Infinera Corporation Reports Fourth Quarter and Fiscal Year 2020 Financial Results

Sunnyvale, California, UNITED STATES


SAN JOSE, Calif., Feb. 23, 2021 (GLOBE NEWSWIRE) -- Infinera Corporation (NASDAQ: INFN) today released financial results for its fourth quarter and fiscal year ended December 26, 2020.

GAAP revenue for the quarter was $353.5 million compared to $340.2 million in the third quarter of 2020 and $384.6 million in the fourth quarter of 2019.

GAAP gross margin for the quarter was 35.7% compared to 31.8% in the third quarter of 2020 and 29.0% in the fourth quarter of 2019. GAAP operating margin for the quarter was (1.9)% compared to (7.9)% in the third quarter of 2020 and (15.8)% in the fourth quarter of 2019.

GAAP net loss for the quarter was $(9.9) million, or $(0.05) per share, compared to $(35.9) million, or $(0.19) per share, in the third quarter of 2020, and $(66.6) million, or $(0.37) per share, in the fourth quarter of 2019.

Non-GAAP revenue for the quarter was $354.4 million compared to $341.2 million in the third quarter of 2020 and $386.5 million in the fourth quarter of 2019.

Non-GAAP gross margin for the quarter was 37.6% compared to 35.2% in the third quarter of 2020 and 35.2% in the fourth quarter of 2019. Non-GAAP operating margin for the quarter was 6.6% compared to 2.2% in the third quarter of 2020 and 2.3% in the fourth quarter of 2019.

Non-GAAP net income for the quarter was $26.3 million, or $0.13 per share, compared to a net income of $4.2 million, or $0.02 per share, in the third quarter of 2020, and $6.4 million, or $0.03 per share, in the fourth quarter of 2019.

GAAP revenue for the year was $1,355.6 million compared to $1,298.9 million in 2019. GAAP gross margin for the year was 30.2% compared to 25.1% in 2019. GAAP operating margin for the year was (11.4)% compared to (27.0)% in 2019. GAAP net loss for the year was $(206.7) million, or $(1.10) per share, compared to $(386.6) million, or $(2.16) per share, in 2019.

Non-GAAP revenue for the year was $1,359.7 million compared to $1,316.6 million in 2019. Non-GAAP gross margin for the year was 33.8% compared to 33.6% in 2019. Non-GAAP operating margin for the year was (0.5)% compared to (6.3)% in 2019. Non-GAAP net loss for the year was $(36.1) million, or $(0.19) per share, compared to $(107.3) million, or $(0.60) per share, in 2019.

A further explanation of the use of non-GAAP financial information and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.

“We ended the year with another quarter of strong performance marked by solid execution across the board. Fourth quarter non-GAAP revenue was in line with our outlook, with non-GAAP gross margin and non-GAAP operating margin coming in above the guidance range. Further, we generated free cash flow in the quarter,” said David Heard, Infinera CEO. “I am encouraged by the financial progress, operational improvements, and technology innovation delivered by the Infinera team in 2020. We believe our team’s focused execution in 2020 positions us well towards achieving our target business model.”

Financial Outlook

Infinera's outlook for the quarter ending March 27, 2021 is as follows:

  • GAAP revenue is expected to be $329 million +/- $10 million. Non-GAAP revenue is expected to be $330 million +/- $10 million.
  • GAAP gross margin is expected to be 32.5% +/- 150 bps. Non-GAAP gross margin is expected to be 35.5% +/- 150 bps.
  • GAAP operating expenses are expected to be $144 million +/- $2.0 million. Non-GAAP operating expenses are expected to be $123 million +/- $2.0 million.
  • GAAP operating margin is expected to be (11.5)% +/- 200 bps. Non-GAAP operating margin is expected to be (2.0)% +/- 200 bps.

Fourth Quarter 2020 Investor Slides Available Online

Investor slides reviewing Infinera's fourth quarter of 2020 financial results will be furnished to the Securities and Exchange Commission (SEC) on a Current Report on Form 8-K and published on Infinera's Investor Relations website at investors.infinera.com prior to the fourth quarter of 2020 earnings conference call. Analysts and investors are encouraged to review these slides prior to participating in the conference call webcast.

