Infinera Corp [INFN] Filings

10-Q 1 infn-20240629.htm 10-Q infn-20240629

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 June 29, 2024


☐			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)


Delaware						77-0560433
(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 class

Trading Symbol(s)

Name of exchange on which registered

Common stock, par value $0.001 per share

INFN

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 July 26, 2024, 235,663,546 shares of the registrant’s Common Stock, $0.001 par value, were issued and outstanding.

Table of Contents

INFINERA CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE FISCAL QUARTER ENDED JUNE 29, 2024

INDEX


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets - As of June 29, 2024 and December 30, 2023	3

	Condensed Consolidated Statements of Operations - Three and Six Months ended June 29, 2024 and July 1, 2023	4

	Condensed Consolidated Statements of Comprehensive Loss - Three and Six Months ended June 29, 2024 and July 1, 2023	5

	Condensed Consolidated Statements of Stockholders' Equity - Three and Six Months ended June 29, 2024 and July 1, 2023	6

	Condensed Consolidated Statements of Cash Flows - Three and Six Months ended June 29, 2024 and July 1, 2023	8

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42

Item 4.	Controls and Procedures	43

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	46

Item 5.	Other Information	80
Item 6.	Exhibits	81

	Signature Page	82

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Condensed Consolidated Financial Statements (Unaudited)

INFINERA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par values)

(Unaudited)


	June 29, 2024		December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	114,670	$	172,505
Short-term restricted cash	333		517
Accounts receivable, net	284,382		381,981
Inventory	384,258		431,163
Prepaid expenses and other current assets	167,144		129,218
Total current assets	950,787		1,115,384
Property, plant and equipment, net	220,163		206,997
Operating lease right-of-use assets	38,836		39,973
Intangible assets, net	20,306		24,819
Goodwill	230,688		240,566
Long-term restricted cash	649		837
Other long-term assets	57,406		50,662
Total assets	$	1,518,835	$	1,679,238
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	237,904	$	299,005
Accrued expenses and other current liabilities	131,572		110,758
Accrued compensation and related benefits	53,837		85,203
Short-term debt, net	25,273		25,512
Accrued warranty	14,937		17,266
Deferred revenue	140,926		136,248
Total current liabilities	604,449		673,992
Long-term debt, net	660,420		658,756

Long-term accrued warranty	14,521		15,934
Long-term deferred revenue	21,985		21,332
Long-term deferred tax liability	1,694		1,805
Long-term operating lease liabilities	44,795		47,464
Other long-term liabilities	39,383		43,364
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 June 29, 2024 and December 30, 2023 Issued and outstanding shares – 235,135 as of June 29, 2024 and 230,994 as of December 30, 2023	235		231
Additional paid-in capital	1,998,670		1,976,014
Accumulated other comprehensive loss	(32,829)		(34,848)
Accumulated deficit	(1,834,488)		(1,724,806)
Total stockholders' equity	131,588		216,591
Total liabilities and stockholders’ equity	$	1,518,835	$	1,679,238

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

Table of Contents

INFINERA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Revenue:
Product	$	266,470	$	299,624	$	501,794	$	614,444
Services	76,269		76,604		147,867		153,859
Total revenue	342,739		376,228		649,661		768,303
Cost of revenue:
Cost of product	167,290		188,166		323,555		386,840
Cost of services	39,152		41,733		79,395		84,680
Amortization of intangible assets	—		3,537		—		7,093

Restructuring and other related costs	703		—		676		—
Total cost of revenue	207,145		233,436		403,626		478,613
Gross profit	135,594		142,792		246,035		289,690
Operating expenses:
Research and development	74,678		79,346		151,940		160,388
Sales and marketing	41,897		41,624		82,642		83,331
General and administrative	34,107		31,159		66,954		60,394
Amortization of intangible assets	2,256		3,523		4,512		7,112
Merger-related charges(1)	8,517		—		8,517		—
Restructuring and other related costs	3,948		1,431		4,262		2,221
Total operating expenses	165,403		157,083		318,827		313,446
Loss from operations	(29,809)		(14,291)		(72,792)		(23,756)
Other (expense) income, net:
Interest income	793		717		1,915		1,188
Interest expense	(8,163)		(7,387)		(16,792)		(14,187)

