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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number: 001-33486
INFINERA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware77-0560433
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
6373 San Ignacio Avenue
San Jose, CA 95119
(Address of principal executive offices, including zip code)
(408) 572-5200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s) Name of exchange on which registered
Common stock, par value $0.001 per shareINFN The Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of February 23, 2024, 231,422,390 shares of the registrant’s Common Stock, $0.001 par value, were issued and outstanding.


INFINERA CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED September 30, 2023
INDEX
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
 42
Item 1A.
Item 5.
Item 6.


PART I. FINANCIAL INFORMATION
 

Item 1.Condensed Consolidated Financial Statements (Unaudited)
INFINERA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par values)
(Unaudited)
September 30,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents$123,927 $178,657 
Short-term restricted cash
1,725 7,274 
Accounts receivable, net328,863 419,735 
Inventory456,880 374,855 
Prepaid expenses and other current assets127,145 152,451 
Total current assets1,038,540 1,132,972 
Property, plant and equipment, net200,718 172,929 
Operating lease right-of-use assets29,877 34,543 
Intangible assets, net27,075 47,787 
Goodwill225,219 232,663 
Long-term restricted cash984 3,272 
Other long-term assets45,912 44,972 
Total assets$1,568,325 $1,669,138 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$282,122 $304,880 
Accrued expenses and other current liabilities110,288 141,450 
Accrued compensation and related benefits77,160 78,849 
Short-term debt, net25,641 510 
Accrued warranty18,845 19,747 
Deferred revenue100,777 158,501 
Total current liabilities614,833 703,937 
Long-term debt, net657,936 667,719 
Long-term accrued warranty17,013 16,874 
Long-term deferred revenue21,173 23,178 
Long-term deferred tax liability2,234 2,348 
Long-term operating lease liabilities39,158 45,862 
Other long-term liabilities34,749 29,573 
Commitments and contingencies (Note 11)
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 September 30, 2023
      and December 31, 2022
      Issued and outstanding shares – 229,442 as of September 30, 2023 and
      220,408 as of December 31, 2022
229 220 
Additional paid-in capital1,963,838 1,901,491 
Accumulated other comprehensive loss(45,159)(22,471)
Accumulated deficit(1,737,679)(1,699,593)
Total stockholders' equity181,229 179,647 
Total liabilities and stockholders’ equity$1,568,325 $1,669,138 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

INFINERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 Three Months EndedNine Months Ended
 September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Revenue:
Product$316,613 $317,439 $931,057 $869,744 
Services75,756 73,008 229,615 217,562 
Total revenue392,369 390,447 1,160,672 1,087,306 
Cost of revenue:
Cost of product190,312 210,018 577,152 597,027 
Cost of services40,209 39,765 124,889 116,145 
Amortization of intangible assets3,528 6,227 10,621 18,687 
Restructuring and other related costs 22  185 
Total cost of revenue234,049 256,032 712,662 732,044 
Gross profit158,320 134,415 448,010 355,262 
Operating expenses:
Research and development76,846 76,156 237,234 228,202 
Sales and marketing41,075 33,919 124,406 105,072 
General and administrative29,368 28,923 89,762 86,963 
Amortization of intangible assets2,976 3,582 10,088 10,995 
Restructuring and other related costs400 1,142 2,621 9,545 
Total operating expenses150,665 143,722 464,111 440,777 
Income (loss) from operations
7,655 (9,307)(16,101)(85,515)
Other (expense) income, net:
Interest income546 269 1,734 426 
Interest expense(7,608)(6,516)(21,795)(18,760)
Gain on extinguishment of debt 15,521  15,521 
Other (loss) gain, net
(7,540)(7,105)10,586 (4,605)
Total other (expense) income, net
(14,602)2,169 (9,475)(7,418)
Loss before income taxes(6,947)(7,138)(25,576)(92,933)
Provision for income taxes2,466 4,792 12,510 16,568 
Net loss$(9,413)$(11,930)$(38,086)$(109,501)
Net loss per common share:
Basic$(0.04)$(0.05)$(0.17)$(0.51)
Diluted$(0.04)$(0.05)$(0.17)$(0.51)
Weighted average shares used in computing net loss per common share:
Basic228,077 217,620 225,465 215,104 
Diluted228,077 217,620 225,465 215,104 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

INFINERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 
 Three Months EndedNine Months Ended
 September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Net loss$(9,413)$(11,930)$(38,086)$(109,501)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment2,208 (9,673)(21,936)(34,883)
Actuarial loss on pension liabilities  (447) 
Amortization of actuarial (gain) loss(108)77 (305)246 
Net change in accumulated other comprehensive loss2,100 (9,596)(22,688)(34,637)
Comprehensive loss$(7,313)$(21,526)$(60,774)$(144,138)
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

INFINERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

 
Three Months Ended September 30, 2023
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total Stockholders' Equity
 SharesAmount
Balance at July 1, 2023226,488 $226 $1,942,477 $(47,259)$(1,728,266)$167,178 
ESPP shares issued1,739 2 6,193 — — 6,195 
Restricted stock units released1,338 1 — — — 1 
Shares withheld for tax obligations(123)— (549)— — (549)
Stock-based compensation— — 15,717 — — 15,717 
Other comprehensive loss— — — 2,100 — 2,100 
Net loss— — — — (9,413)(9,413)
Balance at September 30, 2023229,442 $229 $1,963,838 $(45,159)$(1,737,679)$181,229 

Nine Months Ended September 30, 2023
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total Stockholders' Equity
 SharesAmount
Balance at December 31, 2022220,408 $220 $1,901,491 $(22,471)$(1,699,593)$179,647 
ESPP shares issued3,514 4 14,927 — — 14,931 
Restricted stock units released5,883 5 — — — 5 
Shares withheld for tax obligations(363)— (2,217)— — (2,217)
Stock-based compensation— 49,637 — — 49,637 
Other comprehensive loss— — — (22,688)— (22,688)
Net loss— — — — (38,086)(38,086)
Balance at September 30, 2023229,442 $229 $1,963,838 $(45,159)$(1,737,679)$181,229 

Three Months Ended September 24, 2022
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total Stockholders' Equity
 SharesAmount
Balance at June 25, 2022216,431 $216 $1,867,000 $(29,537)$(1,721,121)$116,558 
ESPP shares issued1,318 1 6,309 — — 6,310 
Restricted stock units released1,324 2 — — — 2 
Shares withheld for tax obligations(210)— (957)— — (957)
Stock-based compensation— — 13,814 — — 13,814 
Other comprehensive loss— — — (9,596)— (9,596)
Net loss— — — — (11,930)(11,930)
Balance at September 24, 2022218,863 $219 $1,886,166 $(39,133)$(1,733,051)$114,201 


6

Nine Months Ended September 24, 2022
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total Stockholders' Equity
 SharesAmount
Balance at December 25, 2021211,381 $211 $2,026,098 $(4,496)$(1,698,042)$323,771 
Cumulative-effect adjustment from adoption of ASU 2020-06— — (196,493)— 74,492 (122,001)
ESPP shares issued2,552 2 15,189 — — 15,191 
Restricted stock units released5,419 6 — — — 6 
Shares withheld for tax obligations(489)— (3,346)— — (3,346)
Stock-based compensation— — 44,718 — — 44,718 
Other comprehensive loss— — — (34,637)— (34,637)
Net loss— — — — (109,501)(109,501)
Balance at September 24, 2022218,863 $219 $1,886,166 $(39,133)$(1,733,051)$114,201 


The accompanying notes are an integral part of these condensed consolidated financial statements.
7

INFINERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended
 September 30,
2023
September 24,
2022
Cash Flows from Operating Activities:
Net loss$(38,086)$(109,501)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization59,403 64,011 
Non-cash restructuring charges and other related costs1,183 6,098 
Amortization of debt issuance costs and discount2,970 5,270 
Operating lease expense6,402 7,203 
Stock-based compensation expense49,393 44,418 
Gain on extinguishment of debt (15,521)
Other, net(683)892 
Changes in assets and liabilities:
Accounts receivable89,248 64,833 
Inventory(82,983)(45,514)
Prepaid expenses and other current assets16,811 (36,971)
Accounts payable(27,798)37,327 
Accrued expenses and other current liabilities(46,163)(23,083)
Deferred revenue(59,839)(36,458)
Net cash used in operating activities(30,142)(36,996)
Cash Flows from Investing Activities:
Purchase of property and equipment(40,900)(37,750)
Net cash used in investing activities(40,900)(37,750)
Cash Flows from Financing Activities:
Proceeds from issuance of 2028 Notes, net of discount 98,751 373,750 
Repayment of 2024 Notes(83,446)(280,842)
Proceeds from asset-based revolving credit facility 80,000 
Repayment of asset-based revolving credit facility (80,000)
Repayment of mortgage payable(381)(366)
Payment of debt issuance cost(2,108)(11,246)
Payment of term license obligation(7,720)(5,413)
Principal payments on finance lease obligations(784)(1,054)
Proceeds from issuance of common stock14,931 15,189 
Tax withholding paid on behalf of employees for net share settlement(2,217)(3,346)
Net cash provided by financing activities17,026 86,672 
Effect of exchange rate changes on cash(8,551)(4,430)
Net change in cash, cash equivalents and restricted cash(62,567)7,496 
Cash, cash equivalents and restricted cash at beginning of period189,203 202,521 
Cash, cash equivalents and restricted cash at end of period(1)
$126,636 $210,017 
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net$9,955 $9,330 
Cash paid for interest$21,579 $14,694 
Supplemental schedule of non-cash investing and financing activities:
Unpaid debt issuance cost$ $1,313 
8

