Stockholders' Equity | 9 Months Ended |
Sep. 27, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Stockholders' Equity | ' |
Stockholders’ Equity |
Stock-based Compensation Plans |
The Company has stock-based compensation plans pursuant to which the Company has granted stock options, RSUs and PSUs. The Company also has an ESPP for all eligible employees. As of September 27, 2014, there were a total of 17.5 million shares of common stock available for grant under the Company’s 2007 Equity Incentive Plan ("2007 Plan"). The following tables summarize the Company’s equity award activity and related information (in thousands, except per share data): |
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| Number of Stock | | Weighted-Average | | Aggregate | | | | | |
Options | Exercise | Intrinsic | | | | | |
| Price | Value | | | | | |
| Per Share | | | | | | |
Outstanding at December 28, 2013 | 6,367 | | | $ | 7.26 | | | $ | 17,452 | | | | | | |
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Stock options granted | 25 | | | $ | 9.02 | | | | | | | | |
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Stock options exercised | (1,280 | ) | | $ | 6.99 | | | $ | 3,210 | | | | | | |
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Stock options canceled | (92 | ) | | $ | 12.39 | | | | | | | | | |
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Outstanding at September 27, 2014 | 5,020 | | | $ | 7.24 | | | $ | 17,631 | | | | | | |
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Vested and expected to vest as of September 27, 2014 | 5,017 | | | | | $ | 17,622 | | | | | | |
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Exercisable at September 27, 2014 | 4,921 | | | $ | 7.24 | | | $ | 17,329 | | | | | | |
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| Number of | | Weighted- | | Aggregate | | | | | |
Restricted | Average | Intrinsic | | | | | |
Stock Units | Grant Date | Value | | | | | |
| Fair Value | | | | | | |
| Per Share | | | | | | |
Outstanding at December 28, 2013 | 6,583 | | | $ | 7.72 | | | $ | 64,443 | | | | | | |
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RSUs granted | 2,415 | | | $ | 8.37 | | | | | | | | | |
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RSUs released | (2,625 | ) | | $ | 7.74 | | | $ | 22,477 | | | | | | |
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RSUs canceled | (424 | ) | | $ | 7.88 | | | | | | | | | |
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Outstanding at September 27, 2014 | 5,949 | | | $ | 7.97 | | | $ | 63,122 | | | | | | |
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Expected to vest at September 27, 2014 | 5,751 | | | | | | $ | 61,021 | | | | | | |
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| Number of | | Weighted- | | Aggregate | | | | | |
Performance | Average | Intrinsic | | | | | |
Stock Units | Grant Date | Value | | | | | |
| Fair Value | | | | | | |
| Per Share | | | | | | |
Outstanding at December 28, 2013 | 721 | | | $ | 7.04 | | | $ | 7,054 | | | | | | |
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PSUs granted | 508 | | | $ | 7.53 | | | | | | | | |
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PSUs released | (255 | ) | | $ | 6.36 | | | $ | 2,097 | | | | | | |
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PSUs canceled | (97 | ) | | $ | 7.18 | | | | | | | | |
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Outstanding at September 27, 2014 | 877 | | | $ | 7.49 | | | $ | 9,298 | | | | | | |
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Expected to vest at September 27, 2014 | 659 | | | | | $ | 6,994 | | | | | | |
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The aggregate intrinsic value of unexercised stock options is calculated as the difference between the closing price of the Company’s common stock of $10.61 at September 26, 2014 and the exercise prices of the underlying stock options. The aggregate intrinsic value of the stock options that have been exercised is calculated as the difference between the fair market value of the common stock at the date of exercise and the exercise price of the underlying stock options. The aggregate intrinsic value of unreleased RSUs and unreleased PSUs is calculated using the closing price of the Company's common stock of $10.61 at September 26, 2014. The aggregate intrinsic value of RSUs and PSUs released is calculated using the fair market value of the common stock at the date of release. |
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The following table presents total stock-based compensation cost for instruments granted but not yet amortized, net of estimated forfeitures, of the Company’s equity compensation plans as of September 27, 2014. These costs are expected to be amortized on a straight-line basis over the following weighted-average periods (in thousands, except for weighted-average period): |
