• Infinera Corporation Reports Fourth Quarter and Fiscal 2021 Financial Results

    Источник: Nasdaq GlobeNewswire / 16 фев 2022 16:03:01   America/New_York

    SAN JOSE, Calif., Feb. 16, 2022 (GLOBE NEWSWIRE) -- Infinera Corporation (NASDAQ: INFN) today released financial results for its fourth quarter and fiscal year ended December 25, 2021.

    GAAP revenue for the quarter was $400.3 million compared to $355.8 million in the third quarter of 2021 and $353.5 million in the fourth quarter of 2020.

    GAAP gross margin for the quarter was 35.6% compared to 33.2% in the third quarter of 2021 and 35.7% in the fourth quarter of 2020. GAAP operating margin for the quarter was (2.5)% compared to (8.7)% in the third quarter of 2021 and (1.9)% in the fourth quarter of 2020.

    GAAP net loss for the quarter was $(33.1) million, or $(0.16) per share, compared to $(53.8) million, or $(0.26) per share, in the third quarter of 2021, and $(9.9) million, or $(0.05) per share, in the fourth quarter of 2020.

    Non-GAAP revenue for the quarter was $401.2 million compared to $356.8 million in the third quarter of 2021 and $354.4 million in the fourth quarter of 2020.

    Non-GAAP gross margin for the quarter was 37.2% compared to 38.0% in the third quarter of 2021 and 37.6% in the fourth quarter of 2020. Non-GAAP operating margin for the quarter was 4.3% compared to 2.4% in the third quarter of 2021 and 6.6% in the fourth quarter of 2020.

    Non-GAAP net income for the quarter was $5.7 million, or $0.03 per share, compared to net loss of $(3.0) million, or $(0.01) per share, in the third quarter of 2021, and a net income of $16.7 million, or $0.13 per share, in the fourth quarter of 2020.

    GAAP revenue for the year was $1,425.2 million compared to $1,355.6 million in 2020. GAAP gross margin for the year was 34.9% compared to 30.2% in 2020. GAAP operating margin for the year was (6.1)% compared to (11.4)% in 2020. GAAP net loss for the year was $(170.8) million, or $(0.82) per share, compared to $(206.7) million, or $(1.10) per share, in 2020.

    Non-GAAP revenue for the year was $1,429.1 million compared to $1,359.7 million in 2020. Non-GAAP gross margin for the year was 37.6% compared to 33.8% in 2020. Non-GAAP operating margin for the year was 2.1% compared to (0.5)% in 2020. Non-GAAP net loss for the year was $(8.8) million, or $(0.04) per share, compared to $(36.3) million, or $(0.19) per share, in 2020.

    A further explanation of the use of non-GAAP financial information and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.

    Infinera CEO David Heard said, “Q4 was a pivotal quarter for us. We achieved record revenue and bookings for the company, and exited the year with substantial backlog. Our strong performance in the quarter was the perfect way to wrap-up 2021, a year in which we strengthened our portfolio, bolstered our management team, accelerated growth and expanded margins.”

    “Looking ahead to 2022, we intend to build on the foundation we established in 2021,” continued Heard. “The demand drivers fueling our business are robust. While we expect the industry-wide supply chain challenges to remain intense through at least the first half of the year, we are focused on driving 8-12% revenue growth in 2022 and delivering on our longer-term target business model.”

    Financial Outlook

    Infinera's outlook for the quarter ending March 26, 2022 is as follows:

    • Revenue is expected to be $360 million +/- $15 million.
    • GAAP gross margin is expected to be 34.0% +/- 150 bps. Non-GAAP gross margin is expected to be 37.0% +/- 150 bps.
    • GAAP operating expenses are expected to be $151 million +/- $2 million. Non-GAAP operating expenses are expected to be $132 million +/- $2 million.
    • GAAP operating margin is expected to be (7.6)% +/- 200 bps. Non-GAAP operating margin is expected to be 0.5% +/- 200 bps.

    Fourth Quarter 2021 Investor Slides Available Online

    Investor slides reviewing Infinera's fourth quarter of 2021 financial results will be furnished to the Securities and Exchange Commission (SEC) on a Current Report on Form 8-K and published on Infinera's Investor Relations website at investors.infinera.com prior to the fourth quarter of 2021 earnings conference call. Analysts and investors are encouraged to review these slides prior to participating in the conference call webcast. A copy of this press release can be found at investors.infinera.com.