Property and equipment included in accounts payable and accrued liabilities$18,529 $2,698 
Transfer of inventory to fixed assets$1,207 $4,805 
Unpaid term licenses (included in accounts payable, accrued liabilities and other long-term liabilities)$16,510 $8,591 
(1)     Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
September 30,
2023
September 24,
2022
Cash and cash equivalents$123,927 $198,044 
Short-term restricted cash1,725 8,946 
Long-term restricted cash984 3,027 
Total cash, cash equivalents and restricted cash$126,636 $210,017 

The accompanying notes are an integral part of these condensed consolidated financial statements.
9

INFINERA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Basis of Presentation and Significant Accounting Policies
Infinera Corporation (the “Company”) prepared its interim condensed consolidated financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as amended.
The Company has made certain estimates, assumptions and judgments that can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates, assumptions and judgments made by management include inventory valuation, revenue recognition, accounting for income taxes, stock-based compensation, employee benefit and pension plans, manufacturing partner and supplier liabilities, allowances for sales returns, allowances for credit losses, useful life of intangibles and property, plant and equipment, impairment loss related to lease abandonment, accrued warranty, operating and finance lease liabilities, restructuring and other related costs and loss contingencies. Management believes that the estimates and judgments upon which they rely are reasonable based upon information available to them at the time that these estimates and judgments are made. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with inflation, disruption in the global economy and financial markets and the ongoing effects of the coronavirus (“COVID-19”) pandemic. These estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in the Company's condensed consolidated financial statements.
The interim financial information is unaudited, but reflects all adjustments that are, in management’s opinion, necessary to provide a fair presentation of results for the interim periods presented. All adjustments are of a normal recurring nature. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
This interim information should be read in conjunction with the consolidated financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as amended.
For the three-months ended September 30, 2023, one customer accounted for 12% of the Company's total revenue and for the nine-months ended September 30, 2023, the same customer accounted for 11% of the Company's total revenue. For the three-months ended September 24, 2022, one customer accounted for 12% of the Company's total revenue and for the nine-months ended September 24, 2022, no customer accounted for 10% or more of the Company's total revenue.
There have been no material changes in the Company’s significant accounting policies for the nine-months ended September 30, 2023 compared to those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as amended.
Accounting Pronouncements Not Yet Adopted
Segment Reporting Disclosures
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company plans to adopt the standard when it becomes effective beginning in fiscal year 2024 annual financial statements, and is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the Consolidated Financial Statements.
10


Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The standard enhances income tax disclosure requirements for all entities by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. The standard will be effective for fiscal year 2024 annual financial statements with early adoption permitted. The Company plans to adopt the standard when it becomes effective beginning in fiscal year 2024 annual financial statements, and expects the adoption of the standard will impact certain of the income tax disclosures.
2.Leases
The Company has operating leases for real estate (facilities) and automobiles. For the three- and nine-months ended September 30, 2023, operating lease expense was $3.4 million and $11.6 million, respectively. Included in operating lease expense were rent expense and impairment charges due to restructuring resulting in abandonment of certain lease facilities, amounting to $0.4 million and $2.6 million, for the three- and nine-months ended September 30, 2023, respectively. For the three- and nine-months ended September 24, 2022, operating lease expense was $4.2 million and $17.5 million, respectively. Included in operating lease expense were rent expense and impairment charges due to restructuring resulting in abandonment of certain lease facilities, amounting to $1.1 million and $7.5 million, for the three- and nine-months ended September 24, 2022, respectively.
Variable lease cost, short-term lease cost and sublease income were immaterial during the three- and nine-month periods ended September 30, 2023 and September 24, 2022.
The following table presents current and long-term portion of operating lease liabilities as classified in the condensed consolidated balance sheets (in thousands):
September 30,
2023
December 31,
2022
Accrued expenses and other current liabilities$11,875 $10,948 
Other long-term liabilities39,158 45,862 
Total operating lease liability$51,033 $56,810 
The Company also has finance leases. The lease term for these arrangements range from three to five years with options to purchase, or ownership transferring at the end of the term. As of September 30, 2023 and December 31, 2022, finance leases included in property, plant, and equipment, net in the condensed consolidated balance sheets were $5.6 million and $1.9 million, respectively. Finance lease expense includes amortization of the right-of-use assets and interest expense. Total finance lease expense during the three- and nine-month periods ended September 30, 2023 and September 24, 2022 was not material.
The following table presents maturity of lease liabilities under the Company's non-cancelable leases as of September 30, 2023 (in thousands):
Operating LeaseFinance Lease
Total lease payments$62,873 $5,436 
Less: interest(1)
11,840 781 
Present value of lease liabilities$51,033 $4,655 
(1)    Calculated using the interest rate for each lease.
11