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| Unrecognized | | Weighted- | | | | | | | | | | | |
Compensation | Average Period | | | | | | | | | | | |
Expense, Net | (in years) | | | | | | | | | | | |
Stock options | 317 | | | 1.5 | | | | | | | | | | | |
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RSUs | 30,599 | | | 2.3 | | | | | | | | | | | |
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PSUs | 2,704 | | | 1.6 | | | | | | | | | | | |
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Employee Stock Options |
The estimated values of stock options, as well as assumptions used in calculating these values were based on estimates as follows (expense amounts in thousands): |
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| Three Months Ended | | Nine Months Ended | | | | | | | | |
Employee and Director Stock Options | 27-Sep-14 | | 28-Sep-13 | | 27-Sep-14 | | 28-Sep-13 | | | | | | | | |
Volatility | N/A | | N/A | | 52% | | N/A | | | | | | | | |
Risk-free interest rate | N/A | | N/A | | 1.30% | | N/A | | | | | | | | |
Expected life | N/A | | N/A | | 4.3 years | | N/A | | | | | | | | |
Estimated fair value | N/A | | N/A | | $3.85 | | N/A | | | | | | | | |
Total stock-based compensation expense | $108 | | $665 | | $623 | | $2,190 | | | | | | | | |
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N/A | Not applicable because the Company did not grant any stock options to employees for the periods presented. | | | | | | | | | | | | | | |
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Employee Stock Purchase Plan |
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The fair value of the ESPP shares was estimated at the date of grant using the following assumptions (expense amounts in thousands): |
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| Three Months Ended | | Nine Months Ended | | | | | | | | |
Employee Stock Purchase Plan | 27-Sep-14 | | 28-Sep-13 | | 27-Sep-14 | | 28-Sep-13 | | | | | | | | |
Volatility | 46% | | 49% | | 46% - 51% | | 46% - 49% | | | | | | | | |
Risk-free interest rate | 0.06% | | 0.10% | | 0.02% - 0.11% | | 0.10% - 0.14% | | | | | | | | |
Expected life | 0.5 years | | 0.5 years | | 0.25 - 0.5 years | | 0.5 years | | | | | | | | |
Estimated fair value | $2.54 | | $3.00 | | $2.05 - $2.57 | | $1.87 - $3.00 | | | | | | | | |
Total stock-based compensation expense | $1,092 | | $777 | | $2,726 | | $2,050 | | | | | | | | |
Restricted Stock Units |
During the three and nine months ended September 27, 2014, the Company granted RSUs to employees and members of the Company’s board of directors to receive an aggregate of 0.1 million shares and 2.4 million shares of the Company’s common stock, respectively. The Company accounted for the fair value of the RSUs using the closing market price of the Company’s common stock on the date of grant. Amortization of stock-based compensation related to RSUs in the three and nine months ended September 27, 2014 and September 28, 2013 was approximately $5.6 million and $15.9 million, respectively, and approximately $5.5 million and $18.2 million, respectively. |
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Performance Stock Units |
Pursuant to the 2007 Plan, during fiscal 2012, the Company granted 0.5 million shares of PSUs to certain of its executive officers. These PSUs will only vest upon the achievement of certain specific revenue and operating profit criteria and are subject to each named executive officer’s continued service to the Company. If the financial performance metrics are not met within the time limits specified in the award agreements, the PSUs will be canceled. During the three and nine months ended September 27, 2014, the Company did not release any shares subject to these PSUs. |
Pursuant to the 2007 Plan, during fiscal 2013, the Company granted 0.6 million shares of PSUs to certain of its executive officers. The number of shares to be issued upon vesting of PSUs range from 0 to 1.5 times the number of PSUs granted depending on the relative performance of the Company’s common stock price compared to the NASDAQ Telecom Composite Index over the span of one, two and three years of total shareholder returns. During the three and nine months ended September 27, 2014, the Company released zero shares and 0.3 million shares of PSUs, respectively, based on a payout of 1.5 times of the target number of PSUs. |
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The ranges of estimated values of the PSUs granted, as well as assumptions used in calculating these values were based on estimates as follows: |