Conference Call Information

Infinera will host a conference call for analysts and investors to discuss its results for the fourth quarter of 2020 and its outlook for the first quarter of 2021 today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Interested parties may join the conference call by dialing 1-866-373-6878 (toll free) or 1-412-317-5101 (international). A live webcast of the conference call will also be accessible from the Events section of Infinera’s website at investors.infinera.com. Replay of the audio webcast will be available at investors.infinera.com approximately two hours after the end of the live call.

Contacts:

Media:
Anna Vue
Tel. +1 (916) 595-8157
avue@infinera.com

Investors:
Amitabh Passi, Head of Investor Relations
apassi@infinera.com

Michael Bowen, ICR, Inc.
Tel. +1 (203) 682-8299
Michael.Bowen@icrinc.com 

Marc P. Griffin, ICR, Inc.
Tel. +1 (646) 277-1290
Marc.Griffin@icrinc.com

About Infinera

Infinera is a global supplier of innovative networking solutions that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. The Infinera end-to-end packet-optical portfolio delivers industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. To learn more about Infinera, visit www.infinera.com, follow us on Twitter @Infinera, and read Infinera's latest blog posts at www.infinera.com/blog.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or Infinera's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or the negative of these words or similar terms or expressions that concern Infinera's expectations, strategy, priorities, plans or intentions. Such forward-looking statements in this press release include, without limitation, Infinera's positioning for achievement of its target business model and Infinera's financial outlook for the first quarter of 2021. These forward-looking statements are based on estimates and information available to Infinera as of the date hereof and are not guarantees of future performance; actual results could differ materially from those stated or implied due to risks and uncertainties. The risks and uncertainties that could cause Infinera’s results to differ materially from those expressed or implied by such forward-looking statements include the effect of the COVID-19 pandemic on Infinera’s business, results of operations, financial condition, stock price and personnel; the effect of global and regional economic conditions on Infinera’s business, including effects on purchasing decisions by customers; Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to make anticipated capital expenditures; Infinera's ability to service its debt obligations and pursue its strategic plan; delays in the development and introduction of new products or updates to existing products; market acceptance of Infinera’s end-to-end portfolio; Infinera's reliance on single and limited source suppliers; fluctuations in demand, sales cycles and prices for products and services, including discounts given in response to competitive pricing pressures, as well as the timing of purchases by Infinera's key customers; the effect that changes in product pricing or mix, and/or increases in component costs, could have on Infinera’s gross margin; Infinera’s ability to respond to rapid technological changes; aggressive business tactics by Infinera’s competitors; the effects of customer consolidation; our ability to identify, attract and retain qualified personnel; the impacts of foreign currency fluctuations; Infinera’s ability to protect its intellectual property; claims by others that Infinera infringes their intellectual property; impacts of the recent presidential administration change in the United States; war, terrorism, public health issues, natural disasters and other circumstances that could disrupt the supply, delivery or demand of Infinera's products; and other risks and uncertainties detailed in Infinera’s SEC filings from time to time. More information on potential factors that may impact Infinera’s business are set forth in Infinera's periodic reports filed with the SEC, including its Annual Report on Form 10-K for the year ended on December 28, 2019 as filed with the SEC on March 4, 2020, and its Quarterly Report on Form 10-Q for the quarter ended September 26, 2020 as filed with the SEC on November 5, 2020, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Infinera’s website at www.infinera.com and the SEC’s website at www.sec.gov. Infinera assumes no obligation to, and does not currently intend to, update any such forward-looking statements.

Use of Non-GAAP Financial Information

In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including measures that exclude acquisition-related deferred revenue, other customer related charges, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, acquisition-related inventory adjustments, restructuring and related costs, COVID-19 related costs, litigation charges, amortization of debt discount on Infinera’s convertible senior notes, gain/loss on non-marketable equity investments, and income tax effects. For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the section titled “GAAP to Non-GAAP Reconciliations” below.