The following table presents supplemental information for the Company's non-cancelable leases for the nine-months ended September 30, 2023 (in thousands, except for weighted average and percentage data):
Operating LeaseFinance Lease
Weighted average remaining lease term4.79 years4.24 years
Weighted average discount rate9.32 %9.88 %
Cash paid for amounts included in the measurement of lease liabilities$12,261 $784 
Leased assets obtained in exchange for new lease liabilities$3,104 $4,363 
3.Revenue Recognition
Disaggregation of Revenue
The following table presents the Company's revenue disaggregated by geography, based on the shipping address of the customer (in thousands):
Three Months EndedNine Months Ended
September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
United States$229,649 $222,071 $683,798 $573,786 
Other Americas25,361 21,496 69,073 75,232 
Europe, Middle East and Africa99,261 94,181 278,154 306,630 
Asia Pacific38,098 52,699 129,647 131,658 
Total revenue$392,369 $390,447 $1,160,672 $1,087,306 
The Company sells its products directly to customers who are predominantly service providers and to channel partners that sell on its behalf.
The following table presents the Company's revenue disaggregated by sales channel (in thousands):
Three Months EndedNine Months Ended
September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Direct$264,076 $287,055 $768,456 $821,666 
Indirect128,293 103,392 392,216 265,640 
Total revenue$392,369 $390,447 $1,160,672 $1,087,306 
Contract Balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
September 30,
2023
December 31,
2022
Assets (Liabilities)
Accounts receivable, net$328,863 $419,735 
Contract assets$37,407 $60,172 
Deferred revenue$(121,950)$(181,679)
Revenue recognized for the three- and nine-months ended September 30, 2023 that was included in the deferred revenue balance at the beginning of the reporting period was $17.4 million and $112.7 million, respectively. Revenue recognized for the three- and nine-months ended September 24, 2022 that was included in the deferred revenue balance at the beginning of the reporting period was $21.5 million and $92.0 million, respectively. Changes in the contract asset and liability balances during the three- and nine-month periods ended September 30, 2023 and September 24, 2022 were not materially impacted by other factors.
12


Transaction Price Allocated to the Remaining Performance Obligation
The Company’s remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially satisfied, consisting of deferred revenue and backlog. The Company’s backlog represents purchase orders received from customers for future product shipments and services. The Company’s backlog is subject to future events that could cause the amount or timing of the related revenue to change, and, in certain cases, may be canceled without penalty. Orders in backlog may be fulfilled several quarters following receipt or may relate to multi-year support service obligations.
The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) pursuant to contracts that are not subject to cancellation without penalty at the end of the reporting period (in thousands):
Remainder of 20232024202520262027ThereafterTotal
Revenue expected to be recognized in the future as of September 30, 2023
$347,267 $132,403 $18,163 $8,660 $6,182 $3,378 $516,053 
13

4.Fair Value Measurements
Disclosure of Fair Values
Financial instruments that are not re-measured at fair value include accounts receivable, accounts payable, accrued liabilities, and debt. The carrying values of these financial instruments other than the Company's 2024 Notes, 2027 Notes and 2028 Notes (as defined below and collectively referred to as "convertible senior notes") approximate their fair values. The fair value of convertible senior notes was determined based on the quoted bid price of the convertible senior notes in an over-the-counter market on September 29, 2023 (the last trading day of the quarter).
The following table presents the estimated fair values of the convertible senior notes (in thousands):
As of September 30, 2023As of December 31, 2022
 Fair Value Measured UsingFair Value Measured Using
 Level 1Level 2TotalLevel 1Level 2Total
Convertible senior notes$ $630,605 $630,605 $ $785,364 $785,364 
Cash equivalents are measured and reported at fair value on a recurring basis. The following table presents the fair value of these financial assets and their levels within the fair value hierarchy (in thousands):
As of September 30, 2023As of December 31, 2022
 Fair Value Measured UsingFair Value Measured Using
 Level 1Level 2TotalLevel 1Level 2Total
Money market funds$70,000 $ $70,000 $95,000 $ $95,000 
During the nine-months ended September 30, 2023, there were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy. As of each of September 30, 2023 and December 31, 2022, none of the Company’s existing assets or liabilities were classified as Level 3.
The Company measures goodwill and intangible assets at fair value on a nonrecurring basis when there are identifiable events or changes in circumstances that may have a significant adverse impact on the fair value of these assets. The Company performed an analysis of impairment indicators of these assets and noted no adverse impact to their fair values as of September 30, 2023.
Facilities-related Charges
The Company classifies certain facilities-related charges within Level 3 of the fair value hierarchy and applies fair value accounting on a nonrecurring basis when impairment indicators exist or upon the existence of observable fair values.
In connection with its restructuring plans (as discussed in Note 7, “Restructuring and Other Related Costs” to the notes to condensed consolidated financial statements), the Company incurred facilities-related charges of $0.4 million and $2.6 million for the three- and nine-months ended September 30, 2023, respectively. The Company incurred facilities-related charges of $1.1 million and $7.5 million for the three- and nine-months ended September 24, 2022, respectively. These charges primarily consisted of impairment charges incurred for operating lease right-of-use assets and were calculated at fair value based on estimated future sublease rental receipts that the Company could reasonably obtain over the remaining lease term at the discount rate. Facilities-related charges are classified as Level 3 measurement due to the significance of these unobservable inputs. See Note 7, "Restructuring and Other Related Costs" to the notes to condensed consolidated financial statements for more information.