Other (loss) gain, net	(11,183)		7,170		(17,395)		18,126
Total other (expense) income, net	(18,553)		500		(32,272)		5,127
Loss before income taxes	(48,362)		(13,791)		(105,064)		(18,629)
(Benefit from) provision for income taxes	(75)		6,472		4,618		10,044
Net loss	$	(48,287)	$	(20,263)	$	(109,682)	$	(28,673)
Net loss per common share:
Basic	$	(0.21)	$	(0.09)	$	(0.47)	$	(0.13)
Diluted	$	(0.21)	$	(0.09)	$	(0.47)	$	(0.13)
Weighted average shares used in computing net loss per common share:
Basic	234,349		225,922		232,941		224,159
Diluted	234,349		225,922		232,941		224,159

(1) Represents charges incurred directly in connection with the pending merger with Nokia. See Note 1, Basis of Presentation and Significant Accounting Policies, for further information.

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

Table of Contents

INFINERA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net loss	$	(48,287)	$	(20,263)	$	(109,682)	$	(28,673)
Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment	10,306		(16,973)		2,238		(24,144)
Actuarial loss on pension liabilities	—		—		—		(447)
Amortization of actuarial (gain) loss	(109)		740		(219)		(197)
Net change in accumulated other comprehensive income (loss)	10,197		(16,233)		2,019		(24,788)
Comprehensive loss	$	(38,090)	$	(36,496)	$	(107,663)	$	(53,461)

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

Table of Contents

INFINERA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Three Months Ended June 29, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at March 30, 2024	231,962	$	232	$	1,990,537	$	(43,026)	$	(1,786,201)	$	161,542




Restricted stock units released	3,429	3		—		—		—		3
Shares withheld for tax obligations	(256)	—		(1,397)		—		—		(1,397)
Stock-based compensation	—	—		9,530		—		—		9,530
Other comprehensive loss	—	—		—		10,197		—		10,197
Net loss	—	—		—		—		(48,287)		(48,287)
Balance at June 29, 2024	235,135	$	235	$	1,998,670	$	(32,829)	$	(1,834,488)	$	131,588


	Six Months Ended June 29, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 30, 2023	230,994	$	231	$	1,976,014	$	(34,848)	$	(1,724,806)	$	216,591




Restricted stock units released	4,438	4		—		—		—		4
Shares withheld for tax obligations	(297)	—		(1,599)		—		—		(1,599)
Stock-based compensation	—	—		24,255		—		—		24,255
Other comprehensive loss	—	—		—		2,019		—		2,019
Net loss	—	—		—		—		(109,682)		(109,682)
Balance at June 29, 2024	235,135	$	235	$	1,998,670	$	(32,829)	$	(1,834,488)	$	131,588


	Three Months Ended July 1, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at April 1, 2023	224,832	$	225	$	1,925,060	$	(31,026)	$	(1,708,003)	$	186,256




Restricted stock units released	1,744	1		—		—		—		1
Shares withheld for tax obligations	(88)	—		(567)		—		—		(567)
Stock-based compensation	—	—		17,984		—		—		17,984
Other comprehensive loss	—	—		—		(16,233)		—		(16,233)
Net loss	—	—		—		—		(20,263)		(20,263)
Balance at July 1, 2023	226,488	$	226	$	1,942,477	$	(47,259)	$	(1,728,266)	$	167,178

Table of Contents


	Six Months Ended July 1, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2022	220,408	$	220	$	1,901,491	$	(22,471)	$	(1,699,593)	$	179,647



