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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 March 26, 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 April 29, 2022, 215,194,919 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 MARCH 26, 2022
INDEX
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
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)
March 26,
2022
December 25,
2021
ASSETS
Current assets:
Cash$191,937 $190,611 
Short-term restricted cash
6,528 2,840 
Accounts receivable, net276,056 358,954 
Inventory291,690 291,367 
Prepaid expenses and other current assets161,188 147,989 
Total current assets927,399 991,761 
Property, plant and equipment, net158,397 160,218 
Operating lease right-of-use assets38,469 45,338 
Intangible assets76,266 86,574 
Goodwill249,534 255,788 
Long-term restricted cash5,563 9,070 
Other long-term assets39,910 38,475 
Total assets$1,495,538 $1,587,224 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$188,460 $216,404 
Accrued expenses and other current liabilities142,903 147,029 
Accrued compensation and related benefits79,850 88,021 
Short-term debt, net495 533 
Accrued warranty21,000 23,204 
Deferred revenue129,796 137,297 
Total current liabilities562,504 612,488 
Long-term debt, net599,474 476,789 
Long-term accrued warranty18,585 21,106 
Long-term deferred revenue29,907 31,612 
Long-term deferred tax liability2,280 2,364 
Long-term operating lease liabilities50,404 54,326 
Other long-term liabilities62,179 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 March 26, 2022
      and December 25, 2021
      Issued and outstanding shares – 213,231 as of March 26, 2022 and
      211,381 as of December 25, 2021
213 211 
Additional paid-in capital1,851,002 2,026,098 
Accumulated other comprehensive loss(15,610)(4,496)
Accumulated deficit(1,665,400)(1,698,042)
Total stockholders' equity170,205 323,771 
Total liabilities and stockholders’ equity$1,495,538 $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 Ended
 March 26,
2022
March 27,
2021
Revenue:
Product$267,453 $254,161 
Services71,421 76,746 
Total revenue338,874 330,907 
Cost of revenue:
Cost of product182,887 165,485 
Cost of services37,959 43,260 
Amortization of intangible assets6,231 4,616 
Restructuring and other related costs150 514 
Total cost of revenue227,227 213,875 
Gross profit111,647 117,032 
Operating expenses:
Research and development73,411 73,529 
Sales and marketing35,824 32,772 
General and administrative27,890 26,506 
Amortization of intangible assets3,746 4,405 
Acquisition and integration costs 614 
Restructuring and other related costs7,270 2,319 
Total operating expenses148,141 140,145 
Loss from operations(36,494)(23,113)
Other income (expense), net:
Interest income53 40 
Interest expense(4,992)(11,843)
Other gain (loss), net6,020 (12,395)
Total other income (expense), net1,081 (24,198)
Loss before income taxes(35,413)(47,311)
Provision for income taxes6,437 1,011 
Net loss$(41,850)$(48,322)
Net loss per common share:
Basic$(0.20)$(0.24)
Diluted$(0.20)$(0.24)
Weighted average shares used in computing net loss per common share:
Basic212,182 202,638 
Diluted212,182 202,638 
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 Ended
 March 26,
2022
March 27,
2021
Net loss$(41,850)$(48,322)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment(11,201)(3,833)
Amortization of actuarial loss87 861 
Net change in accumulated other comprehensive income (loss)(11,114)(2,972)
Comprehensive loss$(52,964)$(51,294)
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 March 26, 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 issued1,234 1 8,880 — — 8,881 
Restricted stock units released675 1 — — — 1 
Shares withheld for tax obligations(59)— (524)— — (524)
Stock-based compensation— — 13,041 — — 13,041 
Other comprehensive loss— — — (11,114)— (11,114)
Net loss— — — — (41,850)(41,850)
Balance at March 26, 2022213,231 $213 $1,851,002 $(15,610)$(1,665,400)$170,205 


Three Months Ended March 27, 2021
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (loss)
Accumulated
Deficit
Total Stockholders' Equity
 SharesAmount
Balance at December 26, 2020201,397 $201 $1,965,245 $(11,898)$(1,527,264)$426,284 
Shares of common stock sold in at-the-market equity offering, net of issuance costs46 — 332 — — 332 
ESPP shared issued1,294 2 9,011 — — 9,013 
Restricted stock units released2,269 2 — — — 2 
Shares withheld for tax obligations(194)— (1,938)— — (1,938)
Stock-based compensation— — 10,949 — — 10,949 
Other comprehensive income— — — (2,972)— (2,972)
Net loss— — — — (48,322)(48,322)
Balance at March 27, 2021204,812 $205 $1,983,599 $(14,870)$(1,575,586)$393,348 