    Conference Call Information

    Infinera will host a conference call for analysts and investors to discuss its results for the fourth quarter of 2021 and its outlook for the first quarter of 2022 today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Interested parties may register for the conference call at https://conferencingportals.com/event/PUIteabr. A live webcast of the conference call will also be accessible from the Events section of Infinera’s website at investors.infinera.com. Replay of the audio webcast will be available at investors.infinera.com approximately two hours after the end of the live call.

    Contacts:

    Media:
    Anna Vue
    Tel. +1 (916) 595-8157
    avue@infinera.com

    Investors:
    Amitabh Passi, Head of Investor Relations
    Tel. +1 (669) 295-1489
    apassi@infinera.com

    About Infinera

    Infinera is a global supplier of innovative open optical networking solutions that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. Infinera solutions deliver industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. To learn more about Infinera, visit www.infinera.com, follow us on Twitter and LinkedIn, and subscribe for updates. Infinera and the Infinera logo are registered trademarks of Infinera Corporation.

    Forward-Looking Statements

    This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or Infinera's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or the negative of these words or similar terms or expressions that concern Infinera's expectations, strategy, priorities, plans or intentions. Such forward-looking statements in this press release include, without limitation, Infinera’s future business plans, the demand drivers fueling Infinera's business, industry-wide supply chain challenges, Infinera's ability to drive revenue growth and deliver on its longer-term target business model for 2022, and Infinera's financial outlook for the first quarter of 2022. These forward-looking statements are based on estimates and information available to Infinera as of the date hereof and are not guarantees of future performance; actual results could differ materially from those stated or implied due to risks and uncertainties. The risks and uncertainties that could cause Infinera’s results to differ materially from those expressed or implied by such forward-looking statements include supply chain issues, including delays, shortages and increased costs, and Infinera's dependency on sole source, limited source or high-cost suppliers; delays in the development, introduction or acceptance of new products or updates to existing products; fluctuations in demand, sales cycles and prices for products and services, including discounts given in response to competitive pricing pressures, as well as the timing of purchases by Infinera's key customers; aggressive business tactics by Infinera’s competitors; the effect of the COVID-19 pandemic on Infinera’s business, results of operations, financial condition, stock price and personnel; Infinera's ability to identify, attract and retain qualified personnel; the effects of customer and supplier consolidation; Infinera’s ability to respond to rapid technological changes; Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to meet such capital needs; the effect of global and regional economic conditions on Infinera’s business, including effects on purchasing decisions by customers; risks and compliance obligations relating to Infinera's international operations as well as actions by the U.S. or foreign governments; the impacts of foreign currency fluctuations; Infinera's ability to service its debt obligations and pursue its strategic plan; Infinera’s ability to protect its intellectual property; claims by others that Infinera infringes on their intellectual property rights; events that are outside of Infinera's control, such as natural disasters, terrorist attacks or other catastrophic events that could harm Infinera's operations; and other risks and uncertainties detailed in Infinera’s SEC filings from time to time. More information on potential factors that may impact Infinera’s business are set forth in Infinera's periodic reports filed with the SEC, including its Annual Report on Form 10-K for the year ended on December 26, 2020 as filed with the SEC on March 3, 2021, and its Quarterly Report on Form 10-Q for the quarter ended September 25, 2021 as filed with the SEC on November 3, 2021, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Infinera’s website at www.infinera.com and the SEC’s website at www.sec.gov. Infinera assumes no obligation to, and does not currently intend to, update any such forward-looking statements.

    Use of Non-GAAP Financial Information

    In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that exclude acquisition-related deferred revenue adjustment, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and other related costs, inventory related charges, COVID-19 related costs, amortization of debt discount on Infinera’s convertible senior notes, litigation charges, foreign exchange (gains) losses, net, and income tax effects. For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the table titled “GAAP to Non-GAAP Reconciliations” and related footnotes.