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| Year Ended | | | | | | | | | | | | | | |
| 28-Dec-13 | | | | | | | | | | | | | | |
Infinera Volatility | 55% | | | | | | | | | | | | | | |
NASDAQ Telecom Composite Index Volatility | 23% | | | | | | | | | | | | | | |
Risk-free interest rate | 0.42% | | | | | | | | | | | | | | |
Correlation with NASDAQ Telecom Composite Index | 0.56 | | | | | | | | | | | | | | |
Estimated fair value | $6.27 - $7.06 | | | | | | | | | | | | | | |
Pursuant to the 2007 Plan, during the three and nine months ended September 27, 2014, the Company granted zero shares and 0.4 million shares of PSUs, respectively, to certain of its executive officers. The number of shares to be issued upon vesting of PSUs range from 0 to 1.5 times the number of PSUs granted depending on the relative performance of the Company's common stock price compared to the iShares North American Tech-Multimedia Networking ("IGN") Index over the span of one, two and three years of total shareholder returns. |
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The ranges of estimated values of the PSUs granted, as well as assumptions used in calculating these values were based on estimates as follows: |
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| | Nine Months Ended | | | | | | | | | | | | | |
| | 27-Sep-14 | | | | | | | | | | | | | |
Infinera Volatility | | 49% - 50% | | | | | | | | | | | | | |
IGN Index Volatility | | 25% | | | | | | | | | | | | | |
Risk-free interest rate | | 0.66% - 0.71% | | | | | | | | | | | | | |
Correlation with IGN Index | | 0.6 | | | | | | | | | | | | | |
Estimated fair value | | $6.59 - $7.60 | | | | | | | | | | | | | |
Pursuant to the 2007 Plan, during the three months ended September 27, 2014, the Company granted 0.1 million shares of PSUs to several employees. These PSUs will only vest upon the achievement of certain specific performance criteria and are subject to each employee's continued service to the Company. If the specific performance metrics are not met within the time limits specified in the award agreements, the PSUs will be cancelled. |
Amortization of stock-based compensation related to PSUs in the three and nine months ended September 27, 2014 was approximately $0.6 million and $1.5 million, respectively. Amortization of stock-based compensation related to PSUs in the three months ended September 28, 2013 was approximately $0.5 million. Amortization of stock-based compensation in the nine months ended September 28, 2013 was approximately $0.1 million, including $1.5 million of expense offset by a $1.4 million decrease in fair value for one award classified as a liability award, in accordance with ASC 718. |
Stock-Based Compensation |
The following tables summarize the effects of stock-based compensation on the Company’s condensed consolidated balance sheets and statements of operations for the periods presented (in thousands): |
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| 27-Sep-14 | | 28-Dec-13 | | | | | | | | |
Stock-based compensation effects in inventory | $ | 3,160 | | | $ | 3,189 | | | | | | | | | |
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Stock-based compensation effects in deferred inventory cost | $ | 13 | | | $ | 15 | | | | | | | | | |
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Stock-based compensation effects in fixed assets | $ | 126 | | | $ | 145 | | | | | | | | | |
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| Three Months Ended | | Nine Months Ended |
| 27-Sep-14 | | 28-Sep-13 | | 27-Sep-14 | | 28-Sep-13 |
Stock-based compensation effects included in net income (loss) before income taxes | | | | | | | |
Cost of revenue | $ | 492 | | | $ | 422 | | | $ | 1,421 | | | $ | 1,382 | |
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Research and development | 2,270 | | | 2,434 | | | 6,488 | | | 8,175 | |
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Sales and marketing | 1,982 | | | 1,853 | | | 5,517 | | | 5,659 | |
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General and administration | 1,628 | | | 1,807 | | | 4,707 | | | 4,167 | |
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| 6,372 | | | 6,516 | | | 18,133 | | | 19,383 | |
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Cost of revenue – amortization from balance sheet (1) | 999 | | | 1,127 | | | 2,714 | | | 4,419 | |
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Total stock-based compensation expense | $ | 7,371 | | | $ | 7,643 | | | $ | 20,847 | | | $ | 23,802 | |
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(1) | Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period. | | | | | | | | | | | | | | |