ESPP shares issued	1,775	2		8,734		—		—		8,736
Restricted stock units released	4,545	4		—		—		—		4
Shares withheld for tax obligations	(240)	—		(1,668)		—		—		(1,668)
Stock-based compensation	—	—		33,920		—		—		33,920
Other comprehensive loss	—	—		—		(24,788)		—		(24,788)
Net loss	—	—		—		—		(28,673)		(28,673)
Balance at July 1, 2023	226,488	$	226	$	1,942,477	$	(47,259)	$	(1,728,266)	$	167,178

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

Table of Contents

INFINERA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 29, 2024		July 1, 2023
Cash Flows from Operating Activities:
Net loss	$	(109,682)	$	(28,673)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	30,986		39,401
Non-cash restructuring charges and other related costs	52		1,155
Amortization of debt issuance costs and discount	1,825		2,108
Operating lease expense	4,506		4,279
Stock-based compensation expense	24,332		33,649

Other, net	(174)		(682)
Changes in assets and liabilities:
Accounts receivable	94,764		94,216
Inventory	46,148		(53,162)
Prepaid expenses and other current assets	(52,618)		11,377
Accounts payable	(78,074)		(28,023)
Accrued expenses and other current liabilities	(4,634)		(50,699)
Deferred revenue	6,641		(25,295)
Net cash used in operating activities	(35,928)		(349)
Cash Flows from Investing Activities:




Purchase of property and equipment	(22,658)		(27,582)
Net cash used in investing activities	(22,658)		(27,582)
Cash Flows from Financing Activities:
Proceeds from issuance of 2028 Notes, net of discount	—		98,751
Repayment of 2024 Notes	—		(83,446)
Payment of debt issuance cost	—		(2,030)
Proceeds from asset-based revolving credit facility	25,000		—
Repayment of asset-based revolving credit facility	(25,000)		—

Repayment of mortgage payable	(240)		(253)
Principal payments on finance lease obligations	(372)		(471)
Payment of term license obligation	(5,148)		(5,505)
Proceeds from issuance of common stock	4		8,738
Tax withholding paid on behalf of employees for net share settlement	(1,599)		(1,668)
Net cash (used in) provided by financing activities	(7,355)		14,116
Effect of exchange rate changes on cash	7,734		(8,629)
Net change in cash, cash equivalents and restricted cash	(58,207)		(22,444)
Cash, cash equivalents and restricted cash at beginning of period	173,859		189,203
Cash, cash equivalents and restricted cash at end of period(1)	$	115,652	$	166,759

Table of Contents


	Six Months Ended
	June 29, 2024		July 1, 2023
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net	$	13,360	$	8,983
Cash paid for interest	$	13,237	$	11,076
Supplemental schedule of non-cash investing and financing activities:
Unpaid debt issuance cost	$	—	$	375
Property and equipment included in accounts payable and accrued liabilities	$	26,888	$	16,068

Unpaid term licenses (included in accounts payable, accrued liabilities and other long-term liabilities)	$	18,832	$	10,276

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


	June 29, 2024		July 1, 2023

Cash and cash equivalents	$	114,670	$	163,007
Short-term restricted cash	333		2,449
Long-term restricted cash	649		1,303
Total cash, cash equivalents and restricted cash	$	115,652	$	166,759

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

Table of Contents

INFINERA CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.Basis of Presentation and Significant Accounting Policies

Infinera Corporation ("Infinera" or the “Company”) prepared its interim condensed consolidated financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

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, and disruption in the global economy and financial markets. 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 30, 2023.

For both the three- and six-months ended June 29, 2024, no end-customer accounted for 10% or more of the Company's total revenue. For the three-months ended July 1, 2023, one end-customer accounted for 13% of the Company's total revenue and for the six-months ended July 1, 2023, no end-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 six-months ended June 29, 2024 compared to those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Nokia Merger Agreement

On June 27, 2024, Infinera, Nokia Corporation, a company incorporated under the laws of the Republic of Finland (“Nokia”) and Neptune of America Corporation, a Delaware corporation and wholly owned subsidiary of Nokia (“Merger Sub”) entered into an Agreement and Plan of Merger (as it may be amended, modified or waived from time to time, the “Merger Agreement”) that provides for Merger Sub to merge with and into Infinera (the “Merger”), with Infinera surviving the Merger as a wholly owned subsidiary of Nokia.