    Infinera has included forward-looking non-GAAP information in this press release, including an estimate of certain non-GAAP financial measures for the first quarter of 2022 that exclude stock-based compensation expense, amortization of acquired intangible assets, and restructuring and other related costs. Please see the section titled “GAAP to Non-GAAP Reconciliation of Financial Outlook” below for specific adjustments.

    Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its prospects for the future and are considered by management for the purpose of making operational decisions. In addition, these results are the primary indicators management uses as a basis for its planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for revenue, gross margin, operating expenses, operating margin, and net income (loss) prepared in accordance with GAAP. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.


    Infinera Corporation
    Consolidated Statements of Operations
    (In thousands, except per share data)
    (Unaudited) 

     Three Months Ended Twelve Months Ended
     December 25,
    2021    		 December 26,
    2020    		 December 25,
    2021    		 December 26,
    2020
    Revenue:       
    Product$316,956  $267,226  $1,099,376  $1,045,551 
    Services 83,301   86,299   325,829   310,045 
    Total revenue 400,257   353,525   1,425,205   1,355,596 
    Cost of revenue:       
    Cost of product 206,577   178,153   732,071   751,465 
    Cost of services 45,580   44,724   174,008   160,118 
    Amortization of intangible assets 5,782   4,611   19,621   29,247 
    Acquisition and integration costs —   —   —   1,828 
    Restructuring and other related costs (148)  (106)  1,531   4,146 
    Total cost of revenue 257,791   227,382   927,231   946,804 
    Gross profit 142,466   126,143   497,974   408,792 
    Operating expenses:       
    Research and development 75,783   64,728   299,894   265,634 
    Sales and marketing 39,052   32,145   138,829   129,604 
    General and administrative 28,411   24,336   115,415   112,240 
    Amortization of intangible assets 4,307   4,745   17,455   18,581 
    Acquisition and integration costs —   (265)  614   13,346 
    Restructuring and other related costs 5,055   7,230   13,246   24,586 
    Total operating expenses 152,608   132,919   585,453   563,991 
    Loss from operations (10,142)  (6,776)  (87,479)  (155,199)
    Other income (expense), net:       
    Interest income 365   33   455   118 
    Interest expense (12,616)  (12,853)  (49,099)  (46,728)
    Other gain (loss), net (8,228)  10,777   (22,667)  1,121 
    Total other income (expense), net (20,479)  (2,043)  (71,311)  (45,489)
    Loss before income taxes (30,621)  (8,819)  (158,790)  (200,688)
    Provision for income taxes 2,447   1,105   11,988   6,035 
    Net loss$(33,068) $(9,924) $(170,778) $(206,723)
    Net loss per common share:       
    Basic$(0.16) $(0.05) $(0.82) $(1.10)
    Diluted$(0.16) $(0.05) $(0.82) $(1.10)
    Weighted average shares used in computing net loss per common share:       
    Basic 210,908   195,655   207,377   188,216 
    Diluted 210,908   195,655   207,377   188,216 


    Infinera Corporation
    GAAP to Non-GAAP Reconciliations
    (In thousands, except percentages)
    (Unaudited)

      Three Months Ended Twelve Months Ended
      December 25, 2021   September 25, 2021   December 26, 2020   December 25, 2021   December 26, 2020  
    Reconciliation of Revenue:                    
    GAAP as reported $400,257    $355,814    $353,525    $1,425,205    $1,355,596   
    Acquisition-related deferred revenue adjustment(1)  979     978     892     3,913     4,089   
    Non-GAAP as adjusted $401,236    $356,792    $354,417    $1,429,118    $1,359,685   
                         
    Reconciliation of Gross Profit and Gross Margin:                    
    GAAP as reported $142,466  35.6% $118,093  33.2% $126,143  35.7% $497,974  34.9% $408,792  30.2%
    Acquisition-related deferred revenue adjustment(1)  979     978     892     3,913     4,089   
    Stock-based compensation expense(2)  2,034     1,968     1,742     7,928     7,785   
    Amortization of acquired intangible assets(3)  5,782     4,609     4,611     19,621     29,247   
    Acquisition and integration costs(4)  —     —     —     —     1,828   
    Restructuring and other related costs(5)  (148)    1,434     (106)    1,531     4,146   
    Inventory related charges(6)  (2,041)    8,623     —     6,582     —   
    COVID-19 related costs(7)  —     —     —     —     3,641   
    Non-GAAP as adjusted $149,072  37.2% $135,705  38.0% $133,282  37.6% $537,549  37.6% $459,528  33.8%
                         
