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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 24, 2022
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, 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 October 28, 2022, 219,743,831 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 24, 2022
INDEX
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
  49
Item 1A.
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 24,
2022		December 25,
2021
ASSETS
Current assets:
Cash and cash equivalents$198,044 $190,611 
Short-term restricted cash
8,946 2,840 
Accounts receivable, net284,001 358,954 
Inventory331,058 291,367 
Prepaid expenses and other current assets159,825 147,989 
Total current assets981,874 991,761 
Property, plant and equipment, net160,053 160,218 
Operating lease right-of-use assets35,396 45,338 
Intangible assets55,583 86,574 
Goodwill224,238 255,788 
Long-term restricted cash3,027 9,070 
Other long-term assets39,517 38,475 
Total assets$1,499,688 $1,587,224 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$246,124 $216,404 
Accrued expenses and other current liabilities133,577 147,029 
Accrued compensation and related benefits70,438 88,021 
Short-term debt, net547 533 
Accrued warranty20,758 23,204 
Deferred revenue106,738 137,297 
Total current liabilities578,182 612,488 
Long-term debt, net667,070 476,789 
Long-term accrued warranty18,214 21,106 
Long-term deferred revenue22,592 31,612 
Long-term deferred tax liability1,939 2,364 
Long-term operating lease liabilities47,294 54,326 
Other long-term liabilities50,196 64,768 
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 September 24, 2022
      and December 25, 2021
      Issued and outstanding shares – 218,863 as of September 24, 2022 and
      211,381 as of December 25, 2021
219 211 
Additional paid-in capital1,886,166 2,026,098 
Accumulated other comprehensive loss(39,133)(4,496)
Accumulated deficit(1,733,051)(1,698,042)
Total stockholders' equity114,201 323,771 
Total liabilities and stockholders’ equity$1,499,688 $1,587,224 
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 24,
2022		September 25,
2021		September 24,
2022		September 25,
2021
Revenue:
Product$317,439 $270,818 $869,744 $782,420 
Services73,008 84,996 217,562 242,528 
Total revenue390,447 355,814 1,087,306 1,024,948 
Cost of revenue:
Cost of product210,018 187,956 597,027 525,494 
Cost of services39,765 43,722 116,145 128,428 
Amortization of intangible assets6,227 4,609 18,687 13,839 
Restructuring and other related costs22 1,434 185 1,679 
Total cost of revenue256,032 237,721 732,044 669,440 
Gross profit134,415 118,093 355,262 355,508 
Operating expenses:
Research and development76,156 76,648 228,202 224,111 
Sales and marketing33,919 33,223 105,072 99,777 
General and administrative28,923 28,301 86,963 87,004 
Amortization of intangible assets3,582 4,351 10,995 13,148 
Acquisition and integration costs— — — 614 
Restructuring and other related costs1,142 6,546 9,545 8,191 
Total operating expenses143,722 149,069 440,777 432,845 
Loss from operations(9,307)(30,976)(85,515)(77,337)
Other income (expense), net:
Interest income269 22 426 89 
Interest expense(6,516)(12,622)(18,760)(36,482)
Gain on extinguishment of debt15,521 — 15,521 — 
Other loss(7,105)(4,763)(4,605)(14,439)
Total other income (expense), net2,169 (17,363)(7,418)(50,832)
Loss before income taxes(7,138)(48,339)(92,933)(128,169)
Provision for income taxes4,792 5,455 16,568 9,541 
Net loss$(11,930)$(53,794)$(109,501)$(137,710)
Net loss per common share:
Basic$(0.05)$(0.26)$(0.51)$(0.67)
Diluted$(0.05)$(0.26)$(0.51)$(0.67)
Weighted average shares used in computing net loss per common share:
Basic217,620 209,183 215,104 206,201 
Diluted217,620 209,183 215,104 206,201 
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 24,
2022		September 25,
2021		September 24,
2022		September 25,
2021
Net loss$(11,930)$(53,794)$(109,501)$(137,710)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment(9,673)(2,725)(34,883)(1,078)
Amortization of actuarial loss77 844 246 2,569 
Net change in accumulated other comprehensive income (loss)(9,596)(1,881)(34,637)1,491 
Comprehensive loss$(21,526)$(55,675)$(144,138)$(136,219)
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 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 