Upon and subject to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Common Stock that is issued and outstanding as of immediately prior to the Effective Time will be automatically canceled, extinguished and converted into, at the election of the holder, the right to receive the following consideration, subject to proration in accordance with the Merger Agreement:

•cash in an amount equal to $6.65, without interest thereon (such consideration, the "Cash Consideration");

•a number of ordinary shares, with no nominal value and in book-entry form, of Nokia ("Nokia Shares") based on an exchange ratio of 1.7896 Nokia Shares for each share of Common Stock (the "Share Consideration"); or

•cash in an amount equal to $4.66, without interest, and a number of Nokia Shares based on an exchange ratio of 0.5355 for each share of Common Stock (the "Mixed Consideration").

In each case, the Nokia Shares will be delivered in the form of American Depositary Shares (the “Nokia ADSs”), with each Nokia ADS representing the right to one Nokia Share. The election right for holders of Common Stock with respect to the Mixed Consideration and the Share Consideration will be subject to proration pursuant to the terms of the Merger Agreement.

Completion of the Merger is subject to customary conditions, including but not limited to the adoption of the Merger Agreement by the Company’s stockholders; the satisfaction of certain domestic and foreign regulatory approvals, filings and authorizations, including antitrust clearance in the United States, antitrust approval by the European Commission, antitrust approval in the United Kingdom and antitrust approvals in other non-U.S. jurisdictions, and in connection with certain foreign investment laws in the U.S. and other specified locations, including filings with CFIUS and foreign investment authorities in certain non-U.S. jurisdictions; the absence of a law or order preventing, materially enjoining, materially restraining or materially impairing the consummation of the Merger; and performance by the parties in all material respects of all their obligations under the Merger Agreement.

The Merger Agreement includes certain customary termination rights for the Company and Nokia. Upon termination of the Merger Agreement in certain circumstances, the Company may be required to pay Nokia a termination fee of $65.0 million, and Nokia may be required to pay the Company a termination fee of $130.0 million.

The Merger is expected to close in the first half of 2025.

The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is filed as Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on June 28, 2024.

Other than transaction expenses associated with the proposed Merger of $8.5 million recorded in operating expense in the accompanying condensed consolidated statements of operations for the quarter ended June 29, 2024, the terms of the Merger Agreement did not impact the Company’s condensed consolidated financial statements for the quarter ended June 29, 2024.

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.

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 six-months ended June 29, 2024, operating lease expense was $3.7 million and $7.4 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 $0.7 million, for the three- and six-months ended June 29, 2024, respectively.

For the three- and six-months ended July 1, 2023, operating lease expense was $4.4 million and $8.2 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 $1.4 million and $2.2 million, for the three- and six-months ended July 1, 2023, respectively.

Variable lease cost, short-term lease cost and sublease income were immaterial during the three- and six-month periods ended June 29, 2024 and July 1, 2023.

The following table presents current and long-term portion of operating lease liabilities as classified in the condensed consolidated balance sheets (in thousands):


	June 29, 2024		December 30, 2023
Accrued expenses and other current liabilities	$	12,219	$	11,888
Other long-term liabilities	44,795		47,464
Total operating lease liability	$	57,014	$	59,352

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 June 29, 2024 and December 30, 2023, finance leases included in property, plant, and equipment, net in the condensed consolidated balance sheets were $3.6 million and $4.5 million, respectively. Finance lease expense includes amortization of the right-of-use assets and interest expense. Total finance lease expense during the three- and six-month periods ended June 29, 2024 and July 1, 2023 was not material.

The following table presents maturity of lease liabilities under the Company's non-cancelable leases as of June 29, 2024 (in thousands):


	Operating Lease		Finance Lease
Total lease payments	$	107,122	$	4,831
Less: interest(1)	50,108		525
Present value of lease liabilities	$	57,014	$	4,306

(1) Calculated using the interest rate for each lease.