    Reconciliation of Operating Expenses:                    
    GAAP as reported $152,608    $149,069    $132,919    $585,453    $563,991   
    Stock-based compensation expense(2)  11,233     11,664     11,177     43,884     41,676   
    Amortization of acquired intangible assets(3)  4,307     4,351     4,745     17,455     18,581   
    Acquisition and integration costs(4)  —     —     (265)    614     13,346   
    Restructuring and other related costs(5)  5,055     6,546     7,230     13,246     24,586   
    Litigation charges (9)  —     (594)    —     2,291     —   
    Non-GAAP as adjusted $132,013    $127,102    $110,032    $507,963    $465,802   
                         
    Reconciliation of Income/(Loss) from Operations and Operating Margin:                    
    GAAP as reported $(10,142) (2.5)% $(30,976) (8.7)% $(6,776) (1.9)% $(87,479) (6.1)% $(155,199) (11.4)%
    Acquisition-related deferred revenue adjustment(1)  979     978     892     3,913     4,089   
    Stock-based compensation expense(2)  13,267     13,632     12,919     51,812     49,461   
    Amortization of acquired intangible assets(3)  10,089     8,960     9,356     37,076     47,828   
    Acquisition and integration costs(4)  —     —     (265)    614     15,174   
    Restructuring and other related costs(5)  4,907     7,980     7,124     14,777     28,732   
    Inventory related charges(6)  (2,041)    8,623     —     6,582     —   
    COVID-19 related costs(7)  —     —     —     —     3,641   
    Litigation charges (9)  —     (594)    —     2,291     —   
    Non-GAAP as adjusted $17,059  4.3% $8,603  2.4% $23,250  6.6% $29,586  2.1% $(6,274) (0.5)%


      Three Months Ended Twelve Months Ended
      December 25,
    2021    		   September 25,
    2021    		   December 26,
    2020    		   December 25,
    2021    		   December 26,
    2020    		  
    Reconciliation of Net Income/(Loss):                    
    GAAP as reported $(33,068)   $(53,794)   $(9,924)   $(170,778)   $(206,723)  
    Acquisition-related deferred revenue adjustment(1)  979     978     892     3,913     4,089   
    Stock-based compensation expense(2)  13,267     13,632     12,919     51,812     49,461   
    Amortization of acquired intangible assets(3)  10,089     8,960     9,356     37,076     47,828   
    Acquisition and integration costs(4)  —     —     (265)    614     15,174   
    Restructuring and other related costs(5)  4,907     7,980     7,124     14,777     28,732   
    Inventory related charges(6)  (2,041)    8,623     —     6,582     —   
    COVID-19 related costs(7)  —     —     —     —     3,641   
    Amortization of debt discount on Infinera's convertible senior notes(8)  7,627     7,442     6,910     29,411     25,349   
    Litigation charges (9)  —     (594)    —     2,291     —   
    Foreign exchange (gains) losses, net(10)  4,622     4,213     (9,671)    17,159     (185)  
    Income tax effects(11)  (709)    (404)    (691)    (1,618)    (3,688)  
    Non-GAAP as adjusted $5,673    $(2,964)   $16,650    $(8,761)   $(36,322)  
                         
    Reconciliation of Adjusted EBITDA (12):                    
    Non-GAAP Net Income (Loss) $5,673    $(2,964)   $16,650    $(8,761)   $(36,322)  
    Non-GAAP Interest expense  4,989     5,180     5,943     19,688     21,379   
    Non-GAAP Income tax effects  3,156     5,859     1,796     13,606     9,723   
    Non-GAAP Depreciation and Amortization  13,261     11,965     16,521     46,507     52,312   
    Non-GAAP as adjusted $27,079    $20,040    $40,910    $71,040    $47,092   
                         
    Net Income/(Loss) per Common Share - Basic:                    
    GAAP as reported $(0.16)   $(0.26)   $(0.05)   $(0.82)   $(1.10)  
    Non-GAAP as adjusted $0.03    $(0.01)   $0.13    $(0.04)   $(0.19)  
                         