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 


Three Months Ended September 25, 2021
 Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Accumulated
Deficit		Total Stockholders' Equity
 SharesAmount
Balance at June 26, 2021208,468 $208 $1,996,091 $(8,526)$(1,611,180)$376,593 
ESPP shared issued977 1 7,153 — — 7,154 
Restricted stock units released879 1 — — — 1 
Shares withheld for tax obligations(147)— (1,326)— — (1,326)
Stock-based compensation— — 13,524 — — 13,524 
Other comprehensive income— — — (1,881)— (1,881)
Net loss— — — — (53,794)(53,794)
Balance at September 25, 2021210,177 $210 $2,015,442 $(10,407)$(1,664,974)$340,271 

6
Nine Months Ended September 25, 2021
 Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Accumulated
Deficit		Total Stockholders' Equity
 SharesAmount
Balance at December 26, 2020201,397 $201 $1,965,245 $(11,898)$(1,527,264)$426,284 
Stock options exercised46 — 332 — — 332 
ESPP shares issued2,272 2 16,164 — — 16,166 
Restricted stock units released6,967 7 — — — 7 
Shares withheld for tax obligations(505)— (4,724)— — (4,724)
Stock-based compensation— — 38,425 — — 38,425 
Other comprehensive income— — — 1,491 — 1,491 
Net loss— — — — (137,710)(137,710)
Balance at September 25, 2021210,177 $210 $2,015,442 $(10,407)$(1,664,974)$340,271 


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 24,
2022		September 25,
2021
Cash Flows from Operating Activities:
Net loss$(109,501)$(137,710)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization64,011 60,233 
Non-cash restructuring charges and other related costs6,098 917 
Amortization of debt discount and issuance costs5,270 24,039 
Operating lease expense7,203 11,792 
Stock-based compensation expense44,418 38,545 
Gain on extinguishment of debt(15,521)— 
Other, net892 3,466 
Changes in assets and liabilities:
Accounts receivable64,833 42,498 
Inventory(45,514)(24,893)
Prepaid expenses and other current assets(36,971)14,973 
Accounts payable37,327 (2,076)
Accrued liabilities and other current liabilities(23,083)19,127 
Deferred revenue(36,458)(24,152)
Net cash (used in) provided by operating activities(36,996)26,759 
Cash Flows from Investing Activities:
Purchase of property and equipment, net(37,750)(32,314)
Net cash used in investing activities(37,750)(32,314)
Cash Flows from Financing Activities:
Proceeds from issuance of 2028 Notes373,750 — 
Repayment of 2024 Notes(280,842)— 
Proceeds from asset-based revolving credit facility80,000 — 
Repayment of asset-based revolving credit facility(80,000)(77,000)
Repayment of third-party manufacturing funding— (24,610)
Repayment of mortgage payable(366)(233)
Payment of debt issuance cost(11,246)— 
Payment of term license obligation(5,413)(5,474)
Principal payments on finance lease obligations(1,054)(1,185)
Proceeds from issuance of common stock15,189 16,497 
Tax withholding paid on behalf of employees for net share settlement(3,346)(4,724)
Net cash provided by (used in) financing activities86,672 (96,729)
Effect of exchange rate changes on cash(4,430)3,301 
Net change in cash, cash equivalents, and restricted cash7,496 (98,983)
Cash, cash equivalents, and restricted cash at beginning of period202,521 315,383 
Cash, cash equivalents, and restricted cash at end of period(1)
$210,017 $216,400 
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net$9,330 $15,901 
8
Cash paid for interest$14,694 $17,171 
Supplemental schedule of non-cash investing and financing activities:
Unpaid debt issuance cost$1,313 $— 
Property and equipment included in accounts payable and accrued liabilities$2,698 $851 
Transfer of inventory to fixed assets$4,805 $4,133 
Unpaid term licenses (included in accounts payable, accrued liabilities and other long-term liabilities)$8,591 $9,858 

(1)     Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
September 24,
2022		September 25,
2021
Cash and cash equivalents$198,044 $203,484 
Short-term restricted cash8,946 2,840 
Long-term restricted cash3,027 10,076 
Total cash, cash equivalents and restricted cash$210,017 $216,400 

