Dec. 29, 2012
Inventory:
 
 
Raw materials
$ 12,224 
$ 13,003 
Work in process
53,136 
57,281 
Finished goods
65,631 
57,525 
Total
130,991 
127,809 
Property, plant and equipment, net:
 
 
Property, plant and equipment
200,033 
197,569 
Less accumulated depreciation and amortization
(122,878)
(117,226)
Total
77,155 
80,343 
Accrued expenses:
 
 
Loss contingency related to non-cancelable purchase commitments
4,687 
5,401 
Professional and other consulting fees
3,379 
3,703 
Taxes payable
3,068 
3,588 
Royalties
704 
1,516 
Accrued rebate and customer prepay liability
1,102 
1,284 
Other accrued expenses
7,000 
9,991 
Total
19,940 
25,483 
Computer hardware [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment
9,066 
9,024 
Computer software [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment
16,134 
15,834 
Laboratory and manufacturing equipment [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment
125,633 
120,543 
Furniture and fixtures [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment
1,299 
1,285 
Leasehold improvements [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment
33,120 
33,370 
Construction in progress [Member]
 
 
Property, plant and equipment, net:
 
 
Property, plant and equipment
$ 14,781 
$ 17,513 
Balance Sheet Details - Details of Selected Balance Sheet Items (Parenthetical) (Detail) (Customer locations [Member], USD $)
In Millions, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Customer locations [Member]
 
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
 
Inventory awaiting customer acceptance
$ 12.6 
$ 15.6 
Balance Sheet Details - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Balance Sheet Details [Line Items]
 
 
Letters of credit outstanding
$ 3.6 
$ 3.6 
Value added tax license
1.5 
1.5 
Customer proposal guarantee
1.4 
1.4 
Property leases
$ 0.7 
$ 0.7 
Comprehensive Loss - Summary of Changes in Accumulated Other Comprehensive Loss (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Accumulated Other Comprehensive Income Loss Net Of Tax [Line Items]
 
 
Accumulated other comprehensive loss, Unrealized Gain on Auction Rate Securities, Beginning balance
$ 166 
 
Other comprehensive loss before reclassifications, Unrealized Gain on Auction Rate Securities
 
Amounts reclassified from accumulated other comprehensive loss, Unrealized Gain on Auction Rate Securities
(166)
 
Net current-period other comprehensive loss, Unrealized Gain on Auction Rate Securities
(166)
 
Accumulated other comprehensive loss, Unrealized Gain on Auction Rate Securities, Ending balance
 
Accumulated other comprehensive loss, Unrealized Gain on Other Available-for-Sale Securities, Beginning balance
16 
 
Other comprehensive loss before reclassifications, Unrealized Gain on Other Available-for-Sale Securities
(9)
 
Amounts reclassified from accumulated other comprehensive loss, Unrealized Gain on Other Available-for-Sale Securities
 
Net current-period other comprehensive loss, Unrealized Gain on Other Available-for-Sale Securities
(9)
136 
Accumulated other comprehensive loss, Unrealized Gain on Other Available-for-Sale Securities, Ending balance
 
Accumulated other comprehensive loss, Foreign Currency Translation, Beginning balance
(1,650)
 
Other comprehensive loss before reclassifications, Foreign Currency Translation
(117)
 
Amounts reclassified from accumulated other comprehensive loss, Foreign Currency Translation
 
Net current-period other comprehensive loss, Foreign Currency Translation
(117)
382 
Accumulated other comprehensive loss, Foreign Currency Translation, Ending balance
(1,767)
 
Accumulated other comprehensive loss, Accumulated Tax Effect, Beginning balance
(760)
 
Other comprehensive loss before reclassifications, Accumulated Tax Effect
 
Amounts reclassified from accumulated other comprehensive loss, Accumulated Tax Effect
 
Net current-period other comprehensive loss, Accumulated Tax Effect
 
Accumulated other comprehensive loss, Accumulated Tax Effect, Ending balance
(760)
 
Accumulated other comprehensive loss, Beginning balance
(2,228)
 
Other comprehensive loss before reclassifications
(126)
 
Amounts reclassified from accumulated other comprehensive loss
(166)
 