    Net Loss per Common Share - Diluted:                    
    U.S. GAAP as reported $(0.16)   $(0.26)   $(0.05)   $(0.82)   $(1.10)  
    Non-GAAP as adjusted $0.03    $(0.01)   $0.08    $(0.04)   $(0.19)  
                         
    Weighted Average Shares Used in Computing Net Income/(Loss) per Common Share:
    		                    
    Basic  210,908     209,183     195,655     207,377     188,216   
    Diluted(13)  218,009     209,183     203,259     207,377     188,216   

    (1)    Business combination accounting principles require Infinera to write down to fair value its maintenance support contracts assumed in Infinera's acquisition of Coriant, which closed during the fourth quarter of 2018. The revenue for these support contracts is deferred and typically recognized over a period of time after the Coriant acquisition, so Infinera's GAAP revenue for a period of time after the acquisition will not reflect the full amount of revenue that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP adjustment eliminates the effect of the deferred revenue write-down. Management believes these adjustments to revenue from support contracts assumed in the Coriant acquisition are useful to investors as an additional means to reflect revenue trends in Infinera's business.

    (2)    Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation effective January 1, 2006. The following table summarizes the effects of stock-based compensation related to employees and non-employees (in thousands):

      Three Months Ended Twelve Months Ended
      December 25,
    2021    		 September 25,
    2021    		 December 26,
    2020    		 December 25,
    2021    		 December 26,
    2020
    Cost of revenue $2,034 $1,968 $1,742 $7,928 $7,785
    Total cost of revenue  2,034  1,968  1,742  7,928  7,785
    Research and development  4,472  4,714  4,501  18,554  16,863
    Sales and marketing  3,276  3,059  2,771  12,345  10,907
    General and administration  3,485  3,891  3,905  12,985  13,906
    Total operating expenses  11,233  11,664  11,177  43,884  41,676
    Total stock-based compensation expense $13,267 $13,632 $12,919 $51,812 $49,461

    (3)    Amortization of acquired intangible assets consists of developed technology, trade names, customer relationships and backlog acquired in connection with the Coriant acquisition. Amortization of acquired intangible assets also consists of amortization of developed technology, trade names and customer relationships acquired in connection with Infinera’s acquisition of Transmode AB, which closed in 2015. GAAP accounting requires that acquired intangible assets are recorded at fair value and amortized over their useful lives. As this amortization is non-cash, Infinera has excluded it from its non-GAAP gross profit, operating expenses and net income measures. Management believes the amortization of acquired intangible assets is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance.

    (4)    Acquisition and integration costs consist of legal, financial, IT, manufacturing-related costs, employee-related costs and professional fees incurred in connection with the Coriant acquisition. These amounts have been adjusted in arriving at Infinera's non-GAAP results because management believes that these expenses are non-recurring, not indicative of ongoing operating performance and their exclusion provides a better indication of Infinera's underlying business performance.

    (5)    Restructuring and other related costs are primarily associated with Infinera's plan to restructure certain international research and development operations, the reduction of operating costs, the closure of Infinera's Berlin, Germany site, the reduction of headcount at Infinera's Munich, Germany site and other international sites, and Coriant's historical restructuring plan associated with its early retirement plan. In addition, this includes certain contractual liabilities and accelerated amortization on operating lease right-of-use assets due to the cessation of use of certain facilities. Management has excluded the impact of these charges in arriving at Infinera's non-GAAP results as they are non-recurring in nature and its exclusion provides a better indication of Infinera's underlying business performance.

    (6)    Inventory related charges were incurred as a result of the exit from certain product lines in connection with restructuring initiatives. Management has excluded the impact of these charges in arriving at Infinera's non-GAAP results as they are non-recurring in nature and its exclusion provides a better indication of Infinera's underlying business performance.

    (7)    COVID-19 related costs consist of higher replacement costs associated with certain warranty parts customers were unable to return for repair due to logistics issues and mobility issues related to COVID-19 public health mandates and restrictions. In addition, Infinera needed to source certain key components from an alternate supplier at substantially higher cost in order to fulfill delivery commitments in the normal course of business. Management has excluded these expenses from non-GAAP financial measures because they were caused by atypical circumstances during the COVID-19 pandemic, as their exclusion provides a better indication of Infinera's underlying business performance.