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
Basis of Presentation
Infinera Corporation (the “Company”) prepared its interim condensed consolidated financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021, other than the adoption of an accounting pronouncement as described in Note 2, "Recent Accounting Pronouncements".
The Company has made certain estimates, assumptions and judgments that can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Significant estimates, assumptions and judgments made by management include revenue recognition, stock-based compensation, employee benefit and pension plans, inventory valuation, accrued warranty, operating and finance lease liabilities, restructuring and other related costs, loss contingencies, and accounting for income taxes. Other less significant estimates, assumptions and judgments made by management include allowances for sales returns, allowances for credit losses, useful life of intangible assets, and property, plant and equipment. 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 on-going 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 inter-company balances and transactions have been eliminated.
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 25, 2021.
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. For the three- and nine-months ended September 25, 2021, no customer accounted for 10% 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 24, 2022 compared to those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021, with the exception of updates to the policy noted below.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.    
10

2.Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In August 2020, the FASB issued ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity" ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments. On December 26, 2021, the Company adopted ASU 2020-06 using the modified retrospective method. Applying the transition guidance, the Company was required to apply the guidance to all impacted financial instruments that were outstanding as of December 26, 2021 with the cumulative effect recognized as an adjustment to the opening balance of accumulated deficit.

The adoption of ASU 2020-06 required the Company to record a $196.5 million reduction of additional paid in capital, on December 26, 2021, due to the recombination of the equity conversion component of convertible debt remaining outstanding, which was initially separated and recorded in equity. The $122.0 million increase in debt represented the removal of the remaining debt discounts recorded for this previous separation. The Company recognized a $74.5 million cumulative effect decrease of initially applying ASU 2020-06 as an adjustment to the December 26, 2021 opening balance of accumulated deficit. Interest expense recognized in future periods will be reduced as a result of accounting for the convertible senior notes as a liability instrument. Since the Company had a net loss in the three- and nine-months ended September 24, 2022, the convertible senior notes were determined to be anti-dilutive and therefore had no impact to basic or diluted net loss per share for the periods as a result of adopting ASU 2020-06. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.
3.    Leases
The Company has operating leases for real estate (facilities) and automobiles. 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. For the three- and nine-months ended September 25, 2021, operating lease expense was $5.1 million and $17.7 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 $0.3 million and $2.8 million, respectively.
Variable lease cost, short-term lease cost and sublease income were immaterial during the three- and nine-months ended September 24, 2022 and September 25, 2021.
The following table presents operating lease liabilities in both current and long-term (in thousands):
September 24,
2022		December 25,
2021
Accrued expenses and other current liabilities$12,429 $16,542 
Other long-term liabilities47,294 54,326 
Total operating lease liability$59,723 $70,868 
The Company also has finance leases. The lease term for these arrangements range from three to five years with option to purchase, or ownership transferring at the end of the term. As of September 24, 2022 and December 25, 2021, finance leases included in property, plant, and equipment, net in the condensed consolidated balance sheets were $1.9 million and $3.5 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-months ended September 24, 2022 and September 25, 2021 was not material.
The following table presents maturity of lease liabilities under the Company's non-cancelable leases as of September 24, 2022 (in thousands):
11

Operating LeaseFinance Lease
Total lease payments$75,802 $1,181 
Less: interest(1)
16,079 54 
Present value of lease liabilities$59,723 $1,127 
(1)    Calculated using the interest rate for each lease.
The following table presents supplemental information for the Company's non-cancelable leases for the nine-months ended September 24, 2022 (in thousands, except for weighted average and percentage data):
Operating LeaseFinance Lease
Weighted average remaining lease term5.55 years1.25 years
Weighted average discount rate9.21 %6.94 %
Cash paid for amounts included in the measurement of lease liabilities$17,666 $1,054 
Leased assets obtained in exchange for new lease liabilities$5,197 $— 
12

4.    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 24,
2022		September 25,
2021		September 24,
2022		September 25,
2021
United States$222,071 $163,583 $573,786 $496,416 
Other Americas21,496 28,877 75,232 77,985 
Europe, Middle East and Africa94,181 114,815 306,630 323,998 
Asia Pacific52,699 48,539 131,658 126,549 
Total revenue$390,447 $355,814 $1,087,306 $1,024,948 
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 24,
2022		September 25,
2021		September 24,
2022		September 25,
2021
Direct$287,055 $259,349 $821,666 $795,672 
Indirect103,392 96,465 265,640 229,276 
Total revenue$390,447 $355,814 $1,087,306 $1,024,948 
Contract Balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
September 24,
2022		December 25,
2021
Assets (Liabilities)
Accounts receivable, net$284,001 $358,954 
Contract assets$57,124 $49,052 
Deferred revenue$(129,330)$(168,909)
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. Revenue recognized for the three- and nine-months ended September 25, 2021 that was included in the deferred revenue balance at the beginning of the reporting period was $20.1 million and $74.0 million, respectively. Changes in the contract asset and liability balances during the three- and nine-month periods ended September 24, 2022 and September 25, 2021 were not materially impacted by other factors.
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):
13