Infinera has included forward-looking non-GAAP information in this press release, including an estimate of certain non-GAAP financial measures for the first quarter of 2021 that exclude acquisition-related deferred revenue adjustments, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs related to Infinera's acquisition of Coriant, and restructuring and related expenses. Please see the section titled “GAAP to Non-GAAP Reconciliation of Financial Outlook” below on specific adjustments.

Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its prospects for the future and are considered by management for the purpose of making operational decisions. In addition, these results are the primary indicators management uses as a basis for its planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for revenue, gross margin, operating expenses, operating margin, and net income (loss) prepared in accordance with GAAP. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.

A copy of this press release can be found on the Investor Relations page of Infinera’s website at investors.infinera.com.

Infinera and the Infinera logo are trademarks or registered trademarks of Infinera Corporation. All other trademarks used or mentioned herein belong to their respective owners.

Infinera Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited) 

    
 Three Months Ended Twelve Months Ended
 December 26,
2020
 December 28,
2019
 December 26,
2020
 December 28,
2019
Revenue:       
Product$267,226   $307,861   $1,045,551   $1,011,488  
Services86,299   76,706   310,045   287,377  
Total revenue353,525   384,567   1,355,596   1,298,865  
Cost of revenue:       
Cost of product178,153   213,536   751,465   735,059  
Cost of services44,724   38,543   160,118   146,916  
Amortization of intangible assets4,611   8,437   29,247   32,583  
Acquisition and integration costs   7,238   1,828   28,449  
Restructuring and related(106)  5,407   4,146   29,935  
Total cost of revenue227,382   273,161   946,804   972,942  
Gross profit126,143   111,406   408,792   325,923  
Operating expenses:       
Research and development64,728   68,632   265,634   287,977  
Sales and marketing32,145   37,979   129,604   151,423  
General and administrative24,336   30,014   112,240   126,351  
Amortization of intangible assets4,745   6,617   18,581   27,280  
Acquisition and integration costs(265)  11,011   13,346   42,271  
Restructuring and related7,230   18,024   24,586   40,851  
Total operating expenses132,919   172,277   563,991   676,153  
Loss from operations(6,776)  (60,871)  (155,199)  (350,230) 
Other income (expense), net:       
Interest income33   59   118   1,139  
Interest expense(12,853)  (8,946)  (46,728)  (31,657) 
Other income (loss), net10,777   3,001   1,121   (2,907) 
Total other income (expense), net(2,043)  (5,886)  (45,489)  (33,425) 
Loss before income taxes(8,819)  (66,757)  (200,688)  (383,655) 
Provision for/(benefit from) income taxes1,105   (163)  6,035   2,963  
Net loss$(9,924)  $(66,594)  $(206,723)  $(386,618) 
Net loss per common share:       
Basic$(0.05)  $(0.37)  $(1.10)  $(2.16) 
Diluted$(0.05)  $(0.37)  $(1.10)  $(2.16) 
Weighted average shares used in computing net loss per common share:       
Basic195,655   180,864   188,216   178,984  
Diluted195,655   180,864   188,216   178,984  
                

Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands, except percentages and per share data)
(Unaudited) 

    
 Three Months Ended Twelve Months Ended
 December
26, 2020
   September
26, 2020
   December
28, 2019
   December
26, 2020
   December
28, 2019
  
Reconciliation of Revenue:                   
U.S. GAAP as reported$353,525     $340,211     $384,567     $1,355,596     $1,298,865    
Acquisition-related deferred revenue adjustment(1)892     1,037     1,891     4,089     9,631    
Other customer related charges(2)                    8,100    
Non-GAAP as adjusted$354,417     $341,248     $386,458     $1,359,685     $1,316,596    
                    