14

Cash, Cash Equivalents and Restricted Cash
As of September 30, 2023, the Company had $126.6 million of cash, cash equivalents and restricted cash, including $47.0 million of cash held by its foreign subsidiaries.
As of December 31, 2022, the Company had $189.2 million of cash, cash equivalents and restricted cash, including $65.9 million of cash held by its foreign subsidiaries.
The Company's cash held by its foreign subsidiaries is used for operating and investing activities in those locations, and the Company does not currently have the need or the intent to repatriate those funds to the U.S.
15

5.Goodwill and Intangible Assets
Goodwill
Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired.
The following table presents details of the Company’s goodwill during the nine-months ended September 30, 2023 (in thousands):
Balance as of December 31, 2022
$232,663 
Foreign currency translation adjustments(7,444)
Balance as of September 30, 2023
$225,219 
The gross carrying amount of goodwill may change due to the effects of foreign currency fluctuations as a portion of these assets are denominated in foreign currency. To date, the Company has not recognized any impairment losses on goodwill.
Intangible Assets
The following tables present details of the Company’s intangible assets as of September 30, 2023 and December 31, 2022 (in thousands, except for weighted average data):
 September 30, 2023
 Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:
Customer relationships$110,318 $(83,243)$27,075 3.0
Developed technology148,733 (148,733) — 
Total intangible assets with finite lives$259,051 $(231,976)$27,075 

 December 31, 2022
 Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:
Customer relationships and backlog$151,461 $(114,294)$37,167 3.5
Developed technology170,467 (159,847)10,620 0.7
Total intangible assets with finite lives$321,928 $(274,141)$47,787 
The gross carrying amount of intangible assets and the related amortization expense of intangible assets may change due to the effects of foreign currency fluctuations as a portion of these assets are denominated in foreign currency. Amortization expenses were $6.5 million and $20.7 million for the three- and nine-months ended September 30, 2023, respectively. Amortization expenses were $9.8 million and $29.7 million for the three- and nine-months ended September 24, 2022, respectively.
Intangible assets are carried at cost less accumulated amortization and impairment, if any. Amortization expenses are recorded to the appropriate cost and expense categories.
The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of September 30, 2023 (in thousands):
 Fiscal Years
 TotalRemainder of 20232024202520262027Thereafter
Total future amortization expense$27,075 $2,256 $9,025 $9,025 $6,769 $ $ 
16

6.Balance Sheet Details
Restricted Cash
The Company’s restricted cash balance is held in deposit accounts at various banks globally. These amounts primarily collateralize the Company’s issuances of standby letters of credit and bank guarantees.
Allowance for Credit Losses
The following table provides a rollforward of the allowance for credit losses for accounts receivable for the nine-months ended September 30, 2023 (in thousands):
Balance as of December 31, 2022
$1,422 
Additions(1)
267 
Write offs(2)
(390)
Recoveries during the period(333)
Balance as of September 30, 2023
$966 
(1)The new additions during the nine-months ended September 30, 2023 are primarily due to specific reserves.
(2)The write offs during the nine-months ended September 30, 2023 are primarily amounts fully reserved previously.
Accounts Receivable Factoring
The Company sells certain designated trade account receivables based on factoring arrangements with well-established factoring companies. Pursuant to the terms of the arrangements, the Company accounts for these transactions in accordance with ASC Topic 860, "Transfers and Servicing". The Company's factor purchases trade accounts receivables on a non-recourse basis and without any further obligations. Trade accounts receivables balances sold are removed from the condensed consolidated balance sheets and cash received is reflected as cash provided by operating activities in the condensed consolidated statements of cash flows. The difference between the fair value of the Company's trade receivables and the proceeds received is recorded as interest expense in the Company's condensed consolidated statements of operations. For the three- and nine-months ended September 30, 2023, the Company's recognized factoring related interest expense was approximately $0.3 million and $0.7 million, respectively. For the three- and nine-months ended September 24, 2022, the Company's recognized factoring related interest expense was approximately $0.2 million and $0.4 million, respectively.
For the three- and nine-months ended September 30, 2023, the Company's gross amount of trade accounts receivables sold were approximately $18.1 million and $52.5 million, respectively. For the three- and nine-months ended September 24, 2022, the Company's gross amount of trade accounts receivables sold were approximately $25.0 million and $67.6 million, respectively.
17