Remainder of 20222023202420252026ThereafterTotal
Revenue expected to be recognized in the future as of September 24, 2022
$426,197 $386,279 $74,744 $11,973 $5,947 $4,190 $909,330 
5.    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 (collectively referred to as "convertible senior notes" below) 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 23, 2022 (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 24, 2022As of December 25, 2021
 Fair Value Measured UsingFair Value Measured Using
 Level 1Level 2TotalLevel 1Level 2Total
Convertible senior notes$— $640,397 $640,397 $— $765,412 $765,412 
We measure and report our cash equivalents 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 24, 2022As of December 25, 2021
 Fair Value Measured UsingFair Value Measured Using
 Level 1Level 2TotalLevel 1Level 2Total
Money market funds$50,044 $— $50,044 $— $— $— 
During the nine-months ended September 24, 2022, there were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy. As of each of September 24, 2022 and December 25, 2021, 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 24, 2022.    
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 9, “Restructuring and Other Related Costs” to the Notes to Condensed Consolidated Financial Statements), 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. The Company incurred facilities-related charges of $0.3 million and $2.8 million for the three- and nine- months ended September 25, 2021, 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 9, "Restructuring and Other Related Costs" to the Notes to Condensed Consolidated Financial Statements for more information.
14
Cash and Cash Equivalents
As of September 24, 2022 and December 25, 2021, the Company had $210.0 million and $202.5 million of cash, cash equivalents and restricted cash, respectively. Of the total cash, cash equivalents and restricted cash, $89.6 million and $77.6 million was held by its foreign subsidiaries as of September 24, 2022 and December 25, 2021, respectively. 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 United States.
6.    Derivative Instruments
Foreign Currency Exchange Forward Contracts
The Company transacts business in various foreign currencies, has international sales, cost of sales, and expenses denominated in foreign currencies, and carries foreign-currency-denominated account balances, subjecting the Company to foreign currency risk. The Company’s primary foreign currency risk management objective is to protect the U.S. dollar value of future cash flows and minimize the volatility of reported earnings.
Historically, the Company entered into foreign currency exchange forward contracts to manage its exposure to fluctuation in foreign exchange rates that arise from its Euro and British Pound denominated account balances. Gains and losses on these contracts were intended to offset the impact of foreign exchange rate fluctuations on the underlying foreign currency denominated account balances, and therefore did not subject the Company to material balance sheet risk.
The Company had no outstanding foreign currency exchange forward contracts as of September 24, 2022. As of December 25, 2021, the Company had $29.5 million outstanding foreign currency exchange forward contracts. The Company posted collateral of $0.9 million to cover associated potential credit risk exposure as of September 24, 2022 and December 25, 2021. This amount is included in restricted cash on the accompanying condensed consolidated balance sheets.
The Company did not enter into any foreign currency exchange forward contracts during the three-months ended September 24, 2022. For the nine-months ended September 24, 2022, the before-tax effect of the foreign currency exchange forward contracts was a net gain of $0.6 million. For the three-months ended September 25, 2021, the before-tax effect of the foreign currency exchange forward contracts was immaterial. For the nine-months ended September 25, 2021, the before-tax effect of the foreign currency exchange forward contracts was a net gain of $0.8 million. These were included in other loss in the condensed consolidated statements of operations. In each of these periods, the impact of the gross gains and losses was offset by foreign exchange rate fluctuations on the underlying foreign currency denominated amounts.
The fair value of derivative instruments not designated as hedging instruments in the Company’s condensed consolidated balance sheets was as follows (in thousands):
 As of September 24, 2022As of December 25, 2021
 
Gross Notional(1)
Accrued expenses and other current liabilities
Gross
Notional(1)
Accrued expenses and other current liabilities
Foreign currency exchange forward contracts
Related to Euro denominated monetary balances$— $— $21,981 $(139)
Related to British Pound denominated monetary balances