Reconciliation of Gross Profit:                   
U.S. GAAP as reported$126,143   35.7% $108,276   31.8% $111,406   29.0% $408,792   30.2% $325,923   25.1%
Acquisition-related deferred revenue adjustment(1)892     1,037     1,891     4,089     9,631    
Other customer related charges(2)                    8,100    
Stock-based compensation(3)1,742     1,878     1,752     7,785     6,449    
Amortization of acquired intangible assets(4)4,611     7,287     8,437     29,247     32,583    
Acquisition and integration costs(5)     43     7,238     1,828     28,449    
Acquisition-related inventory adjustments(6)                    1,778    
Restructuring and related(7)(106)    1,504     5,407     4,146     29,935    
COVID-19 related costs(8)               3,641         
Non-GAAP as adjusted$133,282   37.6% $120,025   35.2% $136,131   35.2% $459,528   33.8% $442,848   33.6%
                    
Reconciliation of Operating Expenses:                   
U.S. GAAP as reported$132,919     $135,193     $172,277     563,991     $676,153    
Stock-based compensation(3)11,177     10,185     9,321     41,676     36,330    
Amortization of acquired intangible assets(4)4,745     4,696     6,617     18,581     27,280    
Acquisition and integration costs(5)(265)    1,045     11,011     13,346     42,271    
Restructuring and related(7)7,230     6,679     18,024     24,586     40,851    
Litigation charges(9)                    4,100    
Non-GAAP as adjusted$110,032     $112,588     $127,304     $465,802     $525,321    
                    
Reconciliation of Income/(Loss) from Operations:                   
U.S. GAAP as reported$(6,776)  (1.9)% $(26,917)  (7.9)% $(60,871)  (15.8)% $(155,199)  (11.4)% $(350,230)  (27.0)%
Acquisition-related deferred revenue adjustment(1)892     1,037     1,891     4,089     9,631    
Other customer related charges(2)                    8,100    
Stock-based compensation(3)12,919     12,063     11,073     49,461     42,779    
Amortization of acquired intangible assets(4)9,356     11,983     15,054     47,828     59,863    
Acquisition and integration costs(5)(265)    1,088     18,249     15,174     70,720    
Acquisition-related inventory adjustments(6)                    1,778    
Restructuring and related(7)7,124     8,183     23,431     28,732     70,786    
COVID-19 related costs(8)               3,641         
Litigation charges(9)                    4,100    
Non-GAAP as adjusted$23,250   6.6% $7,437   2.2% $8,827   2.3% $(6,274)  (0.5)% $(82,473)  (6.3)%
                                        


    
 Three Months Ended Twelve Months Ended
 December
26, 2020
 September
26, 2020
 December
28, 2019
 December
26, 2020
 December
28, 2019
Reconciliation of Net Income/ (Loss):         
U.S. GAAP as reported$(9,924)  $(35,896)  $(66,594)  $(206,723)  (386,618) 
Acquisition-related deferred revenue adjustment(1)892   1,037   1,891   4,089   9,631  
Other customer related charges(2)            8,100  
Stock-based compensation(3)12,919   12,063   11,073   49,461   42,779  
Amortization of acquired intangible assets(4)9,356   11,983   15,054   47,828   59,863  
Acquisition and integration costs(5)(265)  1,088   18,249   15,174   70,720  
Acquisition-related inventory adjustments(6)            1,778  
Restructuring and related(7)7,124   8,183   23,431   28,732   70,786  
COVID-19 related costs(8)         3,641     
Litigation charges(9)            4,100  
Amortization of debt discount(10)6,910   6,741   4,567   25,349   17,612  
Gain/Loss on non-marketable equity investment(11)            (1,009) 
Income tax effects(12)(691)  (991)  (1,268)  (3,688)  (5,037) 
Non-GAAP as adjusted$26,321   $4,208   $6,403   $(36,137)  $(107,295) 
          
Net Income/(Loss) per Common Share - Basic and Diluted:         
U.S. GAAP as reported$(0.05)  $(0.19)  $(0.37)  $(1.10)  $(2.16) 
Non-GAAP as adjusted(13)$0.13   $0.02   $0.03   $(0.19)  $(0.60) 
          
Weighted Average Shares Used in Computing Net Loss per Common Share - Basic and Diluted:         
Basic195,655   189,589   180,864   188,216   178,984  
Diluted(14)203,259   195,868   186,349   188,216   178,984  
                    