Selected Balance Sheet Items
The following table provides details of selected balance sheet items (in thousands):
September 30,
2023
December 31,
2022
Inventory
Raw materials$110,353 $48,688 
Work in process69,916 66,591 
Finished goods
276,611 259,576 
Total inventory$456,880 $374,855 
Property, plant and equipment, net
Computer hardware$48,024 $46,454 
Computer software(1)
76,973 62,102 
Laboratory and manufacturing equipment345,384 297,261 
Land and building12,372 12,369 
Furniture and fixtures2,843 2,828 
Leasehold and building improvements50,985 50,360 
Construction in progress35,879 42,418 
Subtotal572,460 513,792 
Less accumulated depreciation and amortization(2)
(371,742)(340,863)
Total property, plant and equipment, net$200,718 $172,929 
Accrued expenses and other current liabilities
Loss contingency related to non-cancelable purchase commitments$16,789 $28,796 
Taxes payable40,251 42,757 
Short-term operating and finance lease liability13,002 11,701 
Restructuring accrual209 941 
Other accrued expenses and other current liabilities40,037 57,255 
Total accrued expenses$110,288 $141,450 
(1)Included in computer software at September 30, 2023 and December 31, 2022 were $34.7 million and $29.3 million, respectively, related to enterprise resource planning (“ERP”) systems that the Company implemented. The unamortized ERP costs at September 30, 2023 and December 31, 2022 were $10.8 million and $9.0 million, respectively. Also included in computer software at September 30, 2023 and December 31, 2022 was $32.4 million and $24.2 million, respectively, related to term licenses. The unamortized term license costs at September 30, 2023 and December 31, 2022 was $17.3 million and $9.1 million, respectively.
(2)Depreciation expense was $13.5 million and $38.7 million (which includes depreciation of capitalized ERP cost of $1.3 million and $3.5 million, respectively) for the three- and nine-months ended September 30, 2023, respectively. Also included in depreciation expense for the three- and nine-months ended September 30, 2023 was $2.4 million and $6.8 million, respectively, related to term licenses. Depreciation expense was $11.5 million and $34.3 million (which includes depreciation of capitalized ERP cost of $1.1 million and $2.6 million, respectively) for the three- and nine-months ended September 24, 2022, respectively. Also included in depreciation expense for the three- and nine-months ended September 24, 2022 was $2.0 million and $5.5 million, respectively, related to term licenses.
7.Restructuring and Other Related Costs
In 2021, the Company announced a plan to restructure certain international research and development operations (the "2021 Restructuring Plan"). The 2021 Restructuring Plan is substantially completed. Additional restructuring activities may occur in the future in connection with the Company’s ongoing transformation initiatives.
In the three- and nine-month periods ended September 30, 2023 and September 24, 2022, the Company incurred lease-related impairment charges from consolidation of various sites that resulted in abandonment of related leased facilities. This was a result of restructuring initiatives undertaken in previous years.
18

The following table presents restructuring and other related costs included in cost of revenue and operating expenses in the accompanying condensed consolidated statements of operations under the restructuring plans (in thousands):
 Three Months Ended
 September 30, 2023September 24, 2022
Cost of
Revenue
Operating ExpensesCost of
Revenue
Operating Expenses
Severance and other related expenses$ $ $22 $32 
Lease related impairment charges 405  1,076 
Others (5) 34 
Total$ $400 $22 $1,142 

 Nine Months Ended
 September 30, 2023September 24, 2022
Cost of
Revenue
Operating ExpensesCost of
Revenue
Operating Expenses
Severance and other related expenses$ $ $166 $1,789 
Lease related impairment charges 2,566  7,535 
Others 55 19 221 
Total$ $2,621 $185 $9,545 
Restructuring liabilities are reported within accrued expenses and other long-term liabilities in the accompanying condensed consolidated balance sheets (in thousands):
Severance and other related expensesLease related impairment chargesOthersTotal
Balance at December 31, 2022$792 $ $149 $941 
Charges 2,566 55 2,621 
Cash Payments(739)(1,371)(60)(2,170)
Non-Cash Settlements and Other9 (1,195)3 (1,183)
Balance at September 30, 2023$62 $ $147 $209 
As of September 30, 2023, the Company's restructuring liability was primarily comprised of $0.2 million related to the 2021 Restructuring Plan. The liability related to the 2021 Restructuring Plan is expected to be paid by the end of 2023.
8.Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss includes certain changes in equity that are excluded from net loss. The following table sets forth the changes in accumulated other comprehensive loss by component for the nine-months ended September 30, 2023 (in thousands): 
Foreign Currency Translation Actuarial Gain (Loss) on PensionTotal
Balance at December 31, 2022$(49,632)$27,161 $(22,471)
Other comprehensive loss before reclassifications(21,936)(447)(22,383)
Amounts reclassified from accumulated other comprehensive loss (305)(305)
Net current-period other comprehensive loss(21,936)(752)(22,688)
Balance at September 30, 2023$(71,568)$26,409 $(45,159)