The following table presents supplemental information for the Company's non-cancelable leases for the six-months ended June 29, 2024 (in thousands, except for lease term, discount rate and percentage data):


	Operating Lease			Finance Lease
Weighted average remaining lease term	15.1 years			3.8 years
Weighted average discount rate	10.64		%	10.00		%
Cash paid for amounts included in the measurement of lease liabilities	$	8,416		$	372
Leased assets obtained in exchange for new lease liabilities	$	3,923		$	—

3.Revenue Recognition

Disaggregation of Revenue

The following table presents the Company's revenue disaggregated by geography, based on the shipping address of the end-customer (in thousands):


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
United States	$	200,478	$	217,114	$	365,196	$	454,149
Other Americas	28,316		23,157		48,086		43,712
Europe, Middle East and Africa	84,197		85,643		179,912		178,893
Asia Pacific	29,748		50,314		56,467		91,549
Total revenue	$	342,739	$	376,228	$	649,661	$	768,303

The Company sells its products directly to customers and to channel partners.

The following table presents the Company's revenue disaggregated by sales channel (in thousands):


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Direct	$	211,030	$	237,584	$	425,373	$	500,446
Indirect	131,709		138,644		224,288		267,857
Total revenue	$	342,739	$	376,228	$	649,661	$	768,303

Contract Balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):


	June 29, 2024		December 30, 2023
Assets (Liabilities)
Accounts receivable, net	$	284,382	$	381,981
Contract assets	$	73,970	$	46,738
Contract liabilities(1)	$	(22,145)	$	(3,313)
Deferred revenue(2)	$	(162,911)	$	(157,580)

(1) Included in this balance are deposits, customer advances and variable rebates and incentives.

(2) Included in this balance are amounts related to services that are subject to cancellation and pro-rated refund rights of $63.8 million and $85.9 million as of June 29, 2024 and December 30, 2023, respectively.

Revenue recognized for the three- and six-months ended June 29, 2024 that was included in the deferred revenue balance at the beginning of the reporting period was $41.1 million and $93.2 million, respectively. Revenue recognized for the three- and six-months ended July 1, 2023 that was included in the deferred revenue balance at the beginning of the reporting period was $44.4 million and $95.3 million, respectively. Changes in the contract asset and liability balances during the three- and six-month periods ended June 29, 2024 and July 1, 2023 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 non-cancellable 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 2024		2025		2026		2027		2028		Thereafter		Total
Revenue expected to be recognized in the future as of June 29, 2024	$	426,065	$	71,700	$	28,897	$	19,812	$	12,363	$	4,751	$	563,588

Table of Contents

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 June 28, 2024 (the last trading day of the quarter).

The following table presents the estimated fair values of the convertible senior notes (in thousands):


	As of June 29, 2024						As of December 30, 2023
	Fair Value Measured Using						Fair Value Measured Using
	Level 1		Level 2		Total		Level 1		Level 2		Total
Convertible senior notes	$	—	$	732,613	$	732,613	$	—	$	658,609	$	658,609

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 June 29, 2024						As of December 30, 2023
	Fair Value Measured Using						Fair Value Measured Using
	Level 1		Level 2		Total		Level 1		Level 2		Total
Money market funds	$	50,000	$	—	$	50,000	$	115,000	$	—	$	115,000

During the six-months ended June 29, 2024, there were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy. As of each of June 29, 2024 and December 30, 2023, 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 a qualitative analysis of impairment indicators of these assets and noted no adverse impact to their fair values as of June 29, 2024.

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 $0.7 million for the three- and six-months ended June 29, 2024, respectively. The Company incurred facilities-related charges of $1.4 million and $2.2 million for the three- and six-months ended July 1, 2023, 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.

Table of Contents

Cash, Cash Equivalents and Restricted Cash

As of June 29, 2024, the Company had $115.7 million of cash, cash equivalents and restricted cash, including $38.9 million of cash held by its foreign subsidiaries.

As of December 30, 2023, the Company had $173.9 million of cash, cash equivalents and restricted cash, including $48.1 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.