(1)Business combination accounting principles require Infinera to write down to fair value its maintenance support contracts assumed in Infinera's acquisition of Coriant, which closed during the fourth quarter of 2018. The revenue for these support contracts is deferred and typically recognized over a period of time after the Coriant acquisition, so Infinera's GAAP revenue for a period of time after the acquisition will not reflect the full amount of revenue that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP adjustment eliminates the effect of the deferred revenue write-down. Management believes these adjustments to revenue from support contracts assumed in the Coriant acquisition are useful to investors as an additional means to reflect revenue trends in Infinera's business.
  
(2)Other customer-related charges include one-time benefits and charges that are not directly related to Infinera’s ongoing or core business results. During the second quarter of 2019, Infinera agreed to reimburse a customer for certain expenses incurred by them in connection with a network service outage that occurred during the fourth quarter of fiscal 2018. Management has excluded the impact of this charge in arriving at Infinera's non-GAAP results because it is non-recurring, and management believes that this reimbursement is not indicative of ongoing operating performance.
  
(3)Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation effective January 1, 2006. The following table summarizes the effects of stock-based compensation related to employees and non-employees (in thousands):


     
  Three Months Ended Twelve Months Ended
  December
26, 2020
 September
26, 2020
 December
28, 2019
 December
26, 2020
 December
28, 2019
Cost of revenue $1,742  $1,878  $1,752  $7,785  $6,449 
Total Cost of revenue 1,742  1,878  1,752  7,785  6,449 
Research and development 4,501  4,209  3,574  16,863  17,457 
Sales and marketing 2,771  2,706  2,578  10,907  8,413 
General and administration 3,905  3,270  3,169  13,906  10,460 
Total Operating expenses $11,177  $10,185  $9,321  $41,676  $36,330 
Total stock-based compensation expense $12,919  $12,063  $11,073  $49,461  $42,779 
                     


(4)Amortization of acquired intangible assets consists of developed technology, trade names, customer relationships and backlog acquired in connection with the Coriant acquisition. Amortization of acquired intangible assets also consists of amortization of developed technology, trade names and customer relationships acquired in connection with the Transmode AB acquisition. U.S. GAAP accounting requires that acquired intangible assets are recorded at fair value and amortized over their useful lives. As this amortization is non-cash, Infinera has excluded it from its non-GAAP gross profit, operating expenses and net income measures. Management believes the amortization of acquired intangible assets is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance.
  
(5)Acquisition and integration costs consist of legal, financial, IT, manufacturing-related costs, employee-related costs and professional fees incurred in connection with the Coriant acquisition. These amounts have been adjusted in arriving at Infinera's non-GAAP results because management believes that these expenses are non-recurring, not indicative of ongoing operating performance and their exclusion provides a better indication of Infinera's underlying business performance.
  
(6)Business combination accounting principles require Infinera to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to Infinera's cost of sales excludes the amortization of the acquisition-related step-up in carrying value for units sold in the quarter. Additionally, in connection with the Coriant acquisition, cost of sales excludes a one-time adjustment in inventory as a result of renegotiated supplier agreements that contained unusually higher than market pricing. Management believes these adjustments are useful to investors as an additional means to reflect ongoing cost of sales and gross margin trends of Infinera's business.
  
(7)Restructuring and related costs are primarily associated with the reduction of operating costs, the closure of Infinera's Berlin, Germany site, the reduction of headcount at Infinera's Munich, Germany site and other sites, and Coriant's historical restructuring plan associated with its early retirement plan. In addition, this includes accelerated amortization on operating lease right-of-use assets due to the cessation of use of certain facilities. Management has excluded the impact of these charges in arriving at Infinera's non-GAAP results as they are non-recurring in nature and its exclusion provides a better indication of Infinera's underlying business performance.
  