Net change in accumulated other comprehensive loss
(292)
470 
Accumulated other comprehensive loss, Ending balance
$ (2,520)
 
Comprehensive Loss - Components of Reclassifications of Accumulated Other Comprehensive Loss (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Accumulated Other Comprehensive Income Loss Net Of Tax [Line Items]
 
Total reclassifications for the period
$ (166)
Other gain (loss), net [Member]
 
Accumulated Other Comprehensive Income Loss Net Of Tax [Line Items]
 
Total reclassifications for the period
(166)
Provision for income taxes [Member]
 
Accumulated Other Comprehensive Income Loss Net Of Tax [Line Items]
 
Unrealized gain on auction rate securities
$ 0 
Basic and Diluted Net Loss Per Common Share - Computation of Net Loss Per Common Share Basic and Diluted (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Schedule Of Computation Of Basic And Diluted Earnings Per Common Share [Line Items]
 
 
Net loss
$ (15,279)
$ (20,612)
Weighted average common shares outstanding
114,308 
108,666 
Net loss per common share - basic and diluted
$ (0.13)
$ (0.19)
Basic and Diluted Net Loss Per Common Share - Antidilutive Shares Excluded from Computation of Diluted Net Loss Per Share (Detail)
In Thousands, unless otherwise specified
Mar. 30, 2013
Mar. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total
15,152 
17,650 
Stock options [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total
8,591 
9,485 
RSUs [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total
5,407 
6,061 
PSUs [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total
553 
1,317 
ESPP [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total
601 
694 
Warrants to purchase common stock [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total
93 
Stockholders' Equity - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended
Mar. 30, 2013
Mar. 28, 2013
Mar. 30, 2013
NASDAQ Telecom Composite Index [Member]
Mar. 30, 2013
NASDAQ Telecom Composite Index [Member]
2007 Equity Incentive Plan [Member]
Minimum [Member]
Mar. 30, 2013
NASDAQ Telecom Composite Index [Member]
2007 Equity Incentive Plan [Member]
Maximum [Member]
Mar. 30, 2013
Restricted Stock Units [Member]
Mar. 31, 2012
Restricted Stock Units [Member]
Mar. 30, 2013
Performance Stock Units Grants [Member]
Mar. 31, 2012
Performance Stock Units Grants [Member]
Dec. 29, 2012
Performance Stock Units Grants [Member]
Mar. 30, 2013
Performance Stock Units Grants [Member]
Minimum [Member]
Mar. 30, 2013
Performance Stock Units Grants [Member]
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Granted options to employees to purchase shares of common stock
19,400,000 
 
 
 
 
 
 
 
 
 
 
 
Closing price of common stock
 
$ 7.00 
 
 
 
 
 
 
 
 
 
 
Number of shares available for grant cost
400,000 
 
 
 
 
 
 
 
 
 
 
 
Amortization of stock based compensation
 
 
 
 
 
$ 6.9 
$ 6.3 
$ 0.8 
$ 0.5 
 
 
 
Ranges of number of shares issued on vesting of PSUs
0.5 
 
 
1.5 
 
 
 
 
 
0.5 
2.0 
Number of shares released under PSUs
500,000 
 
 
 
 
 
 
 
 
 
 
 
Shares of PSUs to executive officers
 
 
300,000 
 
 
 
 
 
 
500,000 
 
 
PSUs released on achievement of performance goals
 
 
 
 
 
 
 
200,000 
 
 
 
 
Amortization of stock based compensation expense offset
 
 
 
 
 
 
 
0.6 
 
 
 
 
Decrease in fair value
 
 
 
 
 
 
 
1.4 
 
 
 
 
Number of shares to be purchased on exercise of warrants
92,592 
 
 
 
 
 
 
 
 
 
 
 