Table of Contents

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 six-months ended June 29, 2024 (in thousands):


Balance as of December 30, 2023	$	240,566
Foreign currency translation adjustments	(9,878)
Balance as of June 29, 2024	$	230,688

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 June 29, 2024 and December 30, 2023 (in thousands, except for remaining useful life):


	June 29, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Remaining Useful Life (In Years)
Intangible assets with finite lives:

Customer relationships	$	72,200	$	(51,894)	$	20,306	2.3
Total intangible assets with finite lives	$	72,200	$	(51,894)	$	20,306


	December 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Remaining Useful Life (In Years)
Intangible assets with finite lives:

Customer relationships	$	72,200	$	(47,381)	$	24,819	2.8

Total intangible assets with finite lives	$	72,200	$	(47,381)	$	24,819

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 $2.3 million and $4.5 million for the three- and six-months ended June 29, 2024, respectively. Amortization expenses were $7.1 million and $14.2 million for the three- and six-months ended July 1, 2023, 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 June 29, 2024 (in thousands):


			Fiscal Years
	Total		Remainder of 2024		2025		2026		2027		2028		Thereafter
Total future amortization expense	$	20,306	$	4,513	$	9,025	$	6,768	$	—	$	—	$	—

Table of Contents

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 roll forward of the allowance for credit losses for accounts receivable for the six-months ended June 29, 2024 (in thousands):


Balance as of December 30, 2023	$	876
Additions(1)	408
Write offs(2)	(105)


Balance as of June 29, 2024	$	1,179

(1)The new additions during the six-months ended June 29, 2024 are primarily due to specific reserves.

(2)The write offs during the six-months ended June 29, 2024 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 six-months ended June 29, 2024, the Company's recognized factoring related interest expense was approximately $0.1 million and $0.2 million, respectively. For the three- and six-months ended July 1, 2023, the Company's recognized factoring related interest expense was approximately $0.1 million and $0.4 million, respectively.

For the three- and six-months ended June 29, 2024, the Company's gross amount of trade accounts receivables sold was approximately $8.6 million and $14.3 million, respectively. For the three- and six-months ended July 1, 2023, the Company's gross amount of trade accounts receivables sold was approximately $13.2 million and $34.4 million, respectively.

Table of Contents

Selected Balance Sheet Items

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


	June 29, 2024		December 30, 2023
Inventory
Raw materials	$	119,421	$	133,561
Work in process	68,695		68,407
Finished goods	196,142		229,195
Total inventory	$	384,258	$	431,163
Property, plant and equipment, net
Computer hardware	$	48,822	$	48,611
Computer software(1)	74,033		74,752
Laboratory and manufacturing equipment	364,789		354,103
Land and building	12,372		12,372
Furniture and fixtures	3,144		2,916
Leasehold and building improvements	46,505		46,652
Construction in progress	65,914		41,328
Subtotal	615,579		580,734
Less accumulated depreciation and amortization(2)	(395,416)		(373,737)
Total property, plant and equipment, net	$	220,163	$	206,997
Accrued expenses and other current liabilities
Loss contingency related to non-cancelable purchase commitments	$	17,539	$	17,909

Taxes payable	16,748		24,248

Short-term operating and finance lease liability	13,091		12,905

Restructuring accrual	4,924		6,042

Other accrued expenses and other current liabilities(3)	79,270		49,654
Total accrued expenses	$	131,572	$	110,758

(1)Included in computer software at June 29, 2024 and December 30, 2023 were $34.6 million and $34.8 million, respectively, related to enterprise resource planning (“ERP”) systems that the Company implemented. The unamortized ERP costs at June 29, 2024 and December 30, 2023 were $7.4 million and $9.6 million, respectively. Also included in computer software at June 29, 2024 and December 30, 2023 was $29.1 million and $29.6 million, respectively, related to term licenses. The unamortized term license costs at June 29, 2024 and December 30, 2023 was $18.6 million and $23.6 million, respectively.