The accompanying notes are an integral part of these condensed consolidated financial statements.
6

INFINERA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months Ended
 March 26,
2022
March 27,
2021
Cash Flows from Operating Activities:
Net loss$(41,850)$(48,322)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization21,572 20,546 
Non-cash restructuring charges and other related costs5,390 1,410 
Amortization of debt discount and issuance costs1,060 7,822 
Operating lease expense2,702 5,228 
Stock-based compensation expense12,939 10,974 
Other, net789 2,065 
Changes in assets and liabilities:
Accounts receivable81,816 38,671 
Inventory(1,979)4,059 
Prepaid expenses and other current assets(23,481)20,669 
Accounts payable(19,829)(23,584)
Accrued liabilities and other current liabilities(14,351)(11,964)
Deferred revenue(8,990)(8,944)
Net cash provided by operating activities15,788 18,630 
Cash Flows from Investing Activities:
Purchase of property and equipment, net(16,059)(11,721)
Net cash used in investing activities(16,059)(11,721)
Cash Flows from Financing Activities:
Repayment of revolving line of credit (77,000)
Repayment of mortgage payable(121)(22)
Payment of term license obligation(1,418)(2,544)
Principal payments on finance lease obligations(400)(309)
Proceeds from issuance of common stock8,875 9,344 
Tax withholding paid on behalf of employees for net share settlement(524)(1,938)
Net cash provided by (used in) financing activities6,412 (72,469)
Effect of exchange rate changes on cash(4,634)(278)
Net change in cash1,507 (65,838)
Cash and restricted cash at beginning of period202,521 315,383 
Cash and restricted cash at end of period(1)
$204,028 $249,545 
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net$1,967 $4,355 
Cash paid for interest$7,137 $7,654 
Supplemental schedule of non-cash investing and financing activities:
Property and equipment included in accounts payable and accrued liabilities$1,477 $255 
Transfer of inventory to fixed assets$2,037 $1,041 
Unpaid term licenses (included in accounts payable, accrued liabilities and other long-term liabilities)$9,290 $10,533 

7

(1)     Reconciliation of cash and restricted cash to the condensed consolidated balance sheets:
March 26,
2022
March 27,
2021
Cash$191,937 $234,029 
Short-term restricted cash6,528 3,288 
Long-term restricted cash5,563 12,228 
Total cash and restricted cash$204,028 $249,545 

The accompanying notes are an integral part of these condensed consolidated financial statements.
8

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 the outbreak of novel strains of the coronavirus (“COVID-19”). 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 March 26, 2022, no customer accounted for 10% or more of the Company's total revenue. For the three-months ended March 27, 2021, one 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 three-months ended March 26, 2022 compared to those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021.
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.