(8)COVID-19 related costs consist of higher replacement costs associated with certain warranty parts customers were unable to return for repair due to logistics issues and mobility issues related to COVID-19 public health mandates and restrictions. In addition, Infinera needed to source certain key components from an alternate supplier at substantially higher cost in order to fulfill delivery commitments in the normal course of business. Management has excluded these expenses from non-GAAP financial measures because they were caused by atypical circumstances during the COVID-19 pandemic, as their exclusion provides a better indication of Infinera's underlying business performance.
  
(9)Litigation charges are associated with the preliminary settlement of a litigation matter agreed to during the quarter ended June 29, 2019. Management has excluded the impact of this charge in arriving at Infinera's non-GAAP results because it is non-recurring and management believes that this expense is not indicative of ongoing operating performance.
  
(10)Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. Accordingly, for GAAP purposes, Infinera is required to amortize as debt discount an amount equal to the fair value of the conversion option that was recorded in equity as interest expense on the $402.5 million in aggregate principal amount of its 2.125% convertible debt issuance in September 2018 due September 2024 and $200 million in aggregate principal amount of 2.50% convertible debt issued in March 9, 2020 due March 2027. Interest expense has been excluded from Infinera's non-GAAP results because management believes that this non-cash expense is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance.
  
(11)Management has excluded the gain on the sale related to non-marketable equity investments in arriving at Infinera's non-GAAP results because it is non-recurring, and management believes that this income is not indicative of ongoing operating performance
  
(12)The difference between the GAAP and non-GAAP tax provision is due to the net tax effects of the purchase accounting adjustments, acquisition-related costs and amortization of acquired intangible assets.
  
(13)Non-GAAP EPS as adjusted did not exclude the impact of foreign currency. Had the impact of foreign currency been excluded for the three months ended December 26, 2020, September 26, 2020 and December 28, 2019, non-GAAP EPS as adjusted would have been $0.08, loss of less than one cent, and $0.02, respectively, and for the twelve months ended December 26, 2020 and December 28, 2019, non-GAAP EPS as adjusted would have been $(0.19) and $(0.57), respectively.
  
(14)The non-GAAP diluted shares include the potentially dilutive securities from Infinera's stock-based benefit plans excluded from the computation of dilutive net loss per share attributable to common stockholders on a GAAP basis because the effect would have been anti-dilutive. These potentially dilutive securities are added for the computation of diluted net income per share on a non-GAAP basis in periods when Infinera has net income on a non-GAAP basis. During the three months ended December 26, 2020, the Company included the dilutive effects of the 2027 Notes in the calculation of diluted net income per common share as the average market price was above the conversion price of the Notes. The dilutive impact of the Notes was based on the difference between the Company's average stock price during the period and the conversion price of the Notes.


Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)

 December 26,
2020
 December 28,
2019
ASSETS   
Current assets:   
Cash$298,014   $109,201  
Short-term restricted cash3,293   4,339  
Accounts receivable, net of allowance for doubtful accounts of $2,912 in 2020 and $4,005 in 2019319,428   349,645  
Inventory269,307   340,429  
Prepaid expenses and other current assets171,831   139,217  
Total current assets1,061,873   942,831  
Property, plant and equipment, net153,133   150,793  
Operating lease right-of-use assets68,851   68,081  
Intangible assets124,882   170,346  
Goodwill273,426   249,848  
Long-term restricted cash14,076   19,257  
Other non-current assets36,256   27,182  
Total assets$1,732,497   $1,628,338  
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$175,762   $273,397  
Accrued expenses and other current liabilities150,550   193,168  
Accrued compensation and related benefits52,976   92,221  
Short-term debt, net101,983   31,673  
Accrued warranty19,369   21,107  
Deferred revenue133,246   103,753  
Total current liabilities633,886   715,319  
Long-term debt, net445,996   323,678  
Long-term financing lease obligations1,383   2,394  
Accrued warranty, non-current21,339   22,241  
Deferred revenue, non-current29,810   36,067  
Deferred tax liability4,164   8,700  
Operating lease liabilities76,126   64,210  
Other long-term liabilities93,509   69,194  
Commitments and contingencies   
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 December 26, 2020
and December 28, 2019
Issued and outstanding shares – 201,397 as of December 26, 2020 and
181,134 as of December 28, 2019
201   181  
Additional paid-in capital1,965,245   1,740,884  
Accumulated other comprehensive loss(11,898)  (34,639) 
Accumulated deficit(1,527,264)  (1,319,891) 
Total stockholders' equity426,284   386,535  
Total liabilities and stockholders’ equity$1,732,497   $1,628,338  
          

Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 Twelve Months Ended
 December 26,
2020
 December 28,
2019
Cash Flows from Operating Activities:   
Net loss$(206,723)  $(386,618) 
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization100,140   119,824  
Non-cash restructuring charges and related costs5,471   13,937  
Amortization of debt discount and issuance costs28,115   19,162  
Operating lease expense18,556   31,141  
Stock-based compensation expense49,461   43,294  
Other, net4,438   178  
Changes in assets and liabilities:   
Accounts receivable32,150   (35,395) 
Inventory71,424   (42,840) 
Prepaid expenses and other assets(36,127)  (93,621) 
Accounts payable(93,411)  83,272  
Accrued liabilities and other expenses(107,704)  54,658  
Deferred revenue21,910   25,658  
Net cash used in operating activities(112,300)  (167,350) 
Cash Flows from Investing Activities:   
Proceeds from sales of available-for-sale investments   1,499  
Proceeds from sale of non-marketable equity investments   1,009  
Proceeds from maturities of investments   25,085  
Acquisition of business, net of cash acquired   (10,000) 
Purchase of property and equipment, net(39,009)  (30,202) 
Net cash used in investing activities(39,009)  (12,609) 
Cash Flows from Financing Activities:   
Proceeds from issuance of common stock from at-the-market equity offering, net of issuance costs of $3,38092,916     
Proceeds from issuance of 2027 Notes194,500     
Proceeds from revolving line of credit55,000   48,125  
Proceeds from short-term borrowings   24,310  
Proceeds from mortgage payable   8,584  
Repayment of revolving line of credit(8,000)  (20,000) 
Repayment of third party manufacturing funding(5,346)    
Payment of debt issuance cost(2,455)  (273) 
Repayment of mortgage payable(233)  (300) 
Principal payments on financing lease obligations(1,587)  (163) 
Payment of term license obligation(5,692)    
Proceeds from issuance of common stock17,072   12,053  
Minimum tax withholding paid on behalf of employees for net share settlement(2,013)  (426) 
Net cash provided by financing activities334,162   71,910  
Effect of exchange rate changes on cash and restricted cash(267)  (1,491) 
Net change in cash, cash equivalents and restricted cash182,586   (109,540) 
Cash, cash equivalents and restricted cash at beginning of period132,797   242,337  
Cash and restricted cash at end of period(1)$315,383   $132,797  
    
Supplemental disclosures of cash flow information:   
Cash paid for income taxes, net$5,039   $16,944  
Cash paid for interest$15,638
   $9,564  
Supplemental schedule of non-cash investing and financing activities:   
Unpaid debt issuance cost$   $2,493  
Third-party manufacturer funding for transfer expenses incurred$   $6,960  
Transfer of inventory to fixed assets$1,083   $2,961  
Property and equipment included in accounts payable and accrued liabilities$   $3,838  
Unpaid term licenses (included in accounts payable, accrued liabilities and other long term liabilities)$12,478   $  
          


(1)Reconciliation of cash and restricted cash to the condensed consolidated balance sheets:


    
 December 26,
2020
 December 28,
2019
    
 (In thousands)
Cash$298,014  $109,201 
Short-term restricted cash3,293  $4,339 
Long-term restricted cash14,076  $19,257 
Total cash and restricted cash$315,383  $132,797 
        

Infinera Corporation
Supplemental Financial Information
(Unaudited)