    (8)    Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. Accordingly, for GAAP purposes, Infinera is required to amortize as debt discount an amount equal to the fair value of the conversion option that was recorded in equity as interest expense on the $402.5 million in aggregate principal amount of its 2.125% convertible debt issuance in September 2018 due September 2024 and $200 million in aggregate principal amount of 2.50% convertible debt issued on March 9, 2020 due March 2027. Interest expense has been excluded from Infinera's non-GAAP results because management believes that this non-cash expense is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance.

    (9)    Litigation charges are associated with the settlement of litigation matters. Management has excluded the impact of these charges in arriving at Infinera's non-GAAP results because they are non-recurring, and management believes that this expense is not indicative of ongoing operating performance.

    (10)    Foreign exchange (gains) and losses have been excluded from Infinera's non-GAAP results because management believes that this expense is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance. Exclusion of foreign exchange (gains) and losses from non-GAAP results commenced in the first quarter of 2021 and prior periods have been adjusted for comparability.

    (11)    The difference between the GAAP and non-GAAP tax provision is due to the net tax effects of the purchase accounting adjustments, acquisition-related costs and amortization of acquired intangible assets. Management believes the exclusion of these tax effects provides a better indication of Infinera's underlying business performance.

    (12)    Adjusted EBITDA is a non-GAAP supplemental measure of operating performance that does not represent and should not be considered an alternative to operating loss or cash flow from operations, as determined by GAAP. Infinera's adjusted EBITDA is calculated by excluding the above non-GAAP adjustments, interest expenses, income tax effects and depreciation and amortization expenses. Management believes that adjusted EBITDA is an important financial measure for use in evaluating the Company's financial performance, as it measures the ability of our business operations to generate cash.

    (13)    The non-GAAP diluted shares include the potentially dilutive securities from Infinera's stock-based benefit plans and convertible senior notes excluded from the computation of dilutive net loss per share attributable to common stockholders on a GAAP basis because the effect would have been anti-dilutive. These potentially dilutive securities are added for the computation of diluted net income per share on a non-GAAP basis in periods when Infinera has net income on a non-GAAP basis as its inclusion provides a better indication of Infinera's underlying business performance.

    Infinera Corporation
    GAAP to Non-GAAP Reconciliations
    (In thousands)
    (Unaudited) 

    Free Cash Flow

    We define free cash flow as net cash provided by (used in) operating activities in the period minus the purchase of property and equipment, net made in the period.

    Free cash flow is considered a non-GAAP financial measure under the SEC’s rules. Management believes that free cash flow is an important financial measure for use in evaluating the Company’s financial performance, as it measures our ability to generate additional cash from our business operations. Free cash flow should be considered in addition to, rather than as a substitute for, net loss as a measure of our performance or net cash provided by (used in) operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited and does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other obligations. Therefore, we believe it is important to view free cash flow as supplemental to our entire statement of cash flows.

      Three Months Ended Twelve Months Ended
      December 25,
    2021    		 September 25,
    2021    		 December 26,
    2020    		 December 25,
    2021    		 December 26,
    2020
    Net cash provided by (used in) operating activities $1,369  $(13,175) $52,216  $28,128  $(112,300)
    Purchase of property and equipment, net  (9,065)  (6,525)  (11,861)  (41,379)  (39,009)
    Free cash flow $(7,696) $(19,700) $40,355  $(13,251) $(151,309)


    Infinera Corporation
    Consolidated Balance Sheets
    (In thousands, except par values)
    (Unaudited)