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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 for the three-months ended March 26, 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.
Accounting Pronouncements Not Yet Effective
In March 2020, the FASB issued ASU 2020-04 (Topic 848), "Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides temporary optional expedients and exceptions to the existing guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. The update was effective upon issuance and may generally be applied through December 31, 2022 to any new or amended contracts, hedging relationships, and other transactions that reference LIBOR. The Company will apply the amendments when its relevant contracts are modified upon transition to alternative reference rates.
3.    Leases
The Company has operating leases for real estate (facilities) and automobiles. For the three-months ended March 26, 2022 and March 27, 2021, operating lease expense was $9.3 million and $7.3 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 $5.6 million and $2.0 million, for the three-months ended March 26, 2022 and March 27, 2021, respectively. Variable lease cost, short-term lease cost and sublease income were immaterial during the three-months ended March 26, 2022 and March 27, 2021.
The following table presents operating lease liabilities in both current and long-term (in thousands):
March 26,
2022
December 25,
2021
Accrued expenses and other current liabilities$14,846 $16,542 
Other long-term liabilities50,404 54,326 
Total operating lease liability$65,250 $70,868 
The Company also has finance leases. The lease term for these arrangements range from three to five years with option to purchase at the end of the term. As of March 26, 2022 and December 25, 2021, finance leases included in property, plant, and equipment, net in the condensed consolidated balance sheets were $5.4 million and $5.5 million, respectively.
The following table presents finance lease expense comprising of amortization of right of use asset and interest expense (in thousands):
Three Months Ended
March 26,
2022
March 27,
2021
Amortization of right of use asset$240 $226 
Interest expense32 51 
Total finance lease expense$272 $277 
The following table presents balance sheet detail of finance lease liability (in thousands):
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March 26,
2022
December 25,
2021
Accrued expenses and other current liabilities$1,075 $1,291 
Other long-term liabilities735 954 
Total finance lease liability$1,810 $2,245 
The following table presents maturity of lease liabilities under the Company's non-cancelable leases as of March 26, 2022 (in thousands):
Operating LeaseFinance Lease
Total lease payments$83,479 $1,910 
Less: interest(1)
18,229 100 
Present value of lease liabilities$65,250 $1,810 
(1) Calculated using the interest rate for each lease.
The following table presents supplemental information for the Company's non-cancelable leases for the three-months ended March 26, 2022 (in thousands, except for weighted average and percentage data):
Operating LeaseFinance Lease
Weighted average remaining lease term5.85 years1.52 years
Weighted average discount rate9.20 %7.01 %
Cash paid for amounts included in the measurement of lease liabilities$7,900 $400 
Leased assets obtained in exchange for new lease liabilities$883 $ 
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4. Revenue Recognition
Capitalization of Costs to Obtain a Contract
The ending balances of the Company's capitalized costs to obtain a contract as of March 26, 2022 and December 25, 2021 were not material.
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 Ended
March 26,
2022
March 27,
2021
United States$170,185 $157,649 
Other Americas20,911 19,531 
Europe, Middle East and Africa108,611 114,908 
Asia Pacific39,167 38,819 
Total revenue$338,874 $330,907 
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 Ended
March 26,
2022
March 27,
2021
Direct$260,892 $271,301 
Indirect77,982 59,606 
Total revenue$338,874 $330,907 
Contract Balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
March 26,
2022
December 25,
2021
Assets (Liabilities)
Accounts receivable, net$276,056 $358,954 
Contract assets$58,612 $49,052 
Deferred revenue$(159,703)$(168,909)
Revenue recognized for the three-months ended March 26, 2022 that was included in the deferred revenue balance at the beginning of the reporting period was $44.9 million. Revenue recognized for the three-months ended March 27, 2021 that was included in the deferred revenue balance at the beginning of the reporting period was $31.3 million. Changes in the contract asset and liability balances during the three-month periods ended March 26, 2022 and March 27, 2021 were not materially impacted by other factors.
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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 20222023202420252026ThereafterTotal
Revenue expected to be recognized in the future as of March 26, 2022
$661,174 $119,111 $26,998 $7,052 $3,673 $3,522 $821,530 
5.    Fair Value Measurements
The following tables represent the Company’s fair value hierarchy for its assets and liabilities measured at fair value on a recurring basis (in thousands): 
 As of March 26, 2022As of December 25, 2021
 Fair Value Measured UsingFair Value Measured Using
 Level 1Level 2TotalLevel 1Level 2Total
Assets (Liabilities)
Foreign currency exchange forward contracts$ $(2)$(2)$ $(221)$(221)
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 and 2027 Notes (collectively referred to as "convertible senior notes" below) approximate their fair values. The fair value of convertible senior notes were determined based on the quoted bid price of the convertible senior notes in an over-the-counter market on March 25, 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 March 26, 2022As of December 25, 2021
 Fair Value Measured UsingFair Value Measured Using
 Level 1Level 2TotalLevel 1Level 2Total
Convertible Senior Notes$ $720,392 $720,392 $ $765,412 $765,412 
During the three-months ended March 26, 2022, there were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy. As of each of March 26, 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 March 26, 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.
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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 $5.6 million and $2.0 million for the three-months ended March 26, 2022 and March 27, 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.
Cash
As of March 26, 2022, the Company had $204.0 million of cash and restricted cash, including $75.3 million of cash held by its foreign subsidiaries.
As of December 25, 2021, the Company had $202.5 million of cash and restricted cash, including $77.6 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 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. The Company utilizes foreign currency forward contracts, which are primarily short term in nature.
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.
As of March 26, 2022 and December 25, 2021, the Company posted collateral of $0.9 million for both periods, on its derivative instruments to cover potential credit risk exposure. This amount is classified as other long-term restricted cash on the accompanying condensed consolidated balance sheets.
For both the three-months ended March 26, 2022 and March 27, 2021, the before-tax effect of the foreign currency exchange forward contracts was a net gain of $0.3 million, included in other gain (loss), net 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.
As of March 26, 2022, the Company did not designate foreign currency exchange forward contracts as hedges for accounting purposes. Accordingly, changes in the fair value are recorded in the accompanying condensed consolidated statements of operations. These contracts were entered into with one institution with high credit quality and the Company consistently monitors the creditworthiness of the counterparties.
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The fair value of derivative instruments not designated as hedging instruments in the Company’s condensed consolidated balance sheets was as follows (in thousands):
 As of March 26, 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 balances7,383 (2)7,566 (82)
$7,383 $(2)$29,547 $(221)
(1)Represents the face amounts of forward contracts that were outstanding as of the end of the period noted.
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-months ended March 26, 2022 and March 27, 2021, the Company's recognized factoring related interest expense was approximately $0.1 million. For the three-months ended March 26, 2022 and March 27, 2021, the Company's gross amount of trade accounts receivables sold were approximately $24.0 million and $31.0 million, respectively.
7.    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 three-months ended March 26, 2022 (in thousands):
Balance as of December 25, 2021
$255,788 
Foreign currency translation adjustments(6,254)
Balance as of March 26, 2022
$249,534 
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 March 26, 2022 and December 25, 2021 (in thousands, except for weighted average data):
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 March 26, 2022
 Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:
Customer relationships and backlog155,863 (107,139)48,724 4.0
Developed technology179,497 (151,955)27,542 1.3
Total intangible assets with finite lives$335,360 $(259,094)$76,266 