                 
  Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
GAAP Revenue ($ Mil) $292.7  $296.3  $325.3  $384.6  $330.3  $331.6  $340.2  $353.5 
GAAP Gross Margin % 22.7 % 20.7 % 26.7 % 29.0 % 23.3 % 29.4 % 31.8 % 35.7 %
Non-GAAP Gross Margin %(1) 35.3 %  30.7 %  33.1 % 35.2 % 28.3 % 33.8 % 35.2 % 37.6 %
Revenue Composition:                
Domestic % 45 % 45 % 51 % 52 % 52 % 50 % 49 % 36 %
International % 55 %  55 % 49 % 48 % 48 % 50 % 51 % 64 %
Customers >10% of Revenue 1  1  1  1  1  1  1   
Cash Related Information:                
Cash from Operations ($ Mil) ($56.2) ($63.8) ($37.2) ($10.2) ($91.5) ($36.6) ($36.4) $52.2 
Capital Expenditures ($ Mil) $6.6  $9.2  $12.5  $2.7  $8.5  $10.5  $8.1  $11.9 
Depreciation & Amortization ($ Mil) $31.0  $31.2  $29.0  $28.6  $25.4  $25.9  $22.9  $25.9 
DSOs 83  80  80  83  75  79  78  82 
Inventory Metrics:                
Raw Materials ($ Mil) $82.5  $70.4  $47.2  $47.4  $50.0  $43.4  $39.3  $34.7 
Work in Process ($ Mil) $63.0  $59.5  $52.2  $48.8  $52.0  $50.9  $51.6  $55.8 
Finished Goods ($ Mil) $187.0  $208.9  $225.4  $244.1  $217.7  $193.9  $185.0  $178.8 
Total Inventory ($ Mil) $332.5  $338.8  $324.8  $340.3  $319.7  $288.2  $275.9  $269.3 
Inventory Turns(2) 2.3  2.5  2.7  2.9  3.0  3.1  3.2  3.3 
Worldwide Headcount 3,708  3,632  3,557  3,261  3,302  3,209  3,074  3,050 
Weighted Average Shares Outstanding (in thousands):                
Basic 176,406  178,677  179,988  180,864  182,024  185,596  189,589  195,655 
Diluted 176,602  179,343  182,073  186,349  189,246  190,127  195,868  203,259 
                 


(1)Non-GAAP adjustments include acquisition-related deferred revenue and inventory adjustments, other customer related charges, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and related costs, and COVID-19 related costs. For a description of this non-GAAP financial measure, please see the section titled “GAAP to Non-GAAP Reconciliations” in this press release for a reconciliation to the most directly comparable GAAP financial measures.
  
(2)Infinera calculates non-GAAP inventory turns as annualized non-GAAP cost of revenue before adjustments for restructuring and related costs, non-cash stock-based compensation expense, and certain purchase accounting adjustments, divided by the average inventory for the quarter.


Infinera Corporation

GAAP to Non-GAAP Reconciliation of Financial Outlook
(In millions, except percentages and per share data)
(Unaudited) 

The following amounts represent the midpoint of the expected range:

  Q1'21
  Outlook
Reconciliation of Revenue:  
U.S. GAAP $329.0  
Acquisition-related deferred revenue adjustment 1.0  
Non-GAAP $330.0  
   
Reconciliation of Gross Margin:  
U.S. GAAP 32.5 % 
Acquisition-related deferred revenue adjustment 0.5 % 
Stock-based compensation 1.0 % 
Amortization of acquired intangible assets 1.0 % 
Restructuring and related costs 0.5 % 
Non-GAAP 35.5 % 
   
Reconciliation of Operating Expenses:  
U.S. GAAP $144.0  
Stock-based compensation (14.0) 
Amortization of acquired intangible assets (4.0) 
Restructuring and related costs (2.0) 
Acquisition and integration costs (1.0) 
Non-GAAP $123.0  
   
Reconciliation of Operating Margin:  
U.S. GAAP (11.5)% 
Acquisition-related deferred revenue adjustment 0.5 % 
Stock-based compensation 5.0 % 
Amortization of acquired intangible assets 2.5 % 
Acquisition and integration costs 0.5 % 
Restructuring and related costs 1.0 % 
Non-GAAP (2.0)%