     December 25,
    2021    		 December 26,
    2020
    ASSETS   
    Current assets:   
    Cash$190,611  $298,014 
    Short-term restricted cash 2,840   3,293 
    Accounts receivable, net 358,954   319,428 
    Inventory 291,367   269,307 
    Prepaid expenses and other current assets 147,989   171,831 
    Total current assets 991,761   1,061,873 
    Property, plant and equipment, net 160,218   153,133 
    Operating lease right-of-use assets 45,338   68,851 
    Intangible assets 86,574   124,882 
    Goodwill 255,788   273,426 
    Long-term restricted cash 9,070   14,076 
    Other long-term assets 38,475   36,256 
    Total assets$1,587,224  $1,732,497 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Accounts payable$216,404  $175,762 
    Accrued expenses and other current liabilities 147,029   150,550 
    Accrued compensation and related benefits 88,021   52,976 
    Short-term debt, net 533   101,983 
    Accrued warranty 23,204   19,369 
    Deferred revenue 137,297   133,246 
    Total current liabilities 612,488   633,886 
    Long-term debt, net 476,789   445,996 
    Long-term accrued warranty 21,106   21,339 
    Long-term deferred revenue 31,612   29,810 
    Long-term deferred tax liability 2,364   4,164 
    Long-term operating lease liabilities 54,326   76,126 
    Other long-term liabilities 64,768   94,892 
    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 in 2021 and 2020
      Issued and outstanding shares – 211,381 in 2021 and 201,397 in 2020    		 211   201 
    Additional paid-in capital 2,026,098   1,965,245 
    Accumulated other comprehensive loss (4,496)  (11,898)
    Accumulated deficit (1,698,042)  (1,527,264)
    Total stockholders' equity 323,771   426,284 
    Total liabilities and stockholders’ equity$1,587,224  $1,732,497 


    Infinera Corporation
    Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)

     Twelve Months Ended
     December 25,
    2021    		 December 26,
    2020
    Cash Flows from Operating Activities:   
    Net loss$(170,778) $(206,723)
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
    Depreciation and amortization 83,583   100,140 
    Non-cash restructuring charges and other related costs 6,805   5,471 
    Amortization of debt discount and issuance costs 32,455   28,115 
    Operating lease expense 14,993   18,556 
    Stock-based compensation expense 51,812   49,461 
    Other, net 4,147   4,438 
    Changes in assets and liabilities:   
    Accounts receivable (45,783)  32,150 
    Inventory (28,022)  71,424 
    Prepaid expenses and other current assets (424)  (36,127)
    Accounts payable 32,304   (93,411)
    Accrued expenses and other current liabilities 39,283   (107,704)
    Deferred revenue 7,753   21,910 
    Net cash provided by (used in) operating activities 28,128   (112,300)
    Cash Flows from Investing Activities:   
    Purchase of property and equipment, net (41,379)  (39,009)
    Net cash used in investing activities (41,379)  (39,009)
    Cash Flows from Financing Activities:   
    Proceeds from issuance of common stock from at-the-market equity offering, net of issuance costs of $3,380 —   92,916 
    Proceeds from issuance of 2027 Notes —   194,500 
    Proceeds from revolving line of credit —   55,000 
    Repayment of third-party manufacturing funding (24,610)  (5,346)
    Repayment of revolving line of credit (77,000)  (8,000)
    Repayment of mortgage payable (350)  (233)
    Payment of debt issuance cost —   (2,455)
    Principal payments on financing lease obligations (1,631)  (1,587)
    Payment of term license obligation (7,272)  (5,692)
    Proceeds from issuance of common stock 16,497   17,072 
    Tax withholding paid on behalf of employees for net share settlement (7,178)  (2,013)
    Net cash (used in) provided by financing activities (101,544)  334,162 
    Effect of exchange rate changes on cash and restricted cash 1,933   (267)
    Net change in cash and restricted cash (112,862)  182,586 
    Cash and restricted cash at beginning of period 315,383   132,797 
    Cash and restricted cash at end of period(1)$202,521  $315,383 


    Infinera Corporation
    Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)

     Twelve Months Ended
     December 25,
    2021    		 December 26,
    2020
    Supplemental disclosures of cash flow information:   
    Cash paid for income taxes$18,703 $5,039
    Cash paid for interest$18,261 $15,638
    Supplemental schedule of non-cash investing and financing activities:   
    Property and equipment included in accounts payable and accrued liabilities$9,011 $—
    Transfer of inventory to fixed assets$2,279 $1,083
    Unpaid term licenses (included in accounts payable, accrued liabilities and other long-term liabilities)$9,339 $12,478