(2)Depreciation expense was $13.3 million and $26.4 million (which includes depreciation of capitalized ERP cost of $1.2 million and $2.5 million, respectively) for the three- and six-months ended June 29, 2024, respectively. Also included in depreciation expense for the three- and six-months ended June 29, 2024 was $2.5 million and $5.0 million, respectively, related to term licenses. Depreciation expense was $12.7 million and $25.2 million (which includes depreciation of capitalized ERP cost of $1.3 million and $2.2 million, respectively) for the three- and six-months ended July 1, 2023, respectively. Also included in depreciation expense for the three- and six-months ended July 1, 2023 was $2.2 million and $4.4 million, respectively, related to term licenses.

(3)Other accrued expenses and other current liabilities included contract liabilities. See Note 3, “Revenue Recognition” to the notes to condensed consolidated financial statements for more information.

7.Restructuring and Other Related Costs

In 2023, the Company implemented a restructuring initiative to reduce costs (the "2023 Restructuring Plan"). In relation to the 2023 Restructuring Plan, the Company incurred and recorded $6.6 million in total of which $5.9 million was recorded in 2023 and $0.7 million was recorded in the three-months ended June 29, 2024. The 2023 Restructuring Plan is expected to be completed in 2024 with the remaining associated payments made in 2024.

Table of Contents

In 2024, the Company implemented a restructuring initiative to reduce costs (the "2024 Restructuring Plan"). In relation to the 2024 Restructuring Plan, the Company incurred and recorded $3.5 million of restructuring costs in the three-months ended June 29, 2024. The 2024 Restructuring Plan is expected to be completed in 2024 with the associated payments made in 2024 and 2025. Additional restructuring activities may occur in the future in connection with the Company’s ongoing transformation initiatives.

In the three- and six-month periods ended June 29, 2024 and July 1, 2023, 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.

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
	June 29, 2024				July 1, 2023
	Cost of Revenue		Operating Expenses		Cost of Revenue		Operating Expenses
Severance and other related expenses	$	703	$	3,566	$	—	$	—
Lease related impairment charges	—		382		—		1,375

Others	—		—		—		56
Total	$	703	$	3,948	$	—	$	1,431


	Six Months Ended
	June 29, 2024				July 1, 2023
	Cost of Revenue		Operating Expenses		Cost of Revenue		Operating Expenses
Severance and other related expenses	$	676	$	3,533	$	—	$	—
Lease related impairment charges	—		729		—		2,161

Others	—		—		—		60
Total	$	676	$	4,262	$	—	$	2,221

Restructuring liabilities are reported within accrued expenses in the accompanying condensed consolidated balance sheets (in thousands):


	Severance and other related expenses		Lease related impairment charges		Others		Total
Balance at December 30, 2023	$	5,887	$	—	$	155	$	6,042
Charges	4,209		729		—		4,938
Cash Payments	(5,292)		(712)		—		(6,004)
Non-Cash Settlements and Other	(30)		(17)		(5)		(52)

Balance at June 29, 2024	$	4,774	$	—	$	150	$	4,924

As of June 29, 2024, the Company's restructuring liability was primarily related to the 2024 Restructuring Plan.

Table of Contents

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 six-months ended June 29, 2024 (in thousands):


	Foreign Currency Translation		Actuarial Gain (Loss) on Pension		Total
Balance at December 30, 2023	$	(59,594)	$	24,746	$	(34,848)
Other comprehensive loss before reclassifications	2,238		—		2,238
Amounts reclassified from accumulated other comprehensive loss	—		(219)		(219)
Net current-period other comprehensive loss	2,238		(219)		2,019
Balance at June 29, 2024	$	(57,356)	$	24,527	$	(32,829)

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 six-month periods ended June 29, 2024 and July 1, 2023, 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 Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net loss	$	(48,287)	$	(20,263)	$	(109,682)	$	(28,673)
Weighted average common shares outstanding - basic and diluted	234,349		225,922		232,941		224,159
Net loss per common share - basic and diluted	$	(0.21)	$	(0.09)	$	(0.47)	$	(0.13)

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 Ended		Six Months Ended
	June 29, 2024	July 1, 2023	June 29, 2024	July 1, 2023
Convertible senior notes	28,019	35,116	28,019	37,608
Restricted stock units	14,971	14,212	16,199	14,897
Performance stock units	3,763	3,675	4,299	3,680
Employee stock purchase plan shares	—	212	—	106
Total	46,753	53,215	48,517	56,291

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 six-month periods ended June 29, 2024 and July 1, 2023, because the effect would have been anti-dilutive.