19

9.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 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 release of outstanding restricted stock units (“RSUs”) and performance shares (referred to herein as the “PSUs”), assumed issuance of common stock under the Company’s 2007 Employee Stock Purchase Plan (the “ESPP”) using the treasury stock method, and shares of common stock issuable upon conversion of convertible senior notes. The Company includes the common shares underlying PSUs in the calculation of diluted net income per common share only when they become contingently issuable. As the Company incurred net losses during the three- and nine-month periods ended September 30, 2023 and September 24, 2022, all potentially issuable shares of common stock were determined to be anti-dilutive.
The following table sets forth the computation of net loss per common share – basic and diluted (in thousands, except per share amounts):
 Three Months EndedNine Months Ended
 September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Net loss$(9,413)$(11,930)$(38,086)$(109,501)
Weighted average common shares outstanding - basic and diluted228,077 217,620 225,465 215,104 
Net loss per common share - basic and diluted$(0.04)$(0.05)$(0.17)$(0.51)
The following sets forth the potentially dilutive shares excluded from the computation of the diluted net loss per share because their effect was anti-dilutive (in thousands):
 Three Months EndedNine Months Ended
 September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Convertible senior notes28,019 49,866 34,412 62,227 
Restricted stock units13,144 14,030 14,313 15,585 
Performance stock units3,661 2,559 3,674 2,727 
Employee stock purchase plan shares 19 71 474 
Total44,824 66,474 52,470 81,013 
The Company uses the if-converted method for calculating any potential dilutive effect of the convertible senior notes. The Company calculates diluted earnings per share assuming that all of the convertible senior notes permitted to be share settled were converted solely into shares of common stock at the beginning of the reporting period. The potential impact upon the conversion of the convertible senior notes was excluded from the calculation of diluted net loss per share for the three- and nine-month periods ended September 30, 2023 and September 24, 2022, because the effect would have been anti-dilutive.
20

10.Debt
The following is a summary of the Company's debt as of September 30, 2023 (in millions):
Net Carrying ValueUnpaid Principal BalanceContractual Maturity Date
CurrentLong-Term
2024 Notes$18.7 $ $18.7 September 2024
2027 Notes 196.6 200.0 March 2027
2028 Notes 461.3 473.8 August 2028
Mortgage6.9  6.9 March 2024
   Total Debt$25.6 $657.9 $699.4 
The following is a summary of the Company's debt as of December 31, 2022 (in millions):
Net Carrying ValueUnpaid Principal BalanceContractual Maturity Date
CurrentLong-Term
2024 Notes$ $101.7 $102.7 September 2024
2027 Notes 195.9 200.0 March 2027
2028 Notes 363.3 373.8 August 2028
Mortgage0.5 6.8 7.3 March 2024
Total Debt$0.5 $667.7 $683.8 
Convertible Senior Notes
In September 2018, the Company issued $402.5 million aggregate principal amount of 2.125% Convertible Senior Notes due 2024 (the "2024 Notes"). In March 2020, the Company issued $200.0 million aggregate principal amount of 2.5% Convertible Senior Notes due 2027 (the “2027 Notes"). In August 2022 and in June 2023, the Company issued $373.8 million and $100.0 million, respectively, aggregate principal amounts of 3.75% Convertible Senior Notes due 2028 (together, the "2028 Notes," and together with the 2024 Notes and 2027 Notes, the “convertible senior notes”). The 2024 Notes bear interest at a fixed rate of 2.125% per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2019. The 2027 Notes bear interest at a fixed rate of 2.5% per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2020. The 2028 Notes bear interest at a fixed rate of 3.75% per year, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2023. No sinking fund is provided for the convertible senior notes.
There have been no changes to the initial conversion price of the convertible senior notes since issuance and during the three- and nine-months ended September 30, 2023. None of the conditions allowing holders of the convertible senior notes to convert early were met. The convertible senior notes were therefore not convertible during the three- and nine-months ended September 30, 2023.
Exchange and Repurchase
In June 2023, the Company issued $100.0 million in additional aggregate principal amount (the "Additional 2028 Notes") of its currently outstanding 3.75% Convertible Senior Notes due 2028 (the "Existing 2028 Notes"). The Additional 2028 Notes were issued under an indenture dated as of August 8, 2022, by and between the Company and U.S. Bank Trust Company, National Association, as trustee. The Additional 2028 Notes constitute a further issuance of, and form a single series with, the Existing 2028 Notes issued on August 8, 2022 in the aggregate principal amount of $373.8 million and have substantially identical terms, including conversion rate, conversion price, convertible dates, redemption rights, conditions for conversion, settlement provisions and ranking.
The net proceeds to the Company from this issuance of Additional 2028 Notes were approximately $96.5 million after deducting the placement agent's fee, other debt issuance costs and discount. The Company used approximately $84.0 million of the net proceeds from this issuance to repurchase approximately $83.9 million in aggregate principal amount, which included accrued and unpaid interest, of its 2024 Notes concurrently with the issuance. This transaction involved a contemporaneous exchange of cash between the Company and holders of the
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2024 Notes participating in the issuance of the Additional 2028 Notes. Accordingly, the transaction was evaluated for modification or extinguishment accounting in accordance with ASC 470-50, Debt – Modifications and Extinguishments on a creditor-by-creditor basis depending on whether the exchange was determined to have substantially different terms. The repurchase of the 2024 Notes and issuance of the Additional 2028 Notes were deemed to have substantially different terms based on the present value of the cash flows or significant difference between the value of the conversion option immediately prior to and after the exchange. Therefore, the repurchase of the 2024 Notes was accounted for as a debt extinguishment. The Company recorded an immaterial loss on extinguishment of debt in interest expense, in the condensed consolidated statements of operations for the nine-months ended September 30, 2023, which includes the write-off of the related deferred issuance costs.
Interest Expense
The following table presents the interest expense related to the contractual interest coupon and the amortization of debt issuance costs on the Company's convertible senior notes (in thousands):
 Three Months EndedNine Months Ended
September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Contractual interest expense$5,803 $4,513 $16,472 $11,291 
Amortization of debt issuance costs and discount799 1,087 3,243 2,626 
Total interest expense$6,602 $5,600 $19,715 $13,917 
The issuance cost and discount related to the 2024 Notes, the 2027 Notes and the 2028 Notes are being amortized to interest expense over the respective contractual term, at effective interest rates of 2.6%, 3.0% and 4.3%, respectively. Unamortized debt issuance costs and discount will be amortized over the remaining life of the 2024 Notes, the 2027 Notes and the 2028 Notes which is approximately 11 months, 41 months, and 58 months, respectively.
The net carrying amount of the convertible senior notes as of September 30, 2023 and as of December 31, 2022 was as follows (in thousands):