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

     December 25,
    2021    		 December 26,
    2020
        
    Cash$190,611 $298,014
    Short-term restricted cash 2,840  3,293
    Long-term restricted cash 9,070  14,076
    Total cash and restricted cash$202,521 $315,383


    Infinera Corporation
    Supplemental Financial Information
    (Unaudited)

      Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
    GAAP Revenue ($ Mil) $330.3  $331.6  $340.2  $353.5  $330.9  $338.2  $355.8  $400.3 
    GAAP Gross Margin %  23.3%   29.4%   31.8%   35.7%   35.4%   35.6%   33.2%   35.6% 
    Non-GAAP Gross Margin %(1)  28.3%   33.8%   35.2%   37.6%   37.6%   37.7%   38.0%   37.2% 
    GAAP Revenue Composition:                
    Domestic %  52%   50%   49%   36%   48%   52%   46%   42% 
    International %  48%   50%   51%   64%   52%   48%   54%   58% 
    Customers >10% of Revenue  1   1   1   —   1   —   —   — 
    Cash Related Information:                
    Cash from Operations ($ Mil) ($91.5) ($36.6) ($36.4) $52.2  $18.6  $21.3  ($13.2) $1.4 
    Capital Expenditures ($ Mil) $8.5  $10.5  $8.1  $11.9  $11.7  $14.1  $6.5  $9.1 
    Depreciation & Amortization ($ Mil) $25.4  $25.9  $22.9  $25.9  $20.5  $18.8  $20.9  $23.4 
    DSOs  75   79   78   82   76   76   70   82 
    Inventory Metrics:                
    Raw Materials ($ Mil) $50.0  $43.4  $39.3  $34.7  $31.8  $33.3  $37.4  $39.4 
    Work in Process ($ Mil) $52.0  $50.9  $51.6  $55.8  $55.5  $55.1  $54.4  $53.9 
    Finished Goods ($ Mil) $217.7  $193.9  $185.0  $178.8  $175.5  $185.6  $197.8  $198.1 
    Total Inventory ($ Mil) $319.7  $288.2  $275.9  $269.3  $262.8  $274.0  $289.6  $291.4 
    Inventory Turns(2)  3.0   3.1   3.2   3.3   3.1   3.1   3.1   3.5 
    Worldwide Headcount  3,302   3,209   3,074   3,050   3,041   3,108   3,205   3,225 
    Weighted Average Shares Outstanding (in thousands):                
    Basic  182,024   185,596   189,589   195,655   202,638   206,780   209,183   210,908 
    Diluted  189,246   190,127   195,868   203,259   217,970   219,459   219,262   218,009 

    (1)    Non-GAAP adjustments include acquisition-related deferred revenue and inventory adjustments, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and other related costs, inventory related charges, and COVID-19 related costs. For a description of this non-GAAP financial measure, please see the section titled, “GAAP to Non-GAAP Reconciliations” of this press release for a reconciliation to the most directly comparable GAAP financial measures.

    (2)    Infinera calculates non-GAAP inventory turns as annualized non-GAAP cost of revenue before adjustments for restructuring and other related costs, inventory related charges, COVID-19 related costs, non-cash stock-based compensation expense, and certain purchase accounting adjustments, divided by the average inventory for the quarter.


    Infinera Corporation
    GAAP to Non-GAAP Reconciliation of Financial Outlook
    (In millions, except percentages)
    (Unaudited) 

    The following amounts represent the midpoint of the expected range:

      Q1'22
      Outlook
    Reconciliation of Gross Margin:  
    GAAP  34.0%
    Stock-based compensation expense  1.1%
    Amortization of acquired intangible assets  1.7%
    Restructuring and other related costs  0.2%
    Non-GAAP  37.0%
       
    Reconciliation of Operating Expenses:  
    GAAP $151.0 
    Stock-based compensation expense  (11.6)
    Amortization of acquired intangible assets  (3.9)
    Restructuring and other related costs  (3.5)
    Non-GAAP $132.0 
       
    Reconciliation of Operating Margin:  
    GAAP  (7.6)%
    Stock-based compensation expense  4.3%
    Amortization of acquired intangible assets  2.8%
    Restructuring and other related costs  1.0%
    Non-GAAP  0.5%

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