Table of Contents

10.Debt

The following is a summary of the Company's debt as of June 29, 2024 (in thousands):


	Net Carrying Value				Unpaid Principal Balance		Contractual Maturity Date
	Current		Long-Term
2024 Notes	$	18,747	$	—	$	18,747	September 2024
2027 Notes	—		197,315		200,000		March 2027
2028 Notes	—		463,105		473,750		August 2028


Mortgage	6,526		—		6,526		August 2024
Total Debt	$	25,273	$	660,420	$	699,023

The following is a summary of the Company's debt as of December 30, 2023 (in thousands):


	Net Carrying Value				Unpaid Principal Balance		Contractual Maturity Date
	Current		Long-Term
2024 Notes	$	18,747	$	—	$	18,747	September 2024
2027 Notes	—		196,829		200,000		March 2027
2028 Notes	—		461,927		473,750		August 2028


Mortgage	6,765		—		6,765		May 2024
Total Debt	$	25,512	$	658,756	$	699,262

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 six-months ended June 29, 2024. 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 six-months ended June 29, 2024.

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

Table of Contents

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 three-months ended July 1, 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 Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Contractual interest expense	$	5,791	$	5,370	$	11,582	$	10,669
Amortization of debt issuance costs and discount	837		1,659		1,664		2,444

Total interest expense	$	6,628	$	7,029	$	13,246	$	13,113

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 2 months, 32 months, and 49 months, respectively.

The net carrying amount of the convertible senior notes as of June 29, 2024 and as of December 30, 2023 was as follows (in thousands):


	2024 Notes				2027 Notes				2028 Notes
	June 29, 2024		December 30, 2023		June 29, 2024		December 30, 2023		June 29, 2024		December 30, 2023
Principal	$	18,747	$	18,747	$	200,000	$	200,000	$	473,750	$	473,750
Unamortized issuance costs and discount	—		—		(2,685)		(3,171)		(10,645)		(11,823)
Net carrying amount	$	18,747	$	18,747	$	197,315	$	196,829	$	463,105	$	461,927

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.

Table of Contents

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 June 29, 2024, the Company was in compliance with all covenants under the Loan Agreement.

As of June 29, 2024, the Company had availability of $132.1 million under the Credit Facility.

As of June 29, 2024, the Loan Agreement included a $50.0 million letter of credit subfacility and $29.0 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, with the remaining principal payment at maturity date. In March 2024, a second amendment to the loan was executed to extend its maturity to May 27, 2024 and as a result, the interest rate increased to 7.50% effective March 27, 2024. In May 2024, an amendment to the loan was executed to extend its maturity to August 25, 2024.

As of June 29, 2024, $6.5 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
	Total		Remainder of 2024		2025		2026		2027		2028		Thereafter


Operating leases(1)(2)	$	107,122	$	8,351	$	14,916	$	12,388	$	10,967	$	6,554	$	53,946
Finance lease obligations(3)	4,831		940		1,121		1,003		955		812		—
2028 Notes, including interest(4)	553,696		8,883		17,766		17,766		17,766		491,515		—
2027 Notes, including interest(4)	215,000		2,500		5,000		5,000		202,500		—		—
2024 Notes, including interest(4)	18,946		18,946		—		—		—		—		—


Mortgage Payable, including interest(4)	6,607		6,607		—		—		—		—		—
Total contractual obligations	$	906,202	$	46,227	$	38,803	$	36,157	$	232,188	$	498,881	$	53,946