Consideration for exercise of warrants
$ 0.5 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity - Summary of Company's Equity Award Activity - Options (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Number of Options, Beginning Balance
9,008 
Number of Options, exercised
(140)
Number of Options, canceled
(277)
Number of Options, Ending Balance
8,591 
Number of Options, Vested and expected to vest as of March 30, 2013
8,569 
Number of Options, Exercisable at March 30, 2013
7,764 
Average Exercise Price Per Share, Beginning Balance
$ 7.13 
Average Exercise Price Per Share, Options exercised
$ 2.96 
Average Exercise Price Per Share, Options canceled
$ 7.56 
Average Exercise Price Per Share, Ending Balance
$ 7.19 
Average Exercise Price Per Share, Exercisable at March 30, 2013
$ 7.10 
Aggregate Intrinsic Value, Beginning Balance
$ 5,726 
Aggregate Intrinsic Value, Options exercised
549 
Aggregate Intrinsic Value, Options canceled
   
Aggregate Intrinsic Value, Ending Balance
7,314 
Aggregate Intrinsic Value, Vested and expected to vest as of March 30, 2013
7,313 
Aggregate Intrinsic Value, Exercisable at March 30, 2013
$ 7,260 
Stockholders' Equity - Summary of Company's Equity Award Activity - RSUs (Detail) (Restricted Stock Units [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Restricted Stock Units [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Number of Performance Stock Units, Beginning Balance
6,703 
Number of Restricted Stock Units, granted
383 
Number of Restricted Stock Units, released
(1,474)
Number of Restricted Stock Units, canceled
(205)
Number of Performance Stock Units, Ending Balance
5,407 
Number of Restricted Stock Units, Expected to vest at March 30, 2013
5,280 
Weighted-Average Grant Date Fair Value Per Share, Beginning Balance
$ 8.01 
Weighted-Average Grant Date Fair Value Per Share, granted
$ 6.69 
Weighted-Average Grant Date Fair Value Per Share, released
$ 8.03 
Weighted-Average Grant Date Fair Value Per Share, canceled
$ 7.94 
Weighted-Average Grant Date Fair Value Per Share, Ending Balance
$ 7.91 
Weighted-Average Grant Date Fair Value Per Share, Expected to vest at March 30, 2013
   
Aggregate Intrinsic Value , Beginning Balance
$ 38,873 
Aggregate Intrinsic Value, RSUs granted
   
Aggregate Intrinsic Value, RSUs released
11,008 
Aggregate Intrinsic Value, RSUs canceled
   
Aggregate Intrinsic Value , Ending Balance
37,849 
Aggregate Intrinsic Value, Expected to vest as of March 30, 2013
$ 36,961 
Stockholders' Equity - Summary of Company's Equity Award Activity - PSUs (Detail) (PSUs [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 30, 2013
PSUs [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Number of Performance Stock Units, Beginning Balance
1,368 
Number of Performance Stock Units, granted
329 
Number of Performance Stock Units, released
(684)
Number of Performance Stock Units, canceled
(460)
Number of Performance Stock Units, Ending Balance
553 
Number of Performance Stock Units, Expected to Vest as of March 31, 2012
312 
Weighted-Average Grant Date Fair Value Per Share, Beginning Balance
$ 10.53 
Weighted-Average Grant Date Fair Value Per Share, granted
$ 6.76 
Weighted-Average Grant Date Fair Value Per Share, released
$ 10.53 
Weighted-Average Grant Date Fair Value Per Share, canceled
$ 11.82 
Weighted-Average Grant Date Fair Value Per Share, Ending Balance
$ 7.22 
Weighted-Average Grant Date Fair Value Per Share, Expected to vest as of March 31, 2012
   
Aggregate Intrinsic Value , Beginning Balance
$ 7,933 
Aggregate Intrinsic Value , PSUs granted
   
Aggregate Intrinsic Value , PSUs released
4,284 
Aggregate Intrinsic Value , PSUs canceled
   
Aggregate Intrinsic Value , Ending Balance
3,871 
Aggregate Intrinsic Value, Expected to vest at March 31, 2012
$ 2,184 
Stockholders' Equity - Total Stock Based Compensation Cost for Instruments Granted but Not Yet Amortized (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Stock options, Unrecognized Compensation Expense, Net
$ 2,969 
Stock options, Weighted-Average Period (in years)
1 year 2 months 12 days 
Restricted Stock Units [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unrecognized Compensation Expense, Net
25,585 
Weighted-Average Period (in years)
1 year 10 months 24 days 
PSUs [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unrecognized Compensation Expense, Net
$ 1,924 
Weighted-Average Period (in years)
2 years 1 month 6 days 
Stockholders' Equity - Ranges of Estimated Values of Stock Options and Performance-Based Stock Options Granted (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 7,975 
$ 9,437 
Employee and Director Stock Options [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Volatility
   