2024 Notes2027 Notes2028 Notes
September 30, 2023December 31, 2022September 30, 2023December 31, 2022September 30, 2023December 31, 2022
Principal$18,747 $102,652 $200,000 $200,000 $473,750 $373,750 
Unamortized issuance costs and discount (926)(3,412)(4,121)(12,402)(10,401)
Net carrying amount$18,747 $101,726 $196,588 $195,879 $461,348 $363,349 
Asset-based revolving credit facility
On June 24, 2022, the Company entered into a Loan, Guaranty and Security Agreement (as amended, the “Loan Agreement”) with the lenders party thereto, and Bank of America, N.A., as agent. The Loan Agreement provides for a senior secured asset-based revolving credit facility of up to $200 million (the "Credit Facility"), which the Company may draw upon from time to time. The Company may increase the total commitments under the revolving credit facility by up to an additional $100 million, subject to certain conditions. In addition, the Loan Agreement provides for a $50 million letter of credit subfacility and a $20 million swingline loan facility.
The Credit Facility has a stated maturity date of June 24, 2027. Availability under the Credit Facility is based upon periodic borrowing base certifications valuing certain inventory and accounts receivable, as reduced by certain reserves. The Credit Facility is secured by a first-priority security interest (subject to certain exceptions) in inventory, certain related assets, specified deposit accounts, and certain other accounts.
Outstanding borrowings accrue interest at floating rates plus an applicable margin of 1.25% to 1.75% for Term Secured Overnight Financing Rate loans and 0.25% to 0.75% for base rate loans. The unused line fee rate payable on the unused portion of the Credit Facility is equal to 0.25% per annum based on utilization of the Credit Facility.
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The Loan Agreement also contains certain customary affirmative and negative covenants, including a financial covenant that requires the Company to maintain a minimum fixed charge coverage ratio. As of September 30, 2023, the Company was in compliance with all covenants under the Loan Agreement.
As of September 30, 2023, the Company had availability of $158.8 million under the Credit Facility.
As of September 30, 2023, the Loan Agreement included a $50.0 million letter of credit subfacility and $23.2 million of letters of credit were issued and outstanding.
Mortgage Payable
In March 2019, the Company mortgaged a property it owns. The Company received proceeds of $8.7 million in connection with the loan. The loan carries a fixed interest rate of 5.25% and is repayable in 59 equal monthly installments of principal balance plus accrued unpaid interest due five years from the date of the loan.
On September 24, 2021, the loan was amended to reduce the interest rate from 5.25% to 3.80% for the remaining 31 equal monthly installments of approximately $0.1 million each.
As of September 30, 2023, $6.9 million of the loan remained outstanding and is included in short-term debt, net in the condensed consolidated balance sheets.
11.Commitments and Contingencies
The following table sets forth commitments and contingencies related to the Company's various obligations (in thousands):
  Payments Due by Period
 TotalRemainder of 20232024202520262027Thereafter
Operating leases(1)(2)
$62,873 $4,066 $15,777 $13,782 $10,437 $8,133 $10,678 
Finance lease obligations(3)
5,436 249 1,296 1,119 1,003 956 813 
2028 Notes, including interest(4)
562,579  17,766 17,766 17,766 17,766 491,515 
2027 Notes, including interest(4)
217,500  5,000 5,000 5,000 202,500  
2024 Notes, including interest(4)
19,145  19,145     
Mortgage Payable, including interest(4)
7,025 196 6,829     
Total contractual obligations$874,558