 December 25, 2021
 Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:
Customer relationships and backlog157,495 (104,701)52,794 4.2
Developed technology182,844 (149,064)33,780 1.5
Total intangible assets with finite lives$340,339 $(253,765)$86,574 
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 $10.0 million and $9.0 million for the three-month periods ended March 26, 2022 and March 27, 2021, 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 March 26, 2022 (in thousands):
 Fiscal Years
 TotalRemainder of 20222023202420252026Thereafter
Total future amortization expense$76,266 $28,118 $23,329 $9,025 $9,025 $6,769 $ 
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8.    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 three-months ended March 26, 2022 (in thousands):
Balance as of December 25, 2021
$1,304 
Additions(1)
755 
Write offs(2)
(182)
Other(3)
(23)
Balance as of March 26, 2022
$1,854 
(1)The new additions during the three-months ended March 26, 2022 are primarily due to specific reserves.
(2)The write offs during the three-months ended March 26, 2022 are primarily amounts fully reserved previously.
(3)Primarily represents foreign currency translation adjustments.    
Selected Balance Sheet Items
The following table provides details of selected balance sheet items (in thousands):
March 26,
2022
December 25,
2021
Inventory
Raw materials$41,225 $39,379 
Work in process55,356 53,924 
Finished goods
195,109 198,064 
Total inventory$291,690 $291,367 
Property, plant and equipment, net
Computer hardware$46,233 $45,824 
Computer software(1)
52,962 56,820 
Laboratory and manufacturing equipment283,357 287,875 
Land and building12,369 12,369 
Furniture and fixtures2,603 2,164 
Leasehold and building improvements51,053 51,471 
Construction in progress30,097 18,807 
Subtotal478,674 475,330 
Less accumulated depreciation and amortization(2)
(320,277)(315,112)
Total property, plant and equipment, net$158,397 $160,218 
Accrued expenses and other current liabilities
Loss contingency related to non-cancelable purchase commitments$30,555 $26,481 
Taxes payable48,498 43,308 
Short-term operating and finance lease liability15,921 17,792 
Restructuring accrual6,776 8,610 
Other accrued expenses and other current liabilities41,153 50,838 
Total accrued expenses$142,903 $147,029 