 
Risk-free interest rate
   
 
Expected life
   
 
Estimated fair value
   
 
Stock-based compensation expense
$ 803 
$ 2,401 
Employee and Director Stock Options [Member] |
Minimum [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Volatility
 
65.00% 
Risk-free interest rate
 
0.70% 
Expected life
 
4 years 
Estimated fair value
 
$ 3.75 
Employee and Director Stock Options [Member] |
Maximum [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Volatility
 
68.00% 
Risk-free interest rate
 
1.00% 
Expected life
 
5 years 3 months 18 days 
Estimated fair value
 
$ 3.76 
Stockholders' Equity - Estimated Fair Value of ESPP Shares (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 7,975 
$ 9,437 
Employee Stock Purchase Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Volatility
46.00% 
57.00% 
Risk-free interest rate
0.14% 
0.16% 
Expected life
6 months 
6 months 
Estimated fair value
$ 1.87 
$ 2.63 
Stock-based compensation expense
$ 708 
$ 896 
Stockholders' Equity - Summary of Effects of Stock-Based Compensation on Company's Balance Sheets (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Stock-based compensation effects in inventory [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects of stock based compensation
$ 4,555 
$ 4,891 
Stock-based compensation effects in deferred inventory cost [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects of stock based compensation
23 
42 
Stock-based compensation effects in fixed assets [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Effects of stock based compensation
$ 165 
$ 171 
Stockholders' Equity - Summary of Effects of Stock-Based Compensation on Company's Statements of Operations (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Effects Of Stock Based Compensation [Line Items]
 
 
Gross Share Based Compensation Before Amortization
$ 6,373 
$ 8,368 
Cost of revenue - amortization from balance sheet
1,602 
1,069 
Allocated Share-based Compensation Expense, Total
7,975 
9,437 
Cost of revenue [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Gross Share Based Compensation Before Amortization
486 
606 
Research and development [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Gross Share Based Compensation Before Amortization
3,119 
3,320 
Sales and marketing [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Gross Share Based Compensation Before Amortization
1,999 
2,219 
General and administration [Member]
 
 
Effects Of Stock Based Compensation [Line Items]
 
 
Gross Share Based Compensation Before Amortization
$ 769 
$ 2,223 
Income Taxes - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Provision for income taxes
$ 331 
$ 579 
Provision for income tax percentage
2.20% 
2.90% 
Pre-tax loss
$ (14,948)
$ (20,033)
Federal statutory rate
35.00% 
 
Segment Information - Revenue and Long-Lived Assets by Geographic Region (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 30, 2013
Mar. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Total revenue
$ 124,625 
$ 104,701 
United States [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Total revenue
79,073 
70,898 
Other Americas [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Total revenue
718 
3,992 
Americas [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Total revenue
79,791 
74,890 
Europe, Middle East and Africa [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Total revenue
38,806 
26,151 
Asia Pacific [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Total revenue
$ 6,028 
$ 3,660 
Segment Information - Property, Plant and Equipment, Net (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 30, 2013
Dec. 29, 2012
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
$ 77,155 
$ 80,343 
United States [Member]
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
75,313 
78,309 
Other Americas [Member]
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
191 
198 
Europe, Middle East and Africa [Member]
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
74 
24 
Asia Pacific [Member]
 
 
Geographic Information For Property Plant And Equipment [Line Items]
 
 
Total property, plant and equipment, net
$ 1,577 
$ 1,812 
Guarantees - Additional Information (Detail)
3 Months Ended
Mar. 30, 2013
Y
Minimum [Member]
 
Guarantor Obligations [Line Items]
 
Product warranty period
Maximum [Member]
 
Guarantor Obligations [Line Items]
 
Product warranty period
Litigation and Contingencies - Additional Information (Detail) (USD $)
Mar. 30, 2013
Commitments And Contingencies [Line Items]
 
The amount of provision made for plaintiff in Lawsuit
$ 0