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(1)Included in computer software at March 26, 2022 and December 25, 2021 were $26.3 million and $25.9 million, respectively, related to enterprise resource planning (“ERP”) systems that the Company implemented. The unamortized ERP costs at March 26, 2022 and December 25, 2021 were $8.2 million and $8.9 million, respectively. Also included in computer software at March 26, 2022 and December 25, 2021 was $18.1 million and $20.9 million, respectively, related to term licenses. The unamortized term license costs at March 26, 2022 and December 25, 2021 was $8.8 million and $9.2 million, respectively.
(2)Depreciation expense was $11.6 million and $11.5 million (which includes depreciation of capitalized ERP cost of $0.8 million and $0.6 million, respectively) for the three-months ended March 26, 2022 and March 27, 2021, respectively. Also included in depreciation expense for three-months ended March 26, 2022 and March 27, 2021 was $1.7 million and $1.6 million, respectively, related to term licenses.
9.    Restructuring and Other Related Costs
In December 2018, the Company implemented a restructuring initiative (the “2018 Restructuring Plan”) as part of a comprehensive review of the Company's operations and ongoing integration activities in order to optimize resources for future growth, improve efficiencies and address redundancies following the Acquisition. As part of the 2018 Restructuring Plan, the Company made several changes to improve its research and development efficiency by consolidating its manufacturing and development sites, including closure of its Berlin, Germany site, reducing headcount at its Munich, Germany site, and processing changes to leverage the Company's engineering and product line development resources across regions and prioritizing research and development initiatives. The Berlin and Munich initiatives were substantially completed in 2020. In 2021 and in the three-months ended March 26, 2022, the Company incurred lease-related impairment charges from consolidation of its Munich site resulting in partial abandonment of the leased facility. In connection with the acquisition of Telecom Holding Parent LLC (“Coriant”, the Acquisition), the Company assumed restructuring liabilities associated with Coriant's previous restructuring and reorganization plans consisting of termination benefits primarily comprised of severance payments. These costs are recorded at estimated fair value.
During 2020, the Company implemented a new restructuring initiative (the "2020 Restructuring Plan") that was primarily intended to reduce costs and consolidate its operations. The identified cost reduction initiatives under the 2020 Restructuring Plan were completed in fiscal year 2021.
In 2021, the Company announced a plan to restructure certain international research & development operations (the "2021 Restructuring Plan"). The Company estimates it will incur total costs related to the restructuring ranging from $15.0 million to $17.0 million, of which $5.5 million was recorded in the three-months ended March 26, 2022. The 2021 Restructuring Plan is expected to be substantially completed with the associated payments made in 2022. Additional restructuring activities may occur in the future in connection with the Company’s ongoing transformation initiatives.
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 2021 Restructuring Plan (in thousands):
 Three Months Ended
 March 26, 2022March 27, 2021
Cost of
Revenue
Operating ExpensesCost of
Revenue
Operating Expenses
Severance and other related expenses$140 $1,461 $514 $272 
Lease related impairment charges 5,592  1,950 
Asset impairment 84  51 
Others10 133  46 
Total$150 $7,270 $514 $2,319 
Restructuring liabilities are reported within accrued expenses, operating lease liabilities and other long-term liabilities in the accompanying condensed consolidated balance sheets (in thousands):
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Severance and other related expensesLease related impairment chargesAsset impairmentOthersTotal
Balance at December 25, 2021$7,536 $ $ $1,346 $8,882 
Charges1,601 5,592 84 143 7,420 
Cash Payments(3,558)(459)  (4,017)
Non-Cash Settlements and Other(159)(5,133)(84)(14)(5,390)
Balance at March 26, 2022$5,420 $ $ $1,475 $6,895 
As of March 26, 2022, the Company's restructuring liability was primarily comprised of $6.0 million related to the 2021 Restructuring Plan and $0.9 million related to assumed restructuring liabilities associated with Coriant's previous restructuring and reorganization plans, which was substantially completed in previous years. The liability related to the 2021 Restructuring Plan is expected to be paid by end of 2022.
10.    Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss includes certain changes in equity that are excluded from net loss. The following table sets forth the changes in accumulated other comprehensive loss by component for the three-months ended March 26, 2022 (in thousands): 
Foreign Currency Translation Actuarial Gain (Loss) on PensionAccumulated Tax EffectTotal
Balance at December 25, 2021$(7,829)$4